Saturday, March 7, 2009

Illuminato & Open Source Hardware Bank - update 2

Eureka! It worked! *splashes into tub like Archimedes*

I've turned off the "build" option because ...... the order queue met the "price scaling fulcrum point" (how's that for sesquipedalian pleonasticity ?) :-) In other words, there's now over 50 Illuminato slot pre-orders, which means that starting on Monday, I'm going to start placing all the orders for parts and building them up - Thanks!

Actually, a funny thing happened... when I first went to regenerate the picture queue, I thought that there was an error in the generating script, but actually what happened was that there were more than 50 orders placed. A few people placed orders after the 50 mark, which means that according to the way Justin, Andrew, and I thought the system ought to work, teeeeeechnically those last few orders were actually people buying some of the earlier "pre-funded" order slots.

I rewrote the scripts so I could show a play-by-play of what happened. Ok, maybe this isn't as edge-of-your-seat gripping as Superbowl replays, but I can try... (click each image to blow it up, but I'm still working on the exporting image part):

Punt return: By the middle of this afternoon, the order queue looked like this, where 42 of the Illuminatos had been "funded":

Quarterback option: Then someone placed an order for 2x "Buy 1-Build-2" (wow, thanks Ben!), which made the order queue look like this:

Run it up the middle: Then someone else bought one:

Breaking mid-field: And then another order for a "Buy 1-Build 2". This filled the last up-to-half fulcrum point of the order queue, and the "Build-2" order spilled over into the otherwise bank-funded X's:

Third down conversion: Then, someone bought another Illuminato. But the problem was that since the 50-way point was already filled, all orders thereafter are technically someone buying an Illuminato away from someone that had pre-built or "funded" it, so I've shaded the square in queue slot 4 with a green shade:

Red-zone drive: The process pretty much repeated a few more times, with the net result being that 5 folks that pre-built the Illuminato's early on in the queue have already been repaid:


Touchdown! Letting someone buy Open Source Hardware at cost = Sustainable breakeven equilibrium = Success! I don't want to jump to any conclusions just yet... but... I'm excited! :)

Now it's time to formally structure the other half of the equation, the Open Source Hardware Bank's fund-matching. I got an email from Maya who said, why bother with the OSHW bank side of things, why not just keep the queue running at Buy/Build option? Well, there are three reasons Andrew, Justin, and I could think of when we were furiously debating this a few weeks ago:

1) Anti-Bubble: A limitless buy/build option could result in a "runaway" scenario, whereby if everyone Buy 1-Build 2'd everything, at some point the tail end of the queue would grow faster than the actual Buy's, and that would be like what happened with the Dutch Tulip Bulb Bubble and Beanie Babies - the system propagates forward, or worse accelerates, without checks and limits on the real underlying "demand" for a product. Yes, technically some folks could argue "bubbles are a reality of economies" but especially these days I want to pretend for a second they're not. I'm in bubble-denial, and as long as the community is designing a "new financing system," why take anything for granted?

2) Time acceleration: In theory the bank should be able to use any quantity bought to be confident enough that there will be 2x more people willing to buy. True, maybe, we'll have to see. Sure, I could have gone ahead and waited until 50 more slot queues were filled up, but if the bank steps in, that means I can go place orders immediately, without waiting a single more day, or week. In this specific case, the tangible, real, practical benefit of the bank is that it allowed me to start building Illuminatos ~4-5 days earlier than I normally would have otherwise.

3) Diversity: The Illuminato might be nice, but I'd like to keep improving it and making it cooler over time, or maybe someone else will make it a lot cooler than I could, and so maybe people would want that one instead. Incremental and periodic "stop-gates" in the order queue (e.g. by capping the order round at 100 before needing to start another order round) mean that the bank can strike a balance between continuing to fund 1 thing over and over and over, and incenting (is that a word?) other hardware too. One of the goals of the Open Source Hardware Bank is to support a wide diversity of projects, not just fund massive scale of a few popular projects (because if that were the case, then the current VC model could have done just fine there, and the bank is supposed to help small timers, not big companies!).

Ok, time to go finish reading the book The Passions and the Interests (it was recommended to me by Martin for inspiration and ideas, since it describes the original arguments people made in the 1700's for capitalism - talk about irony!)...


Matt said...

Hmmm... I hate how the little graphics never seem to scale properly in the blog after I specifically resize them. I think I officially hate the image settings in blogger. Oh well, at least clicking them makes them work.

Adam said...

I have an idea on how you guys could fund Illuminato's:

Put the boards up for sale for $35.
Once you get 100 orders in, buy boards/parts.
Assemble and Ship.

Just kidding about the last part... but seriously, you could just charge a little more than normal, and then produce the boards once you get a set number of orders.

Rich said...

When our boards are built, will we get a confirmation note saying they are now being shipped? My boards are a birthday gift, so knowing when they will arrive makes a big difference to what I tell the recipients....

Rich (#50-51)

Matt said...

@Rich - what a coincidence, I was just talking to Justin about this last night. Yep, he and I are going to email everyone an update, and then put up a blog post tomorrow :)