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Those Oculus Kickstarter Investors Sure Are Ticked Off—So What?

To go from a $2.4 million Kickstarter funded project to a $2 billion Facebook acquisition in just two years should be cause for celebration. Instead, a crowd of 9,522 Kickstarter investors in Oculus feel cheated that “their” project “sold out,” as the Wall Street Journal reports.

While not surprising, such reactions are also unrealistic. A community of users has a reasonable chance of being taken care of in an acquisition, but altruistic investors should expect little to none. They got their promised poster and T-shirt, after all.

The Open Source Pot Of Gold

We’ve been dealing with a similar phenomenon for years in the open source community. Once venture capitalists or companies started funding startups to shepherd open-source projects, it was a foregone conclusion that a few of the best would get acquired or go public. Many developers struggled with this.

I still remember open source luminary Eric Raymond publicly deliberating over what he should do with the millions he made on the VA Linux IPO. (Given how quickly its stock plummeted, perhaps he needn’t have bothered.) Others, not so fortunate, wondered how it could possibly be fair for a company and its employees to profit so handsomely from others’ code contributions. 

Years later MySQL, JBoss, SpringSource, XenSource and more each elected to take hundreds of millions of acquisition dollars, leaving their communities to deal with new landlords, as it were. Given the inconsistent performance among these new project leads, it’s understandable that developers started to wonder whether their code could safely be contributed to a given project. 

The answer is no. It can’t. Not with any certainty, anyway. 

As Bryce Byfield correctly notes, “The only return that free-licensed software promises is credit for your work.” Anything beyond that is gravy. And good luck even getting credit.

Fortunately, those acquiring an open-source project generally recognize the need to take care of its community, even if they’re not always able to do so successfully. Oracle has taken a lot of flak for its treatment of the MySQL community, for example (including some from me), but it has also proven an exceptional steward of the MySQL product. With the resultant rise in PostgreSQL, it’s likely Oracle will find new ways to feed the MySQL community so as to preserve both code and the vibrancy around it.

Community Is The Best Defense

The same holds true outside open source. So much of today’s software and services are free. The way users (or developers) pay is with their attention to a given app, service or GitHub repo. Any company that treats a product’s user community shoddily risks losing that community and, by extension, the very value it sought to acquire.

For example, Instagram users moaned about Facebook’s acquisition of the photo-sharing service, but Facebook has proved to be an excellent owner, consistently improving the service without forcing Instagram to become like Facebook.

In the case of Oculus, however, there’s neither a developer community nor a user community to appease. There’s simply a passel of individual investors who thought Oculus sounded cool and wanted to help fund the next-generation of virtual reality. As Markus Persson complains, “I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition.”

Bravo to him. Seriously. 

But “bravo” doesn’t mean “and so Oculus has an obligation to solicit your opinion on its future.” You helped to start the project. That doesn’t give you a say in where it goes. Not as a small investor, anyway. The second Oculus took venture money from Andreessen Horowitz its Kickstarter investors were rendered effectively irrelevant.

Investing $90 million more, as Andreessen Horowitz did? That gives you a direct say at the board level. Or if you became part of a vocal user community around the project, that would also give you an indirect say in the project’s direction. But just being an enthusiastic early investor nets you nothing except kudos for having the foresight to help fund something that is $2 billion worth of cool right now.

That’s something.

Image courtesy of Shutterstock

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