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Networks of Tinkerers:

a model of open-source innovationPeter B. Meyer

U.S. Bureau of Labor StatisticsAt BEA, July 17 2006

This work does not represent official findings or policies of the U.S. Dept of Labor.

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IntroductionHobbyists have developed important

technologies open source software

in which programmers share source code Linux; email processing; Web

servers/browsers personal computers

Homebrew Club of hobbyists, circa 1975 Pre-history of airplanes

a clearly documented case by many people Fun to see Took a long time

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Goals here

See some of the experimental effortsExplore the “network” of their

communicationsGoal here:

try some modeling assumptions about the hobbyists / tinkerers (not their “output”)show they would share information in networksexplore assumptions a bit

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Early aircraft developments

1800-1860 – George Cayley and many others try aeronautical experiments

1860s – aeronautical journals begin Much sharing of experimental findings 1893 Octave Chanute’s Progress in

Flying Machines 1903 – Wrights fly famous powered glider 1910 – many have flown. Firms are

starting up

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Experimenters and Octave Chanute

Octave Chanute takes interest in flying machines Wealthy former engineer in Chicago Ran experiments of his own on gliders Described previous work in 1894 book Progress in Flying

Machines. discusses a hundred individuals, from many countries,

professions and many experiments, devices, theories helps define “flying machines” work, focused on kites book supports network of information and interested

people Chanute corresponded actively with many experimenters.Chanute preferred that everyone’s findings be open.

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Example exit: Clement Ader’s Eole

It traveled 50 meters in uncontrolled flight in 1891 French military thought it would be useful. Ader didn’t patent outside France because it would expose

details. Chanute criticized this choice. Ader “drops out” from communication with other experimenters

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Hargrave’s Wings, Kites, and Engines

Retired in Sydney Ran many creative diverse experiments starting in

1884 Drawn to flapping-wings designs Also made innovative engines Box kites showed layered wings were stable and had lift

Often made small models or designs without building.

Devices often did not work right the first time but he moved on to new inspirations.

Did not patent, on principle. Published hundreds of findings Chanute: “If there be one man . . . . who deserves to

succeed in flying through the air” – it is Hargrave.

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Lawrence Hargrave’s box kites

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Lilienthal’s Wings and Gliders

German engineer Otto Lilienthal studied birds and lift shapes in wind

20 years of experiments, often with brother Gustav

Wrote book Birdflight as the Basis of Aviation.

Made hang gliders Flew 2000+ times Became famous and an

inspirational figure

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Langley’s aerodrome

Resulting aircraft is heavy, expensive, housed with difficulty Steel materials Large wings Powerful engine Cost ~$50,000

Hard landings; lands on water => can't try twice easily

Operator is not too useful, like rocket, unlike glider

Langley's demonstrations are big, sometimes public

In key demonstrations in Oct & Dec 1903 it crashes early

Editorials attack Embarrassed trustees asked him to stop research But it was designed like a modern passenger jet

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Samuel Langley's technology choices

Professor in Pittsburgh, then Director of Smithsonian Institution in DC

His 1896 powered gliders went over half a mileDecides that for safety:• aircraft must be intrinsically stable, and• pilot must sit up craft must be rigid and strong innovatively, makes strong frame from steel

tubing much heavier than a glider; needs strong

engine for liftSo he gets the best engine made, to that time, for

its weight. (Balzer-Manly engine)

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Wrights' technology choices

Focused on wing shape, propellers, and control mechanism

Built craft as kites, then gliders Did not attach an engine until 1903. Materials light & cheap, wood &

canvas pilot lays flat less drag intrinsically unstable, like a bicycle Pilot controlled that by hip

movements which pulled wires to warp (twist) wing tips to turn glider

This invented piloting skill had no future

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“Measures” of significance in the network

Who did Chanute refer to in 1893 survey? About 190 who made some “informational”

contribution Weinberg’s list from technological

history 150 important innovations before 1910

Who did the Wrights ever cite?

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Assumptions for micro model Assume there are motivated tinkerers

We do observe this Assume they have a way to make

“progress” defining progress carefully

Assume total technological uncertainty No market is identifiable so no clear competition, little R&D

The tinkerers would share information

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The Tinkerer

U t 0

ta t

Tinkerer has activity/hobby A. (for “aircraft” or “activity”)

Tinkerer receives positive utility from A of at per period.• a0 is known• later choices and rules determine at

β is a discount factor between zero and one (assume .95) applied to future period utility.Net present expected utility:

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Tinkering rules Tinkerer may invest in ("tinker with") A The agent thinks that tinkering this

period will raise all future period payoffs at by p units each time period. p stands for a rate of progress, which is

subjectively experienced by the agent We assume p is fixed and known to the

agent Example: .07

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Tinkering decision

p p 2 p 3 p 4 p1

Tinkerer compares those gross benefits to the cost which is 1 utility unit

Tinkerer weights estimated costs and benefits

Benefits from one effort to tinker equal p in each subsequent period.

The present value of those payoffs is:

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Rates of Progress

p 1

Progress must meet the criterion above for tinkering to be worth it

Progress is subjective

There are not many tinkerers working on this activity who can make this much progress.

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Payoffs from endless tinkeringPayoffs

period 0 period 1 period 2 period 3 period 4

Net payoff of each investment at time

0

-1 p p p p pβ/(1-β)

-1 p p p β * pβ/(1-β)

-1 p p β2 * pβ/(1-β)

-1 p β3 * pβ/(1-β)

-1 . . .

a01 1

1 p1 2

Present value of all that at time

zero has a closed form:

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A network of two tinkerers

U0 a01 1

1 p1 fp21 2

Case of two tinkerers with identical utility functions p1 and p2 – subjective rate of progress Their innovations are useful to one

another Tinkerers form a network Present value of expected utility:

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Subgroups of occasional tinkerers

A group of slow-progress tinkerers might agree to work together to generate progress rate p.

Then the group acts like a single “tinkerer” in terms of its output

and also in its incentive to join other groups There are something like economies of scale

here; it’s a positive sum game. So Wilbur and Orville Wright could be one

tinkerer maybe also:

Boston-area group All readers of a certain journal Kite people, together, as distinguished from balloon

people

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Standardization and Specialization

U0 a01 1

1 cs p1 f2p21 2

Only f є (0,1) of experiments one player are usable to another player

Suppose for a cost cs player one can adjust his project to look more like the other tinkerer’s project

And that this would raise the usable findings to f2

That’s standardization Present value of utility after standardizing is:

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Payoff to standardization

Key comparison is:

Player one benefits more from standardizing if, ceteris paribus:

other tinkerers produce a large flow of innovations p2;

the cost of standardizing cs is small; gain in useful innovations from the others (f2-f)

is large.

p2f2 f

1 2 cs

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Same comparison supports choice to specialize If other player and I work on differentiated

problems, rather than overlapping, similar, or competing experiments, can raise useful flow from f to f2.

Again:

Standardization and specialization are natural in

tinkerers’ networks. Don’t need market processes to explain them.

Specialization

p2f2 f

1 2 cs

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Searching and Joining

Suppose there is a cost to joining the network costs of subscribing, paying attention it’s worth the cost to a tinkerer if

the cost (cj) is low he values future outcomes a lot the others are producing a lot of progress (p) their progress is useful to him – f is high enough

Suppose there is also a cost to searching for new members Chanute wrote book others published journals Then the search costs affect innovative output (Web has

effect) There is a role for a special effort to expand the network Paper does not model this

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Entrepreneurial Exits

At a few points there was tension: Ader “drops out” in 1891 Langley keeps secret wing design after

1901. (Chanute shares it anyway.) Wrights stop sharing as much in late

1902 After some perceived of breakthrough Jobs and Wozniak start Apple

they hire Homebrew club people as employees Red Hat becomes a company

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Entrepreneurial exits from network

If a tinkerer has an insight into how to make a profitable product it may be worth leaving the network

conducts directed R&D becomes an entrepreneur enters economic statistics

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Conclusion

This process may be important explaining the rise of industrial countries a long time ago with open source software, now

I do not know of other models of it Key assumptions:

technological uncertainty (no clear product and market) motivated tinkerers some way to make progress some way to network

Search and matching costs take some more thinking

An industry can spring out of this, not well modeled yet

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What are they making?Aeronautical journals appear in 1870s and 1880s. Experimenters make diverse choices.Available metaphors:

Balloons are light, ascends without power Meteorological balloons, hot-air, helium-filled balloons

Rockets are high-powered, rigid, hard to control Kites and gliders (light; fixed wings generating

lift) For lift (upward force), requires speed. Propulsion?

Flapping wings? Birds are light and have big wings Propellers? Jets?

Power? muscles, steam engines, internal combustion engines, in models, wound up rubber bands

Hard to control

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Wilbur and Orville Wright

No college degrees Ran bicycle shop in Dayton, Ohio, US Starting in 1899 read from Langley and

Chanute Corresponded actively with Chanute Good tool makers and users. Have a

workshop. Generally crafted each piece. Collaborated intensely.

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Wrights’ wings and propellers

Wrights’ wind tunnel carefully tested to make air flow smooth

Their balance device measured lift precisely They tested many wings systematically and came to an

ideal design for their craft.

What’s a propeller for an aircraft? Standard idea: like a water propeller, it would pushes air

back. Having studied wings, Wrights’ experiment with propellers

that have a cross section like a wing, with lift in forward direction

This produces 50% more pulling power from a given engine!

This idea lasts

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Wrights’ Propeller

Propeller: “a mechanical device that rotates to

push against air or water A machine for propelling an aircraft or

boat, consisting of a power-driven shaft with radiating blades that are placed so as to thrust air or water in a desired direction when spinning.”

Wrights invented propellers that delivered 50% more pulling power from a given engine!

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This evidence is selected

Many other experimenters and publishers would be worth mentioning if time permitted:

Alphonse Penaud Horatio Phillips Hiram Maxim James Means Alberto Santos-Dumont Richard Pearse Many others

Paper has the beginnings of a list of what was available in the public domain.

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Technology advance through collective invention

Quantity

Product value per unit of cost

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Industry birth

Quantity

Product value per unit of cost

Players who worked together to create a valuable new technology have different incentives once the product has value in a market. The same incentive to mass-produce makes them competitors. The hobbyist activity has then become an industry.

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Conclusion

Airplane case makes plain certain aspects of these individuals and networks.

It seems relevant to personal computer hobbyists open source software projects

A model of this kind could be useful to describe or account for

engineering “skunkworks” in organizations scientific advances differences between societies in speed of

technology development

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Conclusion Why would individuals do this? Start manufacturing company Get revenues from patent Get hired as engineer Lerner and Tirole (2002, and repeatedly) Research funding (Langley, from War dept and Smithsonian) Prestige of accomplishment in contributing To grapple with interesting problems. Or, the concept is so cool! They want the problem solved -- that is, they want to live in a world in which they

can fly through the air (that is, to change their world, not their place in it) "Our experiments have been conducted entirely at our own expense. At the

beginning we had no thought of recovering what we were expending, which was not great . . ." Wrights, How We Invented the Airplane, [1953] p. 87

"I am an enthusiast, but not a crank in the sense that I have some pet theories as to the construction of a flying machine. I wish to avail myself of all that is already known and then if possible add my mite to help on the future worker who will attain final success."

-- Wilbur Wright, 1899 letter to Smithsonian Institution Other airplane; computer; open source people express this thought. Tentative formal assumption: Relevant individuals ("players") have utility functions

that support this activity. - tentatively treat motivation of innovators as exogenous - testable implications of different utility functions? psychic joy of experimenting; or

research salary; or imagined future payoff.

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Secrecy? Not usually Books by Lilienthal (1889) and Chanute (1894) Journal periodicals in France, Britain, US Wrights collected info from Smithsonian and Weather Bureau (location) Chanute actively corresponds with experimenters, researchers

technology moderator Wilbur’s speech to Society of Western Engineers, 1901 Journal publications in 1901 in England and Germany Scientific American article about them in 1902. Visit of Spratt and Herring on tip back problem Langley gets secretive about his wing design Wrights get secretive starting late 1902 Modeling ideas: Sharing institution exists already Innovator chooses sharing vs. secrecy Players may be open (prestige; joy of sharing; desire for progress) Public pool of information is productive But if their device approaches some threshold (technical success or profitability), they close their

connections to the network. (Homebrew and Apple example) This creates an industry. Then competition stimulates progress.

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1866British engineers founded Aeronautical Society of

Great Britain

Crouch, p. 30; Anderson p. 4

1866F.H. Wenham

highlight superiority of long narrow wings over short wide ones in generating lift (though this is sometimes forgotten, later)

Anderson, p. 45

1868 Britainpublication of Annual Reports of Aeronautical Society starts

Crouch, p. 31

1868 Moy scale effects in aerodynamics established

Anderson, p. 46

1869 Parisbeginning of publication of L'Aeronaut

Crouch, p. 31

1870-1871

F.H.Wenham and John Browning developed wind tunnel

Crouch, p. 31

History

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1871 Wenham

found that the center of pressure (center of lift) tended to be near the leading edge of a wing -- a fact sometimes forgotten, later

Anderson, p. ??

1871Alphonse Penaud

upward sloping tail, for stability; center of pressure . . . .; understood it; had theory, created standard.

Anderson, pp. 35-37

1871du Temple powered hop in France

1875Octave Chanute

discovers, on trip to Europe, that European engineers treat airplane as possible

Crouch, p. 26

1876

Penaud

cambered wing 1876. dihedral angle 2 degrees. Was on track to further success, but committed suicide

P 37 Anderson

1883Osborne Reynolds

analysis of "laminar" (smooth) versus turbulent air flows

Anderson, p. 44

1884Horatio Phillips Analysis of wing shapes

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1884Mozhaiski powered hop. Russia.

1888 Francebeginning of publication of the Revue de l'Aeronautique

Crouch, p. 31

1889 Lilienthalpublished Birdflight as the Basis of Aviation

1890Clement Ader

Piloted, steam-engine-powered airplane, the Eole; no controls; wings moved like a bat's

Anderson, p. 51

1894 Jan

ChanutePublication of Progress in Flying Machines

Stoff, p. iv

1894Hiram Maxim Flying machine

Anderson, p. 4

1896Chanute & Herring adapted Pratt truss to gliders

Stoff, , p. iv

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1896Chanute/Herring two-surface, double decker wings

Jakab,47;54-58

1896Samuel Langley

steam-powered unpiloted one minute flight over Potomac

Anderson, p.5

1897Arnot / Herring Indiana gliders

Crouch, p. 210

1898Langley and others

internal combustion gasoline engine determined to be superior to steam enginesfor lightweight power

Anderson, p. 143

1899 Wrightswing warping for control of rolling motion

Jakab, p. 54

1900 Mar

Wrightswilbur wright contacts chanute; ww's already studied Progress

Stoff, p. vi

1901 Oct

Wrightscalculation of smeaton coefficientir wind tunnel, and wing tests, and lilienthal calculations

Jakab, circa p. 130

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Motivation of the Experimenters: Why Would Individuals Do This? To start manufacturing company To get revenues from patented

technology To establish oneself professionally

(Lerner and Tirole, 2002) To earn research funding (Langley,

from War and Smithsonian) To earn respect for their contribution To win a competition To grapple with interesting problems

or solve them

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ConclusionCollective Invention Model:Individuals are motivated by utility functions Sometimes unknown reasons for joining the network Discoveries are random

Key choice – share their findings or not?Octave Chanute and Samuel Langley –co-inventors of the Wright airplane or not?

How much of the invention X is due to its inventor?

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Secrecy: When Does it Start? Books by Lilienthal (1889) and Chanute

(1894) Journal periodicals in France, Britain, US Wrights collected info from Smithsonian and

Weather Bureau (location) Chanute actively corresponds with

experimenters, researchers Wilbur’s speech to Society of Western Engineers,

1901 Publications in 1901 Visit of Spratt and Herring on tip back

problemLangley gets secretive about his wing designWrights get secretive starting late 1902

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1901 Balzer & Manly

high powered light engine (not known or available to Wrights)

Anderson, p 144

1903 May

Wrights

Wrights blade-element propeller (50% more efficient than contemporaries; apparently highest recorded to that time).

Anderson, p. 141

1903 Dec

Langley / Manly

Public demonstration of aerodrome; crashes before full flight

1903 Dec

Wrightsself-powered sustained flight;

takeoff and landing at same level

1904 Wrightstesting grounds on Huffman

Prarie

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End of Information Sharing If the activity succeeds, it becomes an

industry – competitive “commercial production and sale of goods”

The network loses importance, shrinks, breaks up Examples: Wrights in late 1902 clamp down; disagree

with Chanute. Langley's wings Later: Apple computer

Model assumption: Network will self-destruct if there is enough success

Then industry players have private intellectual capital and don't share R&D.

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Two dimensions of new-technology exploration

Quantity

Product value per unit of cost

A player’s technology of production can be characterized by a location. With time the player may invent or adopt technologies producing higher-valued quality per unit of cost, or producing more copies of the same product.

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Timelines

Open-sourcesoftware … industries?

Personal computer and software industry

Aircraft industry

Real businesses: Apple, 1976, many others from Homebrew club; Microsoft 1977, IBM PC 1981

1976Apple I

1975Altair kit

Homebrew Computer club

Red Hat company

Novell & SuSE

combine

IBM commits to Linux

1971Intel

microprocessor

1804 Cayley1804

Cayley1804 Cayley1804

Cayley1804 Cayley1804

Cayley

1893 Chanute book

Progress in Flying Machines

Chanute networks (by mail, travels)

Aeronautical journals

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Special role for network moderators?

Suppose there is a cost to joining the network costs of subscribing, paying attention it’s worth the cost to a tinkerer if

the cost (cj) is low he values future outcomes a lot the others are producing a lot of progress (p) their progress is useful to him – f is high enough

Suppose there is also a cost to searching for new members Chanute wrote book others published journals Then the search costs affect innovative output (Web has

effect) There is a role for a special effort to expand the network Paper does not model this