Werd I/O

Yesterday, in the afternoon, I collapsed. Everything seemed overwhelming and sad.

Today, I'm full of energy again, and I think there's only one kind of work that matters. The work of empowerment.

Broadly: How can we return to a functional democracy that works for everyone?

Narrowly: How can we make sure this administration is not able to follow its authoritarian instincts, how can we make sure they are nowhere near power in 2020, and how can we make sure this never happens again?

A huge amount of this is fixing the media. Not media companies - but the fabric of how we get our information and share with each other. I've been focused on this for my entire career: Elgg, Latakoo, Known, Medium, Matter and Unlock all deal with this central issue.

A convergence of financial incentives has created a situation where white supremacy and authoritarianism can travel across the globe in the blink of an eye - and can also travel faster than more nuanced ideas. Fascist propaganda led directly to modern advertising, and modern advertising has now led us right back to fascist propaganda, aided and abetted by people who saw the right to make a profit as more important than the social implications of their work.

I think this is the time to take more direct action, and to build institutions that don't just speak truth to power, but put power behind the truth. Stories are how we learn, but our actions define us.

Non-violent resistance is the only way to save democracy. But we need it in every corner of society, and in overwhelming numbers.

There are people out on the streets today, who have been fighting this fight for longer than any of us. How can we help them be more effective?

How can we help people who have never been political before in their lives to take a stand?

How can we best overcome our differences and come together in the name of democracy, freedom, and inclusion?

And how can we actively dismantle the apparatus of oppression?

It's time to create a new kind of media that presents a real alternative to the top-down structures that have so disserved us. One that is by the people, for the people, and does not depend on wealthy financial interests.

And with it, a new kind of democracy that is not just representative, but participative. For everyone, forever.

I started looking at blockchain from a position of extreme skepticism. Over time, mostly thanks to friends like Julien Genestoux and the amazing team over at DADA, I've come to a better understanding.

I've always been interested in decentralization as a general topic, of course - the original vision of Elgg had federation at its core, which is something I experimented with in Known as well. I'm also an active Mastodon supporter. It just took me a lot longer than it should have to see the implications in blockchain to actually bring those ideas about - mostly because of the very broey, Wall Street veneer of that scene. I don't need to be associated with the modern day Gordon Gekkos of the world; that's not what I went into technology to do.

What I did go into technology to do is empower people. I want to connect people together and amplify underrepresented communities. I want to help people speak truth to power. And I want to help create a fairer, more peaceful world. Speak to many founders from the early era of the web and they'll say the same thing.

By decoupling communications from central, controlling authorities, decentralization has the potential to do that. For example, the drag community was kicked off Facebook en masse because they weren't using their government-sanctioned names; that couldn't happen in a decentralized system. On the other hand, it's almost impossible to flag problematic content in such a system, so it could also allow marginalized voices to become even more marginalized with no real recourse.

But ICOs are really interesting. There is a well documented demographic bias in venture capital: it's significantly easier for well-connected, upper middle class, straight white men to receive funding. That's because most funding comes via existing connections; reaching out to investors cold is frowned upon and rarely works. The result is that only people who have connections get funding (except at places like Matter and Backstage that explicitly have an open application policy).

ICOs might be a different story. They are (theoretically) legal crowdfunding mechanisms that allow anyone to raise money, potentially from anyone - without diluting ownership of the company. Assuming you can pull it off (which is likely also dependent on having the right connections), you could potentially raise tens of millions of dollars without having to prostate yourself to Sand Hill Road. It's potentially very liberating.

But I need help understanding some of the mechanics - and I suspect the community in general does, too. 

In a traditional venture relationship, investors don't just bring money. They also bring expertise, connections, ideas, and sometimes even a shoulder to cry on. Your investors almost become like cofounders, and you build a relationship that lasts for many years.

In an ICO relationship, it seems to me that the incentive is for investors to dump their tokens almost immediately. You put your money into a presale, you wait for the price to go up, and then you immediately sell, because you don't know what's going to happen in the future. The good news is that you have your presale takings, but the potential for the post-ICO dump to irreversibly crash the price of your tokens seems high - which would effectively prevent you from being able to raise money in this way again. Not to mention the fact that you don't really have any kind of relationship with any of these investors. It's dumb, fickle money.

Equity is scary - you're giving away part of your company. But it also aligns investors with your mission. You're in the same boat: if you succeed, they succeed. At the extreme end, there's potential for certain kinds of investors to push you into unhealthy growth so they can see a return (sometimes employing toxic practices like installing their own HR team), but in general, I do believe that most investors are in it for the right reasons, and want to see companies succeed on their terms. I don't see an equivalent to the non-monetary side of the equation in the ICO world, and I worry that teams will suffer as a result.

But potentially I just don't understand. Just as a my friends helped me get my head into blockchain, I'd love some help with this, too.

I've been thinking a little bit about repurposing of software. One line I've always said I won't cross - inspired by one of the original investors in Elgg, who said the same thing - is that I won't build software that will be used directly or indirectly to kill people. That rules out working on defense contracts, or anything involving weaponry.

The trouble is, software can be repurposed. You could write an algorithm that identifies objects in photographs in order to improve search results, for example, and come into work one day to discover that it could be used for drone targeting. Algorithms can be used for evil. (I would argue that drones, at anybody's hand, fit the definition of "evil".)

I mentioned this on Twitter this morning, and Julien Genestoux made a really important point:

Not "can". will. I am sure there is a ton of OSS code in a lot of the military. Some of it likely used to kill people. we just do not know about it.

— Julien Genestoux (@julien51) March 8, 2018

 Open source software can be used by anyone for anything, as long as the four freedoms are adhered to:

The freedom to run the program as you wish, for any purpose (freedom 0).

The freedom to study how the program works, and change it so it does your computing as you wish (freedom 1). Access to the source code is a precondition for this.

The freedom to redistribute copies so you can help your neighbor (freedom 2).

The freedom to distribute copies of your modified versions to others (freedom 3). By doing this you can give the whole community a chance to benefit from your changes. Access to the source code is a precondition for this.

There is nothing to prevent unethical use of the software. This is a real gap: while I applaud the principles of freedom at work in open source licensing, I would be appalled if Elgg or Known or anything else I'd written were used to cause harm to others. I want no part in that.

Specific modifications to open source licenses exist to achieve certain goals. For example, if software is released under the GNU Affero Public License, running it on a server for people to use counts as redistribution, and any modifications to the code must be made public.

So what if there was a version that refused use for military / defense applications? That would allow software to continue to be used freely, but would deny the license to anyone directly working for, or contracted by, military or defense organizations. Those parties would need to negotiate a specific license, allowing the softare vendor to make decisions on a case by case basis.

The license wouldn't be universal - not everyone has the same objections I do. But for developers like me, it would provide some peace of mind.

My future children, should I have any, will come from a tapestry of places. From my side of their lineage alone, they will come from three continents. They will have multiple passports. They'll share my sense of both coming from a specific place but also no place at all. I don't completely identify with my nationalities, and it's likely that neither will they.

It wasn't until well into my adult life that I understood how far the metadata of my identity diverged from most peoples'. Many people include a nationality in the fabric of who they are; I have multiple, and don't completely identify with any of them. Particularly here in the US, many people identify with a religion; I don't believe in any. For a lot of people, they have a deep, historical relationship with their communities that goes back for generations; mine goes back less than one.

People seem to be very worried about how their culture changes in the face of immigration. The truth is that culture has always been changing through the ebb and flow of populations.

In the 1300s, the Spanish began to drive out their Jewish population - once one of the most prosperous communities of Jews in the world. Continuing a pattern that has been repeated all over the world, they robbed and murdered them, ultimately forcing them to convert to Catholicism, leave the country, or die. Some found their way to Switzerland, where they became textile millers in an area of Zurich called Werd ("river island"). Eventually, they moved their home to the nearby municipality of Elgg.

In the 1600s, a group of English puritans moved to Holland in order to escape the volatile politics and religious intolerance of the time. After some time there, they became afraid of losing their cultural identity to the Dutch, so they secured investment to start a new colony in America. There, they had more control, and could live by their values.

In the 1800s, the Dutch established a system of indentured labor in Indonesia, under a brutal colonial rule and racist caste system. In the 20th century, they enacted some political reforms and invested in infrastructure in the country, allowing the indigenous population limited freedoms like education, but squashed the nationalist movements that began to emerge. The Japanese invaded during the second world war, placing many of the Dutch settlers in internment camps. When that war ended, the Indonesians fought for independence, seizing assets and infrastructure, and many settlers fled back to the Netherlands. Post-war life was hard there, and some found themselves seeking asylum in places like California.

In the early 1900s, between 30,000 and 60,000 Jews were killed in Ukraine over a three year period. Escaping was hard; many families failed. What was once one of the largest Jewish communities in the world was decimated. Some families made it to places like New York, where they changed their names and identities. Partially this was to culturally assimilate into their new home; partially this was because America itself harbored anti-semitic sentiments until well after the second world war.

This is a subset of the events that lead to me, and will lead to my hypothetical future children. I'm descended from Swiss textile merchants, who wound up having a hand in the Reformation; a Mayflower passenger who became the religious leader of the colony; a leader of the resistance against the Japanese in Indonesia whose whole family, including my toddler father, was interned; a major union leader in New England who had fled from Ukraine. My grandfather who served in the US Army and had to deny his Jewishness when he was captured by the Nazis (and survived to later meet Einstein, have tea with Sylvia Plath, and translate Crime and Punishment into English). My academically-inclined parents who moved to study at Oxford for a year and stayed for over twenty.

Growing up in England, I was ashamed of my identity. Teenagers leap on any difference, and my background - even in Oxford, a university city with an ever-changing population of visiting academics - made me feel like an alien. Because I had an English accent, people felt free to say how much they hated Europeans and Americans around me. At one point, I considered changing my last name to Ward, because whenever I had to tell someone my last name over the phone, that's what they would repeat back to me. "Werdmüller." "Ward?" "Werdmüller." "Ward."

As I grew older, I began to bristle against this more and more. "You can become a British citizen, you know," people would tell me, almost without fail, whenever they discovered I wasn't. It was meant kindly, I think: they were proud of their national identity, and they wanted me to be able to attach that metadata to mine, too.

What they missed was that it was an erasure of who I was. My identity really is wrapped up in all these migrations of people - not just hundreds of years ago, but right now. All of it is a part of me. If you asked me today, I wouldn't change my name for the world, and I wouldn't give up any of my history to be able to say I was from any one place. I'm an immigrant everywhere, and that's okay. I proudly come from a long line of immigrants and nomads.

I've learned, the hard way, that this is confronting for many people. They're proud of being British or American, and perhaps my rejection of that somehow reflects on those values. Nationality and religion are shortcuts to identity, in the same way the way you dress can be. In particular, the idea that I am not tethered to any one country - and don't want to be - is very difficult to accept. As one ex-girlfriend put it, "it's like you don't want to fit in".

Today, a growing percentage of the world's population - a little over 40% - is connected over the Internet. We have the ability to  speak to people virtually anywhere, instantly, which means relationships can emerge over greater distances, in greater numbers. The number of dual or multiple citizenships has been rapidly increasing during my lifetime (although no government officially keeps track), and it will continue as more and more people gain the freedom to easily travel and communicate globally.

Many people complain about how immigration is changing the cultural landscape of their country. In America, a country founded by immigrants relatively recently, this is ridiculous. But it's ridiculous everywhere: in a sense, the world is a country of immigrants. Borders can be seen as a kind of top-down attempt to inhibit movement in order to preserve resources, but people have always moved. The ebb and flow of populations is the heartbeat of human civilization.

Which brings me back to my hypothetical future children. I'm anxious that they not be forced to fit into someone else's cookie-cutter idea of what their identity should be. They have the rich histories of the two people who will lead to them; of countries and religion, persecution and immigration. Ultimately, they will have the privilege of deciding who they want to be, and how they define themselves. The usual metadata need not apply.

Prologue:

The first time I ever visited South Park, the tiny patch of grass in downtown San Francisco that the Matter garage would later back onto, Biz Stone bought me a coffee. We circled the park and talked about Elgg, our open source social networking product, and Twitter, the startup he was working on at the time.

The most important piece of advice he gave us was this: hold something back. It's fine to open source your code, to release an open product, but you've got to hold back the thing that will make you valuable.

This was the most important advice we received about Elgg. We ignored it completely.

Six years later: September 2014.

Erin and I stepped down from the Paley Center stage in New York, exhausted. Most accelerators have one demo day. Because Matter is so closely tied to both media and technology, it has two: one at the Folsom Street Foundry in San Francisco, in the heart of SoMa, and the other in New York, the city where most of America's media companies call home.

Known, we told an audience of media luminaries like Jeff Jarvis and industry investors, was a way for post-secondary students to save their coursework, notes and discussions on a site that they controlled. In a world where students are used to delightful apps and beautiful user experiences, the Learning Management Systems used by 93% of institutions are an abomination that actively hinder learning. Worse, when a course is over, all of the discussions and resources that were collaboratively made by the class are deleted forever. With Known, students can publish to their own site, and syndicate to these other platforms, allowing them to take control over their learning using a beautiful, mobile-first user interface.

Better yet, we told the audience, Known has an open source core. We know that one size doesn't fit all in education. With Known, every single feature has an API endpoint, and every single feature can be customized to fit both the needs of the institution and the student. The first pilot is happening right now, and we're getting great feedback.

Applause. Seven minutes later, we were done. This was day zero for our company: the next day, the hard work would begin.

Skip forward: September 2015.

I looked around the table at Garaje. Most of the alumni from Matter's third class were here, and had great stories to tell: Musey were thriving and building beautiful design apps; LocalData were helping to improve American cities; Louder were preparing their acquisition by Change.org. Over in New York, Stringr were delivering video to more and more news stations.

In some ways, Known was doing well. Our software was powering tens of thousands of websites. We had received great coverage at our launch, and continued to get fantastic feedback from educators all over the world. People were using Known to teach on five continents.

Yet at the same time, we didn't know how we were going to pay rent, and growth was linear. For a project, we were doing well. For a company, we weren't doing well - and there were still only two of us.

What went wrong?

First, you have to understand open source.

Open source is best defined by its four freedoms, which are inspired by Roosevelt's declaration of the four freedoms that every human should be able to enjoy. These dictate that you should be able to:

0. Run the program as you wish, for any purpose
1. Study how it works, and modify its function
2. Redistribute copies “so you can help your neighbor”
3. Distribute copies of your modified versions

The intention is that open source software is free as in speech: it grants you liberties over the code you run that you might not get with other products.

Unfortunately, the word "free" is overloaded: it has multiple possible meanings. In reality, open source has become synonymous with free as in beer: software that you can use without incurring any direct licensing costs.

Our strategy was to create an open core that people could freely distribute, and then layer premium services over the top. If you didn't want to worry about managing servers, we had an excellent SaaS product. If you didn't want to worry about managing APIs to third-party platforms, we offered Convoy. Finally, we wanted to provide access to a network of trusted consultants who could create customizations for institutional customers.

Our utopian vision was to have organic growth through sharing, leading to institutional customers. This didn't happen - at least, not as fast as we needed it to.

Second, you have to understand startups.

We have exact numbers internally, but a good rule of thumb in San Francisco is that, to break even, we need to bring in $10,000 per employee per month. This covers below market rate salaries, as well as all the overheads you incur when you're running a business (for example, taxes and moderate infrastructure costs). It doesn't cover some of the extra investment you really need to put into sales, marketing and product development.

To be relatively comfortable as a two-person company, we need to clear $240,000 per year. That's a tough ask for many businesses, which is one reason why investors are useful: they back your team and put money into your company, making a bet that you'll be profitable later on and will be able to pay them back and then some.

Consider, also, that most teams are not limited to two people. I've got a development and product management background; Erin is an analyst and user experience expert. We need to bring on a full-time technical lead and a front-end designer. I can't do either my CEO (sales! research! business development!) or web development jobs justice, and Erin can't do her user experience or front-end jobs justice. We also need to have redundancy on our staff, so if one of us is sick or out doing sales work, the company can continue to be productive. As soon as you start talking about building a real team, those numbers explode.

I don't believe it's possible to start a consumer startup as a full-time endeavor without significant investment. Unlike businesses, only a tiny minority of consumer users are willing to pay money. You need to have enough runway (the time left in your company before it runs out of money) to reach a mass-market audience, and then make sure you're either solving a problem that they are willing to pay for a solution to. Because it's so hard to get money from consumers, these businesses often make their money through advertising: reaching targeted, engaged audiences is absolutely a problem that advertisers will pay for a solution to.

Enterprise startups potentially require less investment, but the sales cycle - the time it takes to sell to an individual customer - is potentially much longer, and the total cost to acquire a single customer is much higher. You need to have enough money in the bank to make this work; investment is a useful vehicle to bring your company to the next stage of its development.

Investors protect their money by minimizing risk. In this context, open source is a liability: remember the free as in beer problem? By giving away the portion of your product that captures value, you're essentially devaluing your business to zero. Why would anybody invest in that? I'm sincerely grateful that Matter did invest in our team. In return, the least we can do is be a good steward of investor value.

That $240,000? It's a baseline. Biz was completely right: you need to hold back the thing that makes you valuable.

Feedback is a gift - and so is open source.

When they work well, open source communities are amazing things: collaborative groups of disparate people all agreeing to make software together for use by the commons. As a methodology, it's beautiful, and can showcase the best of humanity.

When you're building a product for sale, it's important that you've identified a problem that people will pay money to have solved for them, and that you're solving it well. That means talking to a lot of people, and both making and iterating a lot of rough prototypes. Your product has to be compelling, well-made and scalable. As it's concisely described in design thinking circles, you need to constantly be testing its desirability, feasibility and viability.

When your product is open source, you'll get a lot of feedback from the community. This is important to take on board, and the community is a hugely valuable part of your ecosystem - but at the same time, it's unlikely that open source community members are customers. It's possible that they're users; it's also possible that they're open source enthusiasts who are just happy to see another project join the movement.

Open source projects, as a whole, have famously bad usability. That's because their feedback loop is constrained to other developers. One recent example of this disconnect is a heated debate about using Slack vs Internet Relay Chat. To non-technical users, IRC is arcane and unfriendly (which also accurately describes many of the discussions that take place there), yet many open source maintainers couldn't understand the problem.

When you're building a compelling product, the license should be irrelevant. It should be compelling whether it's completely closed or released under the GPL: the license is how you distribute the product, not something that's inherent to the product itself.

Unfortunately, in the case of Known, I think a lot of people liked it because it was free and open source. This was a bad signal - and certainly not one that will lead to paying customers and a thriving business. (It's worth saying here that a consistent voice of real support has been the indie web community, alongside companies like Reclaim Hosting, which legitimately wants to see us succeed.)

I'm not Donald Trump, but ...

The biggest surprise I've had since starting Known is the amount of feedback complaining that we're trying to make money with it. Usually this comes with some kind of a complaint about startups and capitalism.

If you know me, you'll know that my politics err on the liberal side of liberal; Bernie Sanders and Elizabeth Warren are the US politicians who best describe the country I want to live in. I'm hardly a hardcore conservative capitalist. Nonetheless, I was taken aback to discover that we'd accidentally joined an anti-capitalist movement: we've been very open about being a business since the day we announced our existence.

In fact, I really wanted to show that it was possible to create a profitable, thriving business creating respectful software that gives users full control of their data. I think it's important.

Here are some real things I've heard about making money from open source:

• We should have a universal basic income so people won't have to worry about how they'll make money.
  A universal basic income is not money from the sky; it's a proven way to create a real safety net, but it does rely on taxation. It doesn't work if everyone relies on a basic income, and the idea that you should have to live at the lowest possible income if you're going to build respectful software is both ridiculous and kind of offensive. Welfare is important, but not as a way to pay for open source software.
• We should be striving to build a post-money society.
  I mean, to be fair, I'm a Star Trek fan too.
• We should just build software for the love of it and not worry about making money.
  Most egregiously, we've heard this from people who literally take our free product and sell services around it.

All of these are obviously detatched from reality.

This culture of anti-capitalism in open source is actively harmful. It's a reason why so few women (1.5%!) participate in open source projects, for example, and why people in disadvantaged communities are underrepresented. Having the ability to work on a project for free represents enormous privilege. At its best, open source can be a way for people to contribute to a global commons and freely exchange ideas; at its worst, it's exploitative and exclusionary.

It's devalued our time. I get personal requests on all channels on a daily basis - email, Twitter, Facebook, even unsolicited phone calls - asking for free help. (I no longer give free personal help, except on the mailing list, where it can be used to grow a commons of support information that everyone can use.) Sometimes these calls for free help come from people who are making money from our labor.

Open source doesn't need folk songs. It needs a way to fairly compensate the people who participate in it. I'm not at all against anti-capitalism - but it sure is hard to build a business on it.

But aren't there a lot of profitable open source businesses?

No.

We've most often been compared to WordPress, which powers over 23% of the web. Automattic is valued at over $1.1bn, has a huge team worldwide, and is widely held as the poster child for open source businesses.

In reality, the WordPress open source project is held by a non-profit foundation. Automattic concentrates solely on hosted services.

Ghost, another project we've been compared to, is a non-profit entity in its entirety. It made a lot of its money by crowdfunding as a WordPress plugin, before switching to becoming a node.js project. This technical change made it much harder to install, making their paid, hosted services an easy choice.

Ind.ie hasn't really launched Heartbeat, their distributed social network, but their project is significantly better-funded than Known. This is partially because they crowdfunded as a smartphone, before choosing to shift their attention to a more focused problem.

Mozilla has a long history that stems from Netscape. Their success is not something that a new entrant to the market could replicate.

Red Hat is held up as a model open source business: its current market cap is $14.8bn, or roughly 2.8% of a Google. It provides professional services and support licensing around its Linux distributions.

Infrastructure is a more profitable place for open source to thrive: MongoDB, CoreOS and Docker are all examples of well-funded open source startups. Each one sells better support, trustability and reliability - which makes sense to pay for if you're building a business on top of their technologies.

For these businesses, open source allows them to build a bigger market for their products, which they can then capitalize on. It's a smart strategy that has very little to do with freedom, and everything to do with growth.

What about other funding methods?

BountySource, the crowdfunding platform for open source projects, is one oft-mentioned funding method. It's actually a pretty great idea, that I think will wonderfully for hobbyists, and will encourage developers on distributed projects to work on smaller bugs and features. I don't foresee it covering our costs.

Similarly, Patreon works very well for personal projects, and is redefining how some artists make their money.

We currently make a significant portion of our income through professional services, but this isn't sustainable for a number of reasons. As Tomasz Tunguz at Redpoint Ventures pointed out earlier this year in this excellent analysis:

The data suggests that customers are willing to pay 20%+ margins on price points of greater than $200,000. Less than that price point, the data shows it to be difficult to operate a professional services team at better than breakeven.

When you consider all of the overheads inherent to running a company, you would actually make more money just being a freelance developer. Professional services jobs are often one-offs, and while they sometimes lead to contracts, it can be an equal effort to go find the next one. It's not a great way to grow.

That also negates the common argument about making money by providing tertiary services like support and customization. These strategies add more risk to the business, and don't cumulatively add value. At lower price points, it's not even a lifestyle business: it's hand to mouth.

What's next?

None of this should be a downer. I want to open a real conversation about making money sustainably with respectful software. Between Elgg and Known, I've spent the majority of my career working on these issues. I think they're solvable, and I think the result will be a better software ecosystem.

Known isn't at all going away, and we continue to release new versions every single month. We're evaluating the services we provide around it, but we love how the community has rallied around it, and we love how it's being used. We expect it to live and breathe for a long time.

However, we're learning from companies like Automattic, and non-profits like the WordPress Foundation. We're thinking hard about how the project is supported. And it should go without saying that we're committed to building a valuable, growing business.

There's a strong movement around creating alternatives to software that tracks and spies on us. I think that's a fantastic thing. Building software is about empowering people to do things they previously couldn't. But a part of building empowering tools is to make sure they can be provided sustainably. If you're doing something good, you need to be able to keep doing it - and whether you like it or not, that means money.

We need to have a stronger conversation about money in open source, and about building healthy businesses on respectful software.

Conclusions

As either Milton Friedman or Alfred P. Sloan said: "the business of business is business". Build a healthy business; don't be led by ideology. You're not helping build a more open world if you're showing that being open is unsustainable or detrimental; show that you can do well.

And when you succeed, use the fruits of your labor to do good.

We'll be here, cheering for you.

I wrote a follow-up to this post: why we built Known.