I believe in the principles and power of peer-production but am finding it a constant tension as we build the for-profit startup. A big part of that I’m sure is my experiential conditioning. What’s been most recently tested is how much of our business strategy and development plans should be in the public domain.
Taylor Davidson, who is stepping up to help on the financial modeling and strategy side asked me point blank. I fumbled some lame answer that didn’t really say anything. As I’ve sat with it now for a couple of days, I’m actually questioning what if anything should be kept private. It comes down to speed of execution and I also think that the more broader the engagement the greater defensibility we have – provided we execute. If people are a part of it, they’ll rally to support it.
What do you think? Is there anything that should be kept private? Why? What are the risks? What are the benefits?
Right now I’m feeling ready to open everything up and push this experiment even further.
Developed by Shouldless Inc. (^shldlss), VenTwits is a site for people building things they care about. We believe there is something special about communications that happen in public, 140 characters at a time. It seems to encourage a unique breadth and practicality of engagement such as the #hohoto party in Toronto. #hohoto emerged through Twitter (see SlideShare preso) and within 18 days of the first mention was sold-out to over 600 people, raised $25,000 in cash and 2 tonnes of food for Toronto’s Daily Bread Foodbank. All this without any one leader or cash investment – rather it leveraged parallel leadership from over a dozen people and the contributions of countless more. What if we could leverage what happened there?
Well, VenTwits is the beginning of seeing where this can go. Already in the first day, we’ve had people visiting from around the world to see what’s going on, some of whom quickly adopted the new tags and jumped right in. We are already working on another property that will come at this from a different angle as well. Once launched, we want to see how people use them to help things happen and with a few months under our belts we’re planning on open-sourcing our core code and firing up the Social Venture Commons (^svc).
The Social Venture Commons is being established as a non-profit organization dedicated to coordinating the development and application of this concept for the purposes of social change and public benefit. If what we believe about this mode of peer-produced organization is true, then we have a lot to give. If we’re wrong, we’ll have learned a lot from trying.
We’re inspired by the potential of people coming together and contributing to the creation of things they care about. We believe that we are building uniquely helpful ways that help that happen. And we believe, that together, we can use it to create the world we want.
Please jump in and give it a try. And if you have any feedback or want to get in touch – please do.
VenTwits is about people building the things they care about. It came from seeing the potential in Twitter as a medium for discovery, connection, and practical engagement. With VenTwits we hope it can help you find new ventures you are interested, give you an opportunity to participate, and simply help things happen.
To get started, simply login to VenTwits once using your Twitter user name and password. If you aren’t on twitter there is a link right there where you can sign-up quickly and easily. Once you’ve logged in for the first time, VenTwits knows to follow you and look for anything you tweet that uses a VenTwits tag. From that point on, you can tweet through the site, through Twitter, or whichever way you twitter best.
Tagging is simple. In any tweet you post, simply add a ‘^’ in front of a venture name. For example: ^VenTwits. In addition to showing up in your regular twitter stream, that tweet will now show up on VenTwits as well. You can also add another level of tag that allows for conversations to happen around a venture. For example: ^VenTwits !feedback shows up as a conversation around VenTwits feedback.
That’s it. You’re all set.
Now, the best way to get started is to simply explore. Visit http://VenTwits.com and click on the links that you find interesting. Explore a new venture, jump into a thread, or see what the top contributors are talking about. What ever you do, follow your interest. And when you are ready, jump into the conversation. That’s really when the fun begins.
Owning equity in a for-profit venture is a powerful motivator – particularly in the early stages. It’s also one of the most contentious, negotiated parts of building a high-growth venture. This comes from our organizational conventions of control and scarcity – we need to control and amass resources to control and weild power and get things done.
In taking a peer-produced approach to building Shldlss, the for-profit offshoot of the Social Venture Commons, I found we needed a new model to fairly attribute the economic value to those who actually created it. After many conversations, including on this post, here’s where I’m at with what has now become our “Kudos Model” for economic value distribution.
Phase: Set the phase of value creation ending with a valuation event or economic value distribution
For shdlss this is the founding phase extending through to Series A investment. At this point we should have a reasonable grip on the value of what’s been created and what others think it’s worth.
Proportion: Set the estimated proportion of enterprise value that will be newly created during this phase.
For founding phase this would be 100%. Over time, the new value created will likely be proportionately less each time – though not always. A basic benchmark for where to set the proportion might be what a comparable venture might issue in option pool.
Appointment: Appoint key people to allocate Kudos.
For shdlss we will go probably go to 4-6 people who have been and are committed to being involved for the whole phase. This appointment is happening essentially half-way through the phase and will be done shortly.These are people who are closely involved in the project for the entire phase and will have a reasonable sense of the relative value of contributions made during the phase.
Allocation: Have a KudoFest at the end of the phase.
All appointed people will gather to review the stream of all contributions made during the phase. We will use the twitter and VenTwit streams as the core history. Each appointed person will then be able to allocate 100 Kudos to those who made meaningful contributions. They must allocate all Kudos and cannot allocate any to themselves. The 100 limit means the smallest contribution they can recognize (1 Kudo) represents 1% of the value they have to distribute. After each person does their allocations, we will aggregate the allocations and have an initial allocation. The group will then review and discuss and can make any changes provided their is unanimous consent.
Distribution: Distribute financial value rights according to Kudos allocation.
During the founding phase, this could be in common or preferred shares, in subsequent phases this could be through options or other forms of financial value sharing.
This will no doubt evolve as we work our way through the process. As the lead founder, I’ve been asked why I would do it and even told that I’m crazy for trying it. With where I’m at now, I can only see us all as having a much more to gain. Without the spirit of this in play we wouldn’t be where we are at – and that’s what it’s all about – getting it done – together.
I’ve been head-down these last 2 weeks and we’re making great progress toward first launch. For the latest action on the Social Venture Commons – feel free to track the twitter stream.
The model for distributing founding equity among those that contribute is essentially set, and I’ve begun receiving investor commitments on both the charitable and for-profit side. Development has been greatly augmented with the code-mastery of Dan Williams.
My focus heading into 2009 is micro-messaging based collaboration. From where I sit I think it will have a profound effect on the way we organize resources to get things done and will mark a fundamental shift in shape of the organizations and systems of our future.
Some key features of this are:
Broadly accessibile: easy (web-based), distributed (available in any site), portable (sms compatible)
Action oriented: every interaction is a contribution, every contribution builds relationship
Interest driven: fluidly find, follow, and do things that *are* interesting at every moment
3P Launch Co (3PL): SVC based tool and property developer (for-profit)
Within those there are 4 core components that I already see emerging from the SVC platform:
application to formal organizations that are incorporating a degree of peer-production (VenTwits)
application to groups as a lightweight rapid action support system (GroupTwits)
application to tasks for seamless real-time management
personal context engine (semantic history)
The core platform is currently in development and I’m working on some founding partnerships for the SVC to support innovation integration, social tech incubation and organizational capacity. For the for-profit arm we are working to launch our first property (beta) by February.
In January I am seeking a seed round of up to $250,000 invested as either charitable donation (into SVC) or as a convertible debenture into 3PL (also need a new name). The structure being resolved for 3PL will include substantial equity participation for SVC and for founding collaborators in 3PL. Further equity/revenue participation will be designed into each tool/property created in 3PL to further support peer-production.
At the core of all of this is this notion of peer-produced organizations. We’re off to a great start thanks to huge contributions by Joseph Dee and Matt Nish-Lapidus and there are already a handful of others starting to make their mark in this to. While I’m not stupid enough to think this is going to be easy or that there is any guarantee of success by conventional measures, everything in my experience and my body tells me that we are hitting on something that has the potential to make profound change and we’re going to have a heck of a great ride trying.
I’ve been experimenting with peer-producing the first for-profit property coming out of the social venture commons. So far I’m finding once again that there is no better way to learn than to try doing it.
So what’s different about bringing ‘peer-producion’ into the mix? Well so far the difference I’ve most experienced is the degree to which I’m compelled to share what I’m working on at this early stage. It’s not what I’m used to but it is getting more people involved and having a definite impact on how the idea forms and how quickly it becomes reality.
It also brings up the question of how to share equity in the early stages which in my experience is best saved for those who 1) make a meaningful impact on core concept and 2) are going to be part of the team that will get it through the founding phase and into the growth phase.
The conversations around this from one side are around how do we distribute equity fairly using some form of measure as a baseline (e.g. hours in) and on the other side… non-existent (e.g. “can’t talk… building”). For me it’s my inclination to let it ride until we get a crystallization event – which will be in Q1 of 2009 and then take stock of where we are at and work it out in conversation. Logically I’d like a formulaic approach but nothing’s ‘felt’ like it would work yet.
So what seems to be tested by bringing in ‘peer-production‘ into a for-profit startup are:
blurring the edges of organization (permeability)
allocating parcipation rights to future wealth (distribution)
I think this might get easier as the venture gains momentum, size, and value because the value of each individual contribution will be smaller than the value of whole. I’m not willing to bet on that yet though – as that may simply be the lure of convention and I’m sure there will be host of other challenges.
It’s an interesting journey and would love to hear other thoughts/examples/discussion. Fire away in the comments or feel free to ping me directly.
Things have been moving quickly in the last few weeks and I’m happy to say that we’re in development on the Social Venture Commons. I’ve created a more descriptive presentation below and have also included a brief primer on peer production of organizations (a quick snapshot of the #hohoto holiday party in Toronto).
I’m working on initial partnerships for the commons and am getting ready to reach out for seed investment for one of the for-profit properties (VenTwits.com).
In the spirit of peer-producing this as we go below are some specific items we’d love to have taken up. Just post in the comments below or ping me directly.
Research on venture media and group collaboration property acquisitions