Tuesday, August 14, 2012

Follow-up to "Pricing Hardware that Runs GNU/Linux"

Update: It took a few hours, but we found what we need. We found a team that can answer these questions and more. For those who helped, thanks for your input!


In Pricing Hardware that Runs GNU/Linux, I started what I hope will be a new practice at ZaReason -- giving rebates at the end of each accounting cycle, giving back any profits that occur during that time period.

For the last two weeks I have been cringing, literally cringing. How do I tell people that there won't be any rebates this cycle? It was break-even.

GNU Free Documentation License en:User:Amal
Enough computers went out the door to cover costs. Technically it should be counted as a loss since one cost is, "Donate 10% to FLOSS-support group." We donated about 2% plus the cost of a tablet, the ZaTab that will be given as a prize at NZOSA, New Zealand Open Source Awards.

Interesting note: In the last month ZaReason could have reasonably given $100,000 ($1.2m/yr) to various organizations who could have made great use of those funds: the FSF, SFC, EFF, Ada Initiative, Partimus, and numerous LinuxFests and volunteer-run conferences. These orgs need the funds to function. Think about it: ZaReason makes hardware, a tangible item that costs money. ZaReason could be and should be a part of the engine supporting these groups.

The ZaReason Australasia base has such minimal overhead, you would think there would have been significant profit for our first month. For the first month's accounting, I didn't include any start-up costs, none. There still isn't any payroll. But, a large part of our costs for the first few months will continue to be shipping, getting inventory in-country at a rate that doesn't require investment funds (smaller shipments more regularly). We're building inventory slowly, currently: "Get enough to cover the next week's orders." It takes at least a week for inventory to ship from US / Asia --> the base in NZ.

Waiting for hardware is horrid. If you doubt, talk to one of the people who have ordered an UltraLap 430 and have had to wait. Even better, ask Brenda Wallace (current one of the rulers of the Internet in NZ).

CC-SA Cathy Malmrose
Ask her how she feels about having to wait for her shiny new laptop to arrive. She has the patience of a goddess, but she wants it now for good reason. Every geek within earshot of this blog post will be able to empathize -- our hardware is crucial to the work we do and waiting is nearly intolerable.

So, help me with this solution? Put yourself in my shoes?

Public domain Medjaï
Or any shoes that fit? Just take a moment to walk with me, give this concept of "hardware for the community" some brainspace.

Perhaps I was using the wrong tool for the task?

Task = make ZaReason community-driven, give it that "we're all in this together" vibe.

Tool = REI style rebates to make sure there's no profit motive + give back to community

Perhaps the tool should be:

Tool = community ownership of some type with profits going to a mix of organizations that support FLOSS.

Public domain
The Spark: Last week we had lunch with a brilliant thinker named Daniel Spector. I walked away with a dozen quotable quotes and a brain overflowing with sparky ideas. The most interesting was the concept of possibly making ZaReason an employee-run cooperative.

But to do any type of business shift, I need a business person to help. I need The Eben Moglen of Global Business Development, someone who understands why FLOSS is important, who won't waste my time on a profit-for-CEOs type of business structure.

I'm no Utopian, but I do think corporate business structure is, as my 11 year old son would say, "Freakin' unfair." I don't see any reason why ZaReason can't run differently than regular US corporations. I just need to figure out how.

If you haven't met or hear Eben Moglen speak, the top three traits we need are:
CC-Attribution, Share Alike 2.0 Palosirkka

1. Brilliant, well educated, deep experience.

2. Practical, gets the job done,

3. Currently retired, leaving the legacy of accumulated experience

I need a business person to come in and say, "Here's what a co-op would look like in the tech hardware industry and here's how you access the talent to get it done."

I need someone who understands the concept of limited time and won't dump a task list on my over-full plate, someone who knows how to build engines, in this case an engine for FLOSS as a whole.

Note that I haven't given up the 100 days promise. The first week of September, I'll review costs for August and hopefully there will be surplus. Who knows? ZaReason has seen all types of fluctuation in the past and there's nothing I would love more than to issue monetary "thank yous" to those people who believed in us enough from the start.

CC-A-SA 3.0 unported Fir0002
Please comment or email me if you know of someone who could be the Eben Moglen of Global Business Development for ZaReason.

Help me find my way through this particularly dense forest of corporate structure? So I can better build what's needed for hardware that supports FLOSS?

As always, thank you.

1 comment:

  1. I don't know who the Eben Moglen of Global Business Development is, and frankly there's a very high chance that anyone imagining themselves as such is a crackpot.

    But I really admire your desire to build a commercially successful organization that benefits FLOSS. I think many such companies are needed, as FLOSS needs massive resources to realize its potential benefit to humanity. Mozilla is probably the best example right now -- see http://gondwanaland.com/mlog/2011/12/22/mozilla-money-freedom/

    I don't think a fundamentally alternative organizational structure is necessary, and may be a distraction. Management and in particular founders (you) can have a huge effect on a company's operations and objectives, in particular when closely held. But here are a few to explore further, or have your prospective Global Business Development person investigate further, if you feel the need to:

    # Consumer Coopoerative: This is what REI is. In theory, members not only get discounts and refunds and such, they also govern the organization. But if you look at the history of REI, its members rarely participated in governance, and it is impossible for them to now -- it is run as a large retailer, controlled by a self-perpetuating board, and probably less transparently than traditional public company retailers. REI may (I haven't scrutinized) do more philanthropy and internal green projects than traditional retailers, but I think that speaks more to the long term effect of early culture than to alternative structure. REI membership is at this point basically a marketing gimmick/customer loyalty tool -- not that there's anything fundamentally wrong with that! Finally, it isn't clear how a consumer rebate (which doesn't require a consumer coop structure anyway) helps FLOSS.

    # Worker Cooperative: As far as I know most computer technology worker coops are consulting businesses, but there are large non-computer worker coops, most famously Mondragon Corporation, and there are many small coops in a variety of fields in the SF Bay Area. Depending on how these are run, they can be consensus-driven or have fairly traditional management hierarchies. The person who comes to mind as knowing and advocating both worker coops and FLOSS is MJ Ray, who is a member of http://www.software.coop/info/ (I understand relatively little about how coops work in practice and how they intersect with public benefit, eg FLOSS in your case, but this is a failing on my part which I hope to correct eventually, not a disrecommendation of the structure.)

    # Non-Profit Organization: A NPO is at least in theory governed for some public benefit, and can own businesses. This is Mozilla's structure -- the non-profit Mozilla Foundation owns the Mozilla Corporation, through which almost all revenues flow. The main benefit is not tax dedectability of donations (those made to MoFo are deductible, but they a miniscule against MoCo's revenues) but a commitment to public benefit. The flipside is much reduced ability to tap private capital. Note it's also possible for a traditional for-profit or either type of coop to control a non-profit organization for the purposes of the parent's philanthropy, but such is just a vehicle for the parent.

    Regardless of structure, there are various things you can do to militate against hierarchy, perhaps even to the point of not having bosses or titles. Valve Software has gotten some attention recently for purportedly doing this, but lots of details are unknown.

    Also regardless of structure, especially barring margins that I wouldn't expect in your competitive field, by far the most important contribution ZaReason will make to FLOSS is shipping pre-installed free software systems, as many as possible! :-)

    (a future ZaReason customer, when my current hand-me-down laptop gives out, and someone who has done some investigation of organization-structure-and-practices-to-benefit-FLOSS because I see the need and am working on some non-hardware ideas in these veins)