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The Open Source Business?

Cliff posted about 8 years ago | from the applying-open-source-ideas-elsewhere dept.


Ted wonders: "Being an advocate of the open source software movement for some time, I'm wondering how and if the principles of open source software could be applied to a new type of open source business. In a world where people slave away for the sole profit of a board of directors and merciless shareholders, is there room for a new type of organization that throws away the archaic and monolithic organizational structure of today and from there form a company that has its direction dictated by all of the members that run it. An organization where everyone has an equal say in what goes on. There isn't any limit on how many people can be involved (the more the better, in fact) as long as they can be useful. Could this be the way of the future?"

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hm. (2, Insightful)

GregoryD (646395) | about 8 years ago | (#15896438)

Sounds like communism... heh heh heh.

Re:hm. (2, Insightful)

surfbass (994805) | about 8 years ago | (#15896446)

I was just wondering if he was reading the Manifesto...

Re:hm. (1)

Ruff_ilb (769396) | about 8 years ago | (#15896584)

Or, perhaps, the Federalist papers...

Remember everyone, when everyone takes an equal part in something, it can be Democracy just as much as it can be communism.

In fact, communism (in theory) makes everyone equal, wheras democracy gives everyone an equal say.

This seems much more like democratic business, to me. The communism equivalent would probably be something like paying people less and less depending on how wealthy they are...

Re:hm. (1)

Bing Tsher E (943915) | about 8 years ago | (#15896659)

When everybody is free to take an equal part in something, it can be Democracy.

When everybody is forced to take an equal part in something, it can be slavery, Marxism-Leninism, Communism, etc.

Re:hm. (0)

Anonymous Coward | about 8 years ago | (#15896734)

I should remind you that our own economy is a form of feudal slavery, unless one already has a good deal of money. When money runs everything, and it isn't distributed equally, people end up without things - often enough things that they need - if they don't aquire enough via subservience to some source of money, analagous to a peasant serving a feudal lord. Effectively, they're enslaved by their need of adequate food, shelter, and clothing. Even then, they're not guaranteed to get much more than the bare minimum needed to survive. An enormous fraction of our citizens live in poverty or near-poverty, despite being good workers.

A.K.A.: Employee Buyout of a Corporation (4, Insightful)

reporter (666905) | about 8 years ago | (#15896553)

The article at the top states, " there room for a new type of organization that throws away the archaic and monolithic organizational structure of today and from there form a company that has its direction dictated by all of the members that run it."

Such an organization already exists. It is an employee-owned company [] , which often becomes employee-owned through an employee buyout. There are numerous examples of employee-owned companies [] .

The most famous example is United Airlines [] . It operated as an employee-owned corporation from 1994 until 2002 [] .

The lesson here is that sometimes employee-owned companies succeed. Sometimes, they fail. There is nothing magical about being open source or about being a company structured on the open-source process. Such software and such companies are subject to the whims of the marketplace and can succeed or fail -- as determined by the invisible hand of the free market.

Re:A.K.A.: Employee Buyout of a Corporation (0)

Anonymous Coward | about 8 years ago | (#15896654)

Or by the billions in micros~1's bank accounts. You kids and your "invisible hand of the market." Grow up, there's no such thing.

Re:hm. (1)

TheWanderingHermit (513872) | about 8 years ago | (#15896591)

It's also the way some well respecte groups operate. It's the way the Religous Society of Friends, or Quakers, has been handling their business and making their decisions for close to 400 years and it's worked for them. Granted they aren't a business, but it shows an organization can survive with such an attitude.

Worse. Utopianism. (1)

smalloy (600866) | about 8 years ago | (#15896632)


Re:hm. (1)

humble.fool (961528) | about 8 years ago | (#15896667)

Sounds more like labor-oriented anarchy.

hahahahaha - im going to get involved then fork it (1)

LiquidCoooled (634315) | about 8 years ago | (#15896443)


How Will it be Funded:

Initially the company will be funded by a monthly subscription by those who sign up. I'm thinking in the are of maybe 25 a month(in the region of $30)

Re:hahahahaha - im going to get involved then fork (2, Interesting)

LiquidCoooled (634315) | about 8 years ago | (#15896480)

Actually, I just read the source code, I don't want to get involved with this guy:

[!--[if gte mso 9]][xml]
    [o:Company]The Mafia[/o:Company]
    [o:CharactersWithSpaces]2768[/o:CharactersWithSpac es]

Isn't metadata annoying....

Re:hahahahaha - im going to get involved then fork (1, Interesting)

Anonymous Coward | about 8 years ago | (#15896513)

<meta name=ProgId content=Word.Document>
<meta name=Generator content="Microsoft Word 11">
<meta name=Originator content="Microsoft Word 11">

Good luck with that (3, Insightful)

nelsonal (549144) | about 8 years ago | (#15896447)

Open source works mostly because the distribution costs are very low relative to the initial costs of creating software. Very few other industries work that way (power generation and distribution are one).

Disagree (1)

einhverfr (238914) | about 8 years ago | (#15896864)

Seems like the original question is largely describing WL Gore & Assoc. They work almost exactly this way. Go to some time and check them out.

There might be some possibilities in Cuba ... (0)

Anonymous Coward | about 8 years ago | (#15896449)

you pinko trader !

Leadership by committee? Doubtful. (5, Insightful)

XorNand (517466) | about 8 years ago | (#15896450)

One of my network support customers is a tiny township of a few square miles, it's about the smallest form of government in modern-day America. Almost every single decision has to be approved by their board of trustees of about six-seven people. It takes absolutely *forever* to get anything done and is frustrating beyond belief. Yes, it's even worse than corporate America. I can't possibly imagine to run even a small company like that and still remain competitive.

Re:Leadership by committee? Doubtful. (1)

Ruff_ilb (769396) | about 8 years ago | (#15896607)

Ah, but a leadership by committee approach is quite different than a strict vote-based or thumbsup/thumbsdown approach. Wheras a committee has to argue about everything to no end, a simple vote or approval poll is just that, and can be conducted quite quickly, especially in a company.

Of course, the big downsides of democracy (uniformed voters, mostly) obviously wouldn't exist in a company, where (presumably) every employee is intelligent, educated about the company, and has a personal and very material stake in the company.

Re:Leadership by committee? Doubtful. (1)

Short Circuit (52384) | about 8 years ago | (#15896639)

Uniformed voters? Like in Starship Troopers? (the book, that is.)

Re:Leadership by committee? Doubtful. (1)

CodeBuster (516420) | about 8 years ago | (#15896923)

Remember! SERVICE GUARANTEES CITIZENSHIP! Would you like to know more?

Re:Leadership by committee? Doubtful. (1)

einhverfr (238914) | about 8 years ago | (#15896870)

I am actually looking at building a business out of an open source model. Leadership by committee is not an issue-- you don't organize buisnesses that way. What you do is empower employees to help the business out. THis means less command and control and a more decentralized work model.

In soviet russia... (1)

Edward Teach (11577) | about 8 years ago | (#15896451)

organization runs you.

Cooperative (5, Insightful)

John Hasler (414242) | about 8 years ago | (#15896453)

This is called a "cooperative". These have been common in the US for over a hundred years.

Re:Cooperative (4, Insightful)

plopez (54068) | about 8 years ago | (#15896542)

I wish I could mod you up. To expand on the topic, coops are very common, some examples include:
-Credit unions
-Insurance compaines
-Religous communes
-Rural coops, including telephone, electric, water and sewer coops.
-Mutual benefit corps. such as fraternal organizations.

What is blowing the minds of many of the posters is the concept that there is no strict heirarchy of control. There seems be be a propensity of some people to disbelieve that anything can get done without a strict military/fascist type table of order.

And yet very successful examples are all around us.

Re:Cooperative (4, Insightful)

John Hasler (414242) | about 8 years ago | (#15896574)

> What is blowing the minds of many of the posters is the concept that there is
> no strict heirarchy of control. There seems be be a propensity of some people
> to disbelieve that anything can get done without a strict military/fascist
> type table of order.

There does not exist a human organization in which everyone is equal (though some groups try to pretend).

Re:Cooperative (1)

freemywrld (821105) | about 8 years ago | (#15896666)

There does not exist a human organization in which everyone is equal (though some groups try to pretend).

This is simply not true. I used to live in a housing co-op (and yes, we were a legitimate non-profit business), and the organization was such that everyone was equal. Everyone had a voice and a vote. Nothing was settled until consensus was reached (75% of the group had to agree). The only way anyone's say was limited was if they chose to not participate.

Re:Cooperative (2, Interesting)

Rix (54095) | about 8 years ago | (#15896708)

So, rule by those with the most free time. With housing co-ops, it turns into a geritocracy of the attention deprived.

Re:Cooperative (1)

dubl-u (51156) | about 8 years ago | (#15896724)

There does not exist a human organization in which everyone is equal (though some groups try to pretend).

However, the style of cooperatives and consensus-driven organizations is that you don't institutionalize power differences. Just because people aren't equal doesn't mean that we must create and enforce a one-dimensional ranking.

Re:Cooperative (1)

Jason Earl (1894) | about 8 years ago | (#15896893)

Even in cooperatives power is generally doled out according to who put in the most capital. In that sense they are run just like any other corporation. The folks fronting the money get to make the decisions. Any sort of business endeavor that is organized differently is doomed to failure. After all, why would I put my capital into a business, especially a risky small business, if some dork that doesn't put in as much capital as I do gets just as much say in how the business is run.

Re:Cooperative (1)

einhverfr (238914) | about 8 years ago | (#15896916)

Sure, and a non-profit is different from a for-profit business in terms of organization.

Some businesses such as Gore and Associates do a pretty good job of avoiding institutionalized command and control hierarchies. Hierarchies still exist based on a number of criteria of course, but they are based on persuasion rather than delegated power.

Personally I am looking into hybrid structures somewhere between your traiditonal C&C system and the lattice system that Gore has pioneered.

Re:Cooperative (4, Insightful)

markdavis (642305) | about 8 years ago | (#15896643)

Generally, co-ops only work well with a relatively homogeneous collection of people. In a business, it is less likely that all the employees will be in such equal mindsets.

I wouldn't think that co-ops would scale well. It is not all that hard to get 2 to 5 people to agree on a course of action. Much harder , but still doable with 10. But it is nearly impossible with 100 or 1,000. So it will just be a "majority rules".

Without some type of heiarachy, decision making can be much too slow in an "everyone is equal" environment. You need specialization and sub-grouping to focus on particular issues in depth. And some specialization will, inevitably, put some employees on different authority levels than others. For example, hiring and firing... with 1000 employees, there is no way that such an on-going staffing task could be done by "majority rules".

Another example is financing. How many of those employees will really understand finance enough to participate in the voting/control of the spending? Buying? Information Systems? Marketing? Etc.

Re:Cooperative (2, Insightful)

davmoo (63521) | about 8 years ago | (#15896772)

Besides sales, marketing, IT, etc, there is also the other end of the many of those employees will volunteer to clean the toilets and empty the trash cans every day. Sooner or later, every "we're all equal" business is going to have trouble with the proverbial (and now politically incorrect way to say it) too many chiefs and not enough indians. Nobody aspires to be a grunt.

Re:Cooperative (2, Interesting)

siriuskase (679431) | about 8 years ago | (#15896871)

They can contract out the janitorial work, just like most other companies.

Re:Cooperative (3, Insightful)

automatix (664568) | about 8 years ago | (#15896868)

Fonterra [] is the world's largest dairy company, and its a producer's co-operative. Now, the producers (farmers) own 100% of the Fonterra shares, and they're also the company's suppliers. A co-operative doesn't neccessarily mean everyone is equal, just that everyone is an owner/stakeholder and that the company acts in their collective interests. In which case co-op's can scale.

With a vote? (3, Insightful)

MarkByers (770551) | about 8 years ago | (#15896455)

You mean a direct democracy? In a democracy the majority tries to take privileges away from the minorities for their own advantage. This works OK for countries where it is very difficult to leave but it's hardly a good way to run a company. A company is supposed to be a team that works together. The people that get taken advantage of can easily quit and then you end up with a smaller company with the same problem.

Re:With a vote? (2, Insightful)

Billly Gates (198444) | about 8 years ago | (#15896475)

Then if the upper guys quit (The ones the average worker will take advantage of) then it will no longer serve the average employee and it would hurt them.

Unless of course you think the average worker is not qualified to make such decisions and they can shoot themselves in the foot?

Yeah your supposed to work together as a team but guys with clipboards and 4 function calculators have no bussiness telling MBA educated CEO's and board of directors business decisions. Apearently this is whats happening and many big companies have no long term plans because these silly CPA's walk in and tell them what to do or even fire them. Thats not right either.

Reminds me of wall street punishing Sun for first missing out on the pc market eating into workstation and server sales. So sun becomes profitable again by making cost effective systems and then wall street punishes them again and fire Scott mcNealy for not concentrating on selling big mainframes that bring in all the dough and ignore the market disinterest in such systems.

Our first order of business... (2, Funny)

radiotyler (819474) | about 8 years ago | (#15896460)

I'm trying to start off from as simple as possible(hence the plain webpage).

Five bucks says he used Vi to make the whole thing.

Re:Our first order of business... (1)

LiquidCoooled (634315) | about 8 years ago | (#15896472)

You aren't a very good business man, you just lost five bucks.

<meta http-equiv=Content-Type content="text/html; charset=windows-1252">
<meta name=ProgId content=Word.Document>
<meta name=Generator content="Microsoft Word 11">
<meta name=Originator content="Microsoft Word 11">

Re:Our first order of business... (1)

radiotyler (819474) | about 8 years ago | (#15896530)

Sonofa... well, I guess I just got voted off the "Open Source Investment Team".

Re:Our first order of business... (1)

frostoftheblack (955294) | about 8 years ago | (#15896548)

What better way to start an open source company than with Word-designed webpages?

Re:Our first order of business... (1)

Bing Tsher E (943915) | about 8 years ago | (#15896684)

That's what happens when everybody overpromotes 'Firefox' and virtually nobody still runs a browser (the Mozilla suite- 'seamonkey') with that nice little 'Composer' icon down on the status bar. Everything is typed into Web Forms or people are stuck using Microsft tUrd or the likes.

Re:Our first order of business... (1)

aqui (472334) | about 8 years ago | (#15896917)

What's vi ? ;)

(I'd put my bets on Word or Notepad)...

Who's neck? (2, Interesting)

karearea (234997) | about 8 years ago | (#15896461)

It would take a big shift. Too many people think in terms of who's neck is on the line, they like to think of the board of directors or the CEO or the team manager.

Let's not knock communism, like all political ideologies it has it's faults, and the common flaw with most systems is the abuse of power. Even democracy has it's abuses .. the 'great democracy of the west' has what seems to be leaders passing jobs to friends, companies providing campaign contributions to ensure that demcoracy works.

Re:Who's neck? (2, Informative)

thethibs (882667) | about 8 years ago | (#15896532)

We don't need to knock communism—it does a great job of knocking itself.

I know they don't teach history in CS streams, but look it up. Communism has failed everywhere it has been tried, in spite of using force to keep everybody inside. You don't see a whole lot of American refugees lining up to become Cuban citizens. Ask your parents about the Aquarian 60's and the thousands of communes that formed in the US and Canada and lasted about two weeks before the cooperative spirit waned.

Business organizations where everyone is a stakeholder are called co-ops. They've been around for a long time and every capitalist society has a small number of them. They work especially well when the only reason for belonging is to save money. The successful ones have a permanent management team that really makes all the decisions while everyone else just harvests the benefits and goes to the occasional meeting to vote unanimously in favor of management proposals.

What America needs is a president who can save the world while humping chubby jewish girls in the oval office.

Re:Who's neck? (1)

nelsonal (549144) | about 8 years ago | (#15896653)

The approving of management's proposals sounds an awful lot like what stockholders of privately held companies do too. Communism is great, if (and only if) all the members have a strong sense of loyalty to the unit. Families, some religious organizations, and a few small corporations operate very successfully in a communistic environment. Scaling it up to anything larger usually results in chaos and loss.

Re:Who's neck? (1)

Short Circuit (52384) | about 8 years ago | (#15896689)

I know they don't teach history in CS streams

Yeah, we do. It's called general education. In Michigan, it's part of the MACRAO agreement [] .

Communism is still alive in North Korea, Cuba, China and Viet Nam, to name a few countries. But none of these are likely what you're thinking about. Marxist communism has never been fully implemented on a country-wide basis.

Not that I would advocate it...I like government-guided capitalism just fine.

Open source franchise (1)

caston (711568) | about 8 years ago | (#15896464)

I was very interested in this idea for a a long time. Particuarly the idea of having an open source franchise. It is very expensive to setup a franchise though as the government and perhaps even a few lawyers want their bit. I think if you can get around that it could work initially with a very simple business like an open source chain of sandwich shops. Unfortuntaltey I've been spending all my time running a not-so-open business as a self-employed call-out PC tech. Since then i've become interested more in radical life extension and extending my youth span. I may come back to open source business at some point though.

Don't we already have this? (1)

kimvette (919543) | about 8 years ago | (#15896466)

Isn't this called a publicly traded company?

Re:Don't we already have this? (1)

plopez (54068) | about 8 years ago | (#15896520)

except the way most corp. charters read it make a mockery of shareholding as ownership. Usually the board can have their way with the stock holders and screw them in a legally acceptable manner.

Re:Don't we already have this? (1)

nelsonal (549144) | about 8 years ago | (#15896668)

It's not so much the corporate charters, as the ambivolence of most shareholders of their holdings. Most mutual fund holders have no idea what companies they hold and as a result don't even realize that they (collectivly) could have substantial influence on management. Happily in a market based society, everything usually works like a pendulum so you'll likely see an era similar to the 1980s where corporate raiders send poor management teams packing. Ironic that the bad boys of the 80s were usually doing good things.

Use OS as byline.. free pass.. (4, Insightful)

Tracer_Bullet82 (766262) | about 8 years ago | (#15896467)

If you're asking for an organiztion where everyone has "equal" say that's just running for disaster.

There's a valid and powerful reason for hierachy and divison of power(yeah, yeah I know it can get corrupted and all, that does not detract from my point!), because if everyone can go on willy nilly and do whatever they want, then what's to ensure something or heck anything get's done. It's get thing done.

Anyways OP's analogy is flawed, when is in a OS project everyone has equal say?

The project manager certainly has more say than a contributor, and there's nothing wrong with that.

And as much as I love OS and the prevailing spirit here.. can we stop granting aticles based on it just using /bots favourite flavor of the weak?

There is a solution... (1)

Victor Fors (987095) | about 8 years ago | (#15896468)

And it's called forking. If an open-source organization makes bad (to the public) decisions regarding the developement of it's software, and said software is open source (but not nessecarily free as in beer), someone will (if the product is important enough) fork it and develop a free version, which (if the free version is superior) will outcompete the commercial product, or simply develop a superior product from scratch. Simple. (As long as you don't take into account the fact that some people might want to make a living off the developement effort, of course.) And no Linux-failing-to-outcompete-MS flames. MS is an aggressive hoarding monopolistic organization that shouldn't exist in it's current form in the marketplace, in my opinion. And the EUs, apparently.

It's called a co-op (2, Interesting)

qbzzt (11136) | about 8 years ago | (#15896470)

This form of an employee owned and managed business is called a worker's cooperative [] . It's a pretty old idea, which has its advantages and disadvantages.

Many open source projects work because of

1. A charismatic leader, such as Linus.

2. The fact that if said leader misbehaves it's easy for even a small group of competent programmers to fork the project. This forces leaders to strive for consensus.

#1 can happen in a co-op (or a regular business). #2 is a lot harder in a business.

Employee Owned Corporation (2, Insightful)

xplenumx (703804) | about 8 years ago | (#15896471)

I was under the impression that 'open source' meant that the code was freely available - not that the project had no leader or organizational structure. What I think you're dancing around though is the concept of an employee owned [] company - where, in theory, the employees become the 'merciless shareholders.

Re:Employee Owned Corporation (1)

SkeptAck (558548) | about 8 years ago | (#15896565)

Kinda sorta maybe. I got the impression it was sorta like an employee-owned-business and kinda like a co-op, but mostly like a web page with an email address on it. First thought is that with no one "in charge", the ones who work the most will decide what gets worked on the most, at which point they ought to just dump everyone else and go into business.

I doubt it (4, Interesting)

dazilla (647166) | about 8 years ago | (#15896483)

Strangely enough, we tried this type of concept in running our WoW guild. It was nice at first, but as we increased in visibility, we needed people to take on specific roles, and be able to make snap decisions without consulting others. A hierarchical power structure ended up materializing despite our best efforts to keep it decentralized. Also, when we tried decision-making by polling everyone on every single issue, the decisions would take insanely long to determine. In the end, while in a perfect world an "Open-Source Business" should be implementable, I would need major convincing to believe that it could be done and maintained in our world.

Wars aren't won by armies praticing democracy... (2, Interesting)

Silicon_Knight (66140) | about 8 years ago | (#15896484)

Obligatory Movie Quotes:

"Business is War" - Rising Sun
- and -
"We are here to preserve democracy, not to pratice it" - Crimson Tide

I've had some pretty shitty bosses in my career, and I'm now in the process of starting my own companies. One's bringing money in, the other will get there soon.

This is my comment(s):

In my current 9-5 job, whenever the democratic approach, people tend to debate things over until there's nothing left to be debated. Everyone in an organization fullfills different tasks, have different qualifications and skillsets as a result. If you were to run an org with true democracy, NOTHING will get done. You would have to A) make sure that EVERYONE understands WTF that they are voting on, B) you'd get so many different variants of ideas and sorting them through and then doing voting would be a nightmare, and C) there won't be any time left over from voting and hearing everyone's ideas.

What works best is soliciting a few ideas (have ideas bubble up to the top) then discussing a select few ideas that made it, and then having a decision made. A good leader would also justify why that decision is made (ie, I think this has merit, I"m aware of options X, Y and Z, but I'm chosing option D because of blah blah blah) and a good team should learn to stand behind the leader's decision. This of course goes both ways and assume a competant leader (which my current 9-5 job lacks, hence me heading off and starting my own business in the other 8 hours a day).

- SK

New Business Model (1)

kawabago (551139) | about 8 years ago | (#15896489)

What you are proposing is called chaos. Any organization needs structure to function. People need to know where their place is and what they should be doing.

Equal say? (1)

MMC Monster (602931) | about 8 years ago | (#15896498)

Open source doesn't mean equal say in anything. I certainly don't have equal say with the kernel developers over what's going into the next version of linux, for example.

Re:Equal say? (1)

Bing Tsher E (943915) | about 8 years ago | (#15896692)

You have 'say' that is equivalent to your contribution to the project, however.

You respond that you still don't have any say? Hmm...

In a word, no. (1)

Pharmboy (216950) | about 8 years ago | (#15896502)

What you are describing is a way that businesses might *start* out, with VC money, but eventually, everyone needs to make money. Google found a way, RedHat is finding a way, SuSe is finding a way, but they are no longer "equal" once they start making a profit.

I *do* think there is a lot to learn from the system, however. Where I work (not computer related, luxury good sales) there is no hierarchy at all. Everyone is on the same level. I *ask* to get things done, I can't order anyone. Everyone either is a team player, or they just can't work there. Most of the time, it works pretty good (but sometimes badly). Everyone *is* paid differently, ranging from 24k to over 100k, but more money doesn't mean more control or power.

This has worked for many years with 5, 10 and 15 employees but we are having great difficulty getting it to scale. The problem is that the more complicated the tasks and the bigger the organization, the more "rules" you do need. Not just rules, but procedures, and enough layers that if a line employee can't make the call, it doesn't require the owner to make the decision.

The Open Source method is probably the best way to develop software that I can think of (a blend of top down management and communism, with one or two benevolent dictators). The key is to either have someone finance it until it becomes a "real corporation", have it sponsored by someone big enough to gain from it, like IBM, or keep the project small and non-profit forever.

So I think it has it's purpose, it is useful, it is rich in diversity, but I can't see how trying to run a business with these methods will every produce a large corporation, even RedHat sized. And that means no high paying jobs.

It's a co-op, or even communism (2)

Chris Graham (942108) | about 8 years ago | (#15896509)

This "article" is 40 years too late [] .

You can't run a progressive business via commitee - there has to be management vision and clear direction. Even with collaborative software projects, the popular ones have some kind of management layered over them before the masses get what they come for - Wikipedia, Linux, Debian - whilst collaborative, they're all at the top level controlled by a small group of people. I'd be interested if someone could name one truly popular, non-trivial, and actively developed Open Source product that has no leadership of some kind.

Have you ever been involved in FOSS? (1)

Anonymous Coward | about 8 years ago | (#15896511)

Even FOSS projects have leaders, many of which consider themselves benevolent. :)

The second in command is the one that builds trust with, and provides value to the leader.

This sounds a lot like the way capitalistic organizations are supposed to work.

Even if it doesn't exactly work out that way in the "end" for every company, most companies were like that before they became big bloated dinosaurs that were more interested in their own internal structure than their products and customers.

FOSS will change many things in business, but primarily the way software is licensed. Ultimately companies will give their software away for free, after they figure out that any sufficiently motivated individual would be able to copy or pirate their software, and any company is more interested in the supportability ($$$) of the software than the initial cost.

This is why M$ and everyone else is interested in software-as-a-service. 'cause that's what it is. A software package has no value to a (smart) business, if that software package isn't providing updates, either to prevent attacks, or to work with newer software/hardware.

The unpredictable part is only what will happen when all this software is free, and all of humanity has it at it's disposal to further innovate!

It'd be too big of a shift. (1)

ErichTheRed (39327) | about 8 years ago | (#15896522)

A few businesses could work something like this...rural electric and farm cooperatives, for instance. The problem is, once you grow beyond a certain size, you do need some sort of leadership to make the tough decisions.

It's a classic catch-22. If no one is in power, nothing gets decided. If the leaders rule with an iron fist and absolutely refuse to listen to the underlings, they can run the business into the ground. I think the best compromise is to keep businesses small. I've worked mainly for very large corporations, some of which are very old banks and insurance companies. When you get into the thousands of employees, the organization takes on a life of its own. Too much time and money is wasted playing political games. I've seen millions of bucks flushed down the toilet on useless projects designed specifically to fail so a particular VP can look bad.

Plus, doing this across the board would probably grind the economy to a halt. It's incredible how much of peoples' retirement money is tied up in the stock market. Suddenly taking away the pressure to make the numbers every quarter would really screw up the financial services sector.

Family (1)

Saint Stephen (19450) | about 8 years ago | (#15896533)

When I think about possible economic and resource sharing agreements between monkeys, and I hear about all the capitalism, communism, and all the other isms, it strikes me that we actually have a truly different resource sharing agreement structure -- the family unit. You don't bill your son/daughter/wife/husband for the food you dole out to them.

The hippies tried to replicate the family structure -- and that didn't work. The communists tried to do what families do -- and that didn't work. Churches try to replicate the family structure -- and everyone can plainly agree that that's not exactly the way a family works -- churches try to impose a pseudo-family structure on top of the existing family structure, and rely heavily on government favoritism for their economic underpinnings.

What would be really interesting if some sort of large scale structure could have the qualities of sharing that families assume -- but without the icky kum-bay-yahness of the hippies or the stupidity of the communists, or any of the other freaky not-family things that we end up with.

Re:Family (1)

frostoftheblack (955294) | about 8 years ago | (#15896566)

We already have a family. I usually listen to Big Brother most of all.

Try running a "normal" business first (1)

Infonaut (96956) | about 8 years ago | (#15896543)

I'm not saying this to be snarky. If you haven't already been involved in starting a business with three or more people, do that first. I think it will provide a lot of insight into why it is very difficult to make distributed decisionmaking work in a for profit environment. I'm not saying that it can't be done, but there are reasons why such entities have not risen to the top of the economic heap.

its been done before..... (2, Interesting)

gemada (974357) | about 8 years ago | (#15896573)

They called it anarcho-syndicalism [] and it was successfully done in Spain until the fascists crushed them during the spanish civil war. Also a variation was/is used in Israel on kibbutzes [] .

You're Describing Semco (1)

Rhett's Dad (870139) | about 8 years ago | (#15896582)

Check out Ricardo Semler's company in Brazil, named Semco. I read his book "The Seven Day Weekend", and it sounds like his business environment matches your description.

Sounds like a few pirate groups in colonial era (0)

Anonymous Coward | about 8 years ago | (#15896609)

What you have mentioned has been tried before with employee owned companies.

However a more basic and older form is like a FEW pirate groups during the colonial era.
Captain and first mate would get 2-3 shares of loot or vote each and everyone else would get an equal share/vote.
Major decisions would be voted on, while minor decisions retained ship command structure.

I believe existing business entity types could be used as a basis with company bylaws specifically dictating how major decisions and profit distribution is handled.

Cambrian House? (1)

Nrbelex (917694) | about 8 years ago | (#15896618)

Isn't that sorta the idea behind Cambrian House [] ? "Within the crowdsourcing model, contributors to software projects earn royalties in the form of royalty points. If developed products are profitable, profit is shared among contributors based the contributor's share of the total royalty points."

Damn!! (1)

poind3xt3r (890661) | about 8 years ago | (#15896622)

" they can be useful"


Yes, but you have to RTFM (3, Interesting)

delirium of disorder (701392) | about 8 years ago | (#15896629)

As other posters have mentioned, cooperatives and collectives are one option for a more free business model; there are many others. You may be interested in Anarcho-Syndicalism [] . Syndicalists see labor unions as a force for revolutionary social change, replacing capitalism and the State with a new society democratically self-managed by workers. Millions of human hours have been spent thinking about and articulating radically free economic paradigms. Your idea for an open source business is interesting, but doesn't go into much detail. You just say that it would be web based, have startup costs, and will go in whatever direction the workers want. It's not a bad idea, but if you and anyone who reads your "plan" are serious, then you should look at the history of nonhierarchical organizations and learn from the theories, failures, and successes of the past. After you develop stronger ideas about how to create democracy in the workplace, you should create a more concrete plan.

Name an open source project run this way (3, Interesting)

clymere (605769) | about 8 years ago | (#15896631)

It says something that the most succesful open source projects tend to be run on a model almost identical to a typical corporation. I believe Linus refers to it as the "benevolent dictator" model.

What the poster is describing is nothing less than mob rule. Theres a certain amount of this to all open source projects, but you'll find almost all have a small group of people ultimately making the decision about what direction to take. And of course if they make enough bad decisions, a portion of their developers can always create a fork

If anything, its the pirate form of democracy. Everyone gets their say, the captain makes the final decision, and if makes enough bad ones, they vote in a new captain.

Perhaps a modular/component approach? (1)

Eye-of-Modok (991809) | about 8 years ago | (#15896634)

I think it could work if each role was identified and taken on by individuals or small entities in a sort of modular matrix. This structure works well on the Internet through partnerships. Many people have found ways to diversify their revenue streams through partnerships that have led to increased profits for both partners. The key is to add value at each stage, which requires specialization. As the network grows, anyone who isn't holding their weight is not likely to survive. This approach relies less on a strong central vision than organic growth. However, the strongest growth will likely occur as a result of a merging of individual visions in a symbiotic fashion. A friend of mine grew a thriving Internet travel agency through a series of partnerships. Each time a new vendor would come online, his sales would jump. The partner, in turn, was thrilled to able to offer his services. Both happy. Both gaining.

You could apply this approach to non-Internet related businesses, but you'd still need to use technology to your advantage. Logistics can certainly be a big issue. Decision-making would occur between stakeholders hacking away at what works. The larger the group affected and the higher the stakes, the more arduous the process.

There isn't any way to do away with leadership. The smaller the group, the more equal each "module" will be. Larger dynamics demand that a fit leader step up to make things work. People latch on to a leader with charisma and vision and are willing to work hard because they share that vision. There is nothing wrong with that at all. The key is to choose to work for a vision with which you are comfortable, rather than electing to be a high-paid wage slave for a company you don't believe in.

OS Business Plan vs OS Execution (1)

grondak (80002) | about 8 years ago | (#15896638)

Business Plans improve (mostly) with extra folks.

Execution fails (mostly, the coop post contains great counter-examples) with extra folks.

Perhaps the sufficient part of this OS Business concept should be the businss idea and plan itself. We could work out a sustainable business model that would allow for differentiation in services/products or price, and so on.

An example of a market that can sustain this level of competition is health care. Differentiation in that sector invites regulatory scruntiny. So how come there is so much competition? Is there really enough success to support the number of hospitals we have in the US? Must be, because the sector requires additional staffers!

So while running a company "out in the open" may not be good for its future, an open source business plan with closed execution might be the corporate equivalent to a "secure" encryption algorithm with a strong key.


I will uncover my secret plan then... (1)

pitu (983343) | about 8 years ago | (#15896642)

problem: provide fair services for a fair price & fair wages

in brief you must beat the system from within...

you must already be a big corp & have at least 51% of the shares which means that you have been behaving like an
evil, only profit oriented corp until that moment. You decide the next day that you need a drop in the price enough to:

    - keep R&D going along
    - keep decent salaries
    - keep beeing competitive (marketing & stuff)
  and you CUT the extra profits (meaning no or largely less extra surplus at the end of the year & no dividende for the shareholders)

  You open up & publish your bussines strategy = best & cheapest service with no extra profits = clients pay only the real cost of the product. You open your real expenses and challenge the market for better offers. Open Source? Well, your functioning is transparent & open, you let anyone with a better idea/offer than you rather join you than try to defeat you.

  This way, the clients get a fair product for a fair value. No employee is exploited but (is) a service to the people beeing (decently) pâid at the same time.

  No (extra profit, dividende oriented company) can be competitive to your cheapest products. you win they loose, you take over. Replicate this to an other sector

  Gain? If your (ex) shareholders don't kill you in time you will have just the moral satisfaction to make something like this functioning to the overwhelming gratitude of your numerous users/clients.

  Equality in decisions? It never existed & it never should. Just let people do what they're good at.

That'a not how Open Source works (1)

Marcos Eliziario (969923) | about 8 years ago | (#15896650)

Open Source projects are not based on everybody deciding about everything. They are based on merit. All decisions are done by a handfull of people that proved that they have the skills to do the best decisions. Of course, all of it depends on the project creator(s) being able to share his power and being able to understand which contributors should have a say for the well being of the project. Not much different from a healthy "closed-source" company. And as much as there are unhealthy "closed-source" companies (and there's a lot of degrees between healthy/unhealthy) there is also a lot of Open Source projects with pointy-headed bosses, with the added anti-bonus that those pointy-headed bosses think they are Alice.

Keep dreaming (1)

supabeast! (84658) | about 8 years ago | (#15896656)

"There isn't any limit on how many people can be involved (the more the better, in fact) as long as they can be useful. Could this be the way of the future?"

It's not too likely. One reason that corporations in the US and similar economies operate the way they do is that the law structures companies to operate that way at least shareholder held companies - companies that are owned by an individual can operate in all sorts of ways. Of course, you always have the option of forming one of these theoretical "open-source businesses" in a nation that's more friendly to what you propose - France, Italy, or any of the socialist nations of Northern Europe.

Patent Pending (1)

Mr.Bananas (851193) | about 8 years ago | (#15896658)

Open Source Business. That's a pretty novel idea for a business model. Maybe you should patent it.

Google for... (1)

aero6dof (415422) | about 8 years ago | (#15896663)

Employee owned company

The largest publicly traded one I know of offhand is SAIC (

Open Source works when subsidized (1)

AHumbleOpinion (546848) | about 8 years ago | (#15896664)

... a company that has its direction dictated by all of the members that run it ...

Open Source works because it is usually subsidized. Volunteers donating their time, academics who have the freedom to work on what interests them, corporations who sponsor some project, etc. If you can find someone to subsidize your open source firm them you might be successful. Otherwise you will most likely fail like any other poorly run firm. Your post suggest that you do not realize that investors and bosses are roles that have developed, evolved, over time because that has proven successful. Business can be a pretty darwinian process.

You need someone to put up the money for a firm, and since it is their money at risk they get to make the decisions. These investors often need help, they hire workers. Workers may or may not share the vision or plan of the investors so bosses are needed to make sure the workers are implementing the correct vision or plan rather than whatever their pet plan or preferrence is. Occasionally workers have a better plan or vision and bosses pass this up to investors and the plan changes. Usually the workes plan is inferior, this is not necessarily self-delusion it may simply be that the worker is unaware of various complications or parallel goals that are not part of their daily experience and knowledge. In this later case this where bosses use authority to make sure workers are working on the correct thing. Oddly enough, bosses are also desired by workers. Whenever there is a group of workers someone will slack off, the non-slackers want good bosses to make sure everyone pulls their own weight (in the right direction too).

An open source firm with too much freedom, too many decision makers, few with authority will just be inefficient and lose to better and more traditionally run firms. Can you get a bunch of volunteers that share a vision, works on the common goal not a personal agenda, contains no slackers? Sure, but not likely. This is why so many open source project die, open source projects probably have a greater mortality rate than new businesses. It's all about a clearly defined shared goal and proper management and incentives. The corporations have an advantage, well, as I said before, unless the open source firm is subsidized.

Seems to be working for Semco (1)

DeathBunny (24311) | about 8 years ago | (#15896665)

Despite the (inevitable) flood of naysayer in this thread who will of course say that's impossible for a company to run without the expected overpaid stuffed shirt figureheads, there is in fact at least one very successful example of a democratically run company. The company is called Semco.

You can read an interview with the man responsible for the companies transformation (Ricardo Semler) on CNN here: de=nested&commentsort=3&sid=193884&op=Reply []

Or amazon has a couple of books written by Mr. Semler.

Nice idea... now try it (2, Insightful)

mfriedma (945835) | about 8 years ago | (#15896686)

It sounds like a wonderful idea.

As an initial dry run, let me suggest that you get together with 15 of your closest friends and see how long it takes to decide where to have lunch.

I predict one of two results:

1. One or two strong personalities take over and make a decision, or

2. You take longer deciding where to eat lunch than actually eating lunch.

In contrast, in my company (which I happen to be the boss of) I decide where to have our weekly lunch. It therefore takes 30 seconds. Other people get input - they tell me what they like and don't like - but since I'm picking up the check I decide.

Seems to work OK.

Now imagine your happy little company making a hiring decision. Worse yet, a firing decision. Cringing yet?

OSS succeeds by hierarchy or by fork (1)

PinkPanther (42194) | about 8 years ago | (#15896696)

Most successful OSS projects have gotten there not by "everyone having an equal voice" but by a few dedicated individuals directing the efforts of themselves first, of the "community" next. So this approach to success doesn't map onto the OP's concept of an "open source business".

The other winning OSS strategy is the "fork". When a project is not moving the way that another group within the "community" wants, then they fork it. This new fork competes and most likely will succeed if its (small) group of dedicated individuals are more focused (and/or smarter) than the parent's group of individuals.

The bazaar approach to OSS doesn't exist. Or, if it does, it is mostly in the role of feedback (bug reports/complaints/flames).

You will have a difficult time finding 10 people of similar skillsets, dedication and desires to be able to have this business affectively float with all having "equal say".

Why is Open Source a business model? (1)

Zadaz (950521) | about 8 years ago | (#15896721)

Just because orange juice is good at slaking my thirst doesn't make it a good choice for engine coolant. Or blood.

Having too many people involved in decisions is the best way for a company to kill its self. When you say "There isn't any limit on how many people can be involved (the more the better, in fact)" you destroy yourself. The more people you have, the more input that needs to be processed, and you quickly reach the Productivity Event Horizon where no one can do any work because they're constantly thinking about someone else's job. The larger the company, the less likely any one has knowledge to make an informed decision in another part. Yet they'll feel the need to chip in anyway because it's still "their" project.

I'm generally a much bigger fan of Motion Picture development style. Pay everyone really well to do what they do really well. Gaffers gaff, costumers costume, actors act, and when its done, everyone goes their own way. Cost effective, well trained and motivated people and high quality output. (technical quality. Very rarely seem boom mikes in shots any more.) It does take a leader with a vision to tell these people where to start though. And that's something your business model lacks.

Hiring a person into this environment who won't screw it up will be a bitch. And that's a bitch on top of regular hiring. How to bring someone in who's a restrained team player, highly self motivated (there's no promotions) skilled, and willing to work in your experiment.

When your only objection to "business as usual" is the "sole profit of a board of directors and merciless shareholders" you're probably better off just having a very liberal profit sharing program and that's it.

But hey, please prove me wrong, I like surprises.

This makes FP? (1)

jtrask (812819) | about 8 years ago | (#15896723)

Open source philosophy made some good software. Therefore it's probably the best way to do everything, even if there's really no way to apply the metaphor (open source books makes sense, so probably we should have open source cars, too, why not?) Coops, businesses that encourage the voice of people farther down the line, these are all viable and good ideas. No matter how hard you try, though, if you're starting with the square peg of open source, rather than starting with a business, you aren't going to make it through the round hole of business. I'm glad I switched to Digg, where someone posing a question with an ex-buzzword in it doesn't make FP.

Been there, loved it! (1)

Zzyzygy (189883) | about 8 years ago | (#15896726)

Take heart, companies like you are describing do exist, though they are a rare find. I had the privilege and pleasure of working for one for the past four years. It's a cryin' shame they went out of business last year due to crappy post-merger management.

At the risk of sounding altruistic, it was a real kickass job being able to work on FOSS, giving something back to said community, and getting paid for it in the process.

Of course, it helps if your boss also supports open source. :-)


The Take - recommended movie (1)

rafadev (980736) | about 8 years ago | (#15896738)

I recommend you watching the movie "The Take" by Naomi Klein ( [] ). It was filmed in my homeland, Argentina, and it is about the "recovered" factories in my country.
When some factories went broke their employees decided to take the factories and run them by themselves, in a cooperative fashion.
Some factories of this sort have now legally obtained the rights to actually own the factories, in change for some debt the companies had with them, and are actually very successful businesses.
Hope you like it... I really recommend it


Eli Gottlieb (917758) | about 8 years ago | (#15896936)

Oh, if I only had mod points! Parent is extremely Informative

Paging Bruce Sterling (1)

cmholm (69081) | about 8 years ago | (#15896757)

One method for breaking down the formal hierarchy is to decentralize. Bruce Sterling gives an example in Islands In The Net [] . For a more socialistic example, the 'Aztlan/El Paso' chapter in Strieber and Kunetka's Warday [] .

A current example is the content production end of the US film industry, where a number of nominally independent contractors pull together to create a film, then break after the wrap, until someone pulls them together for another project. Granted, the components aren't equal (ie. the producer, and the massive corporation that's gonna distribute the product), but it's a starting point you can tweak to your own purposes.

Sure you can (1)

It's Atomic (986455) | about 8 years ago | (#15896762)

reach a state of Eutopia. Just be an ant, or something lower than human with all its desires and foibles. (Closed source developer working for himself.)

Management by consensus (1)

cdrguru (88047) | about 8 years ago | (#15896778)

If you have never worked for someone that believed in this, you are excused. It is truely a revelation. This isn't what the original question is asking, but it is close enough to be scary.

In a management by concensus environment, you sit everyone down for decisions and everyone gets to have their say. Until everyone agrees on a direction, nothing is decided. If a concensus cannot be reached, it must mean that the whole direction is wrong, so you move up a level and look at earlier higher-level decisions.

A sure sign that you are operating in a management by concensus environment is where the basic strategy of the company is brought up to all employees as "are we on the right track here?" This has the effect of generally alienating everyone because they wonder what the heck they have been doing for the last six months if there isn't a commitment to a direction. It also means that the rug gets yanked out from under everyone periodically.

It doesn't work. It was a nice idea, but it cannot be made to work. Committees never decide anything as a whole - a leader always emerges or is established from the beginning.

recuperadas (1)

zogger (617870) | about 8 years ago | (#15896780)

google that term. It just so happens I ran across that the other day doing an article for Technocrat and thought it was pretty neat. That's what workers are doing in argentina after various international economic schemes and scams blew their economy out. The courts there let them take over abandoned factories in various ways to see if the workers could make a go of it after the owners gave up and went bankrupt. It's exactly what you are looking for as for organizational structure.

Uberparent = Baiting Troll (1)

MSTCrow5429 (642744) | about 8 years ago | (#15896784)

"In a world where people slave away for the sole profit of a board of directors and merciless shareholders..."

Uber-parent, downmod, flamebait.

I serve on a church vestry. (2, Interesting)

Medieval_Thinker (592748) | about 8 years ago | (#15896792)

I am the Sr. Warden of my Episcopal Church. I think we do a better job of following an open source model than you might think. If someone wants to work with the Sunday School or rewrite the policies for the hourly employees, we have a process. That process is not a top-down business process. Our goal is to empower and support anyone who wants to contribute with some safety checks in there before it becomes policy. This seems similar to the way that open source projects are managed.

We are all volunteers after all and are doing this because we believe it is the right thing to do. Some of us contribute a lot, and others have pockets of influence/interest. Others just come on Sunday and are in receive mode instead of give.

It works...

They did it with Cola (1)

ManyLostPackets (646646) | about 8 years ago | (#15896814)

OpenCola anyone? []
Recipe on the side of the can, totally GPL'd. It was done to explain opensource to the public and wasn't meant as a serious venture, but they sold about 150,000 cans.

ThinkGeek used to sell it.

Look at envolution (1)

Schraegstrichpunkt (931443) | about 8 years ago | (#15896840)

Have a look at the Envolution project. The company involved tried to conceal access to both source and binaries for GPL software behind a subscription fee. They're not doing business anymore.

I think there was an alternative firmware for the Linksys WRT54G that did more-or-less the same thing.

Motivating the Employees (2, Funny)

nightowl03d (882197) | about 8 years ago | (#15896843)

If a small tweak to the startup fee structure were made this could be quite lucrative for all us.

Right now there is a 25 euro signup fee that goes straight into the company coffers. That just doesn't make me feel motivated enough to go out and get the amount of new people to join the venture in order to make it succeed. Now with the following small tweak, we could reward people for signing up coworkers. We will start with a list of 7 unique people.

not really nightowl03d
really not nightowl03d
nice nite owl who is not that mean old nightowl03d

Now suppose Dave Rhodes wishes to join our open source company. All he does is crosses off nightowl03d adds his name to the bottom, and sends in the 25 euros to the company.

nightowl, would be next in line. Nightowl03d gets 20 euros, and the company gets a 5 euro management fee, At the end of this iteration we would have the following list.

not really nightowl03d
really not nightowl03d
nice nite owl who is not that mean old nightowl03d
Dave Rhodes

So Dave would sign as many people up as he could, (possibly through bulletin boards), every person he signs up, gets to bump off nightowl, move dave up, and add their name to the bottom as follows...

not really nightowl03d
really not nightowl03d
nice nite owl who is not nightowl03d
Dave Rhodes
Mark Garner

In no time at all Dave will be at the top of the list and making a good income. Hmm, this open source company thing could just work, just so long as people are honest and give proper credit to the people at the top of the list.

The Flat team dream (1)

betasam (713798) | about 8 years ago | (#15896920)

Aside from Semco (Brazil) [] , there aren't many companies that call themselves grassroots managed (the reverse of top-down management.) However, historically all startups during the bootstrap phase have used such a management system before melding into hierarchy-managed organisations. If Flat/Democratically managed organisations were "better" (more efficient in providing higher employee satisfaction, effective delivery of products/services) one would have noticed a good number of NGOs and small companies (think of the size of "id Software [] ") already adopting such a model.

The truth is, there is a severe degree of biological hierarchy imposed upon human society. That prevents any model from becoming fully effective. Studyies of primates (can'c cite off-hand, but am sure there are papers backing this up) prove that there is an inherent hierarchy. Most mammals (particularly the predators) also indicate hierarchy and specialisation. Another good example would be wolves, pack hunters whose stragies are close to us. I've seen many people being seduced by the idea of a truly flat organisation, direct democracy within its limits. The trouble was they never studied why it "could" (and probably would) fail. That resulted in the failure of the model. To put it bluntly, why do you think the vast majority of organisations in the world are built on hierarchy?
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