Does Open Conflict With Making Money?
We had a good chat hanging around Zander's desk yesterday about this line from Matthew Ingram's post on his love/hate relationship with Twitter:
Lastly, I hate that Twitter’s metamorphosis seems to reinforce the idea that being an open network — one that allows the easy distribution of content across different platforms, the way that blogging and email networks do –isn’t possible, or at least can’t become a worthwhile business.
I asked Zander what he thought about that line and he told me he hadn't thought long and hard enough about it to have a fully formed opinion but it was certainly important to our investment thesis and we ought to have an opinion on it.
I do have an opinion on it.
I do not think open conflicts with making money and further I think there are ways to make more money by being open rather than closed, but it takes imagination and a well designed relationship between your product/service and the rest of the Internet.
I also think it is better to open up slowly, cautiously, and carefully rather than start out wide open and then close up every time an existential threat appears on the horizon.
I recall when Etsy first put out an API. It was a read only API. Then they made it read/write. Over time they have added a lot of features that have made it possible for third parties to add value to Etsy and Etsy's sellers and buyers. But they have always protected the essential things that make Etsy's business and marketplace work and hang together as a sustainable entity.
Contrast that with Twitter which started out completely open which allowed anyone to build a third party client, grab a huge percentage of Twitter users, and then threaten to take them away from Twitter. That's not a sustainable relationship between your product/service and the rest of the Internet.
So I do believe that there are many ways to be open, to become more open, and to do so in ways that enrich the overall Internet and your company too. I am quite fond of O'Reilly Doctrine:
Create more value than you capture
And I think doing so means being open, becoming more open over time, but always in ways that allow you and your company to remain a sustainable business that can cover its costs and then some and remain viable and value enhancing for the long haul.