6 ms·

Facebook destroys billions of dollars of shareholder value with open source

18 points by astorplaceCLI 8y ago

artemisyna 8y ago
Well. I wasn't exactly expecting my "most myopic article of the day" to come this early, but here we are...
- artemisyna 8y ago
  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 8y ago
    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.
- B1FF_PSUVM 8y ago
  We haven't had any "X bazillions - three times world GDP - lost to copying" pieces lately, a replacement is in order ...
platz 8y ago
Since you can form a company for any reason, there is not always truly a 'fiduciary dury' to shareholders as often claimed
- pzone 8y ago
  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 8y ago
    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.
johntran 8y ago
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.
- anon4738383 8y ago
  Most "journalists" don't know jack about what they're writing about and lack any sort of integrity, so they confidently espouse random bullshit and/or propaganda. MSM fail.
platz 8y ago
This is the kind of outrage article (in hn context) that social networks feed on to exploit human psychology and drive user engagement
- shokasg 8y ago
  Indeed
mehrdada 8y ago
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 8y ago
  I'd recommend you read part 2 which came out today. https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-of-shareholder-value-with-their-open-source-projects-part-10947d5e8f1a https://medium.com/@daxaxelrod/facebook-destroys-billions-of...
  - mehrdada 8y ago
    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.
Neil44 8y ago
What tools was Facebook built with again?
- sofaofthedamned 8y ago
  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.
- markbnj 8y ago
  Exactly. It's not even a matter of "was built with." How about "is being built with?" If they had to pay for all the stuff they use now then for all I know it would have a big impact on their financial position. More importantly they might not exist at all if they had to scrounge up six figures a year for their first commercial database license. As I said in my response to Axelrod on Medium: open source drops the paywalls around production quality "parts" so that big ideas, which have a big impact on the world, can flourish.
ericb 8y ago
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.
hereiskkb 8y ago
Man, the scale of one sided bullshittery here just reeks of failed analytic skills. Look at the whole deal! The long game!
writepub 8y ago
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
jasonvorhe 8y ago
I haven't read something this terrible in weeks.
btown 8y ago
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 8y ago
  Great points
- minimaxir 8y ago
  I'm all for well-researched cost/benefit analyses. This ain't it, though.
- astorplaceCLI 8y ago
  You might like this https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-of-shareholder-value-with-their-open-source-projects-part-10947d5e8f1a https://medium.com/@daxaxelrod/facebook-destroys-billions-of...
  - btown 8y ago
    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.
travmatt 8y ago
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.
daliwali 8y ago
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.
alecbenzer 8y ago
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?
anon4738383 8y ago
Flame/clickbait article. Ignore this author.

18 points by astorplaceCLI 8y ago

artemisyna 8y ago

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

artemisyna 8y ago
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 8y ago
  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.
B1FF_PSUVM 8y ago
We haven't had any "X bazillions - three times world GDP - lost to copying" pieces lately, a replacement is in order ...

platz 8y ago

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

pzone 8y ago
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 8y ago
  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.

johntran 8y ago

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.

anon4738383 8y ago
Most "journalists" don't know jack about what they're writing about and lack any sort of integrity, so they confidently espouse random bullshit and/or propaganda. MSM fail.

platz 8y ago

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

shokasg 8y ago
Indeed

mehrdada 8y ago

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 8y ago
I'd recommend you read part 2 which came out today. https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-of-shareholder-value-with-their-open-source-projects-part-10947d5e8f1a https://medium.com/@daxaxelrod/facebook-destroys-billions-of...
- mehrdada 8y ago
  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.

Neil44 8y ago

What tools was Facebook built with again?

sofaofthedamned 8y ago
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.
markbnj 8y ago
Exactly. It's not even a matter of "was built with." How about "is being built with?" If they had to pay for all the stuff they use now then for all I know it would have a big impact on their financial position. More importantly they might not exist at all if they had to scrounge up six figures a year for their first commercial database license. As I said in my response to Axelrod on Medium: open source drops the paywalls around production quality "parts" so that big ideas, which have a big impact on the world, can flourish.

ericb 8y ago

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.

hereiskkb 8y ago

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

writepub 8y ago

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

jasonvorhe 8y ago

I haven't read something this terrible in weeks.

btown 8y ago

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 8y ago
Great points
minimaxir 8y ago
I'm all for well-researched cost/benefit analyses. This ain't it, though.
astorplaceCLI 8y ago
You might like this https://medium.com/@daxaxelrod/facebook-destroys-billions-of-dollars-of-shareholder-value-with-their-open-source-projects-part-10947d5e8f1a https://medium.com/@daxaxelrod/facebook-destroys-billions-of...
- btown 8y ago
  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.

travmatt 8y ago

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.

daliwali 8y ago

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.

alecbenzer 8y ago

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?

anon4738383 8y ago

Flame/clickbait article. Ignore this author.