So Crazy it Just Might Work . . .

A Proposal for the Open Capital Corporation (“OCC”)

Our little company, Open Resource Group, LLC, is obviously based on opening up resources to an enterprise that it might otherwise not be able to tap into. By “enterprise,” I mean any project that has a vision, a mission, a plan and is ready to start executing the plan. The Open Source Software movement has taught us that a project no longer requires a formal organization, so “enterprise” does not even mean a company or a non-profit, but it helps a lot. Just as open source software commoditizes the code we combine to create value, so must organizations assemble tangible resources to create value. Blaser’s Second Law states that “There’s no such thing as a resourceless project.”

That’s why I’m not a fan of what you might call the Kumbaya school of project development, because it ignores the money side of the equation. Face it: we all like money – a lot. We like it so much that we get resentful of those who are more skilled at acquiring and spending it than we are, which drives some of us – the more disaffected – to shun projects that reward people well for creating value. Portable money is one of society’s most egalitarian inventions, but sometimes it needs a little help to keep the playing field level and to ensure free entry.

To get money we have to put up with accounting systems. Accounting systems are closed data structures designed to grab as much money as possible from a collective effort and to concentrate it in the hands of those who set up the effort’s accounting system. We may not like those folks much, which is why we don’t actually go to work for them, even though they think we do. We go to work for their accounting system.

In their defense, accounting systems are the arteries which nourish society and bathe us in the creeping abundance that is set to wash over the world. It’s the closed part that we have a problem with, unless we’re skilled at setting up those closed data structures. In that case, we see the capitalized value of a going concern as the natural order of the universe, to be defended to the death. Some people confuse that zeal with patriotism.

Open Capital Company, Unlimited

Under corporate law, the terms “Inc.” and “Limited” are interchangeable. All they mean is that the participants in the corporate legal fiction enjoy limited personal liability for the actions they take on behalf of the corporation. That’s why people with families and mortgages like to work for them and own them. Crooks like to own them too.

So what would an “Unlimited” organization look like? It would have a way of attracting enough capital via a tip jar. Above all, the OCC’s accounting system must be totally open and transparent, maintained in real time on the web, with clear mechanisms to demonstrate that the money’s being spent somewhat reasonably. This is not a big deal – public companies must also be transparent. The OCC would simply do it on the web.

Now let’s imagine the OCC plans to create something we care about. How might we put together our time and money to incentivize some of us to do the work we consider important, especially when those laborers are highly valued in the marketplace and cannot just give away their time and effort? Another way of putting it is that we want our spouses and children to think these projects are as cool as we do. Jeff Jarvis described something similar and called it Mutual of Blogosphere. 

Here’s the Twelve Step Program I propose to harness our idealism and our greed into a more useful structure than the current one, which Shoshana Zuboff has labeled “Managerial Capitalism.”

  1. The Vision

    A group of people collaborate in public to develop a product or service that others like the sound of. They may have a leader – a Linus Torvalds of the concept. 
  2. The Mission

    The group, now fortified and aided by the participation of the public they’re attracting, refine the vision into a mission that’s well defined, explained and has the essential snowball characteristics: a catchy but consequential meme that’s not saddled with the kind of tiresome “Mission Statement” that most groups come up with. I call such a mission buzzword compliant.
  3. The Plan

    The OCC snowball grows into an actionable plan that is straightforward but also detailed enough to explain the challenges and the costs of meeting those challenges. In our Open Capital Concept, the costs are mostly tangible development costs, not marketing costs. That’s because, if a significant amount of money flows into this project’s tip jar, the odds are that it’s compelling enough to do well in the market place. The OCC also saves a slug of money by not paying the lawyers and specialists who live off the arcane needs of a corporation.
  4. The Promises

    As with any form of capital concentration, the people putting up the money deserve some promises from the folks who want to manage the money. In this case, repayment isn’t part of the deal any more than it is in a political campaign, so the promises have a different character. Workers pledge to sell their services at a provable discount. They should also agree to provide all the equipment and utilities needed to do the project: This enterprise should own no tangible goods. Who wants to throw your pin money to help buy an Aeron chair? All those are guidelines, but probably a marker for the more successful OCC’s.

    The OCC must, however, hold intangible property: checking accounts, contracts with the workers, leased servers, domain names, maybe even copyrights and (shudder) patents.

    The OCC is a one-trick pony. It’s only purpose is to develop something valuable to the public, since there’s no way to pay back the tippers without getting embroiled in the securities laws. Nope, the “investors” are really cheerleaders, sending the OCC a lot of tangible attaboys.

  5. The Corporation

    Like it or not, the OCC must be a corporate entity to do this. The money has to be held someplace, which means bank accounts and the accounting system which must be maintained around those, well, accounts. There’s just no other way to focus creative energy in the presence of capital without a corporate entity, unless someone puts it in their personal account, which creates a suite of risks that no one should expose themselves to. Even our beloved Mozilla is sponsored by Netscape.
  6. The Money

    With documentation and transparency established, the tip jar is put up and the funds flow in to the extent the ideas and the co-created descriptions attract people’s interest. This is where we see that money in a tip jar or a campaign is just another form of expression. I watched with fascination as Howard Dean’s tip jar filled up with $803,000 on June 30, 2003.
  7. The Lead Investor(s)

    . . . are the founder(s). Every project requires some investment by its originator(s) before the Tip Jar goes up. There’s a real cost to creating the entity and opening accounts, etc. 
  8. Over- &a
    mp; Under-Subscription

    It’s impossible for the Tip Jar to modulate precisely to the project’s needs. If tips are slow coming in, the project will be pared back or experience a featurectomy. Like survival of the fittest, both of those are usually A Good Thing.

    If the public’s enthusiasm exceeds the project’s needs, it’s OK. In public deliberation, the originators and workers can justify a working wage or even, (gasp!), some real wealth.

    If this OCC is a really good idea, the core team may be limited in how many customers it can support, or in the features it schedules. So it makes sense for anxious customers to also be owners and also to have a way of lobbying for a desired feature.

  9. The Pay-off

    The benefit of tipping the OCC is intangible. There’s no stock owned or dividends or coupons to clip.
  10. TBD
  11. TBD
  12. TBD

*It might look a lot like what Jeff Jarvis described as the “Mutual of Blogosphere.” That’s the term he coined after Terry Heaton’s health scare last year, which resulted in a spontaneous outpouring of financial support for Terry’s medical bills. Like Howard Dean supporters or Katrina donors, many of us are willing to throw a sawbuck or five into the tip jar for someone who is facing an underfunded medical crisis. And we’ll do it without an explicit expectation that we’ll be similarly supported.

3:40:43 PM    

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