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Here's the company of the future
Alan Deutschman,
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January 05, 2007

"You have to love this sweet, satisfying machine," wrote David Pogue in his New York Times review of the Squeezebox. The sweet machine in question is a $300 device that lets audiophiles take digital music from their computer hard drives or from Internet-radio streams, and play it with impressive clarity on high-end speakers in their living rooms. "Its creators have sweated so many details, you want to hand them a towel."

Ah, but who actually did that sweating? Not just the handful of engineers on the payroll at Slim Devices, the startup that makes the Squeezebox. The player, which has sold an impressive 50,000 units, is largely the brainchild of its customers around the world, who have done much of the vital engineering and design work--for free.

They've been motivated by their passions--for great audio, for cool products, for the art of engineering--and also by the satisfaction of being admired and relied on by a global community of their peers.

We know about open-source software and Web services such as Linux, the Mozilla Web browser, and Wikipedia, of course. But Sean Adams, the 27-year-old college dropout who started Slim in his Silicon Valley garage, bet that the same ethos of knowledge sharing and community could extend to a manufactured physical object, one being sold--gasp!--for profit. True, it's a conclusion he came to by accident.

Adams had a more conventional company in mind when he was making the rounds for venture capital. He just happened to be looking for funding during the Valley's particularly inauspicious time of late 2001. "Sean wanted Slim Devices to be open source because he didn't have the money to build a company in the usual way," says Patrick Cosson, Slim's vice president of sales and marketing. "It wasn't a political position. It was out of necessity."

And you know what they say about necessity. Slim Devices will bring in around $10 million in revenue this year. Its fans include music stars Herbie Hancock and Alanis Morissette. And its latest product, released last September, the higher-end $2,000 Transporter, has reaped three times the expected orders.

One of Them: Slim Devices founder and CEO Sean Adams tinkers with his audio devices--just like his company's legion of customer-creators--in his

Slim Devices is still small, of course, and young. But it offers a glimpse of how many companies may come to function in the future: as ecosystems that depend on the active participation of broad networks of contributors. "Everywhere you find innovation today, a community is involved," says Patricia Seybold, author of Outside Innovation: How Your Customers Will Co-Design Your Company's Future (Collins, October 2006).

In this world, running a company is not about brilliance or command, but about attracting and orchestrating the work of talented and passionate outsiders--people who know more than you do, have better ideas, and maybe even care more about your product than you do. As Slim's five-year history shows, there's still an important role for the company and its leaders, but it sure isn't what people have been learning in business school for decades.

People around the world have been contributing to Slim Devices free of charge for all sorts of reasons. Some do it to showcase their skills in the hope of attracting a job offer. Some do it for the challenge. But much of it comes down to this: We want things our way.

"Initially, I really got involved because the product didn't do quite what I wanted," says Adrian Smith, who's employed as a network architect for a large telco in Britain. "Instead of just complaining, [Slim] allowed me to roll up my sleeves and try to improve it."

Hard-core audio enthusiasts like Smith, the sort Adams calls "people who will do anything in the pursuit of sound," are the backbone of the Slim Devices community. But what keeps these avid listeners engaged, in fact, is the chance to be heard. Felix Mueller was a software engineer in San Jose, California, a few miles from Slim's headquarters in Mountain View, when he started writing new features for its players.

The startup's bosses treated him with deference when he dropped by its vintage 1950s Silicon Valley building (which originally belonged to Fairchild Semiconductor, the legendary company that invented the computer chip).

"When I first met Sean," Mueller recalls, "he greeted me with, 'You must be the famous Felix.'" Mueller remained a key member of Slim's community even after he moved to Switzerland. Smith says Slim's executives have earned his trust by relying on his software and "treating me as the expert on how it works."

Slim Devices has depended on its community of enthusiasts to both suggest and create the numerous add-on features that give its products their full richness. But if that's all there was to it, Slim would be merely a customer-centric organization using open-source software development in much the same way giants like IBM do.

Adams's true leap of faith is to let his company rely on nonemployees for much of its most crucial engineering. A particularly vexing challenge for any high-end audio product, for example, is minimizing the amount of power it uses, because electricity creates noise that detracts from the purity of the signal.

And Andrew L. Weekes, the engineer who masterminded Slim Devices' approach to minimizing power, isn't an employee: He works for a company that supplies the British military with target drones, unmanned aircraft that they can use for practice. Still, he's one of a handful of the community's members who have full access to the product's inner sanctum "firmware," the detailed hardware specs and software that determine how it works.

"Vendors told us, 'You guys are insane,'" Adams recalls. "They said, 'What are you doing? You need to protect intellectual property. You need patents.'" Instead, Slim's executives decided to put their trust in the contributors who have proven their talent and commitment to the endeavor for several years.

It's a risk, to be sure. But cultivating customer-creators of all stripes gives Slim access to talent that it otherwise wouldn't have. "There are a lot of bored telecom engineers who would move to California if they didn't have families or passport problems," says Cosson. "Half our contributors are abroad--in Canada, the UK, Switzerland, Germany--and this is their way of connecting to Silicon Valley."

Leading a network of outside contributors--if it can be called "leading"--takes some getting used to, says Dean Blackketter, Slim's chief technology officer. He knows this relationship from both sides: Blackketter was Slim's first customer-creator.

A seasoned software engineer who had worked at Apple, Microsoft, and WebTV, he bought Adams's first product, the SliMP3 (serial No. 3), out of curiosity. He saw that the software code that ran the device was posted as open source on the company's Web site.

He began making improvements and additions to the code and sending them to Adams, who responded by sending a free SliMP3 to Blackketter in San Francisco (now a common gift to contributors), and then another, and then some stock in the company. In 2002, Blackketter came aboard as the company's second employee.

Now he presides over the community, a task that, among other things, requires a talent for suppressing his own ego. "The hardest part is giving up control," he says. "Do I make decisions myself about changing the product, or do I open it up? Every single time I've opened it up, it's paid off. A couple of times, I've been this close to doing it my way, but they"--the people in the community--"changed my mind. Their hearing is better than mine, their ideas are better than mine. They're doing it because they love it."

At some point, though, the community has to be saved from itself, and that's when Slim's managers step in. One customer wrote a piece of software that enabled Slim's boxes to connect to Rhapsody, Real Networks' online music service. He did so by breaking the code that protected Real's data transmission over the Net. Uh-oh.

The author of the Real plug-in lived just a few blocks from Blackketter in San Francisco. Blackketter went over to his house and said, "That's a really good hack, man," but told him it wasn't legal. Only mildly daunted, the hacker put the plug-in on his own Web site rather than Slim's. Then, sure enough, an email came from Real Networks asking him to take down the posting--and, in classic Silicon Valley fashion, to visit Real the following week for a job interview.

Slim managed to hire him first, then eventually worked out a legal relationship with Real and incorporated the plug-in into its players. "You can't be heavy-handed and kill the creativity," Cosson says. "But you have to manage the chaos and resolve disputes."

As the company has grown, Slim's leaders have learned exactly what the founders of Mozilla Web browser discovered: If you're going to have a grown-up company, with a competitive product in the marketplace, you need a staff of paid full-time employees. They make it possible to meet deadlines and run reliably. Some things have to be handled by staff--such as quality control for the physical product. And, of course, you can get paid staffers to do what the volunteers pass up or abandon midway.

"We think of our development community as this big game room, this big playpen, and we're watching," says Cosson. "If the community can elevate an idea and get it over the hump, that's great. But sometimes we have to rewrite software to finish it." Slim now employs 26 people.

The company's open-source model will increasingly be tested as it grows and matures. Already, Slim's top contributors detect changes in the tenor of the online forums that have been so effective. "The community has grown wildly in the last couple of years," says Kevin Deane-Freeman, who makes his living as a hardware designer for a printer manufacturer near Vancouver, British Columbia.

For several years, he has often spent his lunch break working on software for Slim. "It's no longer possible to keep up with it 100%, nor to make everyone happy. That's a big thing when much of why you do it is to see others happy with what you have provided."

With Slim's full-time staff increasing, there's also a danger that the intellectual center of gravity will shift to the inside. In the past, Blackketter says, "the vast majority of our technical discussions, inside and out," took place on Slim's online forums, "where you wouldn't be able to tell who is an employee and who isn't." Now, Adrian Smith warns, "as the employee team has grown, there are more conversations going on in private."

How Slim manages this phase will determine whether it can be more than just a startup that briefly thrived on the open-source model. "With the open organization, the real question is: Can it scale?" says Ram Charan, the prominent management consultant.

Open-source software projects often reach a "forking" point where the community splinters and factions go their different ways. And while the open-source approach offers a nearly limitless resource potential, "that same potential can introduce an unpredictability," says Deane-Freeman, who signs his postings "not a Slim Devices employee" because of confusion that arose from his frequent and authoritative contributions.

"In a larger structure, and especially with a publicly traded company, predictability plays a strong role." Indeed, Slim's unconventional, open style may prove challenging for Logitech International, which announced in October that it had acquired the company for $20 million.

Logitech promised that Slim would remain autonomous, enthusing over "one of [its] key assets, a committed community of developers." But you still have to wonder whether Logitech merely covets Slim Devices for its cool audio technology--and whether, ultimately, it will kill off the more valuable invention.

(Above) One of Them: Slim Devices founder and CEO Sean Adams tinkers with his audio devices--just like his company's legion of customer-creators--in his "mad lab."
Photograph: Jason Madara

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