Crowdfunding and the Law

A quick update on the previous post – Bainbridge provides some links related to crowdfunding and the law.

Bus Law Prof has details on the House bill that “would establish a federal securities law exemption for crowdfunding.” For a good introduction to the phenomenon, see Crowdfunding of Small Entrepreneurial Ventures. For an excellent summary of the key legal issues, see Steve Bradford’s Crowdfunding and the Federal Securities Laws.

Innovations in Nordic Sport

I grew up in Finland where winter sports are huge.  Several winter sports saw quite significant transformations while I was following them in the late 80s.  One was skijumping, the other cross-country skiing.

In skijumping one of the big rivalries during the 1988-1989 season was between Sweden’s Jan Boklov and Finland’s Matti Nykanen.  Nykanen was a skijumping phenom – by the late 80s he was a veteran who had already won four previous world cup titles.  But Boklov introduced a style of skijumping that radically changed the physics and even aesthetics of the sport.  His V-style jumps carried him further and eventually led to a “paradigm shift” of sorts in the sport (judges at first discounted the technique, to an extreme).   “Style” points were quite important in skijumping (see Nykanen’s style versus Boklov’s style in the clip below). But the “uglier” V-style eventually had to be integrated given its clear superiority.  The V-style, introduced by Boklov (and a few others) in the late 80s, is now the exclusive approach in skijumping.

A similar, stylistic innovation also radically shaped cross country skiing.  Traditional cross country skiing was largely about a gliding motion on an established track. But in the 70s and 80s it became increasingly clear that “skating” was actually a far better and faster approach to skiing (the Finn Pauli Siiltonen apparently gets some credit, though the technique was used by many in different forms).  The skating technique, by the late 1980s, led to the creation of two separate sports: classic cross country and skate skiing (separate events in the olympics as well).

There you go: a bit of random trivia you might need in Trivial Pursuit, or to impress your friends over Thanksgiving dinner or if you need a sporting-related example for a class discussion.

Can There Be Strategy in Distributed Movements? Linux and #OWS

An an ongoing research puzzle for me has been how distributed movements, open source|wikipedia, mobilize collective action and get individual incentives and actions aligned.   Is the apparent lack of “strategy” a virtue or a vice?  For example, Linus Torvalds, founder of Linux, has  argued that “brownian motion” drives Linux development:

<From: Linus Torvalds
Subject: Re: Coding style – a non-issue
Date: Fri, 30 Nov 2001 16:50:34 -0800 (PST)

On Fri, 30 Nov 2001, Rik van Riel wrote:
> I’m very interested too, though I’ll have to agree with Larry
> that Linux really isn’t going anywhere in particular and seems
> to be making progress through sheer luck.

Hey, that’s not a bug, that’s a FEATURE!

You know what the most complex piece of engineering known to man in the
whole solar system is?

Guess what – it’s not Linux, it’s not Solaris, and it’s not your car.

It’s you. And me.

And think about how you and me actually came about – not through any
complex design.

Right. “sheer luck”.

Well, sheer luck, AND:
– free availability and _crosspollination_ through sharing of “source
code”, although biologists call it DNA.
– a rather unforgiving user environment, that happily replaces bad
versions of us with better working versions and thus culls the herd
(biologists often call this “survival of the fittest”)
– massive undirected parallel development (“trial and error”)

I’m deadly serious: we humans have _never_ been able to replicate
something more complicated than what we ourselves are, yet natural
selection did it without even thinking.

<….later in thread…>

A strong vision and a sure hand sound like good things on paper. It’s just
that I have never _ever_ met a technical person (including me) whom I
would trust to know what is really the right thing to do in the long run.

Too strong a strong vision can kill you – you’ll walk right over the edge,
firm in the knowledge of the path in front of you.

I’d much rather have “brownian motion”, where a lot of microscopic
directed improvements end up pushing the system slowly in a direction that
none of the individual developers really had the vision to see on their

And I’m a firm believer that in order for this to work _well_, you have to
have a development group that is fairly strange and random.

To get back to the original claim – where Larry idolizes the Sun
engineering team for their singlemindedness and strict control – and the
claim that Linux seems ot get better “by luck”: I really believe this is

The problem with “singlemindedness and strict control” (or “design”) is
that it sure gets you from point A to point B in a much straighter line,
and with less expenditure of energy, but how the HELL are you going to
consistently know where you actually want to end up? It’s not like we know
that B is our final destination.

In fact, most developers don’t know even what the right _intermediate_
destinations are, much less the final one. And having somebody who shows
you the “one true path” may be very nice for getting a project done, but I
have this strong belief that while the “one true path” sometimes ends up
being the right one (and with an intelligent leader it may _mostly_ be the
right one), every once in a while it’s definitely the wrong thing to do.

And if you only walk in single file, and in the same direction, you only
need to make one mistake to die.

In contrast, if you walk in all directions at once, and kind of feel your
way around, you may not get to the point you _thought_ you wanted, but you
never make really bad mistakes, because you always ended up having to
satisfy a lot of _different_ opinions. You get a more balanced system.

So the question for me has been if this is just an accidental feature of a distributed movement or can we actually drive collective action this way?
The recent emergence of #OWS provides an interesting case study unfolding in real time. Fast Company has a nice entry about how the movement came about:

And not posting clear demands, while essentially a failing, has unintended virtue. Anyone who is at all frustrated with the economy–perhaps even 99% of Americans–can feel that this protest is their own.

So is this the way to develop strategy?

Innovator’s DNA

Since Jeff is my colleague – I better plug his recent (2011) book The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators, Harvard University Press.  The book is co-authored with Hal Gregersen (Insead) and Clayton Christensen (Harvard).

I just talked to Jeff about the book – interesting to learn about the intricacies of publishing a practitioner book.  The book is doing very well.  (I was at O’Hare airport a few weeks ago and it’s hard to miss the separate showcase that the book has at various bookstores.)

Jeff, Hal and Clay have also published a few articles related to the book in 2009:

Entrepreneur behaviors, opportunity recognition, and the origins of innovative ventures.  Strategic Entrepreneurship Journal. 

The Innovator’s DNA. Harvard Business Review.  

Be sure to check the book and articles out!

Inventions are inevitable

So, here’s the argument: inventions (including theories and technologies) are inevitably invented.  (This links nicely with Sid Winter’s thesis.) Thus we shouldn’t focus on or celebrate mythic “heroes” who happen to get credit for inventions that are inevitable – someone else would have invented them if the hero wasn’t around (Simonton highlights the increased instance of simultaneous discovery, here’s a wiki site cataloguing simultaneous discoveries).  As Robert Merton put it – “discoveries become virtually inevitable when prerequisite kinds of knowledge and tool accumulate.”

Kevin Kelly talks about this in his book What Technology WantsHe pulls in examples from mathematics and physics.  For example, Einstein was ahead of his time with the theory of relativity but some scholars were concurrently looking at similar questions and would inevitably have come up with the same theory.

Sort of an interesting issue embedded in here.  That is, discovering the realities and truths of nature is one thing – but clearly the possibilities and forms that technologies might take is a very different issue.  This is the space that the STS folks (Science & Technology Studies) have carved out – though they employ a confused epistemology and frequently overstep their bounds (Latour/Woolgar’s Laboratory Life is an example of this problem).  More perhaps on this later.

Here’s a figure from Kevin Kelly’s book (sorry, the quality isn’t the hottest).

Vertical Integration and a Teardown Analysis of the iPhone 4S

iPhone 4S Teardown

Last week there was a very useful WSJ article reporting on an analysis of the supplier relationships at the core of the new iPhone 4S (here … while it lasts). This seems like a nice mini-case analysis to see how our theories seem to explain actual outcomes.

They note that Qualcomm “is the big winner” because it is supplying a suite of chips that adds up to $15 per phone. Intel is a loser because it acquired Infineon and then those chips were dropped from the product.

Samsung lost out on the memory chips to its Korean rival Hynix — a surprise since Samsung is known to have a more reliable product. However, interestingly, Samsung did retain its role as the manufacturer of Apple’s proprietary A5 processor which provides the iPhone 4S and the iPad 2 with the bulk of its computing power.

Read the rest of this entry »

Open source licensing and technology strategy

The most recent issue of Harvard Law Review has an interesting piece on open source and technology strategy – “The host’s dilemma: strategic forfeiture in platform markets for informational goods.”


Voluntary forfeiture of intellectual assets — often, exceptionally valuable assets — is surprisingly widespread in information technology markets. A simple economic rationale can account for these practices. By giving away access to core technologies, a platform holder commits against expropriating (and thereby induces) user investments that support platform value. To generate revenues that cover development and maintenance costs, the platform holder must regulate access to other goods and services within the total consumption bundle. The trade-off between forfeiting access (to induce adoption) and regulating access (to recover costs) anticipates the substantial convergence of open and closed innovation models. Organizational patterns in certain software and operating system markets are consistent with this hypothesis: open and closed structures substantially converge across a broad range of historical and contemporary settings and commercial and noncommercial environments. In particular, this Article shows that (i) contrary to standard characterizations in the legal literature, leading “open source” software projects are now primarily funded and substantially governed and staffed by corporate sponsors, and (ii) proprietary firms have formed nonprofit consortia and other cooperative arrangements and adopted “open source” licensing strategies in order to develop operating systems for the smartphone market.

Here’s the pdf.

Typosquatting as a strategy: faecbook, twitterr

Businessweek has a piece on “typosquatting” – the strategy of buying up the misspelled domain names of popular web sites like twitter and facebook — faecbook, twitterr.  Apparently the practice is very common.  And, the most common misspellings generate significant traffic – for example, had 824,850 unique visitors in September of this year.

So, there’s some work that studies the phenomenon of typosquatting, the origins of common mis-spellings (“fat finger”-effect), perpetrators etc.  Here’s a paper by Tyler Moore and Benjamin Edelman (pdf),   Measuring the perpetrators and funders of typosquatting.

From the above paper – here’s a comparison of candidate typo domains (based on established measure) compared with found domains.  (Looks like there are still some opportunities out there.)

Here’s what the typo-domains are used for.

Occupy Wall Street and Innovation

I just searched for Occupy Wall Street apps on my phone – and the result is below.  I think there will possibly be novel organizational innovations that will emerge (structure of protests, communications, organizational forms etc), but these apps also have elements of novelty.  BusinessWeek talks about a few of these apps, under the title million app march.

Interdisciplinary NSF Solicitation

Here’s an interdisciplinary NSF program solicitation that may interest strategy scholars.

An important research interaction has emerged at the interface of computing and economics and social sciences. The synergy between these fields creates a rich opportunity for studying questions that involve interconnected systems with economic and social aspects. This research interaction has already led to the identification of a number of underlying principles and research themes. These include network structures in economic interaction, theories of learning in the context of such networks, welfare properties of equilibria, the design of mechanisms with constraints, the complexity of computing equilibria, the robustness of equilibria, and the roles of information, reputation, and trust in economic and social interactions. These principles provide lines of attack on a set of important applications. These include the emergence of new kinds of on-line markets, the roles of economic issues in the architecture of the Internet, the design and analysis of markets in the developing world, and the roles of social and economic networks in innovation and knowledge creation.

Further details here.

Sidney Winter is against the cult of the lightbulb

Sid Winter doesn’t like “the cult of the light bulb.”  Worth watching. (I disagree with his argument, for many reasons, but that is beside the point. Interesting lecture.)