Archive for Open Source

Could Uber be Collectivised?

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A provocative piece in The Nation suggests turning the so-called “ride-sharing” company known as Uber into a worker-owned enterprise. In “Socialize Uber: it’s easier than you think, Mike Konczal and Bryce Covert argue that since Uber owns only the proprietary technology that coordinates the glorified taxi rides and processes payments, and drivers own their own cars, Uber is an excellent candidate for conversion to a worker cooperative.

Collectivisation of Uber is a tempting notion, but the authors’ conclusion that it’s the “obvious transition” for Uber is hard to fathom. First, they curiously fail to note that it would be virtually impossible (in a legal and technical sense) for the drivers to acquire Uber. The company is privately owned, with equity held between the founders, many employees, and a huge array of venture capitalists, individual investors, and other firms. These shareholders have complete legal prerogative to hold their equity until the company goes public or sells off (and beyond). The only way the workers could buy Uber is if they pooled their money and acquired the company, which would cost way more than its current $40 billion valuation. Indeed, due to the special circumstances of needing to acquire every last share and option from current holders, this would constitute, by a factor, the most expensive acquisition in the history of venture capitalism.

But let’s just play make-believe and look at Uber as if the workers could assume the reins overnight. I believe in worker cooperatives, not just as an organizational model for firms, but as a transformational force for our economy. That said, Uber is not merely a bunch of hard-working drivers coordinated by technocratic drones. If Uber establishes itself as a dominant, static force in the taxi economy, it might eventually become nine parts technocracy for every one part human ingenuity. But for now, it’s a new kind of craft in very uncertain conditions; autopilot is not an option.

The authors note, “It takes an entrepreneur to start up ride-sharing, but not to run it as a firm.” In truth, it takes a handful of entrepreneurs as well as venture capital to bring a startup of this kind to scale, and it takes a team with exceptional business sense to see it through the growth stage. Even as a staunch advocate of collectivism, I am willing to concede that successfully introducing a disruptive product into a market of this kind is beyond the reach of collectives or self-funded worker-run enterprises. At the very least, they would have to seek investment capital and empower managers with extraordinary vision to navigate this crucial phase. These are two very problematic necessities.

We all know what happens when workers empower managers to use their exceptional talent—those managers demand exceptional compensation. I’m not saying capable people don’t exist who would do this for humble wages, but they’d be exceedingly hard to find. Anyone with a proven track record has far more lucrative options. So whom would workers hire or promote to steer the company? This is where CEOs and other executives command what appear to be rentier compensation packages. It isn’t the actual scarcity of talent, but the scarcity of pedigree, that they’re leveraging. Even the ones with relatively poor records exercise the terrific advantage of having a resumé that shows they know anything at all about running a big company. While it’s surely far easier than they would have us believe, it’s not perfectly intuitive; not just anybody can pick it up overnight. Leadership isn’t an insurmountable obstacle, but it highlights a major problem and a significant gamble.

And then there’s the capital. Even if they don’t need $100B in up-front cash, Uber would need regular influxes of investment capital in order to grow while competing with other venture-backed companies in the ride-hailing app market (not to mention the main competition: taxis). We’re talking no less than tens of millions of dollars on a semi-regular basis. It’s difficult for worker cooperatives in conventional industries to get loans or other traditional forms of cash infusions; this is basically impossible for venture startups in unproven markets.

You might say, why not reinvest profits as capital for growth? Besides the fact that worker-owners would have to consistently forego dividends to grow the firm (a conventional co-op dilemma) the biggest reason is really that it puts tremendous pressure on creating big margins in the first place. Competitors will meanwhile enjoy the relative breathing room of not having to scrape every ounce of profit out of their model while growing strategically. Some of these companies pay no attention to profits at all as they spend investor money improving their position in the market.

This is why venture capital exists—to take seemingly insane risks seeking commensurate returns on the rare wins. For startups, they provide the ability to grow without cannibalizing revenues. I cannot imagine a VC firm wanting to invest in a labor-managed startup, and it wouldn’t be a cooperative if such a firm did decide to invest.

But why wouldn’t an investor want to back a democratically managed startup? We know a lot of these new Silicon Valley firms are relatively flat. Here we get to Konczal and Covert’s claim that at its core, Uber is just a technocracy:

And these workers [drivers] labor individually, doing the same tasks, so there’s no need for a management class to control their daily operations. The capital owners maintain the phone app, but app technology isn’t the major cost, and it’s getting cheaper and easier by the day.

Developing successful technology isn’t just writing code, and most of the supposedly “flat” tech startups are neither nonhierarchical nor equalized in pay scales. Even if the code and the coders came with the acquisition (which they would), consider that all these years a relative handful of people at Uber have been figuring out what to make all that code do. There’s institutional knowledge and specialized skills behind that, some of which might be maintained beyond collectivisation, though that’s doubtful (why would a CTO or senior engineer or product manager stick around—why even would a junior developer who can start anywhere at $75,000 plus equity?). Could the right workers collectively do this under the right circumstances? I believe so. But not coders who weren’t hired for these propensities, and definitely not overnight.

Okay, so forget Uber (seriously, Uber is awful). What if all the Uber drivers wanted to set up their own competing co-operative? Maybe even do something innovative and offer regular customers shares in the company! Unfortunately, the above problems would persist.

There’s that pesky problem of the technology and infrastructure. The overhead costs for such a venture are not trivial, but replicating the model is conceivable. Uber’s trade secrets would be pretty hard to obtain, protected as they are by nondisclosure agreements that could keep even sympathetic insiders from aiding the dissident worker-owned venture. Still, I think most of the model is in plain view. So they’d have to get the right developers working for the right reasons. It’s theoretically possible, but I’d rank it as highly difficult.

It remains harder still to figure out where the capital would come from, and how the organization would work such that drivers, technologists, and business development workers would be on the same page at equitable wages and equal stakes of ownership and control. The irony, of course, is that this company would be competing with Uber and all its infrastructure and those piles of venture capital. My conclusion is precisely the opposite of Konczal and Covert’s: Uber is among the worst candidates for the cooperative model on a large scale.

Now, all this being said, if someone were to create open-source software for the ride-hailing industry, I bet small collectives of highly motivated driver-owners could perhaps eek out nice livings in the right markets. I would love to see that, and in fact I’d lend my expertise to such a project. But this sadly isn’t the place we’re going to kick capitalism’s ass.

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Hacking Urbania: Applying Open Source Development to Cities

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Open-source development is bound to be a growing factor for change as it demonstrates in more and more areas just how profoundly bad the ownership of innovative ideas has been for the common good. If you haven’t noticed that idea reaching out of our computers and into our 3D world, you’re in for a treat.

I just finished reading some mildly curious thoughts from radical sociologist Saskia Sassen (via The New Significance). In addition to being painfully abstract if not esoteric in her presentation, Sassen’s quirky approach to an idea titled “Open Source Urbanism” was entirely unsatisfying, except that it caused a stream of ideas to flow in my tiny brain.

It’s not at all clear that Sassen really understands the concept of open source, or that she bothered doing a Google search using the terms in the title of her commentary. We need to start with a better articulation of what open source means.

Open source is rejection of private intellectual property, at least in the conventional sense. If it’s open source, anyone can see, use, and even copy bit for bit the inner makings of the project under a highly permissive license.

In addition to this, what most of us think of as open source (in spirit if not technically) is a development model by which contributions are relatively democratic and assessed for utility and merit over profitability or their potential to concentrate authorship or credit. Virtually anyone can participate, and contributions that succeed in improving the project will be incorporated into the final product; otherwise, they could inspire a spin off, or maybe fall by the wayside.

Sassen is not the first to come up with the idea of applying this development attitude to our cities. I first learned of it a couple years ago when entrepreneur Mark Groton made a splash in a Wired feature story on his open source urban planning projects. While heavily software-oriented, we’re talking about mass transit and conventional urban planning functionality done using open standards and semi-proprietary code bases. (Basically, the stuff is packaged, installed, and supported by a company at a fee, but the underlying code is open and usable by anyone.) In theory, no longer must small- and medium-sized municipalities either hire contractors to custom-develop planning systems from scratch or pay for big-money packages just to have tools comparable to those the big cities enjoy.

Open Source CityBeyond software, how else would open source concepts be relevant to city planning? I think it would be more in the form of open source architecture or open design, which is to me by far the most exciting new branch of the open source movement. I’m talking about people who may or may not work in a municipal office contributing concrete planning work — blue prints, research and assessment efforts, policy drafts, functional technologies — and just handing their ideas over to the public. The idea of this happening would have sounded insane 20 years ago, but now we see people with talent and expertise making patent- and copyright-free contributions of all sorts to the public good.

Remember, a key attribute of open source is that it can be freely copied by another project, as long as it is always kept open. So I can view the code behind a piece of open-source software, without ever having lent a single minute of my time or ounce of my expertise to that project, and simply copy and paste all that code into a new folder and start building my own version. I just can’t claim the part I borrowed as my own creation or try to prevent someone from borrowing it or try to profit off that portion. (I modified the theme of this very blog by hacking the open source code base!)

Cities do this all the time, quite consciously. So do nations for that matter. They meet at conventions or send direct delegations and share their successes on nearly every front, from dealing with crime to delivering water to acquiring revenues, and they encourage their peers to copy them, without asking for money or even credit in return. It’s not a revolutionary idea at all; it’s simply how we relate when cooperation trumps competition.

But cities are not entirely unlike the corporate world, especially when private contractors are involved. They pay for consultations that might have generalizable applications, but either they or the contractor might consider the results proprietary, forcing every city that wants a similar assessment to start at the drawing board with a consultant. There is room for more openness.

Another matter is labor: those who best know how to innovate and automate aspects of municipal functionality are perversely incentivized to withhold their ideas for fear of ironically innovating their way to a layoff. In these times of austerity and hostility toward labor, even unionized municipal workers are barely more protected from this perversion than unorganized private-sector counterparts. This is a big part of the problem with productivity gains not being generalizable.

Even where openness and idea sharing are commonplace, the approach of an explicitly “open source” process for urban planning might be a positive shift. If at every stage of development, any urban initiative (or rural initiative, for that matter) were treated as open — handled with the understanding it would be kept transparent and shared freely, as well as welcoming public participation in managed ways — we could see new approaches to everything from after-school programs to traffic coordination to emergency services to zoning to local currencies*. City planners of all types could benefit from the technical approach honed by open source software developers with their version planning, communication methods, beta testing models, code repositories, and so forth.

As long as I’m brainstorming, I should note the most exciting potential for open source city organizing is in grassroots form. Above I’ve implied city officials taking advantage of the open approach, but the real beauty of this is something that Sassen did indeed seem to be trying to get at in her commentary: let residents engage in hacking their city through organizing movements that take advantage of ideas coming out of the grassroots, either locally or from another town somewhere, then push for implementation or engage in direct action.

Imagine open-source technologies like 3D printers and open-license designs giving neighborhood activists the technical power to build and install their own traffic light or construct expertly designed playground equipment without contractors. The possibilities are endless. It’s the kind of hyper-localized empowerment (not in any figurative sense, either) that communities can use to thrive during crises.

If you find this stuff interesting, you may dig…

  • The Open Source Ecology project is one of the most fascinating undertakings you’re likely to come across. These guys are pushing (and beginning to practice!) open design on a grand, social scale with ambitious intentions. Take some time to check it out — the promise here cannot be overstated. Watch their video here if you want to have your eyes pop out of your head. (You will also marvel at how utterly shitty the background noise is, but I swear it’s still worth the viewing.)
  • The Open Plans Project is rife with interesting ideas that, properly applied, could have radical implications; I think they’d need to be tied to the kind of social movement that can best take advantage of them.
  • This short interview is decidedly un-radical but it’s kind of inspiring nonetheless.
  • Finally, Open Source Urbanism is something I found in that Google search for the title of Sassen’s article, though I haven’t looked into it very deeply.

With apologies for the disjointed entry, I hope I got some of the salivary glands in your brain working like they are in mine.

*Incidentally, all sorts of community-based alternative economies have traditionally considered openness of design key to their functioning and development, be it an enhanced barter system or a local currency like Ithaca Hours; leaders and advocates of these projects tend to strongly encourage customized implementations of their ideas, which they’ll eagerly share for the price of a cup of coffee.

Image credit: opensource.com

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