4 ms·

Everyone's A VC

15 points by brlewis 16y ago

devmonk 16y ago
I'm not saying that it isn't exciting for sure, but Diaspora as the sole namedrop product out of that? Not that Diaspora isn't cool, but it is an unhosted, alpha-grade, open-source project with no apparent business model competing with Facebook. It won't make money. Interested in Diaspora? Check out this recent review: http://mybroadband.co.za/news/internet/15283-Open-social-networking-Diaspora-tested.html http://mybroadband.co.za/news/internet/15283-Open-social-net... I think it is great, and I'm sure it will do well as a free product, but really- was that the only group worth mentioning? Even if they host the product and trying to compete with Facebook, according to what I've read, you have to overtake an established market using 3x of the funds your competitor puts into it. 3x what Facebook burns? I'm not sure that the improvements it makes in display of photos and security are enough to overwhelm FB. It isn't going after much of a niche need unless you consider it being open-source a niche.
- wccrawford 16y ago
  Overcoming someone that spends 3x as much as you isn't as hard as you might think. Especially if they aren't spending that money wisely.
  - devmonk 16y ago
    Do you truly think that Diaspora has a significant chance where it is positioned right now to overtake Facebook or gain a significant part of their market share in even 3-7 years? Think of all of the really major open-source projects. Now think to yourself, if I was a VC, would I have put money into those developing those projects if my goal was to have at least 10x return? Now think about those projects once more. Was there any single product significantly established in the same market that those products had to overcome when they started, say with the size and spending of Facebook, with a recent movie out about their founder?
david927 16y ago
OpenStarts is creating site that allows micro-equity investments ($50 and up) for web-based startups, which is similar to crowdsourcing but where real equity changes hands. (To get around regulatory issues, companies have to register in the EU.) The problem with investment management is handled via the site. It's a match.com for all stakeholders in a startup: the founders, advisers, investors, and they can designate an investment manager. Innovation is naturally distributed. I think the tide is turning on the support for that innovation, and it's finally also becoming distributed.
alain94040 16y ago
There are serious regulatory issues in the US with issuing real equity to a crowd. We worked around that problem by building a distributed model, inspired by the Open Source GPL. Just like there is no such thing as a "Linux Corp", but rather hundreds of individuals exchanging code through a license, we built the same model with a twist. In effect, our license says "if I contribute to your project and you make money, then you owe me some percentage back." That percentage is really virtual equity. So in effect, we have created a way for people to issue [virtual] stock, that can at a later stage, be converted into equity from a real corporation, once the project becomes successful enough that it requires real management. It's at http://fairsoftware.net http://fairsoftware.net of course :-)
- tptacek 16y ago
  Isn't this basically a recipe for ensuring you never get "real" funding? It looks like it would drastically complicate the due diligence and paperwork involved in setting up an "investable" C-corp.
  - alain94040 16y ago
    Not really. The license has a very specific clause that makes the conversion seamless. Once you trigger it, you have a clean corporation, with shareholders (the founders). That is very compatible with regular angel or VC investors.
    - tptacek 16y ago
      Has any VC with more than $100MM under management ever funded a company that incorporated under your scheme?

15 points by brlewis 16y ago

I'm not saying that it isn't exciting for sure, but Diaspora as the sole namedrop product out of that? Not that Diaspora isn't cool, but it is an unhosted, alpha-grade, open-source project with no apparent business model competing with Facebook. It won't make money. Interested in Diaspora? Check out this recent review: http://mybroadband.co.za/news/internet/15283-Open-social-networking-Diaspora-tested.html http://mybroadband.co.za/news/internet/15283-Open-social-net... I think it is great, and I'm sure it will do well as a free product, but really- was that the only group worth mentioning? Even if they host the product and trying to compete with Facebook, according to what I've read, you have to overtake an established market using 3x of the funds your competitor puts into it. 3x what Facebook burns? I'm not sure that the improvements it makes in display of photos and security are enough to overwhelm FB. It isn't going after much of a niche need unless you consider it being open-source a niche.

wccrawford 16y ago
Overcoming someone that spends 3x as much as you isn't as hard as you might think. Especially if they aren't spending that money wisely.
- devmonk 16y ago
  Do you truly think that Diaspora has a significant chance where it is positioned right now to overtake Facebook or gain a significant part of their market share in even 3-7 years? Think of all of the really major open-source projects. Now think to yourself, if I was a VC, would I have put money into those developing those projects if my goal was to have at least 10x return? Now think about those projects once more. Was there any single product significantly established in the same market that those products had to overcome when they started, say with the size and spending of Facebook, with a recent movie out about their founder?

david927 16y ago

OpenStarts is creating site that allows micro-equity investments ($50 and up) for web-based startups, which is similar to crowdsourcing but where real equity changes hands. (To get around regulatory issues, companies have to register in the EU.) The problem with investment management is handled via the site. It's a match.com for all stakeholders in a startup: the founders, advisers, investors, and they can designate an investment manager. Innovation is naturally distributed. I think the tide is turning on the support for that innovation, and it's finally also becoming distributed.

alain94040 16y ago

There are serious regulatory issues in the US with issuing real equity to a crowd. We worked around that problem by building a distributed model, inspired by the Open Source GPL. Just like there is no such thing as a "Linux Corp", but rather hundreds of individuals exchanging code through a license, we built the same model with a twist. In effect, our license says "if I contribute to your project and you make money, then you owe me some percentage back." That percentage is really virtual equity. So in effect, we have created a way for people to issue [virtual] stock, that can at a later stage, be converted into equity from a real corporation, once the project becomes successful enough that it requires real management. It's at http://fairsoftware.net http://fairsoftware.net of course :-)

tptacek 16y ago
Isn't this basically a recipe for ensuring you never get "real" funding? It looks like it would drastically complicate the due diligence and paperwork involved in setting up an "investable" C-corp.
- alain94040 16y ago
  Not really. The license has a very specific clause that makes the conversion seamless. Once you trigger it, you have a clean corporation, with shareholders (the founders). That is very compatible with regular angel or VC investors.
  - tptacek 16y ago
    Has any VC with more than $100MM under management ever funded a company that incorporated under your scheme?