Tony Stanco The Community is the company

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Tony Stanco The Community is the company

"The Community is the Company''
April 6, 2001

The proprietary software development problem is a structural problem and therefore requires a structural solution1. The diagram below illustrates the appropriate company structure for free software developers. In this solution, software developers join together to align their natural power with market power, so as to replace the proprietary software development paradigm going forward into the 21st century. The major innovation of the FreeDevelopers structure is that it inverts the traditional developer-marketer axis, so that the community of software developers controls the marketers. The proprietary structure has it reversed -- the corporate marketers have been controlling the developers. A proprietary structure fundamentally depends upon the source code being secret, because the marketers have no natural power. Marketers gain power over the developers by using the financial markets to pay them to close their code, thereby causing developer community fragmentation, division and subjugation. It has nothing whatsoever to do with better code or more efficient development. The FreeDevelopers structure corrects that malformation, by aligning financial power with the natural power of developers. In so doing it frees the code, and therefore the developers. From a historical perspective, our structure can be viewed as a continuation of the trend in specialization occurring since the beginning of computing. In the earliest days, hardware, marketing and software development were all in one firm (e.g., IBM). In the 1980s, the firm divided into the hardware side (e.g., Intel-based computers) and the software development/marketing side (e.g., Microsoft). Now at the beginning of the 21st century, the FreeDevelopers structure continues this specialization trend by further dividing the traditional software firm into a marketing side and a developer side. However, while distinct (because of different economic imperatives), the marketing side is subject to, and controlled by, the developer side. As the software community is naturally international, FreeDevelopers joins together software developers from around the globe. We currently have supporters on 7 continents and 43 countries. FreeDevelopers

FreeDevelopers is an international community of GPL software developers.

FreeDevelopers will be owned by the GPL developers of the world as a constituency-based company
FreeDevelopers is the result of a triangulation of 3 of the most successful constituency-based organizations:
NASD (community) and NASDAQ (marketer)
Banks (community) and Visa (marketer)
Citizens and democratic government
approximately 0.8% of FreeDevelopers per month will be released from the trust to participating developers of the world; participating developers will receive monthly ownership interests from the first month they officially join. Therefore, the sooner they join, the larger will be their individual share of the company. FreeDevelopers is based on the proposition: if the code is GPL'd then the developers have the power and are free. GPL software development is most efficient because developer time is used to advance technology by utilizing the scientific method of peer review, not to re-invent the wheel. FreeDevelopers can include all 4 million software developers of the world and grow as the community of developers further increases. The more that join, the more powerful it becomes, and the more valuable is the company. The development arm will be a free-market-in-a-company. It will be a de-centralized meritocracy, with independent, free GPL software projects, competing and cooperating to produce the world's greatest software. This continues the current community-based development methodologies, which do not have traditional hierarchical mechanisms. FreeDevelopers will pay the developers to work on free software projects, lead by current and future GPL project leaders; all GPL projects are an integral part of FreeDevelopers. FreeDevelopers creates a fairer distribution of wealth, because the capitalization of any software company is really only the discounted future value of the work of its developers. For example, arguably the former $500 billion market cap of Microsoft belonged to the 13,000 software developers who created the wealth by creating the software, since unlike traditional industrial companies, there are no real assets that participate in wealth formation. 10-year Trust

The trust is important to give temporal fairness in allowing the whole developer community, of over 4 million developers, to join the company. Ownership interests in FreeDevelopers will be given to developers over 10 years. After 10 years, options can be used for new yearly entrants. Free Software Marketing Company (FSMC)

The Free Software Marketing Company (FSMC) is the majority-owned (51%-95%) marketing arm of FreeDevelopers. The FSMC takes the legal responsibility to guarantee to customers that the software works properly (i.e., provides a warranty) and thereby develops a brand. There needs to be a predominant marketing company for GPL software to compete with proprietary software and to provide salaries to developers. Without such a company, price-cutting would destroy the market for GPL software and then developers could not be paid to work on it.

Sales and services are conceptually distinct activities different from software development, and therefore need to be in a different entity with different fundamental rules of engagement, i.e., a profit motive. Marketers don't have the ethical and moral imperatives that are placed on the developers.
(See e.g. The Declaration of Software Freedom and Explanation, Free Software Foundation, and the `Definition of Free Software'.)
Marketers need to be controlled by the community of developers. They should not be in a position to control the creative community of developers, as is the case with proprietary software. With the software licensed under the GPL, the developers cannot lose control of its marketing; for even if outsiders gain control of the first marketing company, developers can repeat the process with a new marketing company. The resultant ownership of the marketing company by FreeDevelopers depends on how much of the marketing company is shared with hardware companies. Also it depends upon how many proprietary software companies are taken-over to free the code and their developers, as opposed to re-writing their software from scratch. Ownership in the FSMC by FreeDevelopers can be replenished by fresh yearly stock options to FreeDevelopers to ensure that it remains a majority-owned subsidiary of FreeDevelopers. Marketers need to coordinate with hardware companies to produce a joint solution for customers. Public Investors

Developers' power needs to be aligned with market power. Proprietary software companies use the financial markets to control the natural power of developers, by paying them to close the code, and thereby divide and subjugate the developer community. Investors are allies, because they are rational utilitarians who will back any entity that will benefit them, without emotional attachment to current market leaders. The marketing arm of FreeDevelopers must align developer power with market power and give a place for investors; otherwise the financial markets will resist the new commercial structure and try to perpetuate the current proprietary model. Joint Venture/Hardware

The customer wants a joint software/hardware solution, because computers are necessarily a joint product between hardware companies and software developers. Hardware and software are co-equals and therefore need to joint venture in delivering solutions to customers. History has shown that while separating software and hardware into core competencies is a more efficient solution, they still need to work together on joint production. Customers

These are the same traditional customers of computing solutions.

They benefit from the FreeDevelopers structure by superior code development, stability, security, greater efficiencies, more innovations, less upgrades and no supplier lockup. Customers provide the revenues to the software/hardware joint venture, which pays for the hardware side and the software side. On the software side the funds then flow to pay developers' wages at FreeDevelopers. Membership

Software developers from every country in the world are encouraged to apply and be part of the FreeDevelopers community. To begin the membership process sign the The Declaration of Software Freedom, provide your email and check the box to be included on the mailing list. --------------------------------------------------------------------------------

.. solution1
Disclaimer: This document is for the purpose of community building only and is not for capital formation. It is based solely on an analysis of the economic and power structure of the software industry. It does not analyze the legal and tax implications of the structure, especially international legal and tax issues. Since this is a new commercial organization based on community building without legal precedent, the legal and tax implications are expected to be substantial and may require regulatory or statutory accommodation for full implementation in many countries; otherwise the structure may have to be significantly modified to comply with applicable local laws. .

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