Business theorists have started to grasp the risks to established businesses of asymmetric competition. (By analogy to the concept of asymmetric warfare, sometimes companies are competing with rivals whose different business model transforms the nature of the conflict. For example, the competition between Netscape and Microsoft was symmetric because both companies employed the software distribution business model, but the competition between Google and Microsoft, or (more granularly), between Firefox and IE or Linux and Windows, is asymmetric.)
But the NY Times points out an even more disruptive trend in an article entitled Death by Smiley Face: When Rivals Disdain Profit: “There is another breed of rival lurking online for traditional media, and it is perhaps the most vexing yet: call it purpose-driven media, with a shout-out to Rick Warren, the author of “A Purpose-Driven Life,” for borrowing his catchphrase. These are new-media ventures that leave the competition scratching their heads because they don’t really aim to compete in the first place; their creators are merely taking advantage of the economics of the online medium to do something that they feel good about. They would certainly like to cover their costs and maybe make a buck or two, but really, they’re not in it for the money. By purely commercial measures, they are illogical. If your name were, say, Rupert or Sumner, they would represent the kind of terror that might keep you up at night: death by smiley face.”
CraigsList is the obvious poster child of this movement, with open source projects like Firefox another good example, but as the article points out, even Google began as such a “purpose driven” company, and its non-commercial ideals still drive parts of its business strategy. (I recall a recent conversation with Larry or Sergey (I don’t remember which) in which he was commenting on why he’d prefer the ad model to work for Google Book Search if possible, because it would enable poor people to access books, while subscriptions would preserve the old economic dynamics.)
Of course, there have always been purpose-driven entities, some of them great enterprises. But the disconnect between economic ambition and business impact seems greater today than at any time I can remember. Is Craig Newmark an aberration, or an early sign of an emergent new economy of whuffie?