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Building P2P Companies



This idea of collaborative collectives, or what Paolo calls P2P companies, is cropping up all over. It's a natural reaction to the abundance of unemployed talent now prowling the streets and I've heard it from people in several industries.

I've thought about it quite a bit, and I like the concept. I even believe it's possible, though I admit it's a bit of a stretch. I went so far as to write what Paul Holbrook called a personal manifesto on the matter, and distributed it to a carefully screened handful of friends.

But Paolo's proposals raise an important issue -- the conflict between altruism and survival -- although he doesn't point it out. I think we have to address this head-on if P2P companies are to take root. I've pasted a bit of his commentary below for context, but you should read the entire piece yourself for full effect. Back thanks to Steve Pilgrim. Comments follow.

THE DIRECTION WE'RE HEADED

Paolo's onto something here. Collaborative technology offers the potential to have a vast array of experts brought to bear on all sides of a business problem or opportunity. Clearly, there are the issues of human interactions, sacrifices for the greater good of the "the group" and the satisfaction of the paying client, but his notion of a large collaborative organization resembles today's Big 7/5/3 consulting firms.

Something I've been thinking about for some (not much) time: P2P Organizations.

Along all the .com era, all new companies that have been created were after all "traditional" companies, meaning pyramidal structures with managers, employees, offices, etc.

In the last few months I have met (most of times virtually) some very smart people from all parts of the world I would like to work with: to start new projects, to create new technologies, to develop new solutions. But when I think about how this could work out, I keep bumping in the same old "company" idea. We could work together, with the ultimate goal of creating a new company.

But is this really the way to go? With the kind of collaborative technology that we have today, do we really still need companies?

Well, of course, the answer from many points of view is still yes, but it could be a whole new breed of company: a P2P company.

It could be something between a secret society, where all members are somehow guaranteed by other members and are supposed to help each other (of course, this should not be secret!), eBay, where everybody has a "digital reputation" (co-workers and customers commenting on different members of the group) and a true P2P network, where everybody is both a client and a server (there's just people working together, not necessarily anybody is working for anybody else). [...]

[Paolo Valdemarin: Paolo's Weblog]

via [ Source:  Rodent Regatta]

The world I see when reading Paolo's essay is a bit altruistic -- an Open Source-style world -- with each doing his best and contributing in some wholesome way. Someone must organize that effort, set the rules, and take (or allocate) responsibility. In Open Source that leader is a volunteer, directing other volunteers, with no real customer end-dates or guarantees. That works. The other scenarios he paints are essentially marketplaces. These already exist in many industries, with collections of independent contractors trading business among themselves or selling independently.

But a P2P company is different. The vision here (for me) is that a well-connected group generates a sum (technically, financially, productively) far greater than its constituent parts. It gets maximum benefit by sharing common resources. It blends, in a purposeful way, the strengths and weaknesses of each member. As a result the share each member receives will be greater than if that member took only its constituent efforts in isolation. That's the theory.

There are complications. Business is about profit, and when money changes hands there are tensions. There are commitments, liabilities, and responsibilities well beyond the Open Source model. All of these form barriers to the development of a successful P2P company which look much like the barriers we've discussed around weblogs. We've debated the ways and reasons people hoard and control knowledge. The barriers to P2P companies are much the same -- trust, security, and control.

When you start talking seriously about an arrangement like this to others the principle concerns are money and security. A business, even a P2P business, is about profit. People join with the intent of making a personal profit. But there is a natural tension between profit, security, and trust in the P2P model.

A P2P company offers leverage, but no security -- you are still largely a free agent, but now with the opportunity to benefit from the labor of others. When people work for a traditional company they trade some personal profit for a perceived increase in security. Absent the security they want greater profit, and begin to evaluate everything they do in relation to what everyone else does, place dollar signs on it, and get nervous about not getting enough.

This is natural, but the insecurity reduces the amount of trust within the group -- everything becomes a test of proof -- which obscures the original vision (cooperation equals greater return) and increases the desire to maximize personal profit, even to the detriment of the group as a whole. As Brent Ashley has stated so well, when people are flush with work and secure in their future they tend to share, but when we're all on the street scrapping to make a living we aren't interested in giving things away. We want to make every effort count.

Interesting challenges for the architect of a P2P company.

If I sell for you, how do I ensure I get paid? How do we determine what's fair? If I collect the money how do you ensure you get paid? If there are more than two people involved how do we allocate revenues and costs? How do we manage liability and customer satisfaction? Who maintains core services and support? How do we reduce duplication. Are my services worth more than yours? Are we both worth less than someone else? What if I'm not as good a salesman (or programmer or project manager or marketing wonk or business strategist) as I think I am? Will we compete against each other? Will we still be friends? How do we do all this without the customer having a front-row seat at a goat rodeo?

eBay has built a structure that allows buyer and sellers to meet, but those are point-to-point transactions. There is no similar network or infrastructure to support multi-point, ad-hoc business collaboration. So it falls to the P2P Company organizer to establish it. This, then, is the essential role that all companies play -- to organize the labor of others for profit. But the P2P organizer must do so in a way that addresses the unique challenges of trust, security, and control that P2P requires.

These are substantial challenges, but then we get to the hard part -- the vast majority of talented people on the streets today don't know anything about collaborative technologies. For a P2P company to work we have to not only use but optimize all this wonderful collaborative technology.

That may seem strange if you're reading knowledge-focused weblogs because you're already using it. But you are among a tiny minority, and there are a whole bunch of folks out there -- with skills we need for success -- who aren't in that group. Experienced, talented people in sales, marketing, fulfillment, service delivery, training, customer service, research, legal services, education, and other areas could be a boon to our efforts, but may have no clue how or why they should collaborate.

If P2P companies really are in our future (I think they are) then we must solve these problems. More thoughts on how we do this when I return from Toronto.