15-year eras of permissionless movements in software since 1983 and their respective instigators, philosophical orientation, relationship to proprietary software and economic impact in industry.

Movements in Permissionless Software Innovation

The rise of the internet catapulted permissionless innovation thanks to instant connectivity and distribution of content between billions of people on earth, but the fundamental properties of permissionless innovation have been very real and structurally impactful to technology at large for decades before the rise of the internet as we know it today.

We observe and compare three (3) distinct yet overlapping (in timeline contexts) permissionless software innovation movements since 1983.

Over each era of concentration (interestingly, about 15 years each), we roughly describe and assess these foundational movements across the following dimensions:

  • the time period in which a given movement was incepted, concentrated and driven,
  • the instigators of a given movement,
  • the philosophical orientation of that movement,
  • importantly, the movements relationship to proprietary software,
  • and finally, the global economic impact (measured in dollars) a given movement is estimated to have directly and indirectly caused and will likely cause.

Importantly, timeline parameters are not intended to imply the movements ended at any given point, only that they were most broadly concentrated and pronounced over certain periods.

The third movement (COSS) is proposed as a likely extension of the previous two, representing a significant turning point for software and the technology industry overall.

For a deeper and more through coverage of the historical events related to the first two permissionless movements (free software and open source software), Wikipedia provides a great overview here.

It is worth noting that the exact opposite of permissionless (permissioned) has its own movement: AKA “proprietary software”.

The pivotal point in history giving rise to proprietary software was arguably 7 years before the inception of the free software movement with Bill Gates’ “Open Letter To Hobbyists” published in 1976 wherein Gates expressed frustration over software developers lacking monetary incentives to create quality software, effectively marking the birth and motivation for the proprietary software model itself and Microsoft’s focus on closed and restrictively licensed software as their core product good vs. hardware that happened to come with and bundle in software — historically viewed as a commodity where the source was commonly shared and available to anyone who paid for the hardware itself (circa ~1950–1975).

Free Software (FS): 1983 to 1998

Instigator(s):

In 1983, Richard Stallman (RMS) founded the movement and coined the term “Free Software”, galvanizing a transformational era in software creation focused on the belief that all software should adhere to four essential freedoms.

2 years later, the Free Software Foundation was created to steward the movement, definitional clarity and cause that FS embodies.

Today, the FS movement is still alive and well, but the timeline parameter of 1983–1998 points out the period in which FS existed without any sharply contrasting ideologies or efforts.

Philosophy:

We believe that liberalism best describes and encapsulates the philosophical dynamic threaded throughout the origins and ideologies of the FS movement.

The core belief system of the aforelinked four freedoms is to liberate a given user of software from any potentially negative control imposed by the developer of the software:

With proprietary software, the developer and user are rarely (if ever) the same individual.

With free software, the developer and the user are very commonly the same individual.

RMS deeply believes that all proprietary software is very likely malicious, evil, unjust, tainted, malware, user-subjugating and morally wrong.

As a consequence of these beliefs, RMS believes the world must be liberated from all proprietary software in order to shift control back to the user of the software vs. where it is: fully in the hands of the creators of the proprietary software.

Said differently: With proprietary software, the creator of that software indirectly controls/subjugates the user via the software — the user has no fundamental control.

Conversely, with free software, the user has full control over the software and what it implements for that user given they would be able to modify the source code, see the source code, distribute the source code and run the source code. Anywhere. Anyhow.

Relationship to Proprietary Software:

The FS movement views essentially all proprietary software as evil because it is impossible for the user of the software to verify and/or test whether or not the creator of the software implemented something malicious or user-subjugating.

RMS has acknowledged that there could potentially be some proprietary software that is not evil, but it is impossible to know given that the user is never allowed to view the source code or make changes to the software itself.

Thus, the FS relationship to proprietary software has always been a highly antagonistic one: e.g. the FSF regularly campaigns against many of the largest tech and software companies (mostly proprietary software companies) via “Defective By Design”.

Economic Impact:

We believe the direct and indirect economic impact of the FS movement specifically between 1983–1998 (mostly late in this era, from the early 90s onwards) can be roughly measured in the billons (probably tens of billions) of dollars.

While Sun Microsystems (a significant contributor to and supporter of free software since the inception of the FS movement) was founded in 1982 and Red Hat and SUSE (alongside many early Linux vendors) were founded in the early 90s, the vast majority of economic impact caused in industry by the FS movement was likely not driven by companies but rather by developers embracing the FS principles in their respective development efforts when building applications for specific purposes on top of core web infrastructure tooling, operating systems and language compilers licensed under the GPL (the first copyleft license created alongside the origin of the FS movement): Linux (created in 1991), Apache (1993), MySQL (1995) and PHP (1994) — ultimately known as the LAMP stack.

Open Source Software (OSS): ~1998 to 2013

Instigators:

As Wikipedia thoroughly documents, there were many instigators and collaborators driving the inception of the OSS movement.

Bruce Perens and Eric Raymond initially founded the OSI (Open Source Initiative) which currently serves as the stewards of the OSD (Open Source Definition) and OSS movement itself.

Additionally, the OSI serves as the governing body for reviewing, approving or rejecting OSS licensed that may or may not be conformant with the OSD.

Philosophy:

Shortly after the creation of the OSS movement, RMS published “Why Open Source misses the point of Free Software”… we reference this post as evidence for the sharp divide between the values, ideologies and core motivations for the FS movement in comparison to the OSS movement.

While the motivation for creating the OSS term and movement itself was to build upon and continue to promote the essential components of the FS movement, its main goal was to reframe the core FS terminology by focusing on marketing the pragmatic applications of FS in a utilitarian manner as opposed to a liberally-fueled religious manner.

The result was and continues to be highly successful: OSS as a term and movement was embraced a many licenses seeking to expand the spectrum of permissiveness of source visibility, use, modification and distribution. Additionally, industry-wide acceptance of OSS quickly ramped in the years following the origin of the term and OSI.

Relationship to Proprietary Software:

While OSS movement certainly has many staunch advocates promoting 100% pure-OSS approaches to product development, company building and engineering in general, but we believe it is safe to submit that the general relationship between OSS and proprietary software progressively evolved to be far less antagonistic than the FS movement espoused. OSS and proprietary software live in a highly heterogeneous and interwoven stage — further, it is arguable that the OSS explicitly recognizes proprietary software as “not necessarily evil”.

Economic Impact:

The timing for the creation of OSS as a term and utilitarian “new-face” campaign carrying forward the fundamentals of FS could not have been better timed: 1998 marked the explosive rise of the internet and the birth of some of the largest internet companies of today, in particular Amazon (founded in 1994) and Google (also founded in 1998 mere months after “OSS”).

Over the ensuing 15 years from 1998 onwards, it is unquestionable that every single large software and technology company across all major enterprise and consumer internet sectors has made radical and foundational use of OSS by building on the shoulders of the mass developer-led innovation driven globally by this movement.

Not unlike the economic impact of the FS era, the vast majority of value created by OSS was also indirectly captured by platform companies, applications and services built on top of many base OSS projects and packaged as proprietary offerings to end users.

We believe hundreds of billions of dollars in value were captured (far more created) thanks to OSS in this era.

Commercial OSS (COSS): ~2013 to 2030 +

Instigators:

Instead of a group of people or individual as the instigator for this third movement, we believe that the empirically growing critical mass of highly successful COSS companies generating $100M+ in revenue marks the early days of this era which we expect to last as long or longer than the previous two movements (hence 2030 +).

Since 2013, the number of COSS companies that fundamentally build their business and product stack on (vastly) a singular core OSS project has grown from just 2 companies to over 40:

At OSS Capital, we believe a kind of stewardship of the COSS definition is needed to usher in this new kind of company categorization.

FS promotes values and freedoms.

OSS promotes an essential approach and definition that concentrates on utility and permissiveness.

COSS promotes the idea that OSS can increasingly be successfully commercialized directly and merits a new kind of software/technology company category: one that fundamentally depends on the existence of a singular core OSS project to justify its existence.

Philosophy:

Commercialization is the core emphasis of the COSS movement geared and targeted mostly towards investors, founders and innovators looking to create significant value but also directly (as opposed to indirectly) capture value created by their OSS.

We propose that the COSS era is the third permissionless software movement building further on the FS and OSS movements.

Relationship to Proprietary Software:

If FS is focused on liberation and freedom of software from proprietary entrapment and OSS builds on FS ideologies but is focused instead on educating and promoting its utilitarian ideals vs. religious values, then COSS is building on both previous movements but instead directly concentrating on the commercialization and industry innovation benefits of using OSS as a superior means to build platforms and technology companies.

Economic Impact:

We believe that the economic impact of COSS globally over the next decade and beyond will measure in the tens of trillions:

  • Blockchains / Cryptocurrencies are fundamentally enabled by OSS and focused on commercializing OSS and services through new innovative means, focused on a $10T+ intersectional sector: money, finance and banking.
  • The IT infrastructure stack in the enterprise is fast evolving towards OSS standards. Many if not most of the COSSI companies are concentrated in this sector. We expect this $4T+ area to spawn hundreds of highly successful COSS companies that serve specific platform solutions to global enterprises and bring innovation and disruption to new heights.
  • AI/ML/Robotics are vastly driven by OSS. Many of the worlds most powerful AI companies will be COSS companies, building on a singular core OSS project in order to leverage the full potential of distributed ecosystems of development, fast iteration and developer standardization.
  • Domain-specific hardware will be needed to transform the stagnation and lack of iteration capability in the hardware/semiconductor/chip ecosystem (a $500B+ industry). We believe OSS standards like RISC-V are crucial and highly promising to transform this part of fundamental technology.

COSS represents a fundamental value capture shift:

With FS, the vast majority of value created by FS was captured indirectly by proprietary platforms and applications.

With OSS, the same was largely true — all large technology and software platforms build on OSS and capture value generated by OSS indirectly.

With COSS, we expect the value capture dynamic to expand and gradually shift from indirect to direct: a growing number of large and successful companies fundamentally building their entire product stack on a core or set of core OSS project(s).


For more detail on the value creation and capture variables between fundamentally proprietary software (FPS) companies and COSS companies, see our previous post.