
Facebook destroys billions of dollars of shareholder value with open source - astorplaceCLI
https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-of-shareholder-value-with-their-open-source-projects-ec2548ea83ea
======
btown
I'm upvoting not because I agree (I fundamentally don't!) but because it's
important to our entire industry that we develop quantitative counterarguments
to these types of articles.

Interestingly, it's possible that Microsoft will soon have the best concrete
numbers here; as it moves more and more towards open-sourcing key components
of their developer tooling, it will be able to compare everything from talent
pipelines to internal developer productivity before and after the sea change.

That said, could Facebook capture more of the "React consulting and services"
market? Could it, for instance, offer hosting for component sandboxes, or
develop paid tooling that builds on React for rapid line-of-business
application development? Possibly, but it would be such a drop in the bucket
compared to any other use of a Facebook engineer, that it's not worthwhile.
There's value to shareholders in a company, however large, having a "cohesive
focus" in its lines of business.

~~~
astorplaceCLI
You might like this [https://medium.com/@daxaxelrod/facebook-destroys-
billions-of...](https://medium.com/@daxaxelrod/facebook-destroys-billions-of-
dollars-of-shareholder-value-with-their-open-source-projects-
part-10947d5e8f1a)

~~~
btown
I'm guessing you're OP? I have to say, I've never seen someone create a full
DCF in response to an internet comment I've made!

At a high level, it's a really cool build you've put together. You might
consider writing down some of your methodology and assumptions in the blog
post, as it's unclear from the post alone where those multi-billion figures
come from. And someone could reasonably argue that there's overlap between the
categories you've chosen; for instance, is a big part of the goodwill value of
a NPM download realized in the improvements to recruitment and code quality?
Even so, even if many of the assumptions are inaccurate, the order of
magnitude may very well be correct... and if so, it does speak to the open-
sourcing of React being a very valuable move for FB, even if payoff is spread
out over time.

Taking a step back, I think you'll find a big segment of Hacker News really
dislikes clickbait in the way you titled and structured the first blog post.
It's a shame, because I think your devil's-advocate analysis deserves more
attention. Certainly the followup deserves discussion.

~~~
astorplaceCLI
Thanks for your feedback! I think it would be cool to do some more analysis of
the technology industry like what's the NPV of sponsoring a hackathon or a
conference? Does it matter what type of company you are and things like that?
Interesting, I thought of the NPM aspect as separate and didn't account for
the fact that as a repo gets more popular, the higher the chance for better
code quality.

I really regret the clickbait and won't be doing that again in the future. I
think the way that people responding means the future of open source is bright
however.

------
mehrdada
TLDR: complete bullshit analysis.

If you count all the potential downsides of anything and conveniently ignore
any calculation on the upsides, that's what you get.

Facebook similarly destroys billions of shareholder value by hiring people.

~~~
jacoblambda
I'd recommend you read part 2 which came out today.

[https://medium.com/@daxaxelrod/facebook-destroys-billions-
of...](https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-
of-shareholder-value-with-their-open-source-projects-part-10947d5e8f1a)

~~~
mehrdada
Sounds like the author likes getting attention from clickbait titles. I have
stopped taking it seriously. The HN thread on the second part adequately
responds to this.

------
travmatt
If you read this article as satire about technologically illiterate MBA’s who
drain all long term value from companies in order to extract short term
profits for the next quarter, this article makes a lot more sense.

------
johntran
The author misses the point where Facebook was only able to attract talent to
their company because of open source. FB currently employs the creators of
Babel, Redux, and Inferno; whom otherwise would not be there without OSS to
show their talents.

------
writepub
Where's the analysis of how much Facebook benefits from other open source
software? I'm sure billions of it's valuation can be attributed to everything
from Linux that powers it's servers & networking to git & mysql, ...

Coming squarely to react - how many community react libraries has Facebook
used in it's apps? Isn't that the community doing Facebook's work for them?
And how many bugs in react were found & fixed by the community? How many
features were added by the community?

React's relationship, as with other open source, is highly symbiotic. David is
deeply flawed in making it seem like Facebook is the monetary loser in this
relationship

------
artemisyna
Well. I wasn't exactly expecting my "most myopic article of the day" to come
this early, but here we are...

~~~
artemisyna
Among other things, the author completely neglects to consider how the
projects being open source contributes to their success in the first place. He
also fails to consider the goodwill that it generates for the developer
community and the ways in which that helps other aspects of Facebook's
business (recruiting, hiring, culture).

Also, you'd think that someone talking about money would have some notion of
how big a price differential "free" and "having to pay" is for a service, but
that seems to have completely not been a consideration.

~~~
travmatt
He also vastly overestimates the value of a front end library and how easy it
would be to switch to Vue or any other library.

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ericb
The assumption that the popularity of react would be anywhere in the same
order of magnitude if it was not open source is grossly misguided. Many
companies, mine included, avoided it just for the patent lawsuit clause alone.

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platz
This is the kind of outrage article (in hn context) that social networks feed
on to exploit human psychology and drive user engagement

~~~
shokasg
Indeed

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daliwali
There is no way this isn’t well done satire. Facebook might as well hire
people to work on their open source just to keep them away from being
productive at other companies, and that has more value to them than whatever
bullshit monetary value their open source may have.

------
Neil44
What tools was Facebook built with again?

~~~
sofaofthedamned
This comment should be voted up, the OP completely misses the fact we're all
standing on the shoulders of giants. If Axelrod feels there should be a
balance sheet it goes both ways.

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alecbenzer
Is there any reason to believe react would be anywhere near as popular if it
weren't open source? Or am I not getting where the $3 billion figure is coming
from?

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hereiskkb
Man, the scale of one sided bullshittery here just reeks of failed analytic
skills. Look at the whole deal! The long game!

------
jasonvorhe
I haven't read something this terrible in weeks.

------
platz
Since you can form a company for any reason, there is not always truly a
'fiduciary dury' to shareholders as often claimed

~~~
pzone
That ceases to be the case once you start taking money from outside investors.
You don't own the company anymore: the shareholders do.

~~~
platz
I'll grant that may be the case here, or once you enter such a contractual
agreement.

However, I'll take issue with the ownership part. I don't think shareholders
own the company, even if they wield the most influence by contract.

In the u.s. corporations aren't truly owned by anyone - even the CEO .

Corporations own themselves.

That is why we give corporations rights and free speech and treat them as
persons legally - corporations are not, in fact, property.

So shareholders do not in fact 'own' the company, even if they can control it.

