
The first open company - zende
http://blog.gittip.com/post/26350459746/the-first-open-company
======
amix
I like the idea behind Gittip, but I think this is bullshit: "company are
developed for the benefit of society as a whole, and not just the mutual
benefit of the members of the cooperative" Most companies are developed for
the society and for people and most advances in human history have been done
by for-profit organizations. Even the ideas in capitalism (as stated in e.g.
Wealth of Nations) are grounded in benefits for the society and for the
people.

~~~
whit537
My point about benefit to society vs. mutual benefit was a technical one about
the definition of an open company vis-a-vis the definition of a cooperative,
"an autonomous association of persons who voluntarily cooperate for their
mutual social, economic, and cultural benefit"[0]. It wasn't meant to be
ideological.

I love cooperatives. I started one: an organic produce growers' cooperative. I
also love Wealth of Nations, and I love capitalism. The company behind Gittip,
Zeta Design & Development, LLC, was started in 2002 as a for-profit company
and was run that way for a decade. Here's me praising corporations:

[http://blog.gittip.com/post/25215503687/corporations-and-
ope...](http://blog.gittip.com/post/25215503687/corporations-and-open-ones)

My question is, can we do even better?

\----

[0] <http://en.wikipedia.org/wiki/Cooperative>

~~~
amix
Ok, thanks for the clarification. I had read cooperative as a corporation (or
understood it like that).

~~~
whit537
Phew. :-)

------
crazygringo
Please don't call this a "company" of any sort.

A company that doesn't pay its employees is neither a company, nor does it
have employees.

And honestly, why is "cost" for non-employees allowed, but not cost for
employees? An "open company" makes sense in terms of radical transparency, but
a term like that shouldn't be related in any way to banning monetary
compensation.

~~~
whit537
I daresay the Commonwealth of Pennsylvania disagrees with you about whether
Zeta Design & Development, LLC is a company.

Cost for non-employees is "allowed" for the practical reason that if it
weren't, an open company couldn't participate in the economy as it stands
today.

If you want transparency without the non-compensation, look into B
Corporations: <http://www.bcorporation.net/about>

~~~
ry0ohki
Didn't realize this was a Pittsburgh area company, are you involved with any
of the tech groups in the area? Also, you have my respect if you can pull off
something non-standard within the state, I've found PA to be a real PITA to
deal with compared to say Maryland or especially Delaware.

~~~
whit537
I'm a regular at PghPy (meeting tomorrow night! :-) and I spoke at PghTechFest
last month. You?

~~~
ry0ohki
More involved with the startup/AlphaLab community then the specific tech
groups (going to the RubyConf though), I'm sure we'll cross paths at some
point!

~~~
whit537
Ah! Wish I had caught wind of RubyConf. Looks great. Oh well, next year. :^)

------
WiseWeasel
How is this different from most open source projects? Because it's a
registered LLC? Because they have public policies enforcing transparency?
Failing to pay your "employees" combined with an onerous set of requirements
for them seems like a non-starter at worst, and unsustainable at best, since
it takes all the fun out of volunteering. If I'm being held accountable and
even liable for my involvement, I should be getting compensated for it. This
just seems like the worst parts of corporate employment and open source
projects mixed together for some reason; all the fun of filling out TPS
reports, for none of the pay or benefits.

~~~
whit537
From the post:

"An open company differs from an open source project in that an open company
is a formal legal entity, and needn’t be about software."

The set of employees of an open company is much, much smaller than the set of
people working on whatever-it-is that the open company nominally "owns"--
really it's a commons. The only reason to have employees at all is to
formalize access to private data such as passwords and private user data.

Gittip, for example, has one employee, me. If you counted up everyone who has
weighed in on GitHub we'd have maybe 20 or 30 community participants by now?
Many more depending on how you draw the lines.

If I understand you right, the "requirements" would apply to the small set of
people with access to private data, not to the majority participating in
building whatever-it-is together.

~~~
mmahemoff
Wouldn't this be pretty much like MediaWiki, prior to it having paid
employees, or other non-profit foundations?

I'm actually not clear why this is a company instead of a non-profit
foundation. It says:

"An open company differs from a non-profit organization in that an open
company does not itself accept donations, and it does not compensate its
employees. From the open company’s point of view, whether and how its
employees receive money and for what, is undefined."

A non-profit can also not accept donations and not compensate employees, so
the only thing that differs might be how employees receive money, which I
don't really understand here.

~~~
whit537
Probably yes re: early MediaWiki. It's not a non-profit because it's not
registered as such with a government.

------
loceng
I feel this is how all charities should be run.

~~~
ReadEvalPost
I'm with you on transparency, but I don't know how you expect charities to
survive without paid employees.

~~~
lowmagnet
I'd guess through volunteer time, as a lot of charities are run on the ground.
Anything to reduce overhead cost.

~~~
cbr
This is a false bargain. Spending money on overhead can make the money the
charity spends on its program go much further.

[http://blog.givewell.org/2007/01/16/which-of-these-boasts-
is...](http://blog.givewell.org/2007/01/16/which-of-these-boasts-is-not-like-
the-others/)

[http://www.freakonomics.com/2011/06/09/why-ranking-
charities...](http://www.freakonomics.com/2011/06/09/why-ranking-charities-by-
administrative-expenses-is-a-bad-idea/)

------
drone
Functional questions:

1) If all products are priced at-cost, and no employees are paid, is that to
be assumed there will be no products sold that aren't at least, in part,
developed using third parties?

2) If everything is priced at exactly their cost, what costs are factored in
to pricing? Do you factor sunk cost, or only COGS?

2.a) If everything is priced at cost, and there is no added price for value,
do you expect that every product will sell past its sunk and production costs?
If not, who covers the loss when a product doesn't sell enough to meet its
cost of production. (For example, some products require a minimum quantity to
purchase/build before they are priced at a point the market will accept, to
achieve pure cost parity without loss, you'd have to sell every unit in the
same fiscal year.)

2.b) If 2.a can be accepted as some products will fail to meet their
objectives, who makes up the difference? I.E. who put their money up-front to
manufacture the products, and absorbs the loss?

~~~
whit537
1) Afaict everyone depends on third parties. Even if I pick wild blackberries,
where do I get the containers to put them in?

2) Sunk cost. The intention is to factor out wages and profit.

2.a) Maybe use Kickstarter here?

2.b) The community of people who want the product.

------
zende
The open discussion on company decisions is the most open part to me
(<https://github.com/whit537/www.gittip.com/issues>). That's more significant
than releasing the source.

------
speg
Either my monitor is broken, or that is very light text on a white
background...

~~~
fusiongyro
Completely unreadable for me in RHEL 5.7 + FF 7.0.11, even at 300%
magnification.

~~~
whit537
I've added this to the ticket:

<https://github.com/whit537/www.gittip.com/issues/140>

------
pfraze
How will you solve the issue of fair pay among employees? Isn't it likely that
public awareness and popularity would determine who gets paid, regardless of
who does the work?

If this model is successful, and people begin to see whit537 as a kind of
celebrity (like notch or moot) then how would the other employees work their
way into the revenue stream?

~~~
whit537
This is an important open question. Some thinking here:

<https://github.com/whit537/www.gittip.com/issues/27>

~~~
pfraze
Cool, thanks. I appreciate the work you're doing here; hope it goes well.

------
dinkumthinkum
I had a lot of things to say but now I just have the one question. What's so
wrong with making money? I'm really interested. I think a lot of outsiders to
our industry would be surprised to know how rampant to anti-money view is or
at least against anything other than earning a very modest, and very simple
living.

~~~
whit537
Nothing's wrong with making money? I'm currently looking for $2,000.00 per
week myself:

<https://www.gittip.com/whit537/>

;^)

------
ethanpil
What incentive do employees have to work for free?

Why are you not calling yourself a non-profit?

~~~
whit537
The incentive is the same as open source programmers have to work for free.

RE: non-profits ... from the post:

"An open company differs from a non-profit organization in that an open
company does not itself accept donations, and it does not compensate its
employees. From the open company’s point of view, whether and how its
employees receive money and for what, is undefined."

~~~
DASD
Since when are non-profits required to accept donations or even have
employees?

~~~
whit537
De jure, they're not. De facto, they do. No?

~~~
DASD
No. Please look up the idea of a private non-profit. There are quite a few
around.

~~~
whit537
Is this what you mean?

"Non-profit organizations typically fall into one of two categories: public
and private. While a public non-profit organization receives the majority of
its funding from the general public, a private non-profit organization
receives most of its funds from only a few private sources, such as through
donations from a single family or corporation."

[http://smallbusiness.chron.com/difference-between-public-
pri...](http://smallbusiness.chron.com/difference-between-public-private-
nonprofit-organizations-26366.html)

Still accepts donations. Still probably has a staff.

Do you have a better link to what you're talking about?

~~~
DASD
With regard to the source you cited, "such as" is not a blanket translation
equivalent to "still accepts donations." As a single example, a foundation can
be created with a one time funding and a foundation can also receive
investment income. A non-profit can also consist entirely of only a Board of
Directors. Whether you consider the Board as a staff is open to
interpretation.

You mentioned in an off-topic comment here in the discussion about being in
the Pittsburgh area. May I suggest contacting the Pittsburgh Community
Foundation who might be able to share more information with you? They should
be able to tell you with more clarity and reference as to why some non-profits
are not able to receive donations and are possibly not members of their
"community." There are several hundred Community Foundations around the
country if Pittsburgh is not accessible to you.

~~~
whit537
When I search on Google for "Pittsburgh Community Foundation" the closest I
find is "The Pittsburgh Foundation":

<http://pittsburghfoundation.org/>

Is that who you are referring to? They do claim to be a community
foundation.[0] However, I'm confused, because they also claim to be "a tax-
exempt public charity" and that "donors are central to our mission"[0]. They
also have a staff.[1]

I'm having a hard time understanding your point, I guess.

\----

[0] <http://pittsburghfoundation.org/node/207>

[1] <http://pittsburghfoundation.org/staff_aboutUs>

~~~
DASD
tldr: The Pittsburgh Community Foundation is a great reference to contact who
can explain why some non-profits don't accept donations.

Yes, that is the organization and your points are spot-on. My point was not
about the structure of Pittsburgh Foundation but rather related to part of
their purpose.

In this particular example, a non-profit may be part of the geographical
Pittsburgh community but is not necessarily a member(participant might be a
more appropriate word) of the Pittsburgh Foundation "community" which receive
donations/grants through them.

So why would a non-profit not be a "community member?"

Go back to my previous post: They should be able to tell you with more clarity
and reference as to why some non-profits are not able to (added: or elect not
to) receive donations and are possibly not members of their "community."

~~~
whit537
I think you're making a distinction between donations to an operating fund and
donations to an endowment fund. The Pittsburgh Foundation (and presumably
community foundations in general) do accept donations, but they focus on
endowment funds. Am I hearing you correctly?

~~~
DASD
The Pittsburgh Foundation handles both grants and endowment funds. Due to
their presumed expertise in all things non-profit related, the Pittsburgh
Foundation should be familiar with the basic categorization of non-profits as
either private or public. You commented that the "De facto" non-profit does
accept donations. I proffered that the Pittsburgh Foundation is a voice of
reason in your own backyward and they would be happy to point out that this is
not really the case. It is up to you to pursue that.

I do have some other concern which is why is your ethos/structure is posted on
a blog and not a more permanent page? If this is to be a working document then
please annotate changes or if your intention is a truly "open" company then
how about enlisting feedback from potential users some of whom might be lawers
or accountants familiar with small business law and also interested in
alternative business structures?

If mmahemoff's quote (<http://news.ycombinator.com/item?id=4287308>) is direct
from your page, it shows a revision from what is currently shown and from what
I'm going to presume is the original blog post from Google cache.

Quoted in comment from mmahemoff: "An open company differs from a non-profit
organization in that an open company does not itself accept donations, and it
does not compensate its employees. From the open company’s point of view,
whether and how its employees receive money and for what, is undefined."

Current blog display: An open company differs from a non-profit organization
in that an open company is not registered as a charity with a government, and
does not itself accept donations. An open company also does not have a paid
staff, as most non-profits do in practice. From the open company’s point of
view, whether and how its employees receive money and for what, is undefined.

Google Cache
([http://webcache.googleusercontent.com/search?q=cache:RwFZLSt...](http://webcache.googleusercontent.com/search?q=cache:RwFZLStUbSgJ:blog.gittip.com/post/26350459746+&cd=1&hl=en&ct=clnk&gl=us)):
An open company differs from a non-profit organization in that it does not
itself accept donations, and it does not compensate its employees. From the
open company’s point of view, whether and how its employees receive money and
for what, is undefined.

With all of that said, I really like what you're doing here. I just am not
able to see how this would be better than a well-documented non-profit or a B
Corporation. But I am open to being convinced if there really is a better way
to do things. If you want a real challenge and a start-up idea, I'd love to
see you tackle a better non-profit transparency mechanism than we have
available today with GuideStar and Charity Navigator.

------
potomak
I'm trying to do the same with <http://tomato.es>

------
chatmasta
Hellloooo communism.

~~~
whit537
Exactly. You can expect my secret police to visit you tonight. ;-)

------
thomasknoll
"why?"

~~~
terryk88a
to pull one's chain, to see what kind of reaction he'd get from whatever
suckers and chumps he can fool with this BS

or he really believes this BS and has narcissistic personality disorder

~~~
whit537
You have conclusively exhausted the possibilities.

