Swarm Summer School ‘21, Day 1: Dr. Melanie Rieback - New cooperative models

i'd like to introduce um this is melanie ryback this is a resume which is too long to sum up so i'll just stick with the headlines uh mrs ritnik um is a former assistant professor of computer science uh founder of the uh cyber security agency readily open security and started incubating non-profit ventures for open source post-growth startups please correct me emily if i should rename that and called uh one of the nine most innovative women in the european union in 2017. um i'd like to give you the floor please we'll talk about the topic of today was the new cooperative models when building your organization and in line with the social team of today thank you thank you so much so yeah so thank you first of all for the invitation i'm really happy to talk to you all today about social business models so uh basically you know when we decide to start um some kind of a tech company so and it doesn't matter what kind of a tech company it is whether it's just like software or blockchain or you know whatever it is that you all are interested in doing typically the first thing that we do is we go to an incubator and uh you know if we're at this incubator or some kind of startup boot camp usually the very first thing that we see is a powerpoint slide with a picture of an exponential curve so uh we're explained it's explained to us that this is how we are supposed to do things and our stated definition of success is the exit in other words selling your company uh to a larger one or otherwise uh ipoint or in other words going public on the stock market so uh what this means basically is that uh of course if you're trying to start a company that first of all is meant uh for some kind of purpose to for the long term that uh you know if the stated definition of success is selling your company then of course that makes it really rather difficult to create something like you know a modest lifestyle business or you know something that is moderately successful or something that is intended to not be sold now there's an up-and-coming movement uh called steward ownership and these are companies that are actually designed from the very beginning to not be sold um so for example um the way that it works is they have well the concept of steward ownership lately has been promoted by something called the purpose uh foundation and they typically hold one what's called a golden share in in a company and then they basically use this just to be able to veto uh the sale or otherwise uh the the ipo of the company thus trying to ensure that the company cannot be sold now you would probably ask well you know why do you want to do this well basically it's because uh with this whole you know silicon valley model of entrepreneurship that we're generally taught you know there's three steps it's always the same three steps capital uh in other words basically getting investors scale which is that exponential curve and then exit and um if you want to do something else like for example uh bootstrap so you know start uh your company without investors there's actually shockingly few places that you can go to learn how to do this now um the reason why i'm mentioning all this is because i ran into this myself when i was starting my security company radically open security so i have a seven and a half year old uh security consultancy company and we are what i would call a not-for-profit company what does that mean so uh we are registered as something called a fiscal fundraising institution a fiscal fund instilling in dutch and what this is is it is actually an archaic fiscal construction from the dutch church so sometimes a church wants to do a commercial spin-off then it does you know some manner of commercial activity and that money that's raised goes back to the church again with a tax benefit now uh a famous example of this is the language institute regina chele otherwise known as uh the the nolan von first in dutch the nuns and you know this in the netherlands is a very well known language institute in fact our queen maxima learned her dutch there and you know basically the prophets then go back to the nuns that's the way this thing was originally set up so basically what it is is it's a construction where 90 of the profits or more basically have to go to go to to this church i decided at a certain point to make my security consultancy company be the church and then the uh yeah the church doesn't actually have to be a church it can be anything uh called an unbe stifling which is a foundation that is uh certified as being for the public good and basically you can choose any uh foundation that you want so i decided to basically make my so-called church the nlnet foundation and nlnet is essentially a subsidy organization that has donated for over 20 years 25 years to open source digital rights and anything for a better internet so um essentially what that means is that 90 percent of our profits get donated to nln the last ten percent uh is our cash flow buffer and that's actually what we need to be able to run a company um with that ninety percent in the first six years of my company's existence we have already donated over a half a million euros to nln so that's pretty good so what we're actually trying to do is we're sort of taking the model of philanthropy which is typically where you know first you get rich and then you donate it instead we're sort of turning that on its head and we're baking that donation into the core of our business um so you know it's basically just trying to get people to think about what's possible with uh running companies similarly also uh you know we have a number of other ways in which we're we're different of course you know we we are a social enterprise the other way uh radically open security uh is different is that we put really strong emphasis on openness transparency at open source so we for example have this workflow this penetration testing workflow where we invite customers into our chat rooms and they can overhear every single conversation that our ethical hackers are having we do this because we want to optimally transmit the hacker mindset because security is a it's a process it's a mindset it's not just a set of patches that you get from a pen test report so um it turns out that this concept even though it sounded really weird in the beginning uh you know when i first told people that i was going to start a non not-for-profit security company everyone thought i was crazy but after seven and a half years we have roughly 40 staff members we've had close to 150 customers and uh yeah i mean we've won actually quite a few awards uh some some of which uh robert mentioned but uh you know but um 50th most innovative sme in the netherlands uh most innovative i.t leader in the netherlands and also indeed i was a finalist for the eu women innovation uh prize but uh really you know what this validation is about is it is about the business models so um three years ago uh i also created a not-for-profit startup incubator called non-profit ventures because you know i we sort of turned made a success out of radically open security and i wanted to try and help others to be able to do the same because there's nothing inherently you know special about a computer security that makes it more suited than other businesses to um you know run as a not-for-profit business but i thought you know how cool would it actually be if you could use not-for-profit business models for all kinds of other things like education or agriculture or healthcare or you know because if you really think about it i mean you know the majority of the world's problems usually come directly or indirectly from business a lot of people will think oh but you know what about social enterprise you know isn't that getting us sufficiently far where we need to go the problem really with social enterprise is that uh it's too close still to the original silicon valley uh model you still have the capital scale exits so basically it's just you have a variation upon it so basically rather than vcs you're sent to impact investors uh you know you're still more or less supposed to scale maybe it's 3x instead of 10x but all right you're still expected to grow and there's still impact exits in other words you know the famous selling your b corporation to unilever um but if you really break it down actually this is not all that different impact vcs can say that they have uh have different intentions but when push comes to shove they have exactly the same incentive structures so typically with uh vcs whether impact or commercial they have a fee structure that's called uh two percent asset under management so in other words uh two percent a fee on the total amount of money they have in their fund and also twenty percent what they call carry and that's basically a performance incentivization so in other words if they can manage to get money from an exit then 20 of that goes to the investor now the impact vc's have exactly the same 2 and 20 fee structure as the commercial vcs do so they can say that they're doing it for different reasons and perhaps uh you know some of the companies have some kind of a social theme but at the end of the at the end of the day you're still under pressure to grow uh exponentially and you're still under pressure to exit even as a social entrepreneur now if you point this out uh occasionally you know the social enterprise ecosystem gets slightly offended by it but there's also other parties that are really clearly doing things different some examples for example that uh that sort of come to mind is uh there's one impact vc that is called snowball impact management and uh the ceo uh daniela she started snowball with basically what's called a cost of service fee structure so what this means is first of all uh that that perform that 20 carry that performance incentivization this is what embeds the growth imperative so if you want to really enable people to build social companies that are not being pushed to grow through the incentive structure that's being used that you know that performance incentive that has no purpose of being there so first of all you you get rid of that the second thing also is that what people don't understand is two percent fees sounds like a small number like two oh that's isn't that small but what people don't get is uh that is super highly extractive and that's because of compounding if you think about the amount of money that you would pay for example over a period of 30 years for a 2 mortgage that sort of starts to give you an indication of how much you wind up paying uh with 2 percent um and what a lot of people don't get is like let's say i wanted to retire so i put money uh into a 401k or a ira or one of these kinds of retirement vehicles and let's say it had a two percent fee uh for whoever was managing uh my ira over the lifetime of a fund you know typically around about 30 years and given the historic performance of the stock market most people don't realize that two thirds of the returns go to the fund manager two-thirds so this is how extractive two percent actually is now snowball basically it decided to do things differently so first of all they got rid of the carry and second of all they said well actually you know rather than this uh two percent we're actually just making it cost price so in other words what she did is she created a not-for-profit investment fund that it actually is very similar to what i did with radically open security and making and making it a not-for-profit security company so i think this is really exciting so basically what uh what she basically wound up doing was uh just making you know the actual cost price of what it is to run the fund given middle-class salaries and a pension you know that that basically is what they are taking plus of course being able to reinvest for the actual uh you know operational stability of the vehicle i think you know with impact vcs if they really say that they're about impact then i think they should put their money where their mouth is and i think you know what snowball is doing is a really excellent example i think they're a great role model uh for everyone uh to follow so um you know and i think we also as startup potential startup founders we also need to to keep in mind these incentive structures of the vcs that we're dealing with another thing that a lot of us don't think about but it's it's sort of another recent uh development that i also find really inspiring uh is the up-and-coming uh concept of what's called shareholder activism and uh this is actually i think really exciting um you have for example uh exxonmobil uh you know this is one of the most toxic horrible uh companies that is out there now there was a really tiny hedge fund uh called engine one and they basically partnered with uh i believe it was the sacramento sacramento teachers union or something like that and their pension fund and what they did is they basically took 20 million uh asset under management which is nothing absolutely nothing compared to exxon mobil but what they did though is they had uh bought basically 20 million worth of shares and then in one of the shareholder meetings they basically wrote up a shareholder proposal in which they said you know exxon mobil you know you're you really need to get with the times oil and gas are just you know not where the future's at everything is going towards renewables and anyway you're losing money by being in the stone age and uh really we think that you should re uh basically reallocate all of your assets to renewables rather than continuing to explore for gas and oil um the funny thing was they actually managed to convince us some of the larger hedge funds including blackrock and wound up placing three climate activists on the board of exxon mobil basically so this tiny hedge fund with with this you know pension of the teachers union managed to do what i think a generation of climate activists did not manage to do basically getting these three board members uh replaced how you know these climate activists now that they're on the board of exxonmobil are actually going to implement changes within the company is a next step i mean this is basically a playbook uh that's still being written but uh you know i find this to be a really exciting development another thing that i also found uh really quite uh interesting is that uh they also started basically what is called a um an etf basically uh basically an exchange traded fund so what this is is uh they created basically an index fund for the s p 500 so an index fund basically means it's like if you want to invest in the stock market then what you can do is basically you buy this this this etf which is this fund and it basically just tracks the stock market that's all it does so it in this particular case it tracks uh you know the uh uh s p 500 roughly so um but what is really interesting about what they're doing here is everyone who but so 30 of total investments that people make are into index funds so there's a huge amount of money in this market and what they're doing is they're taking the votes of the people who invest in this fund and then they're leveraging these votes for proxy activism let me explain why this matters so basically uh what a lot of people don't realize uh is that as a startup founder let's say i want to ipo my company and then i take it public people would think okay then it's on the stock market and then you need to do what the investors tell you to do is that so bad well you'll understand why it's so bad once you kind of understand how the voting structure typically works so once you're public a large part of who uh you know winds up buying your shares usually tends to be things like investment funds pension funds hedge funds now they tend to vote now they tend to be really lazy actually about voting so there's two proxy voting companies one of which is called um iss and the other which is called glass lewis and those two companies basically have a monopoly on corporate governance globally so they basically come up with these recommendations for voting which basically includes like approve every extra compensation for the directors or you know um you know approve all of the stock buybacks you know that that usually these hedge funds or whoever is trying to do to basically artificially pump up the price of the shares so they can then dump them and run you know this stuff is toxic this stuff is pulling the value out of the real economy you know and rendering these companies unable to do almost anything useful while only enriching the one percent so these are some of the most toxic horrible practices that are out there now the brilliance really of what engine one is doing is that uh they are instead allowing people it's sort of like giving people a fair trade investment option so in other words rather than investing in uh an index fund with blackrock like with ishares or something like that or vanguard instead what they're doing is they're saying we are committed to using these proxy votes for things that matter so the environment uh you know uh social change uh you know basically anything to to make actual real lasting and meaningful change so um you know and it's basically like creating a fair trade product i mean similar to what you know other social enterprises are trying to do with uh tony's or you know or something if you want to buy a chocolate bar but it's basically you allow consumers to choose one thing rather than than the other thing um it's the same thing also with radically open security and you know how we're putting a non-profit security company on the market it just enables in our case companies and governments to be able to choose for this security vendor rather than the other security vendor but by putting this choice on the market it enables people to sort of vote with their euros on the world that they want to live in and given how large uh you know in the case of engine one the market is uh you know for index funds the amount of votes that they could collect this way if they can get even a fraction of the shares uh away from blackrock is huge so you know sadly uh they're not using a cost price fee structure so i think that's the the room for improvement uh in what engine one is doing but i think if you could take uh basically the idea of this shareholder activism and and then combine it with the concept of a not-for-profit uh cost structure like what snowball impact management uh has then to me this would sort of be what in my opinion uh you know post growth finance potentially could look like and i'm using the term post growth uh post growth basically just means um you know if we stop growing you know it what what else is going to happen because let me explain you have the economy and the economy basically always has to be up and to the right okay the moment that it stops growing what happens you get recession and layoffs and suffering and all kind of really bad things why is this it's because there's so much financial extraction happening from the economy that we have to continue growing just to maintain a steady state but we know by now that this this growth puts pressure on our planet this growth puts pressure on the environment and it is just no longer sustainable so you know the question is then how do we implement a flat economy that thrives rather than growing there's a lot of economists out there these days that are talking about questions like this including kate rayworth she has a really great book called donut economics that i would highly recommend to anybody who's interested in these kinds of topics but the point is you know if we want to build a flat economy we need to first understand you know to build a post-growth economy we need to understand how to build a post-growth business so the businesses with the post-growth business the whole idea is we are not extracting financial value out of the business it starts with that you know sort of like that concept of uh steward ownership that i was talking about at the very beginning in other words not extracting the value out of the company through through sales not through ipos you know also not through dividends muhammad yunus also wrote a great book called building social business in which he also talks about no dividend companies for solving human problems of course lots of people jumped on muhammad eunice's ideas like you know with social enterprise uh also with microfinance but unfortunately people commercialized those ideas and took it in a direction that he was not entirely intending so anyhow but the point is i believe that the key with post-growth entrepreneurship is first of all just questioning growth in general asking the question is growth good not enough people ask this question you know and the other thing is uh we need to ask you know is it really necessary and desirable to exit this stuff is so embedded into the startup ecosystem it is so embedded into the behavior of the the ministries that you know if when you stop and think about it this stuff falls apart the only reason why there is an exponential curve you know on the powerpoint slide at your startup bootcamp is because it takes usually about three to five years uh ideally before you you know of exponential growth before you can reach the point where you have to exit if you're not planning on exiting you know you can't keep up exponential growth any longer i mean just mathematically speaking the nature of exponentiality is at a certain point it's growing so quickly it's just not doable so it's not actually about the you know the exponentiality but it's just about your you you're trying to get to that cutoff point sufficiently quickly uh for the investors now the problem is you know also the investors are pushing us towards vcs as quickly as possible this capital first of all it's not helping companies it's not helping us to start good financially viable independent and social companies first of all the problem when you have capital is that it distracts you from a business model you know because when you start uh with money with a big pile of cash you are you get good at spending it and you also wind up spending that money on whatever you feel like developing rather than you know what the mark developing what the market wants but really what the idea is is it's sort of like startups are being treated like what we call a dutch a puff kit basically a battery chicken you are force-feeding your startups investment capital to basically make them big and plump and juicy until the moment when they are liquidated which is literally the term that vcs use for the exits you know in which all that value is pulled out of the company and after you know that value is extracted there is just a carcass there is a almost an empty shell of that company left over and uh yeah and and basically this liquidation moment i mean one of two things are is happening one either you're basically trying to with this exponential growth you know and you're basically artificially hiring using investment capital so you're either trying to turn yourself into an attractive aqua higher for a larger uh company so like you know trying to get yourself bought by google or something and at that point you know a business model has nothing to do with it you don't need a business model if you're just trying to hire people with investment cash and get acquired the second thing is um with the ipo is you know if you're starting with a revenue losing company the fundamentals of that company are unsound but what you're doing is it's basically a pump and dump scheme you're hyping that company which is inherently financially unsound and you know with all kinds of publicity and you know hype and media attention and then what you're trying to is to do is dump these shares onto the public market you know and it's a question whether or not this pump and dump should even be legal um as long as we're in a growth economy uh you know where basically the the law of the the greater fool exists and the greater law of the greater fool basically just means oh well as long as there's a greater fool than me who's you know willing to buy these assets at a higher price than what i spent for them so if you're in a growth economy that can work but the moment that things stop growing the whole system implodes you know and basically the last investor is left holding the bag see what people don't get we celebrate all these unicorns you know and it's like we've got prince constantine who's like oh the netherlands needs to be a country of unicorns right but what people don't understand is that 90 of unicorns are revenue losing 90 percent you know we just testedly assume that these these unicorns at a certain point are going to get enough economies of skill that they're going to start gaining money again but in 90 of the cases statistically speaking this has not worked out that way and there's i can provide citations after this for anybody basically who's interested but another thing that most people don't realize is that uh also 80 percent of vc funds in the last 25 years have failed to keep pace with the stock market so i was talking about that carry and you know that that the performance incentive well it turns out that the majority of vcs actually don't get a penny of that because they're actually most of their their startups uh fail see the vcs are actually living off of the fee stream they're living off of that two percent which basically means that you've got people that are pumping money into these companies uh at the end of the day basically the companies are failing the the shares become worthless you ha the founders are losing their businesses and then you know this is of course terrible for them in their personal lives and their families and their ecosystems and you ask the question like who's winning here just the fund managers that's it because they're living off of this two percent and they're the only ones that are essentially taking zero risk and they're the ones that are getting pretty much the majority of the upside in the majority of the cases if we want more you know evidence of the fact that the startup ecosystem is not working it is the 90 failure rate of startups it is well known that 90 of startups fail and only 10 succeed why are we clinging on to a system with a 90 failure rates you know we can do better the silicon valley ecosystem is at best only what like you know 40 years old you know somehow somehow we managed to start startups before silicon valley before vcs existed you know people bootstrapped with launching customers you know they actually found customers for the companies you know that they were trying to start you know and uh let's make bootstrapping sexy again yeah and this is sort of a plea i think to both people in incubators but also for startup founders the next time an incubator tells you you need vc you know to start your company call on it because first of all you can most of the time easily bootstrap service companies and you can basically use service companies to cross-subsidize the r d on products so you know it requires lateral thinking it's a different way of thinking the other thing that is kind of a bit nefarious is when you ask the question so you've got these like revenue losing unicorns like you've got like say wework that's spending money five times as fast as it's gaining it from customers you can ask the question whose money is it losing now here's the sad part in the us 60 of vc investments comes from pension funds so what that means is that money that's getting burned is coming from people like you and me it's coming from taxpayers in other words uh you know we hope to retire someday now you would ask the question why are pension funds then you know historically knowing that uh 80 of uh of vc funds don't match the stock market why are they all investing in the you know in these vc funds in the first place quite simply it's because right now with the low interest rates because you've got interest rates that are very close to zero you know and in some cases with negative interest if you just put your money in the bank um you know these these pension funds and other investment funds they are desperate for somewhere to put their money to get any kind of returns at all because see they've been promising people like you and me that we're going to get these returns so we can retire someday and uh yeah so and they know that they can't get it with more safe investment like bonds and things like that anymore so they're going into quote-unquote riskier investments out of desperation uh you know like um like vc funds not really very helpful now this is what's transformative i think about things like like snowball it's actually putting a lower fee option on the market which i can imagine also things like pension funds would find more attractive and anyway but uh the point with all of this is the entire startup ecosystem really has turned into a casino for investors you know um but it doesn't have to be that way historically speaking the very first startup incubator was called the batavia industrial center from batavia new york and it wasn't about creating unicorns but it was rather about revitalizing local economies so uh the way that that worked is uh you know i think the the main industry moved out of town a bunch of people got laid off and a rich family there had uh you know they had a restaurant a movie theater and they wanted basically people to have enough money to be able to eat at the restaurant and see movies so what they did is they bought up an empty building and they basically said well we're going to provide uh resources for um companies uh that can basically uh and the whole objective you know is not to become this international explosive success but they're considered a success if they can graduate and get out of this building and ha and get onto main street and just you know to be able to succeed on their own that was the definition of success and one of their very first uh tenants was actually a chicken hatchery and uh joe monusco uh who was the founder of um the batavia industrial center at a certain point he said to a journalist well you know here they're hatching chickens well gee you know they're they're incubating chickens i guess we must be incubating startups so that was actually where the term incubator came from you know eventually it evolved to mean something very very differently and you started different and you had these tech incubators um you know particularly of the model following y combinator now the founder of y combinator paul graham he wrote a blog post in which he literally says and i quote i am a manufacturer of income inequality and this is the model that we're following so i think that you know for us as technologists i think you know we need to pay in particular attention that when we're using our tech skills when we're using our security skills our crypto skills you know really any skill set that we have know that you have a choice you know if you are going to uh you know be aware first of all that there's other ways you can use your skills than just going to work for the big players like like google and facebook and amazon that first remember the startup of today is the larger company of tomorrow but even beyond that when you make your startups understand that you can say no to investors understand that you can make your company steward owned and really build something of social enduring social value for the long term that is not meant to be sold company you know i understand that business can be one of the most effective forms of activism and business can be a mixed media for art it can be a vehicle for spirituality or even for creative expression but we are not taught to think about business that way not in the incubators and not in the business schools i mentioned that uh three years ago i started non-profit ventures that's a post-growth startup uh incubator we have run basically two cohorts uh through our programs uh with roughly a dozen uh founders per cohort and we have had everything from uh sort of post-growth law firms a post-growth brewery we had one lady in nairobi kenya who was creating basically an event bureau for uh for women but she used the profits from that to cross-subsidize uh an ngo called heels for paz that combats men's menstrual poverty in rural china sorry rural kenya uh we had another guy from from new delhi we had uh you know also a post-growth design firm you know and many others so understand that there are alternatives out there and that you do have a choice you know you don't have to just accept you know what's being offered to you so anyway i hope that uh you all found this interesting and inspiring and i'm more than happy to answer questions if you have any thank you very much melanie it was a very inspiring talk [Music] i am i recognize uh the um the shareholder activism actually the netherlands has a similar uh similar project with another oil company here i like to quote the startup of today is the big one of tomorrow yeah of course uh yeah um yeah i'm definitely going to check out snowball man uh small body technologies i'm going to see um we have some questions coming in um by the way what i like about the um what you mentioned if the company cannot be sold by this golden ticket construction it also means that your data cannot be bought over by another company who then can merge it and do it what they like a very uh good yeah see exits are really horrible for data governance and this is a problem that we've seen uh for example in the in the the cyber security space one well-known example is uh was fox i.t and when they got purchased by the ncc group because they had these monitoring black boxes basically throughout the entire dutch government dutch business sector dutch military they wound up getting purchased by ncc group and the entire dutch government let out a simultaneous oh you know our data is now owned by the british um so what happened is there was another small startup called red sox that had uh spun off uh from fox i.t and they were kind of making similar uh monitoring black boxes and basically uh what wound up happening was you know they of course also had investors and of course with all this you know all the govern all these people were jumping ship over to red sox they grew exponentially two years later i read in the paper again congratulations to red sox they just got acquired by the romanians you know and at a certain point you just start to wonder like when are the when are we gonna learn you know and this is i think why steward-owned kinds of companies are a matter of national importance you know if we care at all about our data governance if we care at all about our privacy and not selling things out to foreign investors and really to trying to create create things to cultivate local ecosystems you know that i i think that's what we need right now and especially post coven you know the dutch government right now is trying to figure out you know how are we going to have this post-covered economic recovery you know they even lately had this um basically this proposal this thing called um the national free forms so the national growth fund and they were soliciting uh so-called growth plans for the netherlands uh the economist uh tim jackson and i uh had submitted a uh proposal uh that basically a post-growth plan that said you know have you have you ever thought about whether growth is actually desirable you know and and you know here are some other things that you could do instead um you know and and we need to make these noises because the dutch government doesn't get it yet and i it's not that anybody means badly but it's just that nobody's thought about this yet and that's why i think it's so important to have this discussion it's so important to promote this discourse because until people really start talking about it you know when people start asking questions like why does my why does my incubator have a financial conflict of interest you know that in other words they take equity in their startups but this affects what they're teaching you know one time i went to uh rockstar and uh said hey i'd love to teach you know to a class about uh post-growth entrepreneurship to your founders i'm not gonna charge you a cent for it but i would just love to do it to teach new uh kinds of social impact and they thought about it and they're like well you know but our investors are investment banks like merrill lynch so yeah gee i'm really sorry you know we're gonna have to politely decline i mean their own business model is literally in financial conflict with what they're teaching we need to ask these questions because until we start talking about this this is not going to get solved i agree and so do um our guests uh uh our participants today i see um a question from uh gregor team member from schwartz um very inspiring and very true oh yeah uh usually starters will face a lot of pressure to go to the vc route um what would you advise founders to do to stand tall and go the way he suggests because i can imagine given the the original uh let's say discourse there might be an incentive to first due to [Music] for security i would say if you look at it from a muslim perspective for financial security first somehow well i mean founders oftentimes tend to go for uh vc just because it's comfortable because i mean it enables you to be able to get a salary from day one which is comfortable um you know uh i think what's better is just to sort of like hedge your bets while you're making your startup and really not necessarily start work don't don't don't really rely full-time on income from your company until you're you either you either need to have money saved up or you need to not quit your day job let me put it that way because uh you need you need customers basically to be able to uh to bring in money and that will pay you but that's gonna it usually takes a year or two uh to be able to um get to that point where it's gonna be uh it where you're really gonna be able to pay yourself a salary in the case of radically open security it took me a year i was able to do this as a tech person because i had some savings which most certainly helped but um you know but there's also for example the book um originals where they're one of the things is they were talking about for example uh companies like warby parker which actually started their company while they were still you know one of them was still at you know finishing up his i think his graduate education and the other guy was still sort of working his working his job uh i think part-time you know to make sure there was incoming income coming in it does mean that you won't necessarily be able to work a full-time hours at the beginning but chances are at the very beginning you're not going to have enough business to be able to do that anyway so you know the point is that you can sort of multitask your your old day job with uh sort of the new thing that you're trying to start you can sort of gradually migrate yourself financially over to the new thing once it's financially able to support it the problem is people want instant gratification basically it's like you know i want something and i want it now so i want my business and it's got it it's all or nothing like it's it's you know and again if you've got enough savings to support that you can do that you can do it that way um i did but but of course that implies you have the savings in the first place but again you know the problem really with us this big pot of starting with a big pot of money is that again you're going to be distracted from the core business which should be finding your actual value proposition and finding a viable business model and as long as it it's the same thing with open source projects open source projects tend to get a subsidy and the other problem and i've spoken with this uh about uh i've spoken with nlnet and also sdn phones about this one of their big pet peeves is as soon as the the subsidy runs out the open source project falls over and the reason why is because uh the founders of open source projects are not commercial and they hate money there's no other way that i can say it i mean money money is evil sorry you dare to generalize here on this well well look it depends i mean not everybody's the same but i know a whole lot of academics and open source founders that just do are not so hot on capitalism and quite frankly they don't want to start companies they want to run the open source projects but they don't necessarily want to start companies but what these people don't realize is if their open source project doesn't have a business model it's not going to be able to stand on its own two feet the other thing also is that ideally an open source project should have users because i mean what every open source developer wants is they want people who are going to be using what they build you know and and really you know having users especially paying users that actually validates that what you're creating is valuable enough to people that they want to pay some amount uh basically to use it so um the european commission for example has hired in uh nonprofit ventures to help with mentoring some of their tech startups and our exact niche is basically mentoring tech startups you don't want to have a business and i know that sounds really strange but you know but really trying to make sure that we can help to embed the continuity in those uh open source projects in a way that is non-commercial so they can basically have their cake and eat it too they can hate have the the stability and the financial independence of running a company without that incentivization you know the perverse incentivization that comes from playing the silicon valley game so yeah i i recognize this with projects i've met as well yeah the focus is on the problem to solve and not on the organization around surrounding it yeah okay um that's a half past four now i would like to thank you very much for your uh input um the organizations you mentioned of course anyone especially in europe seek them out the foundational helmet has been very supportive open source projects in the past as well sdn fund for any dutch startups and with that i'd like to invite you as well for the pitches from startups on friday where they'll be presenting their ideas to build on a decentralized manner yeah and the last thing that i would also like to say is uh if any of you have any questions feel free to reach out so you can con you can connect with me on linkedin uh if you like uh feel free to send me a message um you know i i respond to most of the messages that i receive and i'm always sort of friendly and happy to help and happy to answer questions please also do keep in mind that in september also the call for uh applications is opening for the 2022 cohort uh for the post growth uh incubator postgre entrepreneurship incubator that nonprofit ventures is running also feel free uh to consider uh submitting to that and also if you're connected with me on linkedin you'll get a message um a reminder basically when those applications open also if you want more information on this in general you can have a look at postgrowth entrepreneurship.

com thank you what i wanted to ask what where do i do they need to go wonderful