On Wednesday, October 6, I was part of a lineup of lightning talk speakers at Business 3.0: How the Future of Technology Will Change Business, an event organized by the Ivey Alumni Association. These are my slides.
Yesterday, I attended the first ever StatusCamp held in Montreal, and came away being very impressed with what I saw. How often does one get to attend an public unconference organized by a venture funded startup?
Present in full force was the power-packed Status.Net team which included the former CTO of the Wikimedia Foundation, Brian Vibber, and seasoned entrepreneur/open source business pioneer CEO Evan Prodromou. This is a team that understands the DNA of the Internet and its open source roots, and how its future that includes microblogging will eventually be moulded in accordance to its genetic makeup. An illustration in point: the instinctive openness exhibited at StatusCamp towards supporting open protocols such as ActivityStreams, PubSubHubBub, and Salmon within Status.Net highlights the value of being part of on-the-surface seemingly chaotic open source ecosystems, and how we can all be stronger when disparate but open parts can be combined to work together than when we work in silos.
Yes, the Internet has grown up and is a platform upon which commercial activities thrive. In this respect, Status.Net’s WordPress.com/wordpress.org analogy summarizes their business model very well, has been validated with the success of WordPress, and is easy to understand to even people not familiar with open source. I am very much looking forward to the upcoming public beta of the Status.Net hosted service.
At Citadel Rock, we will be actively incorporating Status.Net into our Online Collaboration and Social Media offerings. Customers will have the option of using the Status.Net hosted service (we will normally recommend this) or on their own premises (software maintenance subscriptions can be purchased from Status.Net). Citadel Rock will provide customization and integration services. In 2010, We will be proactively working on integrating the open source TikiWiki platform with Status.Net, similar to what we are doing right now with Big Blue Button, an open source web conferencing system.
It has been a long but very fulfilling day unconferencing Open Space style at Digital Media Camp Toronto. The key headlines:
- There is a nation-wide effort under the umbrella of Canada 3.0 and Canadian Digital Media Network that all stakeholders in the Canadian Digital Media landscape should participate in. The goal of this initiative is to have a unified strategy to secure Canada’s future as a world leader in digital media.
- Digital media (the creation, distribution, and consumption of it) is a key infrastructure input to all sectors of Canada’s economy. It is vitally crucial and impacts all industries, and a desire for a unified strategy requires broad reaching economy-wide coverage. Challenging perhaps, but necessary, and I believe that with sufficient open collaboration, it will succeed.
Notes on individual discussions can be found at the Digital Media Camp Toronto Wiki, but do give some time for handwritten notes that have been written on flipcharts to make its way up into the wiki.
Now that I have had a closer look at the Canadian Digital Media Network website, I do have some suggestions:
- The definition of Digital Media as prominently displayed on the current website is too “weak”. Perhaps better is a statement of what is already happening and will be pervasive in future, something like, “Today, information and media is increasing being created and shared virtually, rather than physically. This trend will not only continue but it is expected that by xxxx, xx% of new content will be distributed and consumed in digital form. Even for media that is non-digital in final form, e.g. a book, much of the production process already uses digital media. Digital media is pervasive and is critical infrastructure now and for the future, whether it is in broadcasting, communications, education, entertainment, finance and insurance, healthcare, internet, manufacturing, natural resources, publishing or any sector of the economy.”
- We need new material (videos, etc…) that covers digital media innovations and activities from the whole of Canada. A united face for digital media in Canada would be highly beneficial and I hope that the Canadian Digital Media Network can fulfill that role. It’ll probably take some time for other regional participants to contribute new content but I hope it will happen soon. My hunch is that an appeal for content in the spirit of collaboration will gather momentum especially as more Digital Media Camps happen in other cities and the 2010 Canada 3.0 conference approaches.
On a separate note, I sense an urgent need for the open source and open content industry to highlight the importance and benefit of Creative Commons and Open Source innovations within the Canada 3.0 and Canadian Digital Media Network fora.
If not, Canada risks losing competitive advantages from being one of the more Open Source and Creative Commons friendly business environments in the world. I would point out that being a smaller country (in population) and therefore lacking the benefit of pure numbers, Creative Commons can be an extremely cost-effective and viral way for for Canadian culture in the form of Digital Media to spread, just as Open Source can do for Digital Media technology.
Nonetheless, I am happy to hear from individuals at the Digital Media Camp that there is not insignificant grassroots level use of Open Source Tools for Digital Media, as well as interest in Open Content initiatives. I also know that Canadian thought leaders like Michael Geist who have strong understanding on the benefits of Open Source and Creative Commons are advisors to policy makers.
Projects like Open Source Cinema, which is a Canadian born project (BC), must be part of the picture. In Toronto, we have leaders, e.g. at Seneca, who are the founding hosts of the international Teaching Open Source Summit this year. Don Tapscott, thought leader and author of “Grown up Digital” and “Wikinomics” is adjunct professor at the Joseph L. Rotman School of Management, University of Toronto. The Open Source Business Resource is an initiative of Carleton University in Ottawa.
With world leading institutions like Harvard Business School now teaching Open Source, and NYU/Yale being involved in initiatives like the Open Video Alliance, Canada cannot afford to be left behind in these areas. As a closing note, check out this video which is a case study illustrating how Creative Commons help filmmakers in the digital age: Media That Matters – Creative Commons Case Study
The short answer is in fact a question: “Why not?” Or more pertinently, we should be asking why we are asking this question at all. For starters, it is not quite fair to group all venture capitalists together, nor does it really make sense doing the same for open source projects. Open source business models after all range from support and services, to largely commercial models where proprietary code is monetized on top of open source assets, and there is a lot of middle ground.
I list below some common arguments against venture capital mixing with open source and the counter-arguments to each of them. You as the reader can make up your own mind.
As for myself, I remain very neutral to the issue – meaning that I believe that at the present moment there is only a minority of venture capital firms that can work effectively with open source companies, and I hope this will change in the future in a way that benefits both open source and venture capital. Now that I’ve stated my position, the arguments…
Venture capital is obsessed with the possibility of exit, which may not be good for open source after all, especially if the exit is a sale to a proprietary software company (like what happened to MySQL inadvertently through Sun?). And frankly, it’s not necessarily good for innovation (which I believe is the real goal of venture capital, not profits :) ). See Fork Well: It Could Be The Last, Best Hope for Community for a “free software centric” but very understandable reaction early on in the Oracle-Sun merger news cycle.
There are many possible good investment exits for open source companies that are good for open source in general, such as a merger with or an acquisition by a larger and more influential open source player (e.g. Red Hat), or an IPO. If companies like Novell who are increasing their open source portfolio become more oriented to open source and successful at the same time, it can also be beneficial. And in the Oracle case, there are others that have argued that they have supported many other open source projects after acquisition, such as JBoss and BerkeleyDB (but admittedly it is difficult to analyze what would have been if these stayed independent or were acquired by other organizations instead).
The whole venture capital industry is based on valuations through traditional corporate measures, which is ill-equipped to value open source communities. In fact, it can be argued that the open source communities transcend corporate boundaries and therefore company-based investment simply is somewhat antithetical to the structure. It’s like fitting a square peg into a round hole.
The venture capital industry is in a state of turmoil (CNET News: Big changes needed in the venture capital market), and coping with the nature of open source is part of the transformation that it needs to have in order to reinvent itself. Part of that is finding new models for valuation, adjusting to different investment timeframes, and part of that might involve some drastic changes (which are coming).
The perceived legal risk around commercializing on top of open source licensed technology scares many venture capitalists.
Venture capitalists and their lawyers are gradually understanding that not all open source licenses are the same, and that the legal text together with an understanding of the community reflects a clear enough line (and therefore measurable risk) that is drawn between what should be “community property” and what falls within the prerogative of the companies operating in the community. With more information, entrepreneurs that are cognizant of these constraints (which are in fact strengths if the business plan is sound) should be able to convince potential investors that risks are mitigated.
Venture capital investment could crowd out and discourage community involvement. There could be many reasons for this but in general it might have the potential of disrupting the well-functioning status quo within an existing community which may reduce the contribution of other members who feel that they benefit less from the investment that the company directly being invested in. There may also be a perception of conflict of interest affecting the judgement of community leaders who are founders, employees or significant shareholders of the company receiving venture capital.
Founders, employees or significant shareholders of the company receiving venture capital can “walk-the-talk” and give back generously to the community. In fact, they must, if their business is to be successful. Venture capital has been shown in many cases to have resulted in successful open source companies that are good for open source. After all, venture capital was invested in Red Hat, Zimbra, Xensource, and many others.
On the other hand, many venture capital companies have traditionally prided themselves of being actively involved in adding value (not just financing) to the companies that they invest in. How many venture capital companies invested in open source companies can say the same in terms of their role in helping the community? But I suspect that this again is more of a “lack of understanding” problem and not necessarily the fundamental conflict of interest that many perceive. Things might be better as more and more successful open source entrepreneurs/investors gain experience. Some organizations that clearly benefit a lot from open source clearly have more role to play, say (possibly controversial), e.g. Google Ventures?
For more information:
- Remarks by Matt Asay, one of the influential people in open source today in an interview about how open source and commercialization mix: http://www.infoworld.com/d/developer-world/open-source-roundtable-matt-asay-176?r=54
- Open-source VC investments: Time for payback (post on The Open Road blog at CNET) http://news.cnet.com/8301-13505_3-10217824-16.html
- Report of venture capital investment in open source related firms from 1997 to 2008: http://blogs.the451group.com/opensource/2009/04/08/the-past-present-and-future-of-vc-investment-in-open-source/
And as a postword, perhaps one day open source may not need venture capital as we know it today, but then maybe venture capital may not be what it is today tomorrow anyway, at least for open source.
Something is changing in the video world, slowly but surely. And who knows, it may suddenly accelerate and take us all by surprise. In about a week from now, visionaries as well as those hard at work at making it happen will be meeting in New York City for the Open Video Conference.
Open video is not just about codecs and the underlying technological infrastructure, but also the content. But beyond “the medium is the message” often quoted from McLuhan, we are beginning to see that “the means is the messenger”. The future of video promises to be one intertwined with participatory culture, where we hope that the prevalence of open media makes a real difference.
A video of the panel discussion of Google Summer of Code mentors (in which I participated) held at the University of Toronto on March 31 is now available for public viewing here at the FOSSLC website. Six of us got together to share our experiences with U of T students on how to succeed at Google Summer of Code.