Apr 2

Nat Torkington

Nat Torkington

Doc Searls: Business as Morality

In the middle of an email conversation with Doc Searls, I mentioned that I was having trouble with the whole "Web 2.0" concept. A laundry list of features or concepts doesn't encapsulate the real change for me: the real key to success is treating the person on the other end of the HTTP connection with respect. Doc, a co-author of The Cluetrain Manifesto, sent a deeply thought-provoking piece in response, and with his permission I post it here. Over to you, Doc:

[Doc Searls writes] It's a matter of morality. That's my current take on it. We can approach everything through one of three moral systems:

- Morality of self-interest. This gives us "owning", "domination", etc. The Old School. Industrial Age shit. Still prevails in many business plans that are just for killing other companies.

- Morality of accounting. We balance everything. "Paying debts", "owing favors". This is our system of justice, by the way. It's all about accounting. (Note the scales of justice symbol.)

- Morality of generosity. We give. We are open. We love without expectation of reward, or even accounting. (In fact, when you bring in accounting, you compromise it.) Think about how we give to our spouses, our children, without strings. It pays off, too. But that's fundamentally not what it's about.

I think some of what we see in Web 2.0 (a term I've never liked, much as I like Tim, who has done the most to promulgate it... I think it's what we'll call the current bubble and the next crash) is the morality of generosity. At eTech, I saw a preview of a browser-based Photoshop/Album organizing/print product front-end service. The biggest thing the creator wanted to show was how generous Flickr is. "Watch this," he said, before using Flickr's API to suck all 6000+ of my photos from Flickr into his product. All the metadata, all the tags and associations, were intact. His point: Flickr isn't a silo. Their closed and proprietary stuff doesn't extend, not is it used, to lock up customer or user data. It's wide open. Free-range. Most of all, however, it is a "good citizen". It is generous where it counts. Nurturing. The same was clear in Cal's tutorial at eTech. People love Flickr because Flickr loves people. The good guys finish first. In this case, anyway.

These three moralities also map somewhat to the market model that looks like this:

  • Relationship
  • Conversation
  • Transaction

We need transaction, but can't reduce everything to it. Although there are whole B schools that have been doing that for 100 years.

We need conversation as well. Which is why we wrote Cluetrain.

But relationship is what actually makes markets. I'm talking about real markets here: places where we do business and make culture. Relationship takes the passions we put into creating businesses and makes them work in the social context we call a market. (Did anybody ever go into business because they were looking for a way to please stockholders?)

You have to be generous in relationships.

I learned this from a Nigerian theologian named Sayo Ajiboye, by the way. Way back here.

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Comments: 27

  Dharmesh Shah [04.02.06 05:00 PM]

Very interesting concept. I agree that with most of it and would posit that most people would rather "give" than "take" (as it makes them feel better and is more fulfiling).

The challenge is that generosity requires acquiring resources to with which to be generous. In the business world, this means finding a way to somehow have the capacity to build something that has value to the community. The good news is that its much easier to do this now (on the Web) than ever before.

  Kevin Farnham [04.02.06 06:49 PM]

Is it just me? I find it difficult to make sense of these arguments. Or to accept that they apply to anyone except for the privileged few.

Doesn't the altruistic model presume wealth as a starting point? Rather than assuming a starting point where we have nothing to work with? Where is the recognition in this model that non-wealthy individuals will have very little financial flexibility for altruism directed toward the world if they have fully directed their altruism toward their family? I don't see it.

With respect to loving your family, giving to them, freely giving, without expecting anything in return, only hoping that the one you love grows and finds happiness--are we giving something we have without having had to work to have it? Are we born spiritually rich? I would say yes, but also no. The wisdom behind the spiritual gifts we give to children is attained through striving and reflection on the lessons of experience.

And certainly to provide them with a decent place to live, with adequate comforts in addition to the necessities, requires very hard work on the parent's part, sacrifice of time and energy, and in fact, impoverishment of the parent if all that can be given is truly given. Certainly, interiorly, vitality is restored, the well refilled. But as the kids leave the nest, the bank account isn't magically replenished.

On the micro-business level, a one-person company, the altruistic business model does not seem to apply. Rather, accounting applies. Income is needed this month to pay this months bills. Otherwise, the altruism toward the family ceases to exist.

The culture of altruism, then, can only exist at a corporate level. Which means, it can only exist if the founder of the altruistic company is wealthy, or if the start-up company is backed by venture capital, which is money primarily from the wealthy.

So, we are talking about corporate generosity and corporate altruism and corporate relationships with customers. It is still economics, I think. It is a kind of giving that does not hurt the giver because what is given is a tiny drop in the bucket compared with the giver's total wealth.

  Tim O'Reilly [04.02.06 07:09 PM]

I have to say that while I don't necessarily disagree with Doc's thoughts about types of morality (though it's hard to avoid characterizing as oversimplification a system that finds only three bases for morality!), I find the idea that Web 2.0 is about a different kind of morality to completely miss the point.

It's ultimately about the internet as platform. And any network-oriented platform follows network scaling rules, in which "generosity" is better survival behavior. (See Jon Postel's "robustness principle.)

I guarantee you that there are huge Web 2.0 success stories that are anything but generous!

Open, reciprocal, transparent -- there are lots of positive words you can throw at this one. But I don't think "treating the person on the other end of the HTTP connection with respect" is a distinguishing characteristic of web 2.0. It's a characteristic of good businesses and good people in any technological era.

  Doc Searls [04.02.06 08:34 PM]

To Kevin: What I wrote to Nate wasn't an argument. It was thinking out loud about something we don't often bring into tech conversations. I agree that it's "still economics." But I'm not sure the economics of selfishness or exchange covers it. In fact, I'm sure it doesn't. And I'd like to think and talk more about that. This whole thing just came up for me as I was writing to Nate.

To Tim: What I said here doesn't have much if anything to do with Web 2.0, even though it addressed Nate's question about Web 2.0.

It has to do with something I'm seeing in the growth of networked markets. It's not something I'm seeing across the board. It's something I'm seeing in *some* cases (such as Flickr's). But I think it's significant. And i think it can't be explained in terms of the moralities of self-interest or of accounting.

I think it *may* have something to do with Internet-as-platform" in the sense that networked markets are supportive of much that we're only beginning to understand. The morality of generosity, it seems to me, is in there somewhere.

As I said before, this is current thinking, not some kind of finished pronouncement. Nate liked it and asked if he could publish it, and I said yes.

  Julian Bond [04.02.06 11:51 PM]

I think we should be talking here about Ethics and not Morals. A system of Ethics is more subjective and has more implications of self interest than a system of Morals which implies some objective or religious truth. But it's a subtle difference.

Slightly off topic, the West has a real problem that the Ethics of Business and the Ethics of Government should be different and more or less orthogonal but increasingly the lobby system is making them the same.

  Kate Trgovac [04.03.06 12:33 PM]

Very thought-provoking - thank you Doc & Nat. Perhaps we should rename Web 2.0, the Generous Web :-)

Seriously though, the model of generosity that Doc describes is something we're seeing in other areas: barter economies, "un"conferences,, I believe this real-world application of generosity is enabled by the open architectures that Doc describes. It is easier to be generous than it once was; and people are valuing generosity.

The neat thing is that individuals and communities have likely always valued generosity, but now, with the democratization of message distribution (blogs, podcasts, etc), individuals can have as much voice/sway/influence as business-elite whose values tended to focus more on competition and profit.

I also appreciate Doc's description from transaction to conversation to relationship. Truth be told, I've struggled with one of the key messages of Cluetrain - that markets are conversations. I'm concerned that it devolves into "talking at" each other. The move to *relationship* implies that each party has a vested interest and that there is an element of give-and-take on both sides.

Neat stuff. Thanks!

Cheers .. Kate

  Chris Heuer [04.03.06 04:28 PM]

Good points all around, but I believe the fundamental shift that is happening today at the heart of it all is the migration from an economy of scarcity into one of abundance. From an economy in which the use of physical materials form the basis of all economic activity to one in which knowledge and digital communications is at the core.

In the context of Doc's email, this is seen when people take simple actions (like tagging a web page in Delicious or commenting on a blog post) that fulfill our self-interested desire to feel good about what we do by easily contributing to the general good of those around us. But it is more then respect for people on the other end of the HTTP connection, it is the recognition that power and wealth do not always equate with value. That instead of there being a sole voice of authority on any given subject, that the real people and their collective wisdom holds the real value. So rather than blindly worshipping a maven because they are published, we are respecting the potential contributions of all people.

I believe that real people today are filling the funnel of expertise, rather than climbing the ladder to fame and fortune. The more we each contribute to the funnel, the better off we all are as a result. This is something I literally just wrote about prior to reading this post - another example of the collective consciousness at work around us.

Yes, morality is at play here, and Doc is one of the first to really figure out how to explain it. Unfortunately, as with our experience in applying the term 'Love' to creating value in the business world, the use of the word 'morality' may just not sit very well with the people who need to embrace the concept.

Is there perhaps another way of saying the same thing?

  Kevin Farnham [04.03.06 07:55 PM]

"Morality" IS a very problemmatic word, I think. "Purpose-driven" from the previous Radar post also has religious intonations for some of us. Though, in reality, the "purpose" in "purpose-driven" can be anything, it doesn't have to be a purpose grounded in morality.

If morality is mentioned within the context of a discussion of business and economics within the wealthy "first" world, those of us who closely follow situations of horror such as massacres in Darfur, starvation in North Korea, AIDS in Africa, cannot help but react with fervent emotion -- "true morality," we think, "could never ignore these situations!"

But, looked at solely within the context of "first world" economics, business, commerce, Doc's comments here and Tim's comments in the previous Radar post are interesting and worthy of discussion. Chris's "funnel" concept is very nice, in my opinion.

I guess I just wish there were a few more Bono's in the world... True morality really must include consideration of all humans on the planet, mustn't it?

  Don Marti [04.03.06 08:42 PM]

Doc, isn't "open" the natural offspring of "networked" and "creatively lazy"?

If you want other people to plug in to you (and in a networked market you do) you can either (1) write technical and legal interfaces of your own, and get "evangelists" to round up people to sign up or (2) open and standardize the interfaces, creating a low enough barrier to working with you that anyone can cross it, and count on people's curiosity and self-interest to bring them in.

  Sanjay Dattatri [04.03.06 10:57 PM]

All three moral systems [if we can call it that] strive to achieve the same thing, only in different ways - namely to get fame and fortune. People usually differentiate between selfish and selfless acts, but they are both the same; one for materialistic benefits FOR ME, the other for self satisfaction (FOR ME).
Web 2.0 people have realized that "be open. Give freely" is also a possible route to fame and fortune.
Selfishness has got a bad rap from us so far. Being selfish consistently results in maximum good for most people most of the time.

  Mark Devlin [04.04.06 02:18 AM]

>Did anybody ever go into business because they were looking for a way to please stockholders?

All entrepreneurs go into business to please themselves, the major stockholders in their business.

Giving away stuff for free is not a moral issue. It is one of many marketing strategies to build a business.

  Balaji Sowmyanarayanan [04.04.06 03:31 AM]


Web2.0 re-examines the old B-school obsession with the 80-20 rule - which obviously focused on Transaction. As we explore the rest 80 percent, it will start reflecting the world, and mirror the life as such.

Web2.0 highlights the transition from rule of law( complience based philosophy) to self regulation. In the old regime, accounting was good enough. Now, in a self regulation regime there is a need for a 'religion'. Giving away and making a huge fuss about it is just a beginning. There is a long way to go to the Zen.

Thanks for the post - I can think up huge market for corporate religion in the pipeline.

  William [04.04.06 07:25 AM]

Wake the Dragon

We are moving towards a period on the internet where only a small number of companies control the vast amount of revenue that is generated in any one area of service offerings. We are also at a point were the likelihood of competing on a revenue basis with any of these large corporations that control most of the key areas grows smaller by the day. If one were to start a business that could possibly be replicated by any of the existing quasi monopolies one would find it very difficult to raise any investment capital from traditional institutional sources. Indeed most of the institutional investors that one would seek out would of course be looking for a return on their investment in a short period of time. This return on investment is usually expected to take the form of an IPO, or an acquisition.

Because of the current situation that sees a handful of companies dominating most internet technology markets; many investors would see any new entrant as a high risk. Most of the quasi monopolies could easily replicate any new technology, and because of this would more than likely not want to acquire any new entrants.

The lack of a market for acquisition will and has led to a shrinking amount of companies that have the financial ability and needed market traction to enter the stock market, and thus return a financial gain to investors. Many times a pending IPO is the prime mover in the acquisition of a competitor by a larger corporation. The acquisition allows the purchaser to acquire the company at a much lower possible price, and it also prevent the company being acquired from attaining the needed capital to expand, grow market share and compete.

While noting the above argument It is interesting and important to realize that the current scenario is not one that is new. Indeed it has played out in history before. One need only look at the old world media industry to see how market consolidation by a handful of quasi media monopolies has led to a lack of investment that would lead to competition. The main difference in the scenario above and the current one that exist in the internet business sector is that the old scenario of market domination, and consolidation has been super imposed as a belief model in an space that it will not fit.

Investment in the previous era of the non internet technology economy was needed to hire people and to purchase the need machines to do the job. You could not create a competing news paper without writers, presses, and distribution. One of the key barriers to entry was the cost of equipment. Because of technologies and in particular the internets evolutionary and revolutionary nature the old world economic barriers to company creation no longer exist. The cost and time that it takes to create an application are so small that the creator does not need to worry about the bottom line or break even points. There need not be a profit motive to create a compelling internet application. Just as an artist paints out of an inner drive to paint, a application developer can create because of a very similar inner drive. I believe that this will create a situation where the current quasi monopolies will ultimately fall to the mass community of application developers that will and have become creators for their own needs as well as for others. Because they have very small over heads and tend to be self funding thorough full time employment, they will be very difficult to compete with. They have an open distribution channel; they have access to low cost creation tools, and they are self funded with their own capital. The large corporations that are currently in the market must support large staffs as well as the expectations of investors that expect profit. They cannot compete against the many no cost and open competitors that are now entering and will continue to enter the market.

It will be seen that taking the revenue possibility away from potential competitors in the evolutionarily and revolutionary platform that is the internet does not decrease entrants, but increase entrants that cannot be competed with on a market share and thus a profit basis.

This kind of paradigm shift was seen early with the struggle of traditional newspapers losing classified readership to online creators that provided the same service at a low to no cost. The new entrants did not need presses and had an open and relatively free distribution channel. The newspapers had to sustain profits to support their existing infrastructure of men and machines, and in most cases because they were public companies had to return profit for investors. The newspapers were slow to go into the online classifieds market because they were under the assumption that for any of their online competitors to continue they would need to make large profits. They also viewed the internet in an old world economic framework that postulates that business are only created and survive when revenue can be generated that makes the endeavor profitable. Once the newspapers did react they discovered that they could not compete or gain any market share from the many classified advertising applications that now existed. Most of the existing classified applications have very little overhead and are not motivated by going public or large profit gains. Most do not have to support large machinery infrastructure or large numbers of employees. Because large profit is not the motive, the newspapers cannot compete.

Newspapers and other media are now seeing this same pattern with blog content creators. The blog creators have low over head and low or no profit expectation and an open distribution channel. Because of this newspaper cannot compete and will eventually become extinct online and possibly the in the off line world.

We are also seeing this in other media. Radio, television and film will be the next to fall to the masses of application creators that can create applications at little to no cost and expect and need low or no profits to keep the application going. No equipment cost, an open distribution channel and users that create the content.

No area of internet technology will be immune from the mass of application and content creators that now have the means and ability to create for creations sake readily at hand. Somewhere below the radar there are many competitors to Google and Yahoo and Microsoft. Sooner rather than later we will see these giants reel.

What happens when you take the profit motive away? When this is done a market is created that is much wider than the previous purely for profit one. Creators begin to quickly create applications because they simply want to do this. They use the internet much like an art gallery or a venue where public speaking is allowed by all members. The new entrants come into the market knowing that they may not profit and this can make their applications much more likeable by users that are no longer trapped into using an application by revenue models that often have as their goal increasing cost of switching. Because this kind of application gains nothing by increasing the cost of switching and gains user traction by sharing its service with others, users will propagate the service by creating content for it and extending it into other applications.

  james burke [04.04.06 10:47 AM]

Feedback from the p2pfoundation on the content of this post here:

  Kevin Marks [04.04.06 03:51 PM]

Doc's split reminded me of a passage in Pinker's The Blank Slate on evolved economic instincts.
How far we can extend the familial uncounted sharing is the issue - with real-world goods their scarcity prevents this from extending far; the free-rider problem is too costly. With infinitely replicable digital goods, we can afford to be more generous, as the cost is lower.

  James Governor [04.10.06 05:00 AM]

Doc appears to be pushing towards post-autistic economics

  Rob [04.14.06 11:54 AM]

This is what David Maister talks about in his professional services series of podcasts about the "rewards of building trusting relationships with clients as opposed to taking a transactional view of marketing."

  john beck [08.21.06 02:26 AM]

True as day light:Business has lost its actual meaning as it becomes busy ness or earning high amoung of money.Morality does'nt seems b/w it yeah but moronity.

  shredder [08.25.06 10:11 PM]

Business and morality are directly propotional to each other now a days it is being using as inversely.As business increases morality have to come much then before.

  smart [10.15.06 11:53 PM]

I dont know why such useful blogs and discussion don't hit me where Tim himself is invloved in this discussion.

  Larry Smith [05.14.07 11:02 AM]

Although we might disagree about how much morality is needed in business, it seems we never disagree when businessmen lack morality.

  Victor [07.31.07 09:24 AM]

When you think of trading cards, a few images often come to mind: Michael Jordan defying gravity to dunk a basket ball, comic book super heroes or even the lovable animated characters of violent Japanese cartoons. But had something far more macabre in mind and with the possible exception of O.J. Simpson, it is clear that their product will not be featuring sports stars. (a Maine based business that has released items such as Serial Killer Action Figures, True Crime Clocks and . . . of course, the controversial Serial Killer Calendar) has recently added a new item to their line of macabre merchandise which may very well surpass the others in popularity and controversy.

One of the company’s two owners, Kris Saunders, says “in the 1990s, Eclipse enterprises published a line of true crime trading cards that caused quite a national stir. They were hugely popular, but very controversial and several litigations ensued. Each time, the courts ruled that the images contained in the artwork were fully protected by the first amendment. In the summer of 2007, we put together a series, featuring the artwork of 5 noted artists. Each of the 75 high quality cards depicts independent renditions of some of the world's most notorious serial killers. The set features 3 full volumes of 25 traditionally formatted cards and a visual array that is truly awesome even to the artistically uninspired.”
The company’s designer and co-owner, James Gilks, had this to had. “What certain people fail to understand is that we are not, in any way, attempting to glorify these individuals. Our merchandise is certainly not a tribute to their crimes. Unlike the countless books and films that depict their actions in gruesome detail, our products simply display a talented artist's rendition of the killers and a collection of quotes which we hope may shed some insight on to the madness that made them kill. I'm sure that there those who are disgusted with the idea of a trading card series that features convicted murderers but I strongly believe that freedom of speech should never be limited to that which is not taboo. Art is and should always be, one of the truest forms of self expression.”

Possibly more unusual than the content of these cards are the artists themselves. Nico Claux (whose work appeared in the first Serial Killer Calendar) is a reformed killer and alleged cannibal from Paris France. Other artists in the series have garnered a massive online following among collectors of true crime, heavy metal bands and even the Satanic Church. Despite the fact that the cards are far from what you would expect to see at your local chain store, James Gilks has said that the overall feedback has been nothing but positive. “I really expected some kind of public outcry from this. I have been preparing to defend our actions from day one but honestly the response has been all positive. Nobody seems to take offense to these products. They see them as what they are intended to be… an amazing gallery of work from some of the best true crime artists in the world.” Since the original true crime trading cards received so much negative publicity in the early 90’s, one is left to ask whether this lack of protest is a form of cultural acceptance for the taboo subject of serial killers or simply an overall indifference and desensitization to violence in our country. Regardless of the answer, it is clear that James Gilks, Kris Saunders and the art team of has no intention of slowing down. “We have many new products in store for later this year” says Mr. Gilks, “including a Serial Killer Board Game, poster line and even a Serial Killer Coloring Book! We are also discussing some big deals with international distribution chains so with any luck you’ll be seeing our merchandise in a store near you by next year.”

  Steve Madden [06.25.08 10:57 AM]

Corporate generosity and altruism is an extension of the "good corporate citizen" concept as it relates to relationships with outside customers. But would that culture even begin to exist without the profit motive which is the fundamental driving force?


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