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Date: -- (:)
From: Markus Mottl <mottl@m...>
Subject: Re: R: Consortium Caml
Hi,

On Sun, 11 Feb 2001, Daniel de Rauglaudre wrote:
> Ok. I see your long long message. You seem to know very well how the
> market work. (this is not ironic, just a constatation.)

My opinion may be biased by my (futile) studies of economics... ;)

> What do you propose? A bigger fee? Other thing than a Consortium?

Certainly not a bigger (fixed!) fee, but, of course, the costs of
maintaining the organisation must come in again (which should be
fairly neglectable). "Planned" prices (fees) almost always have a
devastating effect as historical experiments from several centuries
show. Additionally, people always behave more reasonably if their own
money is at stake, e.g. bad decisions have *immediate* consequences on the
price and therefore their wealth. If you have already paid the fee (sunk
costs), you will probably not think so thoroughly before giving your vote.

One thing I was a bit surprised about is that there was obviously no
previous public effort on the side of INRIA to conduct a survey in this
matter. Why don't you just present various business models on a web
page and ask people on the list (or elsewhere) to answer questions like
"How much would you donate/invest if the model looks like this..." or
"How much do you think will *others* invest (in average) if ...".

If I am not mistaken, some of you teach at universities: walking around
the corner to some colleague teaching economics or law might also help.
Even if they cannot tell you an immediate solution, they might give you
valuable hints on what questions would be important to ask in a survey.

Maybe they are even so friendly and "donate" a student seminar group
that does this survey for you... ;)

> Think more about it before deciding something else?

Yes! "Thinking" is probably the most important thing right now! It seems
to me that the current proposal was chosen too quickly. I'd really suggest
doing some "market research" before becoming too focused on a specific
model. Maybe I am all wrong and your model works out much better than
mine or what other people have proposed so far. But we should better
check in advance...

If you want to know my personal willingness to aid with funding: I
would surely not "donate" more than 500 Euro (rather less on a long term
unless I get a better paid job) but "invest" maybe around 2000 Euro or
a bit more depending on the price ("invest" meaning that I can trade my
share). In case I unexpectedly get rich enough to bear a higher risk,
I might want to invest more than this ;)

You could even persuade other investors who have no direct interest in
OCaml (other than "getting rich fast"... ;)! - Think of it: the amount
of money you could raise with a single offer on the "primary market"
could be the equivalent of several (say, 5?) years of membership fees
(if others have similar donate/invest ratios)! You should certainly also
consider the "interest" you gain from this investment (having a lot of
money now is always better than receiving it over a longer (unpredictable)
period of time).

Here is a potential model (if you think it is nonsense, forget it...):

  * You create e.g. 1,000,000 (virtual) shares of voting rights and
    declare the percentage that INRIA will keep for itself (be careful
    to set a reasonable percentage, otherwise you won't get much money!).

  * People can sign up on a web page (authenticity must be checked
    somehow, of course!) and start bidding "virtually" for the shares
    for some fixed amount of time (say, two weeks) during the IPO. The
    automatic trading system always displays the current price at which
    the highest transaction volume (that's your money!) would be reached.
    The efficiency of markets should automagically let the price converge
    towards the optimum initial price! (Well, kind of: unless people's
    money is really at stake, you cannot expect that this price is what
    you will get).

    You might want to impose further restrictions like e.g. that
    independent bidders can only buy some maximum number of shares, etc.

  * When the IPO-time is over, the initial price is fixed and you ask
    people to accept their last offer (this is probably legally less
    tricky than forcing them to accept it right from the start, which
    would otherwise lead to more efficient initial bidding). Maybe
    you could demand an initial deposit (100 Euro?) to ward off stupid
    gamblers who participate only for the fun of it.

  * People buy your shares with real money. Hopefully all of them accept
    their own last offer...

  * Shares from offers that are not accepted become property of
    INRIA. This last requirement has the funny consequence that people
    who are really interested in buying shares will consider this last
    risk of losing votes to the already powerful INRIA:
    
    They will bid at slightly lower prices depending on their estimation
    on how many people might drop out in the "real money" round.
    This again makes it more likely that other people really accept their
    last offer, because it is cheaper (lower price), which should again
    lead to an optimum tradeoff. (Markets can do such fancy things!)

    There is hardly any possibility for INRIA to influence this process
    to their advantage: manipulating the price up or down will most
    likely lead to less income for them...

  * Now the tricky bit: it must be possible for people to continuously
    trade using *real* money! You might need the service of some competent
    E-commerce company ("liquidmarkets" sounds good ;)

    This won't imply continuous costs for you, because it is naturally
    the trading partners who pay transaction costs.

  * If it seems profitable to you (and the other stakeholders), you
    might want to issue further shares at a later point of time, i.e. you
    get more "real money" for investment (= for improving OCaml).

I have not the slightest idea about possible legal obstacles in this
process (INRIA is a public organisation). But since it is not INRIA that
is traded but voting rights that concern a specific service, it does not
seem less legal to me than your Consortium-proposal, which also gives
some influence to non-public entities.

Any comments?

Regards,
Markus Mottl

-- 
Markus Mottl, mottl@miss.wu-wien.ac.at, http://miss.wu-wien.ac.at/~mottl