Why Open Companies?

a new culture of business


In @whit537's initial post on Open Companies, he laid out three defining principles: maximize sharing, price to cost, and don’t pay employees. I would like to go further and talk about why Open Companies matter.


“[THE WORLD NEEDS PEOPLE WHO] SEE SOMETHING THAT NEEDS TO BE DONE AND START TO DO IT, WITHOUT THE GOVERNMENT’S PERMISSION, OR OFFICIAL ADVICE, OR EXPERT ADVICE, OR APPLYING FOR GRANTS OR ANYTHING ELSE. THEY JUST START DOING IT.” — Wendell Berry

No Permission Required

The worst part of life for many college graduates is realizing that, after 20+ years of practice and preparation, they still aren’t allowed to get to work. Despite their degree, their hard-working attitude, and passion for changing the world, they cannot start. They cannot start until someone lets them by “employing” them. There’s a lot of talk about how “finding a job is a full time job”. This is disastrous. Somehow we have created an economy in which work is a limited resource. In fact, work is, and must be seen as, an infinite opportunity. Open Companies get at this idea, an idea that is essential to entrepreneurship. People want to do good work. Open companies let us start, immediately.

Of course, if Open Companies are to be a success, open workers need to get support from the community. This is both scary and exciting. In many ways, it is the very tension I’ve been wrestling in my work at the Saxifrage School since its inception. My hope—and the hope of Open Companies—is that, if people realize and value of my work, they will respond in support. Open companies aren’t saying that people shouldn’t get paid, it’s saying that they should be paid directly by the community they serve, not by the company. It removes an inefficient layer in the transaction and puts the economy of work back into the hands of communities and individuals and not in the abstraction of the corporation. This open-entry permission to work is the most powerful aspect of the Open Company. Employing “everyone” is, obviously, made possible by the fact that the company does not pay employees. This is the hard part.

While working on the Saxifrage School people often wish we were hiring; they would love to work with me. I try and explain that, in a way, we are. There is an infinite amount of work to do and I need help doing it. I’ve slowly worked myself into a job and anyone else can do the same. And they can do it much quicker than I did because we have a running start. And they don’t have to be as afraid as I was. Some people become entrepreneurs because they want to get rich, others do it so they can be their own boss, but I think most of us do it because we want to do good work and good work is hard to find. Maybe Open Companies can empower a new generation of people who just start doing.


Makes us Honest about our Honesty

I wish I was talking about this (open washing), but I’m talking about this (open-washing).

The recent frenzy of “open”-everything has caused the word to lose meaning in realms outside of (and even within) the open software movement. In most other industries, many groups have neglected to, in the words of Jeff Eaton, “articulate a clear and unambiguous explanation of what ‘open’ really means” in their world. Software has done this, but business has not. Education is just beginning to. The Open Company begins with openness and goes from there. It is concerned, not just with open products, but with open operations, and open employment. Everything it makes it gives away, everyone can see how it runs, and anyone can work for it.

Beginning with openness means adopting a scary, culturally abnormal, vulnerability. As @whit537 has shown, it means things like retweeting your dissenters, requiring open calls with journalists, and having the patience to let people in on the process.

Retweet your critics?

It requires a faith in the power of openness to refine our products and to teach us. Openness allows us to really dig into the failures as much as the successes. As in our personal lives, as in our work: it’s too easy to sweep everything under the rug. The folks at YCombinator, in their “What Happens at YC” FAQ, discuss this ability of openness to teach us and how, unfortunately, it’s a rarity:

“I didn’t consciously realize how much speakers at more public events censored themselves till I was able to compare the same people speaking off the record at YC dinners and on the record at Startup School. YC dinner talks are much more useful, because the details people omit in more public talks tend to be the most interesting parts of their stories. About half the interesting things I know about famous startups, I learned at YC dinners.
One founder wrote:
‘Most of the practical advice is redundant, but there’s value in it even as such—if you hear the same things over and over again from different angles, especially from prominent people, it tends to sink in more. The stories tend to be galvanizing though, especially hearing about the screw ups. That’s the actual beauty in the off-the-record-ness: you hear just how screwed up most of these successful startups were on the way up.’
It’s a shame the only record of all the YC talks over the years is in the memories and notes of founders who heard them. It seems inefficient that only the founders in that specific batch and a handful of alumni guests get to hear each talk. We often think about this problem but there seems no way around it. If we broadcast or even recorded the talks, the speakers would clam up.”

No Corporate Entity

Because an Open Company is a team of individuals who don’t own the company, it has more camaraderie than corporate entity; it focuses more on creating great products that serve needs and less on branding and marketing. Most importantly, it is not subject to the anonymous irresponsibility of corporations. In recent years, we have seen many over-sized non-profits come under serious criticism for acting like for-profits. This is in large part due to how they see themselves as “competing” in the same industries: medicine, education, social services, etc. Open Companies could allow a shift away from a focus on corporate competition to a focus on creating value for the community.

This shift, I think, has the potential to address some of the harshest critics of capitalism while maintaining the good aspects of competition that free-market advocates ascribe to. The Open Company, perhaps, can offer a more liberated market due to its modus operandi. It is set up to not game the system, monopolize markets, lie to the public, or influence politics. It is set up to create value for the common good. There is a healthy competition here in that, if you aren’t creating value, the community, in turn, will not compensate you. Ideally, this is how our current marketplace would act, but the layers of abstraction between consumers and creators makes it difficult. An Open Company turns down the “ultimate privilege of anonymity” and avoids altogether the blurry non-profit/for-profit distinction by having their work be certified by the community they serve.

Not for Sale.

“In 1998, some of the people in the free software community began using the term “open source software” instead of “free software” to describe what they do. The term “open source” quickly became associated with a different approach, a different philosophy, different values, and even a different criterion for which licenses are acceptable. The Free Software movement and the Open Source movement are today separate movements with different views and goals, although we can and do work together on some practical projects.”

By not having anything to sell—because everything is offered freely, openly, and at cost—the only “value” an Open Company has is its community. It reconciles and gets beyond what, in the software world, have become two (or more) pseudo-separate movements. What Audrey Watters notes about open-source is true about Open Companies: you can’t acquire the community. It is not for sale, nor can it be.


Enabling the creation of Open Companies will not be an easy task, but we are on the right trajectory. The support of the community is, first and foremost, necessary to its success. We cannot work for open companies unless the community supports us. This requires a cultural shift that has already begun with the growing popularity of crowd-funding platforms, freelance and remote work, and DIY education. I think that people are ready to begin consistently supporting the work of open companies. Gittip is obviously well-positioned to function as both the prototype and enabler for this open company economy, but I think we will see the real viability of Open Companies when we see the model work in a variety of industries. What would an open farm company look like? An open education company?

It’s exciting to parse through the ramifications this sort of perspective would have in other areas of work. @whit537 and I are currently discussing the possibility of running an OCAccelerator to help launch these first initiatives. Also, an Open Company summit is planned for Winter, 2014.

If you are interested in reading more about Open Companies, head to http://opencompany.biz/ or follow @employeveryone