I’m supposed to be on vacation today. My 50th birthday is coming up and I’m taking some time off to celebrate and reflect. But Jan Wildeboer posted a link to a critical article about a recent Paul Graham essay, and it touched a nerve. I wanted to write down a few thoughts about it while they were fresh.
In the essay, Graham boasts about increasing income inequality. It’s the new version of “greed is good“. He proposes that the best method for modeling democracy is that of the startup. I can’t agree with that.
Look, I work at a ten-year-old startup, but that isn’t what Graham means. He means the Silicon Valley startup which follows this basic model:
1) Come up with an idea
2) Get some rich people to give you money to pursue the idea
If you get past Step 2, this is considered “a success” because if a rich guy wants to give you money your idea must be good, right?
3) Burn through that money as fast as you can in search of turning your idea into something people will watch, download, share or buy
4) Run out of money
5) Get more money
6) Go back to step 4, eroding your share of the idea until the rich people own it
Success is then measured by an acquisition or IPO. Failure is that you can’t get past step 5 at some point.
I can’t remember who told me this, so I do apologize for not being able to credit you, but it was pointed out to me that a lot of startups tend to hit the US$5MM revenue mark and then stall. The reason, she said (and I do believe it was a she) was that startups are aimed at the culture of Silicon Valley, and quite frequently an idea that works in the Valley doesn’t work elsewhere.
The Valley consists mainly of young, white and Asian males. I’ve spent a lot of time in the Valley, and while I’ve met a lot of amazing people, I’ve met an equal number of assholes. The latter seemed to measure value strictly on wealth, and they pursue money above all else (“go big or go home”). Look, I think money is great, it can provide options and security, but the sole pursuit of money is not a good way to live. If I have any wisdom to impart after 50 years it would be to buy experiences, not things. The former will last a lot longer.
And this shameless pursuit of money, in both the Valley and on Wall Street, is creating a huge wealth inequality. From what I could find on the web, the average software engineer in the Valley makes around US$150K. Meanwhile, for the same year the average household income was a little over US$50K, so a third of that probably with more than one person working.
People will defend those salaries because they say they are valuable, but if we are talking about a startup-driven economy, most startups both lose money and eventually fail. So I’m not sure it can be defended on value creation. Plus, as the wealth gap gets larger and larger, there is a real, non-zero chance of a whole lot of people with baseball bats storming those gated communities.
When I was younger and took my first Spanish class, the teacher told us that many countries in South and Central America, where Spanish is spoken, had turbulent political histories. She explained that it was often due to wealth inequality. When you have a small but significant group of rich people and a whole lot of poor people, those at the “top” don’t tend to stay there. She then pointed to the US and its large middle class, and argued that it was one of the reasons we’ve been around for 200+ years.
Also, back in the “old days”, if you asked a kid to list jobs you’d get things like teacher, policeman, doctor, janitor, nurse, mailman, lawyer, baker, fireman and, my favorite, astronaut.
Those are wonderful, productive roles in society. Sure, the doctor and lawyer made more money, but we didn’t look down on the janitor (I can remember really liking the janitor at our elementary school and thinking he was so nice to keep our school clean). But somewhere in the last ten to twenty years, we’ve seemed to lose our way as a culture and we look down on a lot of these jobs. The message seems to be “be scared and buy shit” and success is measured on how much shit you can buy.
It’s not sustainable. In finance the idea of “grow, grow, grow!” is considered the goal. In nature it’s called “cancer”.
This is one reason I love my job. At OpenNMS our business plan is simple: spend less than you earn. The mission statement is: help customers, have fun, make money.
A lot of that comes from the fact that we base our business around open source software. One of the traditional methods for securing profit in the software industry, especially the Valley, is to lock your customers into your products so they both become reliant on them and are unable to easily switch. Then you can increase your prices and … profit!
In order to do this, you have to have a lot of secrets. Your code has to be secret, your product roadmap needs to be secret, and you have to spend a lot of money on engineering talent because you have to find highly skilled specialists to work in such an environment.
Contrast that to open source. Everything is transparent. The code is out there. The roadmap is out there. This week is the CES show in Las Vagas where products will be “unveiled”. We don’t unveil anything – you can follow the development branches in our git repository in real time. While I am lucky to work with highly skilled people, they found OpenNMS, not the other way around, because they had something to offer. Our customers pay us a fair rate for our work because if it isn’t worth it to them, they don’t have to buy it.
This has allowed OpenNMS to survive and, yes, grow, over the last decade while a number of startups have come and gone.
This transparency is important to the “open source way“. It promotes both community and participation, and it is truly a meritocracy, unlike much of the Valley. In the Valley, value is measured more by how much money you make and who you know. In open source, it is based on what you get done and how well you advance the project.
[Note: just to be fair, I know a number of very talented people in the Valley who are worth every penny they make. But I know way more people who, in no way, earn their exorbitant salaries]
Another comment that triggered this post was a tweet by John Cleese about a quote from Charlie Mayfield, the Chairman of the John Lewis Partnership which is a huge retail concern in the UK. He said “… maximisation of profit is not our goal. We aim to make sufficient profit.”
What a novel idea.
I’m sure my comments will be easily dismissed by many as just the ranting of an old fart, similar to “get off my lawn”. But I have always wished for OpenNMS to be, above all else, something that lasts – something that survives me and something that provides value long after I’m gone. Would I like more money? Of course I would, but for longevity the focus must be on creating value and providing a great experience for those who work on the project, and the money will come.
After all, it is the experience that lasts.
One thought on “Capitalism and the Open Source Way”
Great article as always Tarus, hope your 50th is filled with awesome!
John Lewis is actually a Co-operative. The staff own the company making it an amazing company in so many ways 🙂
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