Openbound: a new type of company

Some rough notes on the concept of openbound, which has been in my mind for a long time and is now aching to come out. Buyer beware: this is 1) political and controversial; 2) I have never managed (yet) to start a successful company.

• Opposing capitalism is like standing in front of a train. And yet, capitalism left to itself creates our current state of affairs, which leaves a lot to be desired. The system is generating more wealth and innovation than ever before, but truly distributed abundance hasn't arrived yet.
• There's a beating heart of capitalism, and that's enrepreneurship. Openbounds are about harnessing the creative energy of capitalism towards a more constructive purpose than to make the entrepreneur rich and the rich backers even richer.
• It is silly to orient the entire economic system to make the rich richer. The ones least in the need of more wealth are the rich. Openbounds are about using the power of markets and open source to bring abundance to everyone else.
• What makes capitalism work is open markets, which allow for competition, adaptation and a transfer of economic information. These open markets allow many many people to start businesses and use their initiative. This is the heart.
• The last time we regulated capitalism into a welfare state, it required going through a world war and complete mobilization. I'd like to see another welfare state, but not have to go through what we had to go through to reach one. Also, certain policies of the welfare state made capitalist systems lose efficiency and dynamism, which ended up being counterproductive.
• Inside the economic, there's something completely political: how do you produce your means of subsistence? Are you told what to do, do you determine it yourself? Economic activity (work, organization, ownership) is deeply political.
• Rather than regulate capitalism from the outside, what if we create an alternative within its very heart, entrepreneurship? This is the idea, a new type of company, which is called openbound.
• The first half of openbound is "open". Open stands for open source. The concept is that an openbound works in public. Its products, its processes, even its relationships (safeguarding privacy regulations) are constantly published. Openbounds work in the open.
• The second half of openbound is "bound". Bound stands for a bounded return on capital. In stark contrast to profit maximizing companies (profmaxs), openbounds treat capital as something that has to be compensated, a cost, within a set limit. Openbounds must stay profitable and must provide a return, but they are in the business of maximizing abundance for many, instead of maximizing the wealth of their owners.
• Openbounds are an experiment in unlocking abundance.
• Why would openbounds be a different, perhaps better way to create companies? In short, because all of the things that make companies good remain: competition, innovation, open markets, providing value to customers, profitability. And all the things that make companies bad have little room to grow: concentration of intellectual property, concentration of wealth, enshittification of products.
• Openbound is about both openness and self-restraint.
• Openness ensure that when things go sour, customers and employees can vote with their feet, take what works, and build something better. Bound explicitly limits the return on capital so that the energy of the company can go into something more useful and interesting.
• Effectively, openbounds are setting a higher bar for themselves than profmaxs. They are competing in open markets with profmaxs, but without keeping competitive secrets, and without promising the highest possible returns to investors. And yet, they carry two advantages that offset all the disadvantages: purpose and social choice.
• Purpose is key for starting businesses, even profmaxs. Without a strong purpose to create something new, new companies don't happen. Many entreprenurs are motivated by being the change they want to see in the world far more than cashing out for an early & guilded retirement. But the game is profmax, so they join it and play it as such. An openbound is explicitly created for the purpose of changing the world, not selling it to the highest bidder. There's no finish line. And there's no distraction either. As long as the company is profitable and the capital is paid, the thing to maximize is abundance. An openbound aligns the purpose of purpose-driven founders with the rules by which the company plays.
• Social choice is also strong. Most consumers distrust most companies since most of these companies are just playing the game of maximizing their own profits. This is particularly the case of big companies, which actually can engage in behaviors that destroy value for customers for the purpose of increasing their profits further. A textbook case of this is Google's progressive enshittification of its search engine, once a revolutionary and empowering product. If customers could have a choice between two products of similar quality and price, but one of them sold by an openbound, they would probably prefer to buy that, since the openbound is more aligned with themselves than the profmax.
• What does an openbound mean for its founders? You start one to create a change in the world, and as long you stay profitable, you can take it in whatever direction you please. But you cannot sell it out. And you cannot use your knowledge to forestall competition. You're essentially building an empire without a moat (because your moat is the trust of your customers and employees).
• Capital is trust. Others give you resources for you to put to use. For business, you need two things: capital and initiative. Initiative is talent + application, the human input. But capital is just crystallized trust, so it's also human.
• Openbounds can levy their own "tax" on top of the price at cost, to fund capex in the own openbound or other openbounds.
• Who the hell would start a company and forego the possibility of becoming as rich as they can get? Good question. I suspect I'm not the only one.
• Would any of this be actually possible? We'll have to find out in practice.
• Strategy A: create an innovative company that could be a successful profmax, but do it as an openbound instead. Strategy B: pick a market dominated by large, enshittified profmaxes and offer an openbound alternative.
• Openbounds vs other types of organizations: it's not a non-profit because it must be profitable; it's not a cooperative because it can be funded by external capital.
• There's different possibilities for open (GPL? Public domain? Big competitors must pay licenses?) and different possibilities for bound (bounded dividends, bounded exit, treating investment as debt with a % of interest). The openbound movement will be made stronger by this diversity, which encourages necessary exploration and adaptation into different niches. And what is "maximizing abundance"? Also left open. We'll figure that out collectively through individual acts of entrepreneurship that evolve and converge through open markets.
• Marxism's cardinal error is to consider society unavoidable split in classes, which completely precludes the possibility of different groups coming together towards common goals. By considering class warfare as an axiom, it concludes that classes should unify within to fight and prevail over the other. Capitalism's advantage is that it doesn't prescribe unification of an entire stratum and division between strata, and instead allows for individuals and groups to act according to their own initiative, coordinated by markets.
• Liberalism's cardinal error is to consider that individuals are mainly driven by self-interest, and that optimal outcomes stem from that. Humans are wired for cooperation, not egotism. Markets are about the power of initiative, not self-interest.
• Openbounds are about achieving economic peace. The goal is not to accumulate behind a wall, but to create and share while taking care of yourself. It's about putting on your oxygen mask, then help others put their own. To accumulate as much as you can is an error we can remediate through markets.
• The excess value, rather than accumulating, is constantly transformative towards abundance: divide a portion towards lowering prices, another one to build more openbound capital. The goal is to create a runaway autocatalytic chain reaction towards abundance.
• If someone else comes and executes an idea for an openbound that you were working on, great! If they really do it as an openbound, and it really works, then that change that had to happen in the world already happened. Appreciate the change, those who did it, and move on to something else that needs to be done. There are plenty of things to be done. We can go beyond fighting each other for crumbs.
• Focus on hotspots for hits across economic areas. A few hits can catalyze the whole process.
• A successful bottom-up transformation of capitalism towards social ends would in practice put the capitalist engine at the service of social revolution. The idea is to find the end of the road of any and all subjugation through abundance. (Yeah, revolution from below, through markets. It's a one in a hundred billion shot.)