This post appeared first on kvantomme.be, Kristof van Tomme’s personal blog, but since it is about the WalkHub project, we are reposting it here.
If you dream of building a movement that will significantly impact the world, there’s a big chance that you’ll need venture capital. But the single most important mission of any VC, even of the good ones, obviously is to make money. If not everything goes as planned there is a big risk that your primary objective, the reason for starting that movement, will get sacrificed.
Any investment changes your startup’s objectives. It will make money the primary objective of your venture: IPO, acquisition or failure, your destiny will be set.
For a few years now, my conclusion was that I should just bootstrap my company. Besides a few half hearted attempts a few years ago, I’ve never really tried to raise money. Last week however I realized there is a third path: I now believe that it is possible to accept significant investments AND make sure that the organization we create will not destroy our movement even if it fails.
The dark arts of rationality
Two weeks ago, one of my colleagues recommended me the “Dark Arts of Rationality”, a blogpost on the LessWrong blog that talks about a few controversial rationalist techniques. The first dark art was titled “changing terminal goals”: If someone asks you to make goal B your terminal goal (an ultimate goal that is an end-in-itself), and in exchange guarantees you that you will fulfill your end goal A faster and at a lower cost, it is the rational thing to make that deal.
So it is the right thing to pursue money as a terminal goal, as long as that pursuit becomes the engine of a movement that is fulfilling your other terminal goals.
Venture-proof movement
At the 2014 NYCCamp closing keynote, Robin Chase talked about how she built Zipcar. What really got me excited was how she finished her talk: Early 2013 Zipcar got bought by Avis a car renting company. Ms Chase said this thoroughly changed her company. The important thing however, she said, is that even inside Avis, Zipcar is still fulfilling its original goal: people that use Zipcar drive significantly less because they pay the whole cost of owning and operating a car every time they use a car.
Zipcar’s goal remains untouched because it is intrinsically part of the business model: the business can only be successful if it reduces the number of cars that are being used.
But what about startups that use crowdsourcing to generate a public good? For example now that Github has received 100M$ venture capital, how to make sure that in the future an acquirer, or the stock exchange will not force the company to break its implicit social contract with the open source community? Once investors see a large enough exit what is going to prevent an Oculus rift like acquisition by a company like Facebook? How do you prevent breaking your social contract with your initial community when your startup might get enlisted in an advertisement empire or worse?
I think people are getting weary about bait and switch schemes in which they are enlisted to help build the value of a business through crowdfunding or crowdsourcing after which the business then gets sold and changed beyond recognition. As online communities mature I believe that it will become nearly impossible to grow a business into a world scale movement without a clear irrevocable commitment to the goals of your community.
I think a startup should explicitly formulate its social contract with its community before it gets funding. The clarity of purpose will make it easier for people to trust the organization and this in turn will accelerate the growth of your movement.
WhatsApp also got bought by Facebook but they had an explicit agreement with their customers that they will never do advertisements. I think that this promise was part of what gave WhatsApp the authenticity that helped it to stand out from a crowded market and that contributed to its unprecedented growth rate. It will be really hard for Facebook to break this promise.
Venture-proofing tactics
I think you can venture proof your startup through the following actions:
- Make an explicit commitment that formalizes your social contract with your community
- Open source your software
- Make it easy for people to take their data out and to run a functioning clone of your software
- Start a community owned Foundation that controls key assets of your movement (e.g. trademarks or intellectual property rights)
- Start a culture of open discussions and transparent decision making with your community
What this means for our project
At WalkHub, we have decided to open source our platform. First I wanted to keep the backend of our platform proprietary, but several of the backers of our crowdfunding campaign asked us to make the platform open source. Doing so was an act of vulnerability, but it has made it much easier for me to resonate with our community: When I now talk to people about our project there is nothing but the generosity of that act, there is no hidden agenda. It is obvious that we are aligned with the interests of the open source community and that the resource we are building is truly meant for the public good.
As a result we are no longer just building a SAAS tool that companies can use to document websites. I can now honestly tell to people that we are aiming for a much more epic goal:
We want to build “the ultimate user guide to ALL of the Internet”.
To make it even more obvious that our primary goal for WalkHub is to service the public interest, we have decided that we are going to build a separate open platform that will only contain public content from our community: Instead of turning WalHub into a Github like Bazaar of privately owned public resources with mixed licenses, we want to turn it into a collectively owned resource like Wikipedia with an open license.
Doing so will make it easier for people to believe in the sincerity of our intentions and we will be able to combine the individual walkthroughs people contribute into something that is much bigger than what any individual (organization) could achieve. If we can successfully raise money from the community we will also create an independent Foundation that owns this repository.
Dispelling the TechCrunch myth
To conclude: I believe that too many startup founders have bought into the TechCrunch myth that equals the value of a startup with the amount of money it has raised. Making a startup does not begin with pitching an idea to an investor. Getting an investor into your movement is not a goal. It is something you do because you have found an idea that is so important that rather than risking failure or slow growth, you choose to perform one of the Dark Arts of Rationality:
You temporarily agree to exchange your terminal goal for a monetary objective and work like a mad man so that hopefully this sacrifice will be enough to launch a movement that will eat the world.
This all might sound obvious, but it has taken me quite a while to intuitively accept these truths and to incorporate them into the way I think about the business we are building. If you are building a movement I hope this post might help you find a shortcut to that knowledge.
