The Company of the Future
In Fast Company, Dec/Jan 07 edition, there is a short piece about a new type of company, entitled “Ears Wide Shut“. The company is Squeezebox, which sells “a $300 device that lets audiophiles take digital music from their computer hard drives or from Internet-radio streams, and play it with impressive clarity on high-end speakers in their living rooms.” It is made by Slim Devices, founded by Sean Adams, a 27-year-old college dropout in 2001. They have sold over 50,000 units with about $ 10 million revenue in 2006.
This is a classic Connection Economy, open source and “citizen development” story, because the product is “largely the brainchild of its customers around the world, who have done much of the vital engineering and design work–for free. They’ve been motivated by their passions–for great audio, for cool products, for the art of engineering–and also by the satisfaction of being admired and relied on by a global community of their peers… People around the world have been contributing to Slim Devices free of charge for all sorts of reasons. Some do it to showcase their skills in the hope of attracting a job offer. Some do it for the challenge. But much of it comes down to this: We want things our way.”
Slim Devices has depended on its community of enthusiasts to both suggest and create the numerous add-on features that give its products their full richness. But if that’s all there was to it, Slim would be merely a customer-centric organization using open-source software development in much the same way giants like IBM (NYSE:IBM) do. Adams’s true leap of faith is to let his company rely on nonemployees for much of its most crucial engineering. A particularly vexing challenge for any high-end audio product, for example, is minimizing the amount of power it uses, because electricity creates noise that detracts from the purity of the signal. And Andrew L. Weekes, the engineer who masterminded Slim Devices’ approach to minimizing power, isn’t an employee: He works for a company that supplies the British military with target drones, unmanned aircraft that they can use for practice. Still, he’s one of a handful of the community’s members who have full access to the product’s inner sanctum “firmware,” the detailed hardware specs and software that determine how it works. “Vendors told us, ‘You guys are insane,’” Adams recalls. “They said, ‘What are you doing? You need to protect intellectual property. You need patents.’” Instead, Slim’s executives decided to put their trust in the contributors who have proven their talent and commitment to the endeavor for several years.
It’s a risk, to be sure. But cultivating customer-creators of all stripes gives Slim access to talent that it otherwise wouldn’t have. “There are a lot of bored telecom engineers who would move to California if they didn’t have families or passport problems,” says Cosson. “Half our contributors are abroad–in Canada, the UK, Switzerland, Germany–and this is their way of connecting to Silicon Valley.”
Leading a network of outside contributors–if it can be called “leading”–takes some getting used to, says Dean Blackketter, Slim’s chief technology officer. He knows this relationship from both sides: Blackketter was Slim’s first customer-creator. A seasoned software engineer who had worked at Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and WebTV, he bought Adams’s first product, the SliMP3 (serial No. 3), out of curiosity. He saw that the software code that ran the device was posted as open source on the company’s Web site. He began making improvements and additions to the code and sending them to Adams, who responded by sending a free SliMP3 to Blackketter in San Francisco (now a common gift to contributors), and then another, and then some stock in the company. In 2002, Blackketter came aboard as the company’s second employee.
Now he presides over the community, a task that, among other things, requires a talent for suppressing his own ego. “The hardest part is giving up control,” he says. “Do I make decisions myself about changing the product, or do I open it up? Every single time I’ve opened it up, it’s paid off. A couple of times, I’ve been this close to doing it my way, but they”–the people in the community–”changed my mind. Their hearing is better than mine, their ideas are better than mine. They’re doing it because they love it.”
At some point, though, the community has to be saved from itself, and that’s when Slim’s managers step in. One customer wrote a piece of software that enabled Slim’s boxes to connect to Rhapsody, Real Networks’ online music service. He did so by breaking the code that protected Real’s data transmission over the Net. Uh-oh.
The author of the Real plug-in lived just a few blocks from Blackketter in San Francisco. Blackketter went over to his house and said, “That’s a really good hack, man,” but told him it wasn’t legal. Only mildly daunted, the hacker put the plug-in on his own Web site rather than Slim’s. Then, sure enough, an email came from Real Networks asking him to take down the posting–and, in classic Silicon Valley fashion, to visit Real the following week for a job interview. Slim managed to hire him first, then eventually worked out a legal relationship with Real and incorporated the plug-in into its players. “You can’t be heavy-handed and kill the creativity,” Cosson says. “But you have to manage the chaos and resolve disputes.”
As the company has grown, Slim’s leaders have learned exactly what the founders of Mozilla Web browser discovered: If you’re going to have a grown-up company, with a competitive product in the marketplace, you need a staff of paid full-time employees. They make it possible to meet deadlines and run reliably. Some things have to be handled by staff–such as quality control for the physical product. And, of course, you can get paid staffers to do what the volunteers pass up or abandon midway. “We think of our development community as this big game room, this big playpen, and we’re watching,” says Cosson. “If the community can elevate an idea and get it over the hump, that’s great. But sometimes we have to rewrite software to finish it.” Slim now employs 26 people.
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