Sunday, July 13, 2008

Predictably Irrational: Startups and Open Source

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The Herding Code podcast took up the topic: "Why don't startups run on Microsoft?" which I thought was interesting - it crossed paths with comments in a spat I've followed between Atwood (who chose .NET as a platform for Stackoverflow) and Marco Arment (of tumblr fame (side note: I actually have a tumblr)).  Had you asked me before Friday for an opinion I would have probably attributed it to the Byzantine licensing schemes for Microsoft products as well as marketing oriented decisions like making IIS 7 unavailable on XP. 

On Friday, however, I heard a commentary on Marketplace from Dan Ariely that is a basis for a hypothesis that hadn't occurred to me but seems to make perfect sense for software.  Ariely, a behavioral economist at MIT, starts with suggesting that the next time you eat out with friends, it might be better to have one person pick up the "pain of paying" for dinner rather than distributing it across all the people who were out. According to the commentary (emphasis mine):

Findings from behavioral economics tell us that one person should pay the entire bill and that the person paying should alternate over time. When we pay any amount of money, we feel some psychological pain. We call this the pain of paying. This is the unpleasantness that is associated with forking over our hard earned cash. But it also turns out that this pain does not increase linearly with the cost of the meal. This means that when we double the payment, the pain doesn't double; it increases just by a bit. In fact, the biggest increase in the pain of paying comes when we switch from paying nothing to paying something. Now, it's easy to see why one person should pay the entire bill. How so? Well, if every person paid their share, they would all experience some pain of paying.

If you're curious about how Ariely is able to make that assertion, he elaborates on this and other ideas in his book Predictably Irrational.

It makes perfect sense that this could be a credible idea behind why startups don't work with Microsoft technology - that the cost is less of a factor than "costing" some dollar amount.  If you attach to that complex licensing and many flavors of the same product and you get pain that goes beyond the "pain of paying."

It makes some sense on the Microsoft side of things too; rather than trying to determine which products developers should get matched to, most companies just buy a high end MSDN subscription for developers even though chances are high that not all the products are actually used.  They can count on "enterprise" companies conservatively overpaying and hence getting the most out of them.

A couple of thoughts that come to mind:
1. How could one go about trying to measure the "pain of paying" with software?
2. Does "free" open source translate to more time in managability/expertise?

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1 comment:

Daniel said...

Having many flavors of product adds to friction, which could be another form of pain, though I don't think it's necessarily any less than adopting numerous open source alternatives. There's likely a pain curve we can draw that involves both friction and cost pain. In a purely .NET world, you could avoid the pain of paying by using a slew of open source (MonoRail, ActiveRecord, Windsor, NAspect, MbUnit, Rhino Mocks, NServiceBus, Castle Windsor, etc.) though your expertise requirements are going to skyrocket (I won't say friction increases linearly here since these products tend to work well together since they share a common goal). On the other side of the fence you get free as well but possibly more friction since the market has always been free, so there is less incentive to collaborate and more incidents of "Not Invented Here". A strange idea: choosing Open Source .NET is the best choice because given the constraints of that market, the free alternatives work better together than the free alternatives of another framework. Probably not, but it's an idea.