# Comments from Michael Wilson on NPO Buyout idea

- Author: Joichi Ito
- Date: 1999-09-27T23:00:00Z


From: Michael Wilson
To: Joichi Ito
*** Joi, you sent the notice to the open list, so I figured it wouldn't piss 
  you off to have me comment. You're either very busy, or I got on your 'bad side' 
  somehow, but if you have time, just drop me a note and let me know you're doing 
  well, and when you think you might be Stateside. I'm kicking around, and it 
  might be fun to link up.

 NPO Buyouts and Sustainable Communities DRAFT 0.1 9/21/99 I recently had a 
  discussion with my sister about what we should do about the "Momoko Ito Foundation" 
  and the bicultural community project that we have. I have been thinking a lot 
  recently about community recently. Amano and I had talked a bit about how Japanese 
  seem to be taking a different angle, but that personal communication seems to 
  be quite important. Hector and I talked a bit about multi-cultural and multi-lingual 
  community sites. I also recently exchanged some messages with Howard Rheingold, 
  Jeff Shapard and Lisa Kimball about the state of community sites these days. 

*** I'd actually love to hear more about the Foundation; the links to the details 
  on eccosys are dead. Obviously I think any communication aspect of the study 
  is critical; genes get passed on in reproduction, but memes require the linguistic 
  infrastructure. It's made more complicated by the 'locality' issue; Town A and 
  Town B are next door, and are pretty congruent, which is the same for Town B 
  and C, C and D, etc. When you try to shift context from A to (arbitrarily) M, 
  though, the little differences add up; you'll notice it first, particularly, 
  in language. This has dramatic impact on what are viewed as homogeneous 'culture' 
  and interrelationships between cultures. Anyway, my sister mentioned that she 
  thought that many of the community sites were too commercial looking these days. 
  We all agree that the business model for community sites has not yet been discovered. 
  my sister (Mimi) is studying from an anthropological point of view, small communities 
  and how people in small communities are tied together. She is focusing on Net 
  communities. She talked about the educational software market where there is 
  no good model for the evaluation of software and mothers end up buying what 
  is on the shelf. What is on the shelf, being driving more by advertising and 
  marketing than real evaluation. A community might be able to evaluate and develop 
  this market. There are many communities which straight advertising is not serving 
  well. 
*** Ha! The business model for realworld community has yet to be discovered. 
  It's tied up in a sense of identity, obviously, and we all know how that varies 
  across individuals. Have your sister look up the old PLATO system; there are 
  lots of interesting details from that era on why net-based community works and 
  doesn't. It ends up breaking along lines of affinity (notice the common elements 
  of language in any affinity group, incidentally); you see it in computer communities, 
  cults, gamers, otaku, etc. Language as a tool of group-identity, which means 
  it defines inclusively and exclusively. This is when you start to skew over 
  into reputation capital and trust issues--key elements of any community--where 
  you have the test underlying of 'what are you good at, and just how good?' It 
  might be 'great company, but never be in business with them' or 'good physician, 
  but avoid any stock tips.' I agree that advertising is a poor indicator of reputation 
  or trust; branding is supposed to be one way to approach a quantification, but 
  the technology world is missing the equivalent of an Underwriter's Labs (UL). 
  Look at a piece of US electronic equipment, and you find it had to meet a certain 
  standard and safety. Software/hardware are still a wild context, and it's why 
  the risks and threats exist, not to mention shoddy products and systems. In 
  some ways, it's a good thing, because the lack of embeddedness to that sort 
  of structure helps keep the tempo up; it's also the crack that a lot of problems 
  flow through. Shibuya-san of Keio recommended that I read "An Introduction to 
  Post-Keynesian and Marxian Thories of Value and Price" by Peter M. Lichtenstein. 
  In this book Lichtenstein explains that neo-classical economics says that the 
  market and "demand" determine the price and value of something. Marx stated 
  that the labor that goes into production should determine the value. One can 
  also discuss the actual utility of an object to determine value. The idea that 
  a single market should determine everything is actually a product of our very 
  neo-classical economic view on society. In small communities, it is possible 
  that new forms of value and exchange are more relevant and dynamic than large 
  markets. 
*** True. Marx missed the point, at the edge of the information age. Keynes 
  ended up recanting before he died, but his process of economy lived on (mostly 
  dead now, particularly with Bretton Woods gone). If you remember my 'new econ, 
  same as the old econ' paper, you know I'm tackling some of these issues as well. 
  Certainly value and price are context dependent; one way to think of a localized 
  context is as community, particularly where the emphasis is on relationships 
  (you could just as easily use ecological models, but again, ecology gets fuzzy 
  with politics). We're on the edge of having to come to a better understanding 
  conceptually of community; so far, they're organic, and occur naturally rather 
  than being engineered. Quantification and association of metrics are first steps 
  in the direction (which direction? one is as good as another right now...) needed. 
  As you're aware, economics already copes with 'spot' issues and arbitrage; we 
  could bat around the relationship aspect, and get into the sociology of it, 
  which might be useful
. I have recently begun reading "Towards a New Economics" by Kenneth E. Boulding 
  which Jiro Kokuryo of Keio recommended to me and it also seems quite relevant, 
  discussing the area where economics ends and sociology takes over. 
*** Ahhh. Time to brush back up on statistical theory. I'm not familiar with 
  the book, but one of the key factors I keep running into at the interface between 
  sociology and economics is the resolution. Fine grain of relationships is sociology; 
  pull back and abstract a bit, and you get back to economics. Lump that with 
  all those things you can't get metrics on (motivation) and it gets interesting. 

These recent exchanges and readings sparked an idea that maybe the users of 
  community should form an NPO and buyout the community platform. The NPO could 
  be governed in a way that suits the community the best. 
*** Interesting. So you're modifying the old Kelso approach to equity distribution, 
  and turning the community participants into owners and de facto management. 
  I think this might be a real disaster. The hierarchical tendency would get ugly 
  fast. I'm very interested in watching what's going down with slashdot and andover, 
  with slashdot doing a karma/repcap implementation and andover doing the dutch 
  auction. I wonder if that was part of what prompted your line of thinking. 
One case would be if the users of a large community such as AOL offered to 
  buy AOL and take it private. Another would be if we collected various community 
  tools, managed them as an NPO, and as users increased and donations/tax increased, 
  the NPO could acquire more and more technology and resources. 
*** Hmmm. AOL would never work that way I suspect, it's too much a creature 
  of 'entry point for newbies' and that's a heavy overhead price on a community. 
  Your other model is very congruent to the open source and linux model, but you 
  would lack the test of code (does it function according to design). I don't 
  think you can sustain community past a certain threshold (undefined) well, and 
  I think you run into steep overhead issues as your scale increases (diseconomy 
  of scale due to complexity of relationships).
 Several thoughts on this. Takao Nakamura said that he thought it might be 
  boring to work in an NPO with a bureaucratic governance model. Similarly, Austin 
  Hill described similar schemes where ISP's have been run bo Co-ops where the 
  committee becomes polulated by boring people or the decision making becomes 
  slow. It is necessary to invent a robust and exciting governance model which 
  includes a leadership that allows the organization to make deals, be quick and 
  be visionary. 
*** Heh. Let me just point to Granovetter here, and you know how I tie heterarchical 
  org structures into tempo, particularly optempo. I think you have to lock down 
  on a purpose, have association based on that, and when the 'purpose' grows too 
  big to have freeform org around it, you spawn. What you're describing are what 
  I've outlined as opfor from personal experience; you have to keep small, cadre, 
  decisions made where the event is, allow mistakes (which means plenty of room 
  for failure, with the network able to catch you when you fall), etc. 
Politically speaking, this NPO would have to be similar to a nation-state. 
  It would have to have strong beliefs, policies, likes and dislikes, intelligent 
  people, vision. It should exclude people who are not interested in dropping 
  out of the current advertising and market driven consumer market. 
*** Hmmm. I don't think the nation-state functions quite along those fashions. 
  I agree on the strong focus and solid people, but hierarchical org structures 
  still associate authority upon position, and you can't afford that in what you're 
  talking about. 
It could be financed by donations and by savings on purchasing of infrastructure 
  and products directly. The users would own the platform. Isozaki-san of Netyear 
  mentioned that most Internet companies are already owned by the user. I think 
  the main difference will be that there will no exit for the shareholders, only 
  voting power. This would cut out speculators and shift the managment from growth 
  of revenue to happiness of the users... 
*** Hmmm. The old co-op model, which killed a lot of biz in Berkeley. You get 
  hammered on both the scale and scope issues. I think you also have to build 
  in the spawn/schism function, otherwise you screw yourself. 
Finally, I think that Japan is an interesting place to start such a venture. 
  The US high-tech ventures require 150% growth to be classified as a "growth" 
  company. Without such a classification, there is no option value. Without option 
  value, there is no incentive for the jaded high tech employee. It is currently 
  too easy to make money in Silicon Valley and too difficult to incent people 
  without it. Japan is currently still in a depression and there are quite a few 
  people who are willing to make enough to survive if the work is interesting. 

*** Worse, those of us who are interested in good work are poorly understood. 
  There's a pretty big rush on the cash in on the bubble, make the paper profits, 
  and let the market crash to hell. On the other hand, you really can't plan well 
  beyond a 24/36-month horizon. We're starting to radically up-tempo in a lot 
  of technological directions, but we have unaddressed, unsolved problems that 
  nobody is working on because they won't show the turnaround (yes community, 
  but what about the representation issue?). 
I also believe that eventually the US growth will slow down and option value 
  will decrease. Management structures and ethics developed around the growth 
  model may not be able to manage talent in such a state. If the NPO structure 
  I propose can manage to set a vision and incent intelligent individuals without 
  option value, such a structure may be able to accumulate dissillusioned talent 
  from the Silicon Valley market after a market depression. 
*** Well, they'll consolidate and embed. We're already seeing it happen. It 
  isn't a problem as long as the larger players don't use their market clout to 
  keep the tempo down so they can cope with their own slowing tempo and installed 
  base anchor. Incidentally, the military, which is horribly hierarchical, has 
  internally a culture similar to what you're setting out, where squad through 
  platoon have an internal sense of community, and you sure as hell don't take 
  'reward' seriously where your buddies are concerned. Note, though, that that 
  generally occurs among parallel in rank. 
I have been listening to young and intelligent bureacrats and academics talk 
  about the lack of accountability. Many feel that solid policies necessary to 
  change society are disregarded on not implemented. These people are used to 
  working with option value. If organized properly, I feel that calling on the 
  resources of the academic and government worker community might yield a great 
  deal of people who would help develop the governance model. If a global network 
  of policy designers used the community and the Net to study and propose technically, 
  economically and globally solid proposals to governments, it may be possible 
  to make such proposals so indisputabily "right" that access to such policy would 
  become political power for compliant politicans. Such a group could gain a great 
  deal of reputation value on "vision" and global acceptability. This coupled 
  with the economic power of group buying and acquisition of vital assets, may 
  allow the community to grow to nation-like size. 
*** Bah, accountability. Authority needs to equal responsibility. More important 
  from the angle you're talking about is -what are they willing to be committed 
  to?- Break apart an option, and what you see is a mechanism to reward commitment 
  to a goal that someone can put a metric onto. What's the value in being committed? 
  You get the pay-off. In your community model, you need to look long and hard 
  at what motivates (pays off) the committed behaviour to the community. From 
  there, technology is an enabler, economics reward and test viability, 'government' 
  provides your constraints. The social contract is already evolving, we're just 
  seeing most of the unsuccessful mutations die off. The net, in particular, is 
  already achieving the level of 'power' you're speaking of (power, of course, 
  being the ability to provide or deny dependencies). On the other hand, the point 
  of the community would not be to be dominant or overbearing, but to serve the 
  interests of pro-active and visionarily aligned users. 
Companies, governments and other outside organizations could serve both the 
  needs of this community and others including the traditional markets. This community 
  would just be a sustainable community, or an island in the market. 
*** Hmm, I think you're dropping into Sterling at the end there, but I don't 
  read his stuff. Think ecosystem. As the ecosystem grows, you get increasing 
  room for additional niches (roles in the system); plenty of microecologies can 
  exist locally, with occasional competition. If you lose homeostasis in the ecosystem, 
  everything falls out of the relationships necessary to holding the microecology, 
  and it all goes to hell. 
*** M 





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