Open source leadership vs. corporate leadership

As cryptocurrencies and blockchains have continued to gain steam (and attract capital), a common question in the air is, what type of leader does it take to be successful in this space?

A common variant on that question is: “will [leader] need a grownup in the room once they get ahold of all that money from the crowdsale?”

If it’s not already obvious, cryptocurrency development is open source development.  The basic challenge in open source development is to get other technical people to adopt your technology, and to cultivate broad community support around it.  The skills required are not just technical, but also political.  Open source projects need to strike the right balance between direction, inclusivity, openness, commit rights & governance, etc — you are not only hoping to get people to use your technology, but to volunteer their time to maintain it.  Nice trick!

If you look at some of the most successful open source projects, like WordPress, Ruby on Rails, MongoDB, jQuery, just to name a few — you’ll see a common pattern of buttery technology paired with savvy political leadership.  The big political risk in any open source project is the fork — since the code is open, anyone can just take a copy and develop that in their own way, siphoning off attention and effort.   So the main goal of the politics is to keep people onboard, rather than forking.

But sometimes, even the savvy political leadership part may not be necessary.  Linus Torvalds, founder of Linux and Git, is notorious for his utter lack of sensitivity:

“Some people think I’m nice and are shocked when they find out different… I’m not a nice person, and I don’t care about you. I care about the technology and the kernel—that’s what’s important to me.”

So in some cases, (as in with Linux and Git) the technology can be so good that it can survive even caustic leadership.

The next question, then, is: but open source projects need a business model too, right?

WordPress needed WordPress.com (the hosted service) to supply the business model; Ruby on Rails needed Basecamp (saas); MongoDB followed the Red Hat model of enterprise support (and now hosted services), and Linux has the Linux Foundation (corporate donors) — in each case, you had to figure out a way to build a business on top of the open source foundation.  Sometimes this works, but lots of of times it doesn’t.

What’s different about today’s crypto landscape is that the business model is built-in to the product, so there’s no longer a need to bolt-on a business model.  So maybe we don’t need an adult in the room, at least not in the traditional sense of someone who knows how to “run a business” — making corporate deals, showing up to meetings in a suit, etc.

But, to add another twist: cryptocurrencies are like open source projects that are also central banks — they are both a tech platform and a monetary platform.  So, take all of the politics inherent in open source projects (risk of fork, etc) and lever that up with strong financial interests tied to technology decisions: now you have the cryptocurrency ecosystem.

The two biggest examples from today are Bitcoin’s continued struggle to deal with its scaling issues, and Ethereum’s recent hard fork following the DAO hack. Bitcoin may be reaching consensus on scaling after several years, and it appears that Ethereum (under Vitalik’s direction) has recovered incredibly well after the hard fork.

Both of these have shown that you can build a multi-billion-dollar cryptocurrency platform with very little traditional business infrastructure, but that you will undoubtedly face not only the “regular” open source issues, but a new variant that is even more political and highly charged — that’s a tall order, but seems to be what’s required.

   

  • awaldstein

    So what does marketing mean to this model especially when the core of the community is attention ala Steem and not a service like cloud storage?

    • it’s a good question – steem is “full stack” from the start, rather than layered. For example, you could take the new Kin token and apply it to a different social network — so the currency and the user experience are detached.

      I suspect that ultimately the layered model will win out — people will build consumer experiences that are several layers detatched from the underlying tech / currency — the way that most users don’t know or care whether this website was built using wordpress or ruby on rails, etc.

      • awaldstein

        This has nagged at me ever since I spent a day simply listening at the token summit.

        I think that distinction is a good one as consumer behavior is well just that.

        I still wonder whether this native model can survive on the the attention side of the value equation.

  • What’s interesting in this model is private blockchains and private sidechains. Why is it interesting to me? Because the private chains often are contemplated being built with centralized control-no different than they would be using a private database but with the sexy blockchain component. For example, clearing of stock/futures/options trades have always been done inside a clearinghouse. The centralized authority of the clearing operation sets statistically relevant margin, and governs how/when trades get cleared and reported. If transferred to a private blockchain, who controls all the mechanisms that govern clearing? Is it the community? Or is is the old centralized clearinghouse?

    • I don’t know much about private blockchains, but I suspect the governance would be nearly identical to the old model, just with slightly different underlying tech

  • When you say along lines of “with crypto the business model is baked in”, are you referring purely to currencies or distributed data too? For data, is the baked in model the token model in which there’s an offering and the steward keeps enough that overtime they can release more tokens for more actual money?

    • yes, i’m referring to the value of the token – the idea that the token gains in value as usage in the network grows. and yes, if founders or early adopters of a network have a lot of tokens they can cash them in over time if they want/need to

      • An interesting question is what is purpose of the “business” to open source.

        Does WordPress.org exist to create market for WordPress.com, or is the .com funding for open project?

        If the software aspect is ascendant then I understand token model is included- network “owns” the project IP and token fundraising is sufficient. But if commercial aspect is objective, it could reside as layer above IP, project network and tokens and come with separate business model that isn’t baked in.

        • Yes that’s true – nothing wrong w an additional commercial layer if it works
          In the case of WordPress.com I had always assumed that it was a necessary revenue source for the open source

          In the case of Ruby on rails, it’s more that they were doing Basecamp anyway, and that was profitable and healthy, so RoR fell easily out if it
          In other cases, I suspect that having a token will negate the need to try and create an adjacent commercial enterprise

  • When you say “cryptocurrencies are like open source projects that are also central banks”, I want to emphasize the word “central” in “central bank”. While you make an excellent argument about these platforms’ being both “a tech platform and a monetary platform”, not only yourself but a lot many people miss the dichotomy between a distributed monetary platform vs. a central bank! There is not a single working example in the West of a distributed monetary platform that is not controlled by a government central bank, and this is so since the late 17th. century when the first central banks appeared in Europe. However, lucky for the rest of the world, there is a monetary base of immense size i.e. $500 Billion, completely formed by the public issued tokens in Turkey. There is almost zero control of the Central Bank or any other bank on this “open source” analog blockchain, it is completely owned by millions of merchants. We have to copy from this example, which is unique in the whole world.

    • yes, I was using the term “central” loosely — what I mean is that the monetary policy is baked into the software