Co-Create a Win-Win

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Startup Secret: co-create value with others and take a lot of your costs out. It is amazing how many startups go back to the drawing board and build everything from scratch. It makes zero sense today: there are hundreds of thousands of open-source projects that provide a basis to be disruptive. Do not create value yourself, co-create it. At a bare minimum, even if you find no open source, be open and extensible so others can build around your core (in software, open APIs; in hardware, open-source hardware projects; in a non-profit, build on existing infrastructure and open it to a community). In this cloud world, opening up your APIs is a near-invariable recommendation: the single biggest growth in my Cloud survey (60 collaborators) was the conversation about how important open APIs are. Even at the beginning, create open APIs for your own internal developers to build on, so you have an internal customer and the beginnings of an ecosystem.

What open source is, and why it took off. Anybody can build a piece of code and put it in an open repository, so anybody can look at it, adapt it, and use it. It got started because people realized it is a lot easier, if you have the problem, to design the solution yourself rather than pay some giant company to do it. If you are a coder, you develop it, and if you want people to keep improving it, you say “take a look, see if we should do something better.” Pretty soon hundreds of thousands, in fact millions, of people have contributed. Open source gives the user four freedoms: the freedom to run the program (download and use it, no license fee), the freedom to study it (look at the source), the freedom to change it (fix a bug, add functionality), and the freedom to redistribute your changes (share them). Those last three are why open source is not just a license but a development model, and why mature open-source projects win not only because they are cheaper but because they are better: so many people contribute. This is a huge catalyst for what the economist Schumpeter called creative destruction: to create more value and change the game, you have to destroy something.

Startup Secret: extensibility, the boiling water metaphor. If you build something everybody wants to add value to, that multiplies your value. Imagine you put a pot of boiling water on, and everybody wants soup. If you are the only one with the pot of boiling water, people come to you and add ingredients: someone adds stock, someone ladles some out to make their own derivative and adds meat, the next person adds pasta. Somebody thought about the core thing at the base of soup, boiling water, and made it easy for people to take some out and create their own version or add to it. Think about your value prop that way. That is why I love extensible open APIs.

Build on yourself (eat your own cooking). If you build an application that needs core services (user input, user validation, user experience), write those as capabilities in your own platform and have your apps team build on those same internal APIs. Immediately you have an internal customer testing the openness and extensibility of your APIs. When software companies build on themselves, product development goes way, way quicker (Demandware did this superbly with their e-commerce application). It is literally being your own customer.

Drupal: the largest open-source platform in the world (Dries). Twelve years ago, out of his dorm room in Belgium, Dries started Drupal by accident: he just wanted to create a message board (a typical geek, with his assembly books, chess board, and stamp collection). He made it available for free, and over 12 years people chipped in to add to it. Now roughly one in 50 websites in the world is built on Drupal, with over 15,000 modules (extensions, like apps on the iPhone: a blogging module, a forum module), and drupal.org gets 1.5 million unique visitors a month (which blows me away for a boring website about a piece of technology). Sites built on Drupal range from Sony to NBC to the White House, plus the Olympics, the Grammys, Mitt Romney’s site, and pretty much every major artist (Britney Spears, Michael Jackson, the Rolling Stones, Justin Bieber). 71 of the world’s top universities use it significantly, including Harvard’s main website. Drupal 7 accepted patches from over a thousand different people, and each of the 15,000 modules was built by one or more people, so tens of thousands of people together build the software. That is highly disruptive: even our biggest proprietary competitors have engineering teams of 50 to 100 people, not tens of thousands. Open source leads to collaboration, collaboration leads to community. Drupal holds events all around the world every weekend (batcamp, the Bay Area Drupal Camp, had over 1,500 people; some events have 4,000), where hundreds to thousands show up to make Drupal better. And Drupal enables governments and non-profits (Amnesty, Greenpeace, Doctors Without Borders) to better fulfill their mission, so it changes the industry and enables others at the same time.

How do you make money on free? You start with the free open-source software that developers use, and then for enterprises you offer things like cloud storage and services. You monetize part of what people can do for free by adding convenience and charging for the convenience. That is exactly what Dries did with Acquia: give away the software and build the services that make it secure, reliable, scalable, and cloud-hosted, so Drupal became a cloud service for anybody to create any website at any scale (now called experience management).

The win-win in the community. Who created Drupal? Everybody did. Startup Secret: if you can tap a community, you get a huge advantage, but it has to be a genuine win-win. The reason Drupal or any open-source project takes off is that the person who has the problem wants to solve it. You have to find the person in the medical or bio world who is solving this problem for themselves and will contribute. It cannot be just your need. If you keep asking because you need help, that will not work; but if you can get them to say “I want to solve this problem, so I would like to contribute,” you have the basis for a win-win.

Examples from the room:

• Charles is developing a line of biodegradable products with embedded biotech for sex education and reproductive rights, affordable for low-income individuals. The community that can help: product-design experts and health experts, plus governments with a basis for wanting these products (population, health and safety). It becomes an ecosystem, not just a request for help.
• Meredith is developing a pre-workout and is on the varsity rowing team. She wanted more endurance, so she sent a survey to all the other Harvard varsity teams, cross-referenced what different sports wanted, and came up with an ultimate solution covering many sports. It was not just her creating it: Harvard Athletics was helping her create it. Find out who else cares about the problem enough (other rowers, other athletes in the same community), and there is the beginning of something that could become a community that would love to contribute because it helps them.

Win-win does not always work, and it is not just for open source: it plays out through strategic partnerships too. The reason we do not like pure consulting businesses is that you can only have so many bodies and so many hours in the day, so there is a limited amount of value you can ever deliver per person. Co-creation gives you both a lever (taking cost out of development) and a multiplier (those contributors evangelizing and spreading the word, because they helped create it).