Platform Capitalism

I love open source... whether software, hardware, or CC0, it's virtuous to contribute great work to the public domain, doing it for the love of the craft, and giving back to the community.

Perhaps the best part is that, beyond generosity, open source is a strategy for creating work that lasts... work that remains great.

Granting fully permissive rights to the ins and outs of the work to everyone means not leaving space for a central controlling interest to form which uses the work against those who have built around it.

How Great Work Becomes Shit

I think we've seen the same thing play out in mature platforms enough to recognize the pattern. The "Platform Capitalism" playbook is basically:

  1. Attract users. Give them a really good deal by any means necessary. Overpromise and overdeliver. Light money on fire to make it happen. Interoperate with everyone. Enable other businesses with your API. In a young platform, good times/good vibes are all around.

  2. Make it hard to leave. Limit the use of your API in strategic ways. Start to break interoperability. Behind the curtains, begin tapering back on the "over-delivering" part. Try to maintain the goodwill and sentiment from phase 1, but don't go to obscene lengths to attract or retain users.

  3. Extract value from the system. You're confident your lock-in mechanisms are mature. Users aren't your customer anymore. They can't leave, so squeeze them for what they're worth, and deliver their value to shareholders.

The so-what here is that if you want to build connective technology, you'll have to either accept that the positive-sum spirit of the thing you set out to create will eventually be squeezed out of it due to your capital structure, or you'll have to find a way to resist that.

If you want to build enduring connective technology, you need to build in controls to prevent it from killing itself in that manner. A really great example is Ethereum. Mainnet resembles a platform, and there's serious capital at play... but its make-up prevents there from being a single party that can force changes at will that break it for others.

The controls depend on the technology. e.g.

  • OSS: for libraries (like React), a permissive license prevents the original author from taking away rights they previously extended
  • OSH: essentially the same for hardware... the thing can flourish because the community can be confident that no party can ruin it all for the rest of them
  • connective tech/networks: the network software itself disallows a central controlling party from forming. This could be because the network is organized around a decentralized protocol (like TCP/IP) or using cryptographic mechanisms a la Ethereum.

If a platform becomes significant, and it has a central controlling party, or even just affordances that enable a central controlling party to form, it will form, play out the above playbook, and destroy whatever positive-sum spirit it originally had.