What I really like about Trent Reznor’s style is that he hasn’t “worked it out”. He hasn’t discovered some magic formula for how to make money selling his music using the internet, and then simply lean back, enjoy the money and not care about developing his business model anymore. There’s no autopilot. He seems to genuinely want to connect and seems to enjoy the work involved in connecting, sharing music and creating new intriguing ideas for how to get his music out – and make a decent income in the process. That’s also why it works so well. He really do connect with fans, he really do give them value for their money. And he enjoys it too.
What Trent Reznor does so remarkably well may also serve as an example for all those engaged in promoting or selling a product online, to quit the thinking that they simply need to “work out” a method, which will instantly make them “connect” with thousands of people and let them become rich and successful overnight. That well will run dry for them sooner or later.
Make real connections. Engage others. Give them something of real value. And have fun!
There are several voices in this broad discussion, and to characterize some of the perspectives :
Commercial developers and start-ups, who need a way to make a living from what they do : create WordPress plugins and themes
WordPress users who demand more features and ever more clever ways to personalize and customize the software they use
Open source developers who feel cheated when what they’ve spent hours and hours developing is “sold” by others
Purists who feel that since WordPress is free (GPL’ed as well as free of charge) every component based on or rooted in WordPress ought also to be free
Pragmatics who tend to say that as long as the GPL is respected, developers may do anything with the code, and that plugins which are developed from scratch are not necessarily born GPL’ed
I think this is a crucial discussion for the future of open source and “free” software.
As far as my understanding of the GPL goes there’s nothing wrong with redistributing GPL’ed software, in fact this is the point of the license. The only condition is the software remains licensed under GPL or a similar license. That receivers in your end receive the same benefits that you had, is a key component of what is usually referred to as copyleft.
There’s nothing wrong with charging money for the redistribution of this code either. Noone says anybody should provide stuff for free, just because it is GPL’ed “free” software. What the freedom in “free software” means is that anyone who obtains the code also remains at liberty to redistribute the GPL’ed code and charge for it too, if he or she wishes to do so. We all have expenses, and there are all kinds of good reasons to ask money for the time and work we put into providing a service or a product to someone else.
The tricky thing is, that since users who buy a piece of GPL’ed software also has the full right to redistribute that software, the business model appears to be broken. It may not actually be broken, since there are many good reasons to pay to receive benefits with the software “purchased”. Someone who obtains a piece of GPL’ed software via a bittorrent network, won’t get the support and imminent future updates that someone who “bought” the software from the developer does. But if we toss this aside, that the business model appears broken is probably what leads some developers to pursue proprietary business models.
Now, there’s a perfect match between supply and demand in the users who wants new features and are willing to pay for them too, and the developers ready to supply new features. It appears pretty straightforward. It’s good for users and it’s good for developers, who make a living from what they do. Right? Wrong.
The advantage of using GPL or any other copyleft strategy is that the process of redistribution and refinement can easily be facilitated. If or when a useful feature is included in a version of the code, it can be adopted by the source developer or anybody else involved, so that everybody gains, whether they charge for it to others or not. It can facilitate the creation of a community around “the project”. The software is improved by community developers, and eventually the code or project may leverage much more than any individual developer is capable of.
If you use a proprietary model as a developer you’re shutting others out. As a proprietary developer you have to build your entire organization around the fact that all problems must be solved in-house or paid for. You’re in the business of constructing a costly operation, which must be paid for. In contrast, the free software developer may not have a great income from his work (someone in the linked discussion said he had received 50$ in donations at 20.000 downloads), but also has few expenses and obligations. Once a website has been set up, he can begin to facilitate the distribution and development of his project because it is GPL’ed. This of course doesn’t do it alone, but if it isn’t out there, it won’t be used and improved upon (for free) at all. If an open source developer has 20.000 downloads, it means his work is popular and things are working out. He ought to wake up and find a way to leverage all that traffic and interest to create even better software, which will attract even more users and reach even greater markets. I find open source developers are typically not very good at this, and there are no easy recipes for how to make it work.
My point is, however, that even while it may not seem so at the surface level, you’re in a much worse position as a proprietary developer, than the open source and free software hobbyist, who is capable of inviting global input and value to his work by using the GPL and has very few expenses doing so.
Now, what about the user? At a first glance, users get what they want, a theme or plugin of their choice and style. But the price they pay is not simply the money changing hands. They also become dependant on a company or a particular developer to provide for them the code and support they want. If the user becomes dissatisfied with the company’s service or the company goes bankrupt, or if the developer decides to go his own way leaving the product and it’s users behind, few will relate enough to the product to be able to pick up where he left. If a piece of code has had 20.000 downloads globally, it becomes a lot easier to find someone, for whom this piece of work is not just a strange mess. But it is also possible, for a user who can’t find somebody to help him, to dive into the code himself and learn to solve problems and create new features, and then redistribute his work.
I’m really great with developers selling their work, but I believe they’re shooting themselves in their feet, if they use GPL’ed software in the first place as a platform or market, and then do not use the powerful legal tools at their disposal in the GPL and other free licenses, to leverage the reach and further refinement of what they do. And I believe users who are too impatient with open source communities and hobbyist free software developers and pay for themes and plugins help trap themselves and their developers in closed circles, which will lead them nowhere while the open communities grow stronger. There’s a real danger however, that great developer talent will wind up in these kinds of dead-end relationships, which doesn’t expose their projects to the open scrutiny of global free software communities. There’s also a real danger that open source software projects won’t spawn the businesses and startups they need, in order to create thriving communities and cultivate collaborative efforts to create even better architectures for facilitating the development of great free software. This may happen if developers and startups decline from using the GPL or other copyleft strategies, out of the misunderstanding and fear that they can’t make money on something which is “free”.
After posting my article on the anatomy of Kaplak Stream I found this brilliant video featuring Dan “back of the napkin” Roam. Incredibly insightful stuff, about something we all can learn from and be a lot better at : visualizing and communicating our problems, visions and solutions. Please enjoy :
The Kaplak Mailing List was an important part of the first website of ours at Kaplak.com. However it didn’t come to play the envisioned role in our business strategy; as a direct communications channel and method of communicating directly with our potential customers. As you may be aware, we have focused instead on building a somewhat active blog.
The blog offers a number of RSS feeds for your convenience, which can be read using any feed reader you prefer, and thus offer greater choice and ultimately convenience for most readers. It is not confined to people who have first signed up for our list, and it can be easily shared with others. It also means that every communications effort we make, be it here on the blog or in the wiki or via social messaging tools, help create transparency. The greater transparency and the more widely we can make our particular pool of information accessible, the less work for us, now and in the long run.
To clarify this change in strategy, in a operation of tidying up some of our loose ends today (and the mailing list is a big loose end), I wrote this email to all our mailing list signups :
Dear Kaplak Mailing List Subscriber,
You belong to a select group of people who once managed to locate our Mailing List at http://kaplak.com/ and find what we had to say there sufficiently interesting to sign up your email address for the list.
For a number of reasons, the Kaplak Mailing List didn’t come to play the envisioned role in our business strategy, as a communications channel. Instead we have focused on building a blog (now located at http://blog.kaplak.net/), which offers a number of RSS feeds for your convenience, which can be read using any feed reader you prefer.
As part of rebuilding our site structure, we’ve now taken all email adresses from the mailing list and grouped them in our GMail setup. We’ll maintain and add to this group to keep track of a larger group of people interested in Kaplak, including potential customers, investors, advisors, associates, developers and others generally interested. If you want to stay on this private list, you don’t have to do anything further. We’ll use this list only rarely, to direct attention to high points of interest. Among these, we’ll be sure to notify you when we launch our first product, the Kaplak Stream.
We also use Twitter, Facebook, Identi.ca and a host of other online services. Find a non-exhaustive list on this page : http://kaplak.com/contact/ and feel free to connect with us any time on any of the online services we use, which are convenient for you.
On the other hand, if you want out of the mailing list, have become disinterested with Kaplak and don’t want to have more to do with us, please do mail us back and we’ll remove you from the list right away. We really don’t want to waste your time. We’d also really like if you said a few words about why you want to be removed from the list, if you care to share that with us.
One of the reasons hinted at in the email is simply financial. Our early customer meetings and experiences revealed to us that we had a very difficult time processing the knowhow gained into our system, at the speed we were generating it. We simply didn’t generate any income from our activities and had trouble financing our time.
Therefore, it became critical to us sometime in the spring of 2008 to focus on planning and executing a re-build of Kaplak’s root site and connected sites, in a way which makes it economically feasible for us to intake large amounts of information, and be able to apply this information to our business. The cornerstones of this re-build are the Kaplak Blog and the Kaplak Wiki, and what we call Kaplak Stream (working title). Kaplak Stream will be our first product and our first dash at connecting the dots and making niche producers more visible to their interested target markets.
Don’t waste your time trying to build the next cool time-waste application for Facebook or try to figure out how to tap into the money stream. You probably won’t get funded anyway, and if you’re funded, you probably won’t get the second round.
Build something which meets the problems, we face. You will profit and grow from your experience, even if you fail. We all fail, and that’s why we grow and become really good at something.
The video is about 30 mins. but it’s a really worthwhile watch. No bs. For some reason, the sound is not optimal, so the talk is best heard and digested with your earphones on. Thanks for the tip on this video to Start snakken!
Gary Vaynerchuk of Wine Library gave an entertaining entrepreneurship peptalk at Web 2.0 Expo in New York, on how to build personal branding using the internet : Position yourself to succeed. If you do something, you hate, stop.
At a very young age, Gary took over the family business, a liquor store in New Jersey. Over a period of 6 years Gary and his father Sasha rebranded the business as Wine Library and transformed it from a local store doing roughly $4 million in sales annually to a $50 million national industry leader. The development of the Wine Library juggernaut reached its zenith on August 25, 2006 when Gary was featured with a caricature in the top left corner of the Wall Street Journal, a lifelong goal of Gary’s that he achieved before the age of 30!
Now enjoy his talk :
To sum up Gary’s points :
1. Quit doing stuff you hate. You want to position yourself for great things, and they won’t happen as long as you’re stuck in a daytime job you hate.
2. Stop excusing yourself and think you can’t “monetize”. You can. Even if you collect smurfs, someone will buy into that – smurf it up!
3. Quit watching LOST and you’ll find the afterhours to work for what you want. You won’t get money to do what you want. You work to get it. Find time. Earn a little on the way.
Found this courtesy of Raymond at dltq.org. Thanks for the tip!
Finally got around to get an account for us on Flickr and upload a bunch of photos from one of our recent sessions. These photos are from a meeting on the Kaplak premises in IDEA House in Odense, June 23rd, 2008.
This also gives me the proud opportunity to introduce to you developers Anders Nicolaisen and Jesper Beltoft Lund, who joined Kaplak in May. Please give them a warm welcome onboard! :-)
There’s a place close to where I live in Odense, where I come often to walk my dog. It’s one of those places I call ‘cracks of the industrial city’. As anyone familiar with the lyrics of Leonard Cohen will tell you, the cracks are ‘where the light gets in‘… In this case, it’s a stretch of unused railway tracks grown full with weeds and bushes, and surrounded by the backsides, walls and fences of old industrial buildings.
This place invites two particular breeds of people; dog owners and grafitti artists. It occured to me as a fitting spot to do our first videoblog, on what I term the ‘grafitti phase of a startup’ :
The video is also accessible on YouTube, which didn’t, however, work wonders for the quality of the video. The difficulty of getting compressed video (mp4) into an editing program, and getting it out in the same quality as it got in (mp4), is something I have yet to master. Add to this the further Flash-ification of the video on sites such as Blip.tv and YouTube, and you have a recipe for massacred material – especially if the quality was not that great to begin with.
This post is our first video blog post, and I know we’ve got a lot to learn. There’s a long way to go for us. We’d really like your input on how to improve. Ideas?
Among my too many interests at the present is scalability and problems of scaling webservices, in particular. Of course, this is an obvious concern for Kaplak, as it is and will be for any startup which wants to address a global user base. How do you grow from your cellar setup to a system capable of meeting a much stronger, extraordinary demand?
Alex Conner sent a few tips my way via Twitter, among these this interesting video with Cuong Do Cuong from YouTube. Do Cuong was part of the engineering team that scaled the YouTube software and hardware infrastructure from its infancy to its current scale. In this video he discusses hardware, software and database scaling challenges :
Earlier this winter Rasmus Dahlberg of the Odense-based publishing house Det Historiske Hus asked me ‘why we had founded an association and not a company?’. I answered something to the meaning that the association was much more flexible than a formal business at this point, where we still needed to put together the right team, find investors and expand our network etc. I also told him, that I wasn’t sure if our leadership and organization was in place etc. All these things were true enough.
A few weeks later the association exploded in my face. As a matter of fact, I did see it coming, but, I’m sorry to say, didn’t react swiftly enough on the early symptoms and gut feeling I had. I didn’t realize our differences would escalate into open conflict. Instead I nurtured the vain hope that our differences and different backgrounds would only make Kaplak stronger. Now, the association is no more, and has been replaced by a regular for-profit company. And this is all for the better.
For a long time I have wanted to elaborate on the background of these developments here, but have held back, because I’ve dreaded the painful aspects of reliving the conflicts we had. Yet I know this is something we need to be open and talk about. We want to create an open business, which dares be vulnerable too and openly show what the process of building a company like Kaplak entails, even when it’s rough. It also may allow other startups to learn from our experience.
Last and not least I hope and think that this article may also be part of our internal healing process, which we need to cater to – before we shoot ahead into our bright future.
What went wrong with the association?
The Association of Kaplak Investors (Kaplak Investorforening) was founded on October 15th 2007 by Morten Blaabjerg, Jens Wellejus and Jesper Böttzauw.
We chose to found an association because we believed it would be more flexible and better able to expand the circle of ressourceful people around the project, as well as attract further capital. We needed candidates for several key roles on the team, as well as more capital to create the company we wanted. The association was a method for hooking up our different professional networks, which would help provide the team members we sorely needed, while we jointly saved up cash for a ‘real’ company.
All this was very good in theory, and this idea may indeed have spawned such an outcome, if we’d been a larger circle of people to begin with, with a higher willingness to lay down real money on the table. As it was, it relied too heavily on too few members to invest in the company, as well as lobby and activate their professional networks to also invest and become members of our association. And it relied (too) heavily on information sharing between members, about activities, valuable contacts and potential customers in our networks, and between the association and new investor prospects.
In return for this, all members were given equal influence on proceedings, in their vote and electability for board membership, regardless of the value of their investment. This spelled trouble.
In fact, this choice of organization proved less than flexible. Formal proceedings became too great a mouthful for too few people involved, taking valuable time and ressources from more important tasks, i.e. developing Kaplak as a company. If the association was to work, we needed to work hard to expand it and nurse it, as much as we needed to work on Kaplak the business. At the same time, I had a growing feeling that my partners, albeit enthusiastic about the project, wasn’t so enthusiastic as to actually invest human money, or alternatively, spend more time to help attract and close further investments for the company, and in doing this expand the circle of ressourceful people connected to the project. I felt I was the only one working on the project, but without real ownership to my work, as it became the property of the association.
The conflict arose between Jesper and myself, with Jens in the impossible position as a mediator or taken hostage between us. There were deeper misunderstandings and differences at stake, but the point of conflict was our new wiki.
From the very beginning of Kaplak in the spring of 2007 an internal (and later public) wiki was a key element in Kaplak’s communications and information sharing plan. It was in the first business plan.
Now, when the wiki finally was online in late November, Jesper suddenly objected to using it, even when asked directly to do so. I found myself spending more and more time “persuading” or trying to trick Jesper into using the wiki. One key goal of the wiki was to abolish email as a knowledge sharing tool, yet I kept spending an increasing amount of time in one-to-one bottleneck email correspondance with my partner. This was frustrating, because we could have used all the energy put into emails and explaining back and forth to build our wiki at the same time. My point was then and still is, that there’s no saying “I don’t understand it” when you’re in front of something new, without willingness to dive in and try things out and experiment. Without this willingness to try new things you’ll never learn what it is. This goes for wikis in particular. As an experiment, I copied all of our correspondance into the wiki. In part, because I hoped to show, by example, that we could have this exchange in the wiki just as easily – everything readable and editable by anyone in our circle, not limited to two people. But nothing really happened. Jesper felt reluctant to share any details on his contacts and possible Kaplak customers in his network, although this sharing and connecting was in fact a key contribution of his to Kaplak by his contract. I didn’t feel he trusted me, my leadership or the company, and I slowly lost faith in him as a partner. These events were probably inevitable, given our series of misunderstandings, difficulties and conflicts of which I describe only some here.
In early January we had a very loud board meeting, which culminated with Jesper leaving the board. At this meeting I tried to demonstrate, that Jesper’s efforts didn’t amount to what he had said he’d deliver : leads and contacts. Jesper in turn said he had been talking to a lawyer about my ‘criminal act’ of copy-pasting our ‘private’ correspondance into the wiki, which he believed to be in violation of Danish law. This ended the meeting, as I can’t tolerate a partner who believes I am a criminal, and who had the audacity to discuss these alleged criminal offenses with a lawyer before considering the interests of the company. I can’t live with a partner who’d rather discuss my possible acts of crime with a lawyer, before he’ll contribute value to the company, do the work much needed, and learn to use the tools he’s been given to do so, and by all this protect his own investment in the company.
In addition, I could under no circumstances spend time arguing about any possible grounds for such accusations, because that would just even further lead focus away from what was important : building a great and durable business. To put it bluntly, I found the accusations ridiculous, but also revealing, in terms of how deep our differences struck in relation to Kaplak. Kaplak is a company and product based on technologies of sharing : open source, wikis, filesharing protocols, copy-paste, widgets which flow from platform to platform and so on and so forth. I couldn’t see my partner representing Kaplak in this sense, and this effectively terminated our business relationship.
It was the final straw in a chain of events which spelled out the need for simplifying things. The board was in effect put out of business, unable to legally enter into agreements on behalf of the association. I resigned as a chairman, although I continued to run Kaplak as a CEO, according to my contract for 2007, but without any certainty that my work would be authorized with a new contract for 2008.
Now I worked without any ownership to what I made. This was clearly intolerable.
One thing was sure. I didn’t want Jesper on the board, and I wasn’t very happy to have him as a partner. But it wasn’t any sufficient solution to simply replace one board member with a new one. The real problem, as I saw it, was that influence was awarded to any member of Kaplak on completely equal terms, regardless of investment or value contribution. As a majority investor, CEO and chairman, I technically had to refer to the board, i.e. myself and my partners, even though I owned much more of the company, than my two companions.
This in effect undermined any motivation for further investments in the company by members, as well as for inviting others to join the circle. This also undermined the authority and leadership of the association. Why invest in something you couldn’t be sure (theoretically) wouldn’t be led by a completely different group of people after the next general assembly? Why respect leadership among ‘equal visionaries’? Why work for and respect an assocation which claimed ownership to the company and it’s values, but wasn’t capable of delivering the ressources, it was created to facilitate?
Something needed to be done about this. If we kept going without abiding by the formalities of the association, we would just undermine the authority of the organisation even further, and risk undermining the entire project. We could try to get a stand-in for our board, to sign documents which would subsequently have to be approved by our general assembly. We could change the rules and demand cash investments from all members, in the hope that this would lead to a more responsible board of investors, who would be more careful about protecting their own investments. In other words, we could patch up things a bit and try to keep going until we acquired more members and investments – or until we were fed up with working for nothing, while our business suffered.
Or we could realize that something was wrong with our choice of organisation, at least at this level of Kaplak’s development. We could abolish it altogether, in spite of fears that it might not be very pleasant.
The association was designed to be difficult to abolish, and dissolving it meant to deprive present members of formal influence on the project, and carry over investments and agreements to a new company. As it was, I was the majority investor and only investor of capital so far, but this didn’t provide me with any special influence in the association, where the highest authority remained the general assembly. Two extraordinary general assemblies were needed to dissolve the association, each called with 14 days notice.
The first assembly took place February 21st, which was in effect an ultimatum to all members. To be square : put money on the table or lose influence – or alternatively, abolish the association. An ultimatum may not be the best road for dialogue, but I wanted to make sure the seriousness of the situation was manifest, and that this could not be sweettalked away. I also made it clear, that if we weren’t capable of electing a new board at this assembly, I wanted to dissolve the association. This in effect meant, that we needed at least one new member to sign up before or at the assembly, which made it hard to resist laying down the organisation.
I was the only attendee, which I took as another testimony to the malfunction of the organisation and as a time to wake up to the fact that I had chosen the wrong business partners.
On the other hand, it made things very easy. The association was formally dissolved at a second general assembly on March 10th.
The rebirth of Kaplak
Thus, we abandoned the association in favor of a regular for-profit business, which is the best thing that could happen for Kaplak. There is a re-established clarity of ownership and leadership, which is capable of reinstating confidence in the company. We can begin building income streams and develop Kaplak v1. We’ll do this by selling complementary products, i.e. products which complements Kaplak v1 and attracts the same kind of customers, i.e. somewhat web-savvy niche producers, who knows that they need to get out there with their product, but still has to find the best, precise, low-cost method and tools of achieving this.
To begin with Kaplak will be listed as a private single-person company. Under Danish law, there’s no capital requirements for this type of company. The new company honors the spirit of all agreements entered into by the association, with the exception, that A-shares will only be given to investors who invest a cash amount of a certain level in the company. Mikkel continues to be our hosting partner. As before, warrants will be effective when the company agrees to list as a private limited liability company (anpartsselskab), which requires a substantively larger amount of capital.
We’re also increasingly facing a choice concerning our communications strategy, which this blog post goes to prove. Open business and open communications is not just something you do when everything is running smoothly and there are nice things to report. If there’s something I hate it’s the superficial niceness of startups with only positive stories. This is not something which establishes confidence in my book.
In Kaplak we need to re-orient ourselves at a much more radical level of public openness. It may hurt our chances with certain investors, but then it’ll win us others who understand how we want to do business. The clear argument is that an open system can operate faster (no passwords to remember everywhere), grow bigger, be much more visible online, and invite readers as well as input to the company, at all levels of our activities.
If we want to attract the right people, we need to show a considerable openness concerning our challenges and problems too. And if we want to grow this market we’re in, we need to be daring enough to help others, who will also be our competitors. Because competition is a good thing. It helps you stay on your toes, and it sharpens ideas and business models. And if there’s something we need, it’s this. Smart people, capable of breeding and nurturing sharp ideas and business models.