Hey folks! I am about to publish a blog post below. Thought this might be a good place to get some eyeballs on it before it is released , and generally this group might be interested in the subject of how we can build a more open, innovative and user-centric internet.
Thanks for sharing your perspective!
We all have heard it: In order to build something valuable you it has to be 10X better than whats there. It seems like an accepted law of entrepreneurship.
A law so strong that not even Google+, with Billions of backing, could not become a rival to Facebook. Google+ arguably had some features that made it a better service than Facebook.
This begs the questions if the reasons the 10x law exist actively prevents innovation from happening, why this ‘law’ exists in the first place and what we can do to change the rules?
Everyone knows the pain of trying out new products
Common knowledge suggest services need to be 10x better because in order for users to really bother trying a new product it just needs to be a lot better. I think that’s not the case and the key to solving this question lies in the phrase “to try a new product”.
I believe the real reason are are the switching costs, lock-ins and network effects that make it very hard or impossible to leave services and try out something new.
Imagine you wanted to move from Facebook to Google+, Akasha or Mastadon. All your posts and messages ported over is impossible and you immediately lose access to all of the friends you have on Facebook.
So as long as the following is true people tendenciously do not switch other services, even if they know those are better.
Costs to switch (time & mental effort) > Additional benefit offered * ~10
But…what about innovation?
Don’t these 10x requirements produce the leapfrogs in innovation we need to solve humanities biggest challenges quickly?
Yes because it indeed produces big, measurable, jumps in innovation that have brought humanity forward.
But no because
- The amount of effort, money to build new (but structurally similar) services where 9/10 companies will fail because others dominating the market is a gigantic waste of human potential and time. We don’t have the time to tinker on every new solution for years. We need to get it down to week(ends) or months. ****
- Sometimes already a new feature to an existing service would bring great innovation. For example I waited 4 years before Facebook implemented the ability to save posts for later reading. Simply thing. If I had been able to modify this feature in my own clients it would have offered great workflow innovation for me.
- The necessity to have such big jumps also brought us insane growth requirements that are responsible for a lot of things that go wrong in this world in the first place, and which we need to fix now.
Faster innovation through incremental gains
How would a world look like where not 1/10 companies survive & produce 10x innovation, but 6/10 companies survive, each producing 2x innovation at 1/10 of the cost?
We would enter a world where we create incremental innovations at higher speed and less effort, more employment, more stable companies and economy, more service competition and less exploitation.
What’s holding us back: Network Effects and Data Lock-Ins
Cause #1: How we share success in companies:
Speculative value increase
In order to reward the risk of contributing to a company in either time or money we use equity or stages stocks.
The problem is that in most cases shareholders make most (or all) of their profits if the speculative value of the company increases. The company’s profits, revenue and user numbers are only proxies, success is not directly dependent on them. Growth is the key metric a company optimises for.
Therefore the worst thing that can happen for shareholders is that growth is slow or negative. Losing users or revenue is not acceptable and lock-ins must be created.
Facebook is arguably the king of network effects and also an example of how extreme the above dynamic has become:
In the 2nd quarter of 2018, Facebook lost $120bn (billion!) in stock value within 48 hours, the biggest loss of any company in history. The reason: It posted the least growth since its founding, while still making 5BN in profits the same quarter and growing by 42% since the last year.
Think whatever you want about they way Facebook makes money, but such a highly profitable company should not be losing 20% of their stock value overnight while still being wildly profitable.
Cause #2: You and your data are hostages:
Data and Social Lock-ins & Non-Interoperable data formats
The requirement to grow incentivises companies to lock people into their services and make it very hard to leave. Either it’s difficult to migrate and reuse your data in other services, or they create network effects where you lose your social connections if you leave a service.
This also creates counter incentives for interoperable formats which would make it easier to migrate between services or integrate them into custom workflows.
Further, most businesses require to amass intellectual property in the form of proprietary software. There is an economic incentive to not share their progress with the world.
This way every new service/competitor needs to start freshly, even for a simple app like a calendar app.
The 3 things that need to change
Breaking this dynamic requires tackling the problem from multiple angles.
I think it needs 3 things to make that possible.
- Data and social Interoperability so users can freely move between services that suit their needs better and never lose the ability to communicate with their friends on other services. This will create the free-market pressure to produce good services, as you can’t lock people in as easily anymore and only keep them if you are the best service to them.
Economic models that reward being a good service, not growth.
In an environment where people can easily leave a service, a company can only really be successful if they focus on being a good service. This way they will need to optimise for revenue, not growth. Further, their growth is limited to the amount of people they can be the best service for, so it will be hard to get growth-focused Venture Capital investments. Another economic model is needed where investors make money only if the company is being a good service, thus by making revenue and profits.
Optional but ideal: Open-Source software
New companies should be able to build on each other’s work to provide services faster without spending 1000s of hours in building up services from scratch. Increased collaboration on key infrastructure and drop in development costs are expected.
A way forward?
At WorldBrain.io we are building open-source software and attempt to enable incremental innovation in the (knowledge management) software space.
The foundation to make this possible is Memex, an open-source privacy focused tool to organise your online research. It’s a mix of a Google Search for everything you have seen in the past, Medium’s highlighting and commenting features but for the whole web, and Pocket’s organisation features supercharged. All data is stored locally on your computer by default - you are in control. (You can download it here: worldbrain.io)
This is how it help may tackle the problem:
We bake interoperability deep into the core of Memex.
To make search possible Memex stores personal data from the different services you use (e.g. your browsing history/bookmarks/trails, social media posts and comments, what you shared/liked content on social media, your annotations and notes).
Doing so in a way that creates unified data formats across multiple services. After all, social media posts on Twitter and Facebook are structurally not that different.
To make this data usable for you we are in the process of developing an API that you, developers and entrepreneurs can use to innovate on new services or integrate with your existing ones. This central data store also houses your own social graph, so whichever service you eventually use, you can take your friends with you.
Everything we develop is open source.
Everyone has different workflows when managing knowledge and needs different tools. People can copy Memex, change features and reuse the data they had in their previous Memex via the Storex API, or use 2 Memex tools in parallel. This ensures that innovators do not have to start freshly every time they want to improve a service, but can create incremental gains, acquire users easily and eventually create innovation faster.
WorldBrain.io has no stock value. There is no speculation.
To reward early contributions and risk, we use a non-speculative economic model called Steward Ownership. In practice it is a profit sharing model that has a cap on the returns investors and employees can make - the cap is higher the earlier you join.
This ensures that everyone is focused on building a sustainable service and greed for more than you ought to get is removed.
It allows us as a company to be OK (its surely nothing to celebrate, but its OK) to lose users and revenue to other services as it will only delay investors’ returns, not lower them.
Of course such a data infrastructure, and the resulting data sovereignty, brings a whole new class of (privacy) challenges with it - after all we wanna prevent that this can turn into a Cambridge Analytica 4.0 scenario because people unknowingly share detailed data about their digital life.
We are currently forming a community of people to map out all those challenges and how to tackle them through e.g. good UX, education or privacy preserving technologies.
Our open questions we want to address:
- How do we create a secure technology infrastructure for personal data?
- Data sovereignty & flexible APIs come with risks - Cambridge Analytica 4.0 style risks. How do we create good UX that makes it easy, transparent and flexible to share personal data with other applications, while educating users about the potential risks and opportunities.
- What can we learn from past efforts to interoperability and data model standardisation in order to create interoperable data models/formats for knowledge sharing that can evolve with contemporary needs.
- How does legislation need to change to support ecosystems that are built on privacy as well as data portability/interoperability and reduce social lock-ins?
- How can (governmental) funding mechanisms be designed to support early stage entrepreneurs and organisations using Steward Ownership or Non-Profit models, so they can avoid Venture Capital and focus on generating sustainable revenue/profits.
- How can we facilitate a multi-stakeholder community of individuals & organisations with potentially large spectrum of political, economical and technical motivations/requirements to use this data infrastructure.
- How can we create a community that is inclusive to people with different, sometimes opposing, world views and which lives constructive, consent-focused (not consensus!) discourse to ease those difference and find multi-partisan solutions.
Do you have ideas on how to answer those questions, or know people who do?
Get in touch with us and help designing systems that are user centric, interoperable and build with a strong focus on data sovereignty and privacy.
Join us in our Slack/telegram Channel (coming soon)