Sunday, May 24, 2015

Has the Time Come for Software Cooperative CUs?

As we were departing php[Tek] 2015 last week, I asked my fellow attendees where they were heading. "London," replied Derick Rethans cheerfully, to which I replied with mock seriousness "Ah... that's a long drive." The look of confusion on his face told me that a crucial element was missing from the conversation - he didn't know me well enough to tell that I was joking. Open source is a lot like that. It can be difficult for small businesses in particular, to distinguish between technologies - and technologists - that presented a lasting opportunity, and those that had the potential to fall flat and kill a business model in the process. At php[Tek], as with most of the grass-roots conferences I've attended over the past decade, I recognized an emerging phenomena. It may not be so much a trend as a series of pieces falling into place in the economy and the community at large. Similar to what must have preceded the establishment of Credit Unions in the 1850's, there is an increasingly undercapitalized population relying ever more on applied software technologies. Open Source was a major component falling into place, not merely because it made certain software technologies cheap, but because it democratized access and learning about managing the technologies. Much in the same way, Credit Unions made it possible for individuals and small businesses in impoverished communities not just to self-finance but to learn to oversee and manage their own growth. Regardless of how accountants see software, creating and curating it is a primary factor in the success or failure of modern business operations. Yet even for those that are technologically skilled, the tangible and intangible capital costs can overwhelm the ability of any one business to maintain. Again, Open Source helps by lowering costs and making acquisition of skill levels feasible. Yet even Open Source can present too high a cost of adaptation and configuration management over time. What Open Source does not yet do, and seems to be about to do, is provide a way for neighbors in the technology community - providers and consumers - to secure the future of a software technology together. That is, I think formal cooperatives, or "Software Credit Unions," are about to emerge from the economic primordial soup we call the Market. Many if not most of the core technologies already have found homes in foundations, consortiums, non-profit charities, and public corporations. That's not what I'm pointing out. The applications of these technologies, which provide real value to business process stakeholders, are assets that are frequently constructed with non-trivial personal or business funding. A cooperative form of business would provide pooling of the capital investments, sharing of risks, and amortizing of maintenance costs and risks for members, as well as avoidance of "razing" of small intellectual properties when such small businesses close. If such organizations were formed under the same kinds of fiduciary ethics and practices as a credit union, it would be a boon to the future of technological small business clients and open source contributors alike. It would help define financial and legal standing for popular projects, help quantify the value of contributions, and support necessary but otherwise marginal projects for their members. A cooperative form can also help ensure that peer-review processes (already a part of open source culture) are enforced to members' quality standards and not to requirements of some ill-conceived third party. Software has already irreversibly infiltrated our lives. I don't think it is even possible that cooperatives akin to software credit unions can be avoided. It is happening now. The question is not "if" organizations that hold our software assets will exist. They do now. The question is whether any such organizations will hold a fiduciary role for consumers and producers alike as a membership organization in a credit union model, or leverage us all at a disadvantage like a bank.
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