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Tom Slee and the Omidyar Network: Six Degrees of Skepticism

BY Micah L. Sifry | Monday, September 16 2013

Is the Omidyar Network the new Standard Oil?

Tom Slee has penned a tough critique of the Omidyar Network's philanthropy, titled "Six Degrees of Omidyar," arguing that its venture capital investments "time and time again" have damaged "commons-based sharing" projects, pointing to investees like microfinance fund Unitus, Global Giving, CouchSurfing, Code for America and As with all of Slee's writing, the piece is worth reading.

But I think he's painting with far too broad a brush and has cherry-picked his evidence.

(Full disclosure: the Omidyar Network has been and continues to be a financial supporter of PDM, both as a sponsor of our annual PDF conference and as a funder of our WeGov section. As a senior advisor to the Sunlight Foundation, which ON has supported for six years, I am also directly benefiting from their philanthropy in that consulting role. So consider me biased by close association, though I would call of this a transparent "community of interest" not a conflict of interest).

Slee is right that there's an inherent tension between commerce and sharing, and each enterprise in the sharing sector is facing it differently. He writes, "As capital and social action have conflicting goals, using markets to scale up social action can destroy the very thing that made it special in the first place." And he zeroes in on ON as "the poster child for mixing profit and sharing." Two examples he gives where this went badly are GlobalGiving, where a for-profit subsidiary meant to subsidize the nonprofit parent ended up draining capital in the opposite direction, and Couchsurfing, which was converted from a nonprofit to for-profit with ON support but then lost a great deal of its appeal with its core community of users. (And that sure seems to be the case with the latter.)

Slee now worries that the same thing could happen to the open data/open government world:

Open Government Data is yet another area where commerce and sharing sound like they mix nicely, but where there are real problems. In short, one of the things that making data open does is to make it free. If action around open data is kept non-commercial, then it may form an alternative to profit-driven action, but if commercial use of open data becomes the predominant form then all that has happened is that one form of industry has been replaced by another, and as the new industry is technology-driven it is more likely to be an oligopoly than the industry it replaces.

Slee notes that Code for America has developed an Accelerator arm, with ON funding, "which invests in startups, conveniently augmenting the idea of 'service' with the contradictory idea of 'entrepreneurship' and blurring the boundaries between those who want to make money from government contracts and those who want to contribute to a stronger civic space." And noting the presence of big companies vying for contracts and attention in the "government 2.0" arena he suggests that "open data" has "colonized."

There's no question that any attempt to blend commons production and commercial enterprise is fraught with challenges. Some people are getting into this space because, like everything else about dot-com land, they see a chance to make a killing monetizing users, or in the case of government data, building profitable tools or platforms on top of public resources. (The thought kept going through my mind last spring as I attended Lisa Gansky's Mesh summit, "Who's really here for the sharing? And who's here for the economy?")

But at the same time, the users have a voice, and some of the smartest entrepreneurs in this space also want, first-and-foremost, to serve their users. Robin Chase's concept of "Peers, Inc." which seeks to blend the bottom-up peer-to-peer benefits that can flow from a well-designed and well-tended open platform with the valuable structure that an actual organization with accountable leadership can offer, is a promising synthesis that seeks to get commons production to scale without losing its public benefits. (See also Michel Bauwens' trenchant writing on this subject.)

And there are existing models that suggest this blending of peers and commerce can be done. Take, an ON investee. The company is for-profit, but it has kept the fees it charges very low, while providing lots of free service to millions of people. While ON has a seat on Meetup's board, as far as I know they have never pushed founder Scott Heiferman to sell out for a huge return on investment, and indeed Heiferman and crew have resisted several opportunities to sell the company.

Slee doesn't say this, but ON's investment in came with an explicit disavowal of any conversion event or IPO. So capital from ON may not operate like capital from a typical VC. (At the same time, Slee is totally right to ask that ON be more open about explaining its choices, including explaining its changes in emphasis and sharing what it has learned from its many experiments. That goes for all foundations.)

Slee is also wrong on at least some of his facts. For example was never a nonprofit. Furthermore, the investment from ON came after they were already growing rapidly and had made clear that they were going to be a neutral platform, not a "progressives-only" platform. And it's far from clear that the nature of Change's mission has changed: the vast majority of the campaigns pushed by the site are socially and economically progressive, even if the branding has gotten more generic.

Nor is it clear that ON only invests in enterprises that favor commerce over sharing. It's given roughly $15 million to the Sunlight Foundation over the last seven years. Sunlight gives away all of its data and code back to the public commons (and also re-grants a decent amount of money each year to kindred groups).

Likewise, how has ON's investment in Creative Commons distorted its work bolstering the whole sharing sector? How is their support for MySociety distorting its modus operandi (the organization was doing consulting work and taking government contracts before ON's support, and has continued to do so, but it also gives away a tremendous amount of free software).

What these counter-examples suggest is that support from ON isn't automatically some kind of present-day "Midas touch" that "time and again" ruins the thing it's meant to support. In each case, I suspect a big differentiating factor is the leadership of the organization involved. Maybe Couchsurfing's leaders really wanted to get rich and were hunting for financing that would help them get to "scale" faster, but they misunderstood what made their enterprise so special. Maybe GlobalGiving had bad luck managing their software developers. And so on.

I think Slee is a smart and valuable critic, and we definitely want to pay close attention to the issues he is raising about the contradictions inherent in "the sharing economy." (These days, writer Sam Roudman is doing a lot of this kind of reporting here at techPresident.) But if Slee is going to make such broad generalizations about such an important force as the Omidyar Network, he ought to back them up with broader evidence.

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