Innovation Works Better, Faster With Openness, Not Lock-In

from the don't-fear-the-openness dept

Dave Winer has a short, but important post discussing how a new round of entrepreneurs (and VCs) are too focused on locking in users, rather than making use of open standards.

They worry that, if they provide open access to the data their systems accumulate, no one will come to their website, therefore no one will be able to enjoy their lock-in, thereby justifying their multi-million dollar valuations. Why should we care? Problem isn’t that they’re young, the problem is they have a too-thin value-add to support the kind of investment they’ve taken on.

Since VCs are now investing in news startups, they are really testing the value of lock-in. I wonder how many of the new crop of VCs understand how this has shaken out in the past. I remember when RSS was just getting started, there were all kinds of fancy content management APIs, some were even in the process of being standardized. They all very quickly evaporated when RSS took hold. The difference between a four-screen spec and a bookshelf. Because you need all that complexity to hide all the lock-in. There was no place for lock-in in RSS. It was too obvious how it worked.

Going for proprietary solutions that lock users in is a short-term strategy from a company afraid of its own ability to innovate. Those who actually know they can continue to innovate long term don’t need to worry about locking people in, because people will want to stay. Furthermore, by keeping things open, you enable a wider ecosystem to grow up around things, providing even more value (much of it you don’t have to build yourself). It’s the same old story around open access, open source and other similar concepts. It’s protectionism vs. free markets. It’s copyright vs. creative commons. Openness breeds innovations and creativity — and that’s fearful for those who don’t think they can compete. They need barriers, hurdles and tollbooths to try to keep people from leaving. It’s short term thinking.

Winer blames venture capitalists for this line of thinking:

I think the VCs do a disservice to young technologists. When I was young, I would have said no thanks to lock-in. I’m not going to be so dishonest as to create tools that offer users no choice. I want to win because my stuff is deep and powerful and performs fantastically and has the features users want. Why? I chose my profession because I love what I do. There are lots of ways to make money. I’m not looking for scams and shortcuts.

To be fair, I don’t think all venture capitalists push for lock-in. There are many who do, but there are also many who recognize the value of openness and what it means for the long term and building truly sustainable businesses.

We’ll see what happens. The long term is a bitch, and it has a tendency to plow under get-rich-quick schemes and I know you think it’s idealistic but evolution only builds on open formats and protocols. That’s how technology layers. It’s true some patents hold, and some lock-in gets built on. Look at PDF for example. But there’s a reason HTML took us places PDF never could. The ability of anyone to do anything they wanted to, without having their API key revoked. That’s a big enabler of creativity, to use terminology VCs understand.

To some extent, I think this goes back to the pernicious myth of the “sustainable competitive advantage.” This is a line you hear all too often from venture capitalists, and as I’ve said for over a decade, it’s misleading in the extreme. Really successful businesses have a series of fleeting competitive advantages. The idea of a “sustainable competitive advantage” is a recipe for stagnation and resting on your laurels rather than ongoing innovation. Recognizing that a competitive advantage is always fleeting and competitors are always working hard to catch up is a recipe for continuous innovation and improvement.

It’s the same thing with lock-in vs. openness. Building for lock-in leads to stagnation and resting on one’s laurels. You got them in, and then you just look to set up tollbooths. Building on top of openness allows you to continue to innovate and to better serve the people who love your services and it keeps them there because they’re happy, not because it’s too difficult to leave. Proprietary solutions and lock-in can and do work in the short term, but it’s a dangerous long-term solution that often leads to less innovation. Building on openness creates greater opportunity, greater innovation and better overall solutions.

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Comments on “Innovation Works Better, Faster With Openness, Not Lock-In”

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hij (profile) says:

Control Issues

Back in the day, I was working with another guy on some websites that were supposed to be resources for various tech issues. He kept hitting me with the idea that the site should be designed to make it harder to leave the site. I kept arguing that if we want people to come back we should be designing the sites to encourage people to leave it.

He thought I was nuts because it was just not the way things were done. A few years later google came around, and their primary business model was designed to act as a resource and get people to leave their site as quickly as possible. Yet again we see that people’s control issues override the goal of providing better products and attract more customers.

John Fenderson (profile) says:

This is a battle I've fought my whole career

Often with the exact same people. Sometimes I’ve won it, sometimes I’ve lost it, but I do know that in every case, the project that didn’t engage in lock-in was the one that was more profitable.

I’m very happy to be able to point to that in arguments, because people usually understand money. However, the real reason that I fight to avoid lock-in is philosophical, and Winer hit that nail on the head when he said “I’m not going to be so dishonest as to create tools that offer users no choice.”

Because, in the end, that’s what I think lock-in is: dishonest. When I see other products, in any field, doing the same thing then I think of the companies that produce those products as dishonest.

Editor-In-Chief says:

Re: This is a battle I've fought my whole career

We often see this the spare parts market. Try replacing the cutting blades on a mulcher. Two pieces of heavy metal and the bolt holes are not standard, different between different models. Or try replacing the muffler on a lawn mower and one will have a thread and one diameter and another will have no thread and a different diameter and be bolted on and they are from the same manufacturer.

Or even worse, the part you want from a supplier is a OEM only part. I have seen specific NSK bearings that cannot be purchased as replacements, they are only available from the OEM at either extraordinary expensive prices or you have to purchase an entire unit. In this case, a number of bearings in a gearbox needed replacing, the only way to do so was to purchase a $15,000 gearbox.

A local gearing manufacturer was willing to build the bearings to the specific sizes for a few hundred dollars.

David Oliver Graeme Samuel Offenbach

Editor-In-Chief says:

Re: Re: Re: This is a battle I've fought my whole career

Do the manufacturers know that vendor lock-in means that they have to support their rubbish for a very long time?

A very interesting question. If it lasts for such a long time, is it rubbish? Or was it a mistake in manufacturing that that it has lasted this long?

My problem is when they build machines and devices in which they use non-standard parts where they could have just as easily used a standard part – bolts, nuts, screws, bearings, replacement blades, wheels, etc. Thin in and of itself means that they no longer require such a large inventory of spare parts. This inventory is a cost that they have to bear for at least a period of time. If standard parts are used, that is a cost they can forgo and hence a possible increase in profit margin.

David Oliver Graeme Samuel Offenbach

Rich Kulawiec (profile) says:

Re: This is a battle I've fought my whole career

Agreed. To borrow from one of the oft-cited essays on this site, “saying you can’t compete with open is saying you can’t compete, period”.

Besides, open is a necessary (but not sufficient) requirement for security…which, I hope, is on folks’ radar in ways that perhaps it wasn’t two years ago.

Anonymous Coward says:

The only way to have a “sustainable competitive advantage” is to actually do: “Building on top of openness allows you to continue to innovate and to better serve the people who love your services and it keeps them there because they’re happy”.
The lock-in `investors’ are more like the record labels: blindly throwing lots of money at lots of options to break even quickly, without knowing what makes a winner. Not what Tech needs, nor what true VCs should want.

Eldakka (profile) says:

If I want to make money I will

If I want to make a startup and sell it to Google or Microsoft or Apple or whoever, I’ll do whatever’s necessary (and within the law) to make it an attractive purchase for one of those giants. If it means lock-in, then you bet your ass I’ll implement lock-in.

Once that company’s sold (if it does) and the non-compete has expired, and I’m rich enough to not care about ‘making’ any more money, I’ll contribute anything I can to the open standards open-source equivalent.

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