It’s a big step I feel. I just published our company licenses, documentation, core values, order of priorities and our people’s page. It is a long overdue and these documents will change but we are really growing as a company and myself as a leader. I am grateful to our supporting partner SOW Asia incubating i2i program because they have greatly contributed to formalise these documents that will help us grow.
Below is a video of Tony Hsieh, Founder and President at Zappos, explaining how they came about and what their core values mean.
The documentation has been one of the main problem in defining the standard of the young Open Hardware movement (first Open Hardware Summit was in 2010 in Queens NY). There have been a lot of discussions, but there is no set standard yet, more a recommandation list. We follow that trend even though at some point we would want to define a minimum of set required documents to qualify as an Open Hardware project.
A few days ago, I was lucky to be invited to speak in front of about 3000 leaders at the bi-annual APM gathering in Marseille on the topic “Renaissance & Entrepreneurship, New Ways». The organization was seamless, the stage and screens gigantic, the audience smart and enthusiastic. I loved it. I was there as a young tech / green entrepreneur using innovative methods to reach an international audience. I was honored to share the stage with amazing intellectuals such as Jacques Attali, Serge Soudoplatoff, Pierre-Marie Lledo, Axel Kahn, Florence Servan-Schreiber, Cynthia_Fleury, Jean-Francois Noubel and more.
My 3 key themes were :
Innovation, the shape shifting hull and modular sailing drone
Open Hardware for the Environment, inviting company leaders to change how they approach intellectual property
Global collaboration, to solve world pressing problems
I presented more than 200 slides with many videos and several people asked me to post my presentations : they are below. You can flick through the slides and simply click the links on connected articles / sources / videos.
I really enjoyed sharing my experience during this event, the many smart & difficult questions, the great conversations. I want to send a special thanks to Marc Tirel (for introduction), Fleurke Combier (from APM), Marion Chapsal (coach http://ideasonstage.com/) Yves Rajaud and all the workshop animators – you have been amazing. Also great thanks to my agent who has organized all the logistics of the event, the magic Lavin Agency.
It was my first time in Marseille, I loved the classic small yachts in the Vieux Port.
Even If I must admit, I did not take much time out of my hotel room :)
With Gabriella Levine, we had the amazing luck to have Jeff Hoffman who “is a serial entrepreneur in the internet, technology, and entertainment industries. He has founded, co-founded, and been the CEO of numerous start-ups and larger companies, and has led his companies through acquisitions and public offerings (Priceline.com, uBid.com, CTI, and others).” Jeff told us that many people have great ideas, what really makes a difference is the execution, but more precisely the targeting of the customer. Who will buy? At what price? What kind of quantity? When? How? These are critical questions that change over the lifetime of a product and keeps changing as the technology improves, the cost fluctuates depending on the supply – demand balance and the marketing and distribution strategies.
We had for Jeff these 2 main requests :
Help us narrow down our customer target
Help us “choreograph” the timing in the pricing and product / technology development
Put the client in the room
Jeff’s first advice was to literally put the client in the room. So we did! We drew a life-size client in the room who would be writing either a bank check (yes!!!) or a “fail” sign (no!!!). Having the client in the room helps you answer these hard questions. The client should be there at every stage of decision. We called our client “William” and quickly we realised that William would not be our (only) client in reality, if our client at all. So… we realised that we would quickly see a “fail” sign if we were not more thoughtful here. So… who is Protei’s client?
Who will buy Protei? At what price? In what kind of quantity? How?
Jeff told us that most entrepreneurs would say that “the entire world would buy their products” (by year 4, more than 50% startups would die btw), but since it is impossible to target the entire world, it is a wise idea to target as precisely as possible to start with. Jeff said “Think big, act small“. The people would buy / use Protei come in many different color sizes and flavours (from left to right) :
Humanitarian user: someone who’s life depends on the data / clean up work produced by Protei. This user is hard to reach, has very limited resource and needs a very highly performing product. Even if this potential user makes the greatest use of Protei technology we may not be able to serve this user immediately since our technology is so new and untested.
Kid: Kids are great users, they want a product that is easy and fun to play with, it has to be cheap and robust, plug and play and we can sell in great quantity, but few parents are ready to put a lot of money on expensive toys.
Hobbyist: Hobbyists are great because they love novelty, they are patient to receive their order they have passed on-line, they tend to be very dedicated to assemble, test, document their activities and give us feedback on-line.
Hacker / Maker: want a product that is modular and extendable to modify and run their own experiences on the product as platform. They tend to be very good at tinkering and sometimes good at documenting and sharing their improvements with the community.
Ocean Scientists: are our ultimate target as they are the one that serve the highest goal of Protei that is to explore and protect the ocean. That’s what we want to turn kids, hobbyists and hackers into: active advocates, data-producers and ocean-cleaners. Now Ocean Scientists in academia and institutes generally do not purchase machines and instruments with their own money, they would carve out part of their lab budget to buy Protei. What ocean scientists need is reliability and extendability since often times, the instruments they will put inside will add up to be much more costly than Protei itself. So, interestingly, if ocean scientists may not make the biggest volume of sales, we want their technical needs to drive the evolution of Protei.
Sailors: We have sailors (of real large boats) but they are falling very much in the hobbyist category when it comes to operate a 1 meter long Protei.
Industrial: this is where most revenue may come from in the future but currently the technology is not mature enough to market Protei. These guys are willing to put big money for industrial applications but they need industrial 100% reliable results.
Military: big money surely, but that is not our culture and not what we want Protei to be developed for.
We decided :
GREEN: Our target for MARKETING = Hobbyist / hacker! This is where the greatest volume of sales can be achieved, determining the packaging, channels of marketing and distribution (mostly on-line distribution).
RED: Our target for QUALITY = Ocean Scientist! We want Protei to be used for ocean science and collect ocean data, so we need to know more from our “golden user” the ocean scientist that will drive product and technology development.
Product evolvability : in short that means that we will market a product aimed at hobbyists and hackers that would be easily upgradable to be used for ocean science.
Redefine Product with a user-centric lens
Now we know who is our target market (Hobbyist / hacker) we take in consideration what they want in GREEN, they want to have fun:
1. Easy to use
Right after which comes the requirments of our quality target (Ocean Scientist) in RED, they want reliability:
4. Modular, Extendable
so they can install all sorts of ocean sensor on the sailing robot.
This is a user-centric approach that redefines our product agenda and development strategy.
Very different from the engineering, scientific or intuitive / artistic approach we had so far. It was more than time to do this.
We made the assumption that different buyers would buy a device at a very different price (with different features of course) :
$1 : Humanitarian user (subsidised)
$250 : kid (parents paying)
$700 : hobbyist
$500 : hacker
$1000 : ocean scientist (using lab budget)
$700 : Sailor
$5000 : Foundation
$7000 : Industrial
Empirical criteria ranked on a scale of /100 :
Pricing: at which we can sell each machine depending on the client profile (above)
Promotion: satisfied clients are our best representatives / evangelists. Especially at the beginning, influence might matter more than pricing or even volume of sales.
Improve and share: Protei is Open Hardware that means that we actually invite people to use (copy), modify and distribute our technology for free. We’re asking in return to be credited but most importantly we’re requiring our community to contribute to improve the technology. So our customers are really our R&D department, we treat them as our most precious collaborators.
Accessibility: How easy it is for us to reach our clients? That’s totally subjective, that’s our social networks, the people we like to talk to, the people who like us.
Ease of Production / expectations: Industrial users have extremely high expectation and even if they are willing to pay a high price it will take us a long time to meet their expectation. Kids just want to play, it is much easier to produce for them. Hobbyist / hackers / ocean scientists are the most likely to tinker and to be satisfied with an alpha product.
Ease of delivery: where are we located? Are there high tax / regulation / compliance on imports in the country for the application envisioned? Is the country we’re trying to work with politically unstable, suffering corruption?
These different factors allow us to carve out the potential each client profile have for us. That’s the yellow line.
Next is to roughly estimate how many Protei boats we can sell to each of these potential client. That’s the red line.
So now we multiply the yellow line by the red line and obtain the sales potential per client profile. That’s not an accurate technique in any way, but that’s fast and easy helping us find out who gains the most value from our product VS what’s the sales opportunity for us.
For Protei at the current stage, the rank for potential revenue from sales would be :
Industrial: scoring the highest because that’s where we can make the biggest marging, but the technology is not ready for that yet.
Hobbyist: that’s the immediately most accessible market
Sailor: same as hobbyist as they are passionate about sailing and willing to invest money in their passion
Foundation: they would finance buying many units at the same time but they are quite hard to get
Kids: as we come on the market, we want to build a brand culture that is welcoming for kids but that’s more aimed at ocean scientists
Ocean Scientist: our favourite user but almost smallest group!
Hacker: “hyper-technological-human-anomaly”, but oh so valuable ;)
Humanitarian user: the one that personally needs our technology the most that is also the hardest to get to and serve.
This research is highly valuable since it tells us that extreme users – that we expect to represent a minority of our clients – are the one that are driving technology development even if they rank very low in our sales potential. I think this is not unusual, and crucial for us to aknowledge who are the most valuable (in volume) and/or influential buyers / makers of our products. That also tells us that we need to fight to get to industrial users as fast as possible.
Strategy & Marketing, to reach our goals of sales and cultural growth
Now we know the quality we want to achieve (ocean science), and we know the target client (hobbyist), how are we going to orchestrate our sales?
As our customers are our R&D , our community for a Open Hardware technology, we cannot stress enough how determinant it is for us to be intentional about how we set the right culture (hands-on, hacking for ocean science) around our product depending on who are going to be our first users.
$1000: Early adopters, setting a culture.Ocean Scientist. We want our first users to be hackers – ocean scientists. They are a minority of power users, that will be our star-testers, tinkering and driving with us the development of this new technology.
$700: Quality UP, Price DOWN!Hobbyist, sailors. Driven by our small but high-profile community, we can improve the technology and deliver a second generation of machine with many more features as a kit. Basically it would be a version with more sensors, more powerful electromecanics, more processing and communication range etc. As a reminder, even if $700 could sounds like a lot, it would actually be a very good price for a sailing robot that could be made autonomous with a suitable embed intelligence and sensors.
$500: sustainability and growth. Hackers. $500 retail price is the current average price for a basic 1 meter long RC sailboat. For that price, I believe we should be able to build a very robust sailing robot fully fitted with sensors and an android powered CMU on board. That kind of price and high quality for value should satisfy the greatest volume of customers while being a powerful and extendable platform for science for a while.
$250: Democratize!Kids. Once our technology has been validated by a small (read manageable) but highly qualified core group that would have contributed design and code improvement, it would be time to broaden the diversity of customers. We should open to a large volume of sales also after we have built a robust and scalable data infrastructure to welcome. The dream is “Science instrument at the cost of toy!”.
Kits: customise your product. As an Open hardware company, we pride ourselves to be transparent and offer our clients to buy the parts they want and assemble the boat they dream of. From travelling around the world and talking to potential clients, it became very clear that Protei would be one product in our catalog and that even the internal components of Protei could be used for many other sailing robots designs. At this point we will diversify our offer and empower the community of makers that want to explore and protect the oceans like we do.
From making this one day research we learnt enormously about our sales strategy, and how we intend to building our community and culture around products that they would love and invest in. Thanks a lot Jeff Hoffman for this great lesson!
Talking to Megan Both (Microsoft) and Chris Shipley recently has helped us a lot thinking about Protei services. What should we monetize? What should remain free? What piece has got to be Open Source? What part doesn’t necessarily have to be Open Source? What can we scale? What are our horizontal (business baseline) vs verticals (applications/users)? So much marketing and business strategies to think around beyond a simple product!
The way I like to think about this is the same as cameras : you have someone who builds the parts, one person that assembles the parts into a camera, someone else to test them, ship, distribute, sale, insure, provide all the connected services, accessories, hardware and software, someone that gives you the driver, someone that teaches you how to use the camera, maybe even go to a photography academy, than you have to buy the memory card, the memory card reader, an extra battery, the guy that sells you the cable to connect it to your computer, than you take pictures, but soon you fill up your hard drive, now you upload your pictures, you be part of a community, you sort and tag them, they get into your profile page, it becomes your consumer identity, feed to your social network, flickr it, instagram it, facebook it, you are being analysed among thousands of other users, become part of stats, give general tendencies about what’s beautiful and popular, what is not, what should be tolerated, it informs the company strategy company, can go higher into policy and the philosophy of media, social cohesion, the economy, the making of culture. Each of these steps can become a flourishing business independently. All of these services can be provided by different people, and many new services can be invented around a new technology. mmmm…. 5AM, time to go to sleep!
You will need to respect the corporate formalities.
Dont mix personal and corporate finance.
Utilise your legal as a strategic asset. It is always easier / cleaner to do formalities at the front end.
The choice your company really depends where you want to see your company in 3, 4, 5 years.
LLC or S-corp is usually what I would recommend. It is easy to convert from S-corp or from LLC to C Corp. Why choosing a C-Corp? It is very much loving giving money to the government. There is a big difference when it comes to tax on Asset acquisition and Asset in stock purchase. Don’t make it too complicated. Keep things simple when you are small, it will become complicated anyway.
Don’t count on the growth of your company to pay taxes. We talked about the burst of the .com bubble and 83(b) and sweat equity.
Loan VS Investment
Should I take it as equity or as a loan? Convertible note : it is a hybrid between a promissory note and equity. Some love it, some advice not to. It can be converted in equity, stock at a discount, cash. So when you make such a call, you can phrase it like this :
“We’re looking giving away a convertible note. We’re looking at raising 700,000 USD. The investor will get a 20% discount on stock. ”
The company doesn’t have to give away the control.
It is good for investor because they will get paid before the owners of the company. It is a great way for an investor to wait. It becomes a credit, a liability for the company.
How do you make a valuation? Book value, asset value… the trick is to have a market value that everyone can recognise.
You can make a pre-money valuation and put upfront what the “investor” (someone who owns a note – not shares – not ownership)
5. Lack of a clear exit strategy
There is a variety of exit strategies :
You want to sell to a third party
You want to sell to your key employee
Sell to family members
Work closely with an attorney that will help you be entrepreneurial about the structuring of the company.
What we found was not that different at the DREAM HOTEL in Kochi ! ;) More lasers perhaps :)
We did our presentation in a campus that’s in the middle of the construction process. I felt great energy and excitement.
India opens its doors wide open to the Silicon valley spirit.
We dream of a day when the sun sets at dusk of the silicon valley it would rise to see the the dawn of a silicon coast in India. Team MOBME
Instead of diving into the “startup India” in Bangalore as Gabriella did (posts of Gabriella Levine 1, 2, 3 in Bangalore) , I focused on buying supply to build more Protei prototypes for the rest of the voyage. That means a lot of scooting around again.
I really enjoyed discovering indian ingenuity and all the local craftsmen.
I enjoyed the colourful markets…
But also noticed piles of detritus everywhere in the streets, that ends in the sewage, untreated. Many times we saw the public servants cleaning the congested sewage lines.
Very bad news for Kochi. It’s waters are devastated. I never saw darker waters. Water in public rivers is like ink!
That’s another part of the city. Same observation. Appalling.
We did not have / or taken the time to study in depth water pollution in India.
It is also revealing that it is a Chinese media NTDTV that seem to be concerned about pollution India, chinese acting as a regional environmental whistleblower, interestingly.
India is facing immense challenges when it comes to water quality. Its most sacred river is one of the world most polluted river. Are the gods polluting or are indians responsible for their sacred rivers?
To know why 1,000 Indian children die of diarrhoeal sickness every day, take a wary stroll along the Ganges in Varanasi. As it enters the city, Hinduism’s sacred river contains 60,000 faecal coliform bacteria per 100 millilitres, 120 times more than is considered safe for bathing. Four miles downstream, with inputs from 24 gushing sewers and 60,000 pilgrim-bathers, the concentration is 3,000 times over the safety limit. In places, the Ganges becomes black and septic. Corpses, of semi-cremated adults or enshrouded babies, drift slowly by. Source: The Economist on December 11, 2008
The world treasure Taj Mahal is bordered by the Yamuna river that western journalists have qualified as “a putrid ribbon of black sludge.”
Gabriella presented Protei in Bangalore and had a lot of positive response, in particular from game developers and mobile app developers that are very excited about Protei being used as an augmented reality networking game. Can you imagine? A regatta of Protei boats equipped with android phones, controlled via the web browser with real-time video feedback racing, collaborating to solve complex real-world issues! Having fun while collecting environmental data? Earning money from clean up in the water while playing, well that’s rather exciting to the people we met and to us.
India has a great entrepreneur movement and huge number of environmental issues. Can we pair these two together?
I found fiberglass, resin, wood, glue, plastic, microspheres and many other supplies to build more prototypes.
Unfortunately, I wasn’t allowed to get this fabrication supply on board. That was painful to spend so many days looking for these chemicals, parts, materials and not being allowed. Cannot wait to have our own workshop on land, manufacture Protei and come back to India where Protei is so needed! Good bye India, we’ll see each other again soon!
Singapore is a bubble. It is described as a “startup city” since its independence recognised in 1824. Singapore has been following its motto “Onward Singapore” to become the world 4th financial center, pretty impressive for a 710km2 territory. According to TechCrunch, Singapore has the best ecosystem for startups in Asia.
The event at the INSEAD was very impressive. Many important people came and we had great discussions and learning nuggets. Even more than Hong Kong did, Singapore presented itself as the platform to develop projects in East Asia. It is true that Singapore supports very effectively new comers when it comes to business. The government can easily become a real share-holder of your company which can potentially give you a lot of stability and growth but at the same time restricts your business reactivity / mobility.
We intended to put Protei in the water and immediately residents told us we would be fined the equivalent of 5000 USD for putting anything in the water without permission. I enjoyed our 38 hours in Singapore, but I cannot imagine living there or doing R&D in a place that is that so strictly regulated.
Singapore was also the opportunity to meet friends, here the amazing Dave Lim, TEDxSingapore organiser at the WWF supported Earth Hour headquarters that he directs.
Carly Cooper : Community, company and personal goal
Quoting her father “An idea without a plan is just a wish”.
We talked of how we can make the Unreasonable Community, our company and personal objectives converge and support each other. Also anticipating how we think our plans might fail, and work on preventing that from happening, transforming risks into opportunities. This was an exercise but really was extremely useful. From a blog reader point of view, this might sound extremely corporate but I think will benefit anyone to understand how we take our decisions along this voyage.
Our Unreasonable Community goals
Each company was asked 3 goals they have for the whole voyage. Interestingly, each company is looking for something rather different from others.
Our Company goals for the voyage
A : Business and strategy. How to have the biggest environmental and market impact. That’s work we have to produce.
These are Protei goals while at Unreasonable :
1. Product : getting a precise idea of the product we will mass manufacture.
2. Commercial website to sell Protei.
3. Community website to centralise information about our technology, community and license.
4. Marketing communication : reaching out.
5. Business Strategy to make an Open Hardware for the Environment profitable / sustainable business.
6. Our organisation : explore and Understanding gobal and local demand in every port. From that : make strategic decisions answering as where to set our headquarters, R&D manufacturing, community. Our criteria for deciding where to set our headquarters would be :
( a. prototyping, b. manufacturing, c. access to water, d. costs of living, e. friers family, f. legal / banking / founding, g. language, h. community , networking, , inspiration, culture.)
B : Building Relationships
1. Connection to our community that will help us redefine the product and technology
3. Partners : research, academics, non-profit
4. Manufacturing & Distribution : industroial
5. Potential Protei team members
C : Improving Protei Technology
1. build prototypes and testing them in different waters.
2. Field work : Plastic in Hawaii, radioactivity in Japan, lake pollution in India, Fisheries in Ghana, Water preservation in South Africa for example.
Outline what is Open Hardware for the Environment as a sustainable and desirable business practice. Re-invent capitalism for the environment.
Get to know more about the ocean and coastal residents.
Build a strong relationship with my partner
Abby Lee : Smart Goals
Why is it important to set good goals?
It filters non-sense
It helps you focus on the most important. Time box things.
It constraint stimulates creativity
Attainable : We want to make sure we can attain those goals in the space and time available.
Result-Oriented : focus on results, not tasks. Focus on the goal, not on your method, to get your impact.
Define : Protei goals before we reach Japan?
Pitch. 6’40, 20 slides, 20 seconds. Rehearsed and powerful.
Business documentation. 1, 2 pages to explain our technology, business, perspective and call for sponsors.
Prototype : get one prototype functional to sail in in Yokohama and Tokyo Bay. Take pictures.
Field work : Fukushima exploration. Visiting site, photo, measurements, local fishermen and manufacturing.
Meeting with Qualcomm
Meeting Tokyo University Research Lab
Visit Akihabara Electric town
Obtain medias coverage
Optionals (in the immediate but eventually mandatory) :
Commercial and community Website
Full business plan
I am sorry for the many bullet points, but we have so many things we want to achieve as a company and there is such little time. I hope this helps you understand better what the Protei team is about and what being part of a tech start up incubator is like.
I am very interested to revisit this list after important ports, see how many of our goals have been attained, and perhaps redefine the goals.
I am now trying to make short “on the fly” blog post, that capture the energy and what’s happening right now on the Unreasonable at sea program, rather than waiting to digest the information and publish it later.
Do you want to transform your idea into an Open Hardware Technology for the Environment? And why not into a business or a non-profit organisation? This is how we are doing it. I am not saying it is the best, but it is our preferred way.
General strategic motivations
In the last months, “Open_Sailing” changed name to become “Open-H2O” to cover a larger scope of interest, and “Protei” -that I started alone as a lab of Open-Sailing lab 2 years ago- is going from a purely research project to become a small industrial robotics startup as “Protei INC”. I want to step back and consider the history of the work over the last years, explain the deep transformations we are going through and what motivates our decisions today.
On one side, we have Open-H2O a large non-profit focused on developing Open Technologies to explore and protect the oceans.
On the other side, we have Protei INC a small lean robotic start-up that is going to manufacture, distribute and support beta Protei products.
The separation of the 2 entities have been drafted a year ago here, but what follows is a description of that separation with more details. At the time, this idea of many small companies spawning from an inventors groups (such as squidlabs) or forum (such as instructables) was the most inspiring model.
There are many reasons why we are opting for 2 structures (instead of one hybrid) model to develop Open Hardware for the Environment. This is a big list of pros, and a short list of cons with examples from other companies from which we want to learn from, both in their successes and difficulties. But what I am mostly interested in here, are your comments to help us all improve. Based on your comments I might come back and edit these posts, adding references, better examples, adding paragraphs, correcting grammar and spelling, as this is part of my PhD research at Goldsmiths University in London.
This text goals are :
For Open-H2O, Protei members and our partners to understand these transformations we are going through. It is necessary to explain why 2 entities are born of one, meant to live their own lives, yet to grow and support each other.
To contribute to Open Hardware as a movement, on the questions of Entrepreneurship, document our story to encourage more and more cool projects to turn into resilient and flamboyant Open Hardware Tech Start ups all around the world.
Open a discussion on what are the best strategies to develop structures for Open Hardware for the environment. The stake of this being how to turn the next industrial revolution into a civilisation shift that creates technology for the environment instead of destroying it.
Inventors, Makers, Hackers, Environmentalist, Researchers, Engineers, Students, Retired and active Professionals, Housewives/men, kids, hobbyist, you, ALL HANDS ON DECK.
Non-Profit Resilience & Risky Business
Separating the technology community (Open-H2O) and the manufacturing company (Protei INC) guarantees that even if the manufacturing company goes bankrupt, the community and the technology will continue to thrive for the environmental benefit. If a company fails using open hardware technology licensed by a non-profit, another company can be created by the same or other people. A good example of such resilience is DIY drones, a web community that spawned the wonderful 3D Robotics manufacturing group, the 2 entities having a robust symbiotic relationship with one another.
Research autonomy and Integrity
I have spent the last 8 years in different lab Environments (from art to science) in different countries, at post-graduate level either as a Student, Researcher, Project Leader, Professor Assistant and Invited lecturer. Many of the projects I have been involved at the University have been supported by external sponsors, often in related industries. I can say from experience that most sponsorship allowed us to work freely and produce independent research, but I can also say that several times the researcher freedom and autonomy, as well as the integrity of the research material produced has been altered by an unsuitable relationship between academia and industry. It is vital that research stays free from industrial and manufacturing constraints, as well as the industry needs to be able to meet its goals, often dictated by strict market imperatives and dynamics.
To my point of view, a positive civilisation progress has been achieved with the separation of the church and the state, that guarantees that a state will distinguish what is relevant of faith or reason. Similarly the separation of manufacturing and research is to bring significant benefits.
Open-H2O is for research, it produces ideas designs and prototypes. It is where diversity of non-converging arguments only creates more value to the community and the possible development of multiple technologies in a democratically-led organisation.
On the other Hand, Protei INC is for lean manufacturing of robots. It needs to be univocal, productive, focused and competitive. The corporation structure of the company would be identical the chain of manufacturing, a chain of command, optimised for production.
As you can see the 2 entities have radically different objectives and requirements, it made sense for us to separate the 2 activities, to have more research freedom on one side, and being more productive and profitable on the other side.
Open-H2O : research oriented, a hybrid of an academic structure and how the website/community services are deployed, each of us being responsible for one part of the website content.
Protei INC corporate structure. Minimal 3 Board of director piloting all the manufacturing operations that might be generally sub-contracted to external manufacturers.
Cycles of Innovation
Industry has high security standards, Academia has publishing standards, initial research can be fast, many research projects take forever, some products are simple enough to be launched in a few days, some require years of costly R&D.
Protei_001, 002 and 003 were built by Cesar Harada alone in a garage in New Orleans in less than a month, costing respectively 400, 300 and 150 USD in raw materials. Protei_006 was built in Rotterdam by a team of ~10 brilliant engineers from all around the world over 3 months and costed about 25’000 Euros in raw materials, with a production budget of almost 60’000 Euros total if we include transport of the team and machines, food, stipend, insurance, rent of the factory, machines, testing sessions… The cost of developing a machine / technology / science experiment varies greatly and each researcher has his style and schedule. Cesar loves iterating fast with prototypes with methods inspired from experimental physics, some other people prefer to work a long time on the theory would they ever touch a tool in the workshop or go to the water. Both methods are valid for research and produce different outcomes.
I personally think it is acceptable to spend so much money and time on research because the whole of point of research is that the outcome is uncertain. The outcome of manufacturing is determined at the beginning of the manufacturing process.
A scientist would set up an experiment of which the expected outcome would be A, B or C, but is generally even more valuable is the outcome is D, opening to even more questions and possible outcomes. On the other hand, the manufacturers will need to validate A, B, C in a determined time and budget as part of an optimisation process. The research process opens up from a question, adding to the number of options ; manufacturing optimisation closes down the number of options, a deductive process towards an ideal product.
Practically speaking, we are talking about different profiles and personalities here, and some would draw there the line between the scientist and the engineer : one that dreams, invents and explores and one that rationalise, optimise and produces. Some people can do both, some are much better at one than the other, but that’s what makes me believe the relationship between research (Opem-H2O) and industry (Protei INC) can be so fruitful, working at different speed with different methods or related subjects.
In terms of “Community Management” (Open-H2O) and “Human Resources” (Protei INC), the structures are totally different. In Open-H2O, members have to tolerate their differences ; in Protei INC the manager needs to be able to decide what is produced and for how much, by who, when, where and how (process). As the CEO of Protei INC I want to be able to decide who I work with, pay people to work on what I know is relevant for the company. As a researcher in Open-H2O I have to appreciate and learn from divergent opinions and theories.
My experience is that it is possible that an open source project would self-regulate itself if members have a common goal (having an influent leader and/or a strong and simple vision helps) but I found that many people attracted to “open source” projects tend to be really nice, open minded but undisciplined. That’s not always true, but generally true in my experience, and that gets more true if people are not paid, some will think they can do whatever they want and not tolerate any form of authority : open source does not mean anarchy. Open source projects needs moderation and often even smarter/more subtle management techniques and close follow up. One of my favourite talk dealing with managing an open source community : “Google I/O 2008 – Open Source Projects and Poisonous People” by Brian Fitzpatrick and Ben Collins-Sussman (Google 2008)
Guarantee of Openness of the technology through Open Hardware H2O licensing
Having the IP licensed by a non-profit, guarantees the un-retractable openness of a technology. That means essentially being faithful to the community and the original founding ethical values.
A good example of this is the relation between the Mozilla Foundation (non-profit) and their main community generated product Firefox (free open source software). The Mozilla foundation being a non-profit guarantees that the code remains “eternally” open even if the commercial activities were to fail. Thousands of people continuously voluntarily contribute code understanding it is a collective effort for general interest.
A counter example would be recent events at Makerbot industries. Makerbot has been producing amazing open hardware 3d printers, but after significant external investors and functioning on heavier structural cost (adding admin, legal, machines, rent, salaries etc) making the machine “less hacker friendly, but more user friendly”, the price tag of the machine had to go up. Eventually another manufacturer entered the market announcing they would produce a copy-cat technology faster and cheaper. Not cool, not following “the [unspoken] rules of Open Hardware“. Makerbot industries had to close the source of the project, at the disappointment of many in the Open Hardware community. Being a respected brand and Open Hardware is great, but it might be more critical to be the best, fastest and cheapest in the market. I believe that’s made easier by separating the cost of research and manufacturing to prevent being step on by a vulgar copy cat cloner. We do not want that to happen to us, ever. To finish, I really want to give respects to the Makerbot team for all they’ve done for the movement, by linking to the response on the topic by Bre Pettis.
Cost, concurrence and niche markets
We have 2 main lessons to learn from the example above:
Having too much overhead such as structural cost and investors expecting generous financial returns will increase the price tag of your devices, making us less competitive as our clients would have to pay for our shareholders/investors appetites, our rent, machines, staff, taxes, time of R&D, administrative, legal and web services. That’s why we want to minimize investors, rent, machines, staff as they already exist outside of us : we are set to be a lean manufacturer by working with existing manufacturers – except for what is specific to your technology. Starting open and going closed is a process in which one may loose the trust of one’s community ; when you could (and probably should) have been growing at the same speed and powered by our community (ala DIY Drones + 3D robotics that operated like a small business and had -until recently- no external investors).
In the context of exponentially accelerating technologies and under media pressure, we needs to make the choice to either step back into the closed “old world” of monopoly or, open even more our research on one side, and on the other side being extremely lean and adapt one’s strategy day after day, embracing concurrence, moving with whoever is the fastest and cheapest. If a technology is good, open source and well documented, it’s likely someone will duplicate this technology without any research and development overhead, to manufacture cheaper, faster and probably better. Allow everyone to enjoy the technology you are developing, but be the first to do so (more details in “Public and Private information : a question of timing” paragraph).
Being a commercial manufacturing entity does not encourage a community of volunteer contributors to develop the technology, being a non-profit with environmental goals does (more). Investors do not make your technology progress as much as our community does : we must “feed” and nurture it, we are the community. It Is not tax free R&D, we will have to invest thousands of hours of our time supporting our community in time, money, intellectual and emotional support.
What will happen is that our community will become our main gateway for our clients (“prosumers“), technical support (forum), R&D, service providers, consultants and employees. Open Hardware enables you not only to develop a technology, to build a product, but a market, a community, contribute to a positive movement. It confirms the validity of the Long tail theory (Anderson 2004 ), fortifies a brand identity and structures a well connected and supportive community around your technology. It is a long term investment.
Public and Private information : a question of timing
Open-H2O is doing research, produce intellectual material, designs, prototypes and experiments. The information is published continuously and made open instantly as it happens, for general interest.
Protei optimises for manufacturing, and manufactures robots. It publishes manufacturing ” trade secrets” only the day the product is made available for sales on the market.
Why is that?
Open-H2O wants to be competitive on the knowledge market and guarantees so by publishing daily, remaining constantly at the very forefront of technology development.
Protei INC manufactures robots, that implies that between the time the machine is optimised and produced, a delay is created. This delay would allow a concurrent manufacturer -that already has the production chain in place- to bring to market Protei copycats faster, cheaper and probably better. The buyers would buy the concurrent robots earlier than Protei could sell its stock : all the overhead of Protei INC would be lost. Bankruptcy.
The necessary measures to counteract this are simple :
At Open-H2O, all the development process of new technologies are immediately published and publicly available under the Open Hardware H2O License.
At Protei INC, all documentation is private until Protei INC products are released on the market with their full documentation.
That temporary “unfair advantage” of keeping manufacturing information secret until public release is the condition of Protei INC to survive and support the Open-H2O community.
Compatibility in funding and taxes
Open-H2O is developing a technology, namely Protei.
Protei INC is manufacturing products, Protei Robots.
Anyone can use Protei technology for the benefit of the environment, that’s a work of general interest and therefore fullfils the mission of a non-profit.
On the other hand Protei INC manufacturing Protei robots is a commercial activity.
But the distinction between a Technology for general interest, and Protei as commercial product is what ultimately differentiate the non-profit Open-H2O and the profit Protei in the eye of the IRS (tax office).
It is right to say “Protei technology is developed by Open-H2O and Protei robots manufactured by Protei INC”.
It is NOT right to say “Protei robots are manufactured by Open-H2O and developed by Protei”.
Protei INC and Open-H2O are 2 entities that are very different legally and from a tax perspective.
A corporation is expected to make a profit that will certainly be taxed, a non-profit also needs to make money but must re-invest that money in activities which fullfil a mission the state approves as of general interest to the community.
Sources of typical income :
Open-H2O : small donations, large donation (philanthropy), Research Grant, Education programs, professional tax donation, sponsorship…
Having 2 groups contributing under different aspects of the same technology allows the technology (in general) to receive a greater variety of sources of funding.
A C-corp (Protei INC) can donate tax-deductible money to a Non Profit (Open-H2O).
A non-profit (Open-H2O) cannot donate money to a Profit (Protei INC), BUT a non-profit definitely needs to buy things and services to exist, and operate.
We are in a transition phase, so this is in practice how we are going to operate until Open-H2O becomes fully independent and recognised non-profit and tax exempt.
Some people have been arguing that a B corp would be the hybrid we are looking for, but according to a recent article in The Economist “There is no tax advantage to being a B Corp, but there is to some of the new legal structures.”
Traditionally people are used to volunteer time, work and do tax-deductible donations to a non-profit.
And traditionally people are used to work for money, and pay taxes when interacting with a for-profit.
Instead of making a “suspicious hybrid”, I find it easier to conform to the way people are used to operate and simplify our relation to the tax office.
To avoid conflicts of interest between the 2 structures regarding decision-making and tax breaks, so it makes sense for me not to be directing both structures. I am the director of Protei INC, Gabriella Levine is the President of Open-H2O. In Open-H2O I will be directing the technology development, in Protei INC Gabriella Levine is the COO. In some instance we are not able to vote decisions that could present direct conflicts of interest between the 2 organisations.
Anyone reasonably informed today understands that we are going through a major cultural shift. Capitalism and logics of egoist accumulation have led to the destruction of the environment, and as the number of humans on earth does not cease to grow, worst case scenari beckons. The scale of environmental man-made damages suggests that we need to envision new scalable collective solutions. Everything humans do is a form of technology, so it is technology itself that needs to radically changed to revert the adverse effects on our environment. I propose this axiom to get closer to that “ideal paradigm” :
“If a technology is good for the environment, it should be made available for everyone to use, modify, distribute.”
That is simple enough to call for a volunteer action and establish a consensus among a group of individuals to work together towards a common objective.
The prospect of a shared prosperity with green open technologies
A growing number of environmentalists and economists converge to say that “in the future, there will be no difference between waste and energy” (HSCB Advertising 2012). A practical example of this is seeing the Pacific Ocean Plastic Garbage patch as an enormous storage of energy. I have been quoted “if we had the power to create these problems, we may have the force to remediate these problems […] using natural forces to remediate man-made problems”. Using natural forces -as Protei does- is one thing, but harnessing collective intelligence and appetite for profit is another powerful one.
The idea really is to exploit capitalism and individual greed for environmental good. When I say that Open Hardware technologies allow us to “create markets, not products” or “turning product into markets” the idea is to create a “gold rush” on environmental problems. If we are capable of developing an oil spill cleaning technology or a plastic cleaning technology, AND we make it freely available, we hope to see many other companies exploiting our invention for environmental good.
And that’s where what many perceive as naivety becomes effective. Our license allows everyone to “use, modify, distribute” our technology for free at the condition to “credit the authors, and contribute the improvement to our community“. That means that any company improving our technology must share with us how they improved our technology. That means several good things :
our technology is improved
our community grows and everyone benefits from it
our brand grows (and we can control the naming/trademark and credits that go with it, see “Use of a traditional trademark, quality control authorship” paragraph.)
it is essentially free R&D for us, so the more people research, commercialise our technology, the more credit we get, confirming our position of experts in the field
we are constantly in contact with what other companies would call “concurrence“, that we can start to consider “collaboration” as they improve our technology.
the environment is the big winner if we are not (financially – if another manufacturers wins the preference of the consumer / community – that’s the risk we are willing to take)
We all make some money, support ourselves.
Many are skeptical of the potential commercial success of Open Hardware. If you consider the scale of issues such as the Pacific Ocean Garbage Patch as “demand” and what’s currently available as technological “offer” to solve that problem, you will soon see that our “Open Hardware for the Environment” technology has an enormous market potential. The environmental damage “demand” is a long way ahead of environmental remediation “offer”, and “Open Hardware for the Environment” is the intellectual property to bridge that gap, to scale a technology to that level. We could use that same logic for developing health solution as a clear subject of individual and general interest – yet, many people are dying to pharmaceutical lobbies financial interest, the same way we are destroying our environment to powerful energy, industrial, agricultural etc lobbies. I believe, this is changing too.
I personally think we are at pivot moment in human history, an enlightenment : traditionally environmental issues where trusted to be best understood and addressed by non-profit (such as Greenpeace) academia and government. In recent years, many democratic countries have seen their large public enterprises privatised, public servants and politicians loosing credibility in corruption stories. Citizen do not trust anyone anymore and reclaim a democracy 2.0 that is real-time, transparent, accountable and to which they can democratically take part. As social inequalities grows and adequate natural resources shrink, the tension between governing and governed, rich and poor, responsible for climate change and victims of climate change increase, looking for a space of dialog. In a previous post, I explained how Open Hardware provides this neutral space for collaboration between Government and Citizen powered by Industries and Academia in the context of Brasil. I believe that this political pressure for affordable and transparent tools for transparent data will only amplify the growth of Open Hardware for the Environment as a market.
In 2010 Limor Fried and Philip Torrone presented “13 OPEN SOURCE HARDWARE COMPANIES MAKING $1 MILLION OR MORE (VIDEO)”
That really is to me the demonstration that Open Hardware companies can not only survive, but really thrive serving common good. And that was 2010 : today in 2012 there are hundreds of Open Hardware companies making money and that number is exponentially growing.
A Common Order of Ethical Priority
Even if a non-profit (Open-H2O) and a corporation (Protei INC) may have divergent objectives and modes of operation, they can share a similar order of ethical priorities.
Most corporations today have this order of priority :
Technology (closed IP and monopoly)
This order of priority makes perfect sense for an industry that exploits the environment, instrumentalises people, using technology for profit. In that logic, Profit is what drives technological innovation, people are usually just treated as a disposable “human resource” and the environment is a marketing consideration, part of the “greenwashing” strategy to increase the price tag of the service or product. It is funnier/absurd if you consider that this is the opposite of how the world really works : Without the environment no human would live, no technology would be created, money being one of the most arbitrary and abstract of all technologies.
If we want to create an industry that works for the environment, we must flip the “business as usual” order of priorities on it’s head :
Technology (open IP and collaboration)
And I am not talking about a revolution here, I am talking about sustainability for business. A system that supports itself, that re-enforces how the world really works: by prioritising the environmental growth, we provide people a healthy life, to develop meaningful technologies and make money. That is a virtuous circle, a desirable state of affairs that I think is the shift human society needs to make to become truly sustainable and meaningful in the eyes of other species on this planet.
A different order of development priority
The choice we are making above could seem uniformly applicable to both manufacturing and research. Yet, research and manufacturing are such different contexts, the same order of priority does not result the same decisions in daily operations. We are in the process of developing Protei_010. Protei_010 has one simple hull, will be distributed with a basic RC kit, but the “toy” would be upgradable to become a powerful modular ocean science platform. Environmentalists would stress the development of environmental sensors -which are the finality of our technology- when the majority of our market target would require us to focus on providing the basic functionalities of transport -which is the mean-.
One to develop the end (measure) : the Why. Research. Sensing activities. The end questions. Open-H2O.
One to develop the mean (transport) : the How. Manufacturing. The transport. The means to answer. Prote INC.
Again, that really justifies why we need both. An organisation that proves my argument to be wrong may be the Public Laboratory to which I used to contribute to regularly. Public Laboratory is a non-profit that also sells Citizen Science kits. But to my knowledge, the largest part of PLOTS” revenue come from non-profit grants. Several successful Kickstarter campaigns show that this could change as they are truly developing a community by using crowd-funding platform to pre-sell their Open Hardware for the Environment kits. I personally want to situate the development of an environmental technology in the reckless but powerful reality of market and concurrence for Protei.
A technology that was invented a century ago, that started coming out of labs 25 years ago, became a toy with countless manufacturers for 2 decades reducing price, improving spectacularly specs are quadrocopters (or Quadrotor). Now the performance of quadrocopters are so high in comparison of their price, they are back to the lab to be tested in large numbers, serving now not the purpose of transport but as physical platform for the most advanced swarm robotics and coordinated robotics experiments. Now imagine the same agility on the water, a fleet, a swarm of Protei… :) That’s when industry can really serve the research. Instead of spending decades developing Protei technology, we can develop it’s research and industrial applications simultaneously.
Why Shareholders cannot manage Protei INC, but why Open-H2O community must govern itself meritocratically
A normal C-corp would have the company owned by it’s shareholders. Typically shareholders invest money in the company because they are interested in maximising the company’s profit and their individual dividends. That is also called speculation, and because we want to subvert standard capitalist corporation functionning -namely a C-corp- we refuse to give away to our respected shareholders the capacity to maximise their dividends at the detriment of our ethical engagement that is to prioritise Environmental benefit, over people, over the technology. We want to see our environmental return grow faster than our financial return, that’s our success criteria.
In practical terms, that means that shares distributed by the company would not allow the shareholders to :
decide who the CEO is
manage the company and key decisions
decide how much dividend to allocate themselves.
These are the main “Exotic” conditions attached to the shares of Protei INC that guarantee the durability of our corporation for the betterment of the Environment. We can control the ethical engagement of a small number on the board of Directors ; we cannot control the financial behaviour of whoever decides to invest in the company, especially when that number grows, and when the volume of “external investors” outnumbers in volume the shares of the core team.
On the other hand, Open-H2O wants to be a meritocracy, that is democratically electing it’s representatives for a competitively renewed leadership for quality in research. Knowledge is produced mainly by 2 forces : collaboration and competition. In practice these 2 processes are not opposed but variants of one another as they are comparative processes, with a common goal : excellence.
A robust license acts as an”intellectual currency” to exchange “intellectual property” between Protei INC and Open-H2O. It is the license that both connects and differentiate Protei INC and Open-H2O, since Open_H2O will be developing a Technology in the non-profit world, while Protei INC would be manufacturing a Product in the commercial world.
The Open Hardware H2O is intended to invite anyone to use, modify or distribute Protei technology for free in exchange of crediting the authors and contributing to the Open_H2O community. Protei would be the first technology licensed under Open Hardware H2O but any technology that fulfils the mission of Open-H2O of “developing Open Technologies to explore and protect the oceans” would be eligible to that license and the support of the Open-H2O community.
This license should provide all the legal basics that an inventor that has a technology that he/she wants to develop and licence as open hardware for the environment would want to see covered. So there is the IP specified above but also have a liability disclaimer in case of accident or misuse, environmental considerations and adaptations to specific rules that apply to the aquatic environment, especially in international waters. This license is currently under development and I will update this article when the first version of our license Open Hardware H2O license is released.
Use of a traditional trademark, quality control authorship
This may sound slightly strange but as much as we want to give away a lot of the control of who does what with the Protei technology, being able to modify and commercialise it, I reserve myself the right to decide what is “Protei” and what is not. As the original inventor of the technology, I recognise the contribution of the Open-H2O community to have contributed to the development of Protei. I invented the technology and the name, and I remain the owner of the trademark “Protei”, registered at the US Trademark office. I did not do this because I am a control freak, I do this for the integrity of the community and quality control of the work produced. Granting the name “Protei” to a prototype or product is a like a seal of approval, a quality label. I did not invent this, I learned it from Arduino.
To my point of view Arduino is the most powerful Open Hardware platform project to date, now available in every Radioshack and taught in art, design, robotics and science classes around the world.
Now the downside of having 2 structures :
Confusion if you start like us, from one group that turns into 2, some people might feel they want to belong to both, but that may not be possible. It also means a clear redistribution of responsibilities labor and titles must occur.
Administrative work : yes, it is twice the amount of paperwork at the beginning.
Legal work : the same lawyer for both entities or two separate ones? Really depends on your lawyer experience and your budget.
Structural cost : yes, it costs more to register and run, but to my point of view a lot cleaner.
Public and Private information : That theme overlaps a bit with conflicts of interest, as one may want to have both the up on research and manufacturing (ref. Public and Private information : a question of timing )
Community and employee overlap : potential conflicts of interest. And the political tension might grow if one or the other entity makes more money, but that’s human, and that’s called jealousy or greed.
Beyond general strategic motivations, I also have personal motivations to be wanting to focus on Protei INC and less on Open-H2O for some time.
I used to spend 90% of my time prototyping and testing in the water, 10% to document. Since the project has become a collective effort, I spend 90% of my time managing the team and doing admin work, and 10% prototyping and testing in the water. The best sailing prototype today is still Protei_002 that I built alone for 150 USD alone in garage in New Orleans in 2010. I must get back to the workshop and to the water to make the technology and the community progress.
There is a lot of work ahead of us, but this is an incredibly exciting time. I hope you now understand better the mutations we are experiencing and it encourages you to build similar / better ventures! I have special thoughts here for our friends at OpenROV, Littlebits, OpenMaterials, windowfarms, safecast, PublicLab, OpenRelief that are great sources of inspiration for us and that are totally taking off as Open Hardware businesses : keep going guys! We’re coming too! Open Hardware for the Environment !
42 769 professionnels de tous les secteurs d’activité présents en 2011
15% de donneurs d’ordres internationaux en moyenne venus de plus de 65 pays
Des pavillons toujours plus importants : 17 régions françaises et 30 représentants de pays ou régions étrangères
Plus de 50 organismes étrangers sont les partenaires actifs de Midest
11 Villages Métiers en 2012 représentatifs des savoir-faire français : Électronique, Fixations Européennes, Fonderie, Forge, Informatique industrielle (Nouveau), Mise en forme des métaux, Plastiques / Composites, Caoutchouc, Traitement des matériaux, Transformation du Bois et Usinage / Machines spéciales.
I found many potential manufacturers for Protei :) Here are the super ugly and uber geeky snaps for the record :) Loved that place and the people, really.
Now I have a bag full of catalogs and references, so when our designs are ready i can chase many people for estimates :) YAY !
Gabriella Levine and Cesar Harada have been selected to participate to the Unreasonable at sea for the Protei project.
Please watch the video above and you will understand why we are excited to be part of this great adventure. For several months on the sea, we will be in the company of some of the world most forward thinking entrepreneurs that will be our mentors. This is an immense honor for me and for the Protei Project and we will document this journey as well as possible to share this incredible privilege with the greatest number. You can see our dates of the travels and where we will stop on my time line.