IGNITER

I’ve written some before on our efforts to peer-produce Shouldess Inc. (^shldlss), the developer of VenTwits and the for-profit cohort of the Social Venture Commons (^svc). We’ve decided to launch early and iterate rapidly with VenTwits and its group focused cousin GroupTwits (to be turned on soon). We’re also planning to open source our code once we’ve rebuilt a core based on how people actually use it.

I believe in the principles and power of peer-production but am finding it a constant tension as we build the for-profit startup. A big part of that I’m sure is my experiential conditioning. What’s been most recently tested is how much of our business strategy and development plans should be in the public domain.

Taylor Davidson, who is stepping up to help on the financial modeling and strategy side asked me point blank. I fumbled some lame answer that didn’t really say anything. As I’ve sat with it now for a couple of days, I’m actually questioning what if anything should be kept private. It comes down to speed of execution and I also think that the more broader the engagement the greater defensibility we have – provided we execute. If people are a part of it, they’ll rally to support it.

What do you think? Is there anything that should be kept private? Why? What are the risks? What are the benefits?

Right now I’m feeling ready to open everything up and push this experiment even further.

Foolish or fruiful?

This really began back at the StartupEmpire conference on November 14th, 2008 in the midst of Howard Lindzon’s StockTwits presentation.  Today, VenTwits (^VenTwits) is live as a the first property in a series of initiatives to help things happen and create the world we want.

Developed by Shouldless Inc. (^shldlss), VenTwits is a site for people building things they care about. We believe there is something special about communications that happen in public, 140 characters at a time. It seems to encourage a unique breadth and practicality of engagement such as the #hohoto party in Toronto. #hohoto emerged through Twitter (see SlideShare preso) and within 18 days of the first mention was sold-out to over 600 people, raised $25,000 in cash and 2 tonnes of food for Toronto’s Daily Bread Foodbank. All this without any one leader or cash investment – rather it leveraged parallel leadership from over a dozen people and the contributions of countless more. What if we could leverage what happened there?

Well, VenTwits is the beginning of seeing where this can go. Already in the first day, we’ve had people visiting from around the world to see what’s going on, some of whom quickly adopted the new tags and jumped right in. We are already working on another property that will come at this from a different angle as well. Once launched, we want to see how people use them to help things happen and with a few months under our belts we’re planning on open-sourcing our core code and firing up the Social Venture Commons (^svc).

The Social Venture Commons is being established as a non-profit organization dedicated to coordinating the development and application of this concept for the purposes of social change and public benefit.  If what we believe about this mode of peer-produced organization is true, then we have a lot to give. If we’re wrong, we’ll have learned a lot from trying.

In the past two months, I’ve met some extraordinary people – all through Twitter of course – that have come together to make this happen. As we’re building we’re experimenting with how to peer-produce an organization, how we create and measure value, and how we deliver public benefit.

We’re inspired by the potential of people coming together and contributing to the creation of things they care about. We believe that we are building uniquely helpful ways that help that happen. And we believe, that together, we can use it to create the world we want.

Please jump in and give it a try. And if you have any feedback or want to get in touch – please do.

VenTwits is about people building the things they care about. It came from seeing the potential in Twitter as a medium for discovery, connection, and practical engagement. With VenTwits we hope it can help you find new ventures you are interested, give you an opportunity to participate, and simply help things happen.

To get started, simply login to VenTwits once using your Twitter user name and password. If you aren’t on twitter there is a link right there where you can sign-up quickly and easily. Once you’ve logged in for the first time, VenTwits knows to follow you and look for anything you tweet that uses a VenTwits tag. From that point on, you can tweet through the site, through Twitter, or whichever way you twitter best.

Tagging is simple. In any tweet you post, simply add a ‘^’ in front of a venture name.  For example: ^VenTwits.  In addition to showing up in your regular twitter stream, that tweet will now show up on VenTwits as well.  You can also add another level of tag that allows for conversations to happen around a venture.  For example: ^VenTwits !feedback shows up as a conversation around VenTwits feedback.

That’s it. You’re all set.

Now, the best way to get started is to simply explore.  Visit http://VenTwits.com and click on the links that you find interesting. Explore a new venture, jump into a thread, or see what the top contributors are talking about. What ever you do, follow your interest. And when you are ready, jump into the conversation.  That’s really when the fun begins.

And of course, let us know what you think.  We’re listening.

Owning equity in a for-profit venture is a powerful motivator – particularly in the early stages.  It’s also one of the most contentious, negotiated parts of building a high-growth venture. This comes from our organizational conventions of control and scarcity – we need to control and amass resources to control and weild power and get things done.

In taking a peer-produced approach to building Shldlss, the for-profit offshoot of the Social Venture Commons, I found we needed a new model to fairly attribute the economic value to those who actually created it. After many conversations, including on this post, here’s where I’m at with what has now become our “Kudos Model” for economic value distribution.

1. Phase: Set the phase of value creation ending with a valuation event or economic value distribution
   For shdlss this is the founding phase extending through to Series A investment. At this point we should have a reasonable grip on the value of what’s been created and what others think it’s worth.
2. Proportion: Set the estimated proportion of enterprise value that will be newly created during this phase.
   For founding phase this would be 100%. Over time, the new value created will likely be proportionately less each time – though not always. A basic benchmark for where to set the proportion might be what a comparable venture might issue in option pool.
3. Appointment: Appoint key people to allocate Kudos.
   For shdlss we will go probably go to 4-6 people who have been and are committed to being involved for the whole phase.  This appointment is happening essentially half-way through the phase and will be done shortly.These are people who are closely involved in the project for the entire phase and will have a reasonable sense of the relative value of contributions made during the phase.
4. Allocation: Have a KudoFest at the end of the phase.
   All appointed people will gather to review the stream of all contributions made during the phase. We will use the twitter and VenTwit streams as the core history. Each appointed person will then be able to allocate 100 Kudos to those who made meaningful contributions. They must allocate all Kudos and cannot allocate any to themselves. The 100 limit means the smallest contribution they can recognize (1 Kudo) represents 1% of the value they have to distribute. After each person does their allocations, we will aggregate the allocations and have an initial allocation. The group will then review and discuss and can make any changes provided their is unanimous consent.
5. Distribution: Distribute financial value rights according to Kudos allocation.
   During the founding phase, this could be in common or preferred shares, in subsequent phases this could be through options or other forms of financial value sharing.

This will no doubt evolve as we work our way through the process. As the lead founder, I’ve been asked why I would do it and even told that I’m crazy for trying it. With where I’m at now, I can only see us all as having a much more to gain. Without the spirit of this in play we wouldn’t be where we are at – and that’s what it’s all about – getting it done – together.

I’ve been head-down these last 2 weeks and we’re making great progress toward first launch.  For the latest action on the Social Venture Commons – feel free to track the twitter stream.

The model for distributing founding equity among those that contribute is essentially set, and I’ve begun receiving investor commitments on both the charitable and for-profit side. Development has been greatly augmented with the code-mastery of Dan Williams.

Will post some more fulsome reports next week.

Thanks all for your support so far!