The company E Text Editor is pledging to transform itself to an Open Company, and has written an interesting blog article on its transformation strategy, from which we are excerpting below.

Excerpt:

“Imagine you had a company like this. Totally open. No concept of bosses or employees. Anyone could join in at any time, doing whatever task they found interesting, for whatever time they found appropriate. How could you possibly find a way to compensate them fairly?

The key is in a technology called Trust Metrics. In essence this is a technique for rating each other, but with the key distinction that the way ratings are calculated makes cheating ineffective. This is a new technology, which has not been applied for this purpose before, but it has already proven itself as the underlying principle behind such well known technologies as Googles pagerank and the certifications on Advogato.

By basing the compensation on continuous rating by your peers, it becomes possible to start out by just participating a bit in your free time, and then gradually, as your ratings increase, spend more and more time on the project. It may eventually come to fully supplanting your day job, becoming your primary source of income, or you may choose to just keep it as something you do on the side. And not only can nobody stop you from participating, there is nobody who can fire you either. This makes it a far more secure way to make a living, where your status is solely dependent on your own ability and effort, rather than on arbitrary decisions from some superior.

You could question the fairness of being rated by your peers like this, but keep in mind that the way it is done in companies now, is pretty much completely opaque, with some boss judging you in a pretty much arbitrary manner. At least here you will have full disclosure of why and how you are being rated. Also, it is not completely unprecedented. There are companies like W.L.Gore, which for decades has used peer ratings as the sole basis for compensation. But they have obviously not been open for free participation.

Making It Real

Throughout time, many people have brought up more or less utopian plans for ways to make a living. But if they are never realized, it really amounts to nothing more than hot air. So to make this real, I am putting my company (from which i currently make my living) on the line. Over the next few months I will gradually be transforming the company of the e text editor into an Open Company.”