Subject: RE: Successful FSBs
From: "Benjamin J. Tilly " <ben_tilly@operamail.com>
Date: Fri, 20 Sep 2002 21:48:27 +0500

"Larry M. Augustin" <lma@lmaugustin.com> wrote:
> > Alan Hudson [mailto:giles@yumetech.com] wrote:
[...]
> >  From a global/technological economic point of view I bet these small
> > businesses are vitally important.  I employ 5 folks in my niche
> software
> > business(3D graphics) that generates a lot of open source(200K+ LOC
> last
> > year).
> 
> They are vitally important.  I think there are a lot of them.  But is
> that the future of FSBs?

I think they are important for the future of FSBs.

With open source virtually anyone can start a small
project.  Standard development dynamics favour teams
that self-organize with just a few key developers,
with the open source edge being that those few people
get bug reports and feedback from many more.  The
relatively few projects that get too large for this
model tend to self-organized into a fractal structure
with the majority of the work being done in projects
of the favoured size, and then with a center where
things get integrated.

I don't think that this will change.

Some of these teams will naturally form into FSBs
whose size is self-limited.  This implies that we will
continue to see small FSBs of this size.  Similarly I
see plenty of small delis in NYC that aren't about to
grow.  There are natural forces driving that size for a
certain kind of problem.

> Are the only "pure" FSBs are lifestyle businesses?

Is Red Hat a pure FSB?  It certainly doesn't seem like
a lifestyle business to me!

The fact that there is a natural tendancies that
encourage the existence of lots of small businesses does
not mean that there aren't also roles for larger ones.
Heck, even the small businesses may generate roles.  For
instance all of those small delis need fine meats, and
by and large the ones in my neighbourhood are all selling
the Boar's Head Brand.  Which means that there is a larger
business based on the opportunities for a lot of small
ones.

The same can work in software.  For instance for a long
time Microsoft did a lot of business through providing
tools, training, certifications etc to encourage small
contractors to use the Microsoft toolchain.

Which raises two questions:

1. What services can be provided to existing or would-be
   small FSBs?

2. Is there a reasonable model in which plausible niche
   FSBs would choose to organize under a larger umbrella
   instead?

> Are the only non-lifestyle FSBs mixed businesses like Sun and IBM?
>  
I don't think so.  But I think that they will be a
prominent source of examples going forwards. And I think
that that is a good thing.

Cheers,
Ben
-- 
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