Archive for December, 2011

The Hacking Business Model

December 1st, 2011

I came across a business model called The Hacking Business Model recently.
It’s not entirely like a typical business model whose purpose is to define way for a business to generate income.
The Hacking Business Model is a way to organize a company, particularly a software company, and especially an open source one.

It was mentioned in this article that The Hacking Business Model was drawn up by Zak Greant and Michael Widenius (one of the founders of MySQL), and it was also adopted by the latter’s company, Monty Program Ab.

What interests me is some of the guide/rules of this model. Some of them I’m familiar with such as the flexibility to work other than the office, but some are extremely employee-friendly.

Default Employee Rules

  • The Employee works in distributed company and may work from anywhere.
  • 75 working hours per two weeks. Ideally, employees should work schedules that are kind to them and to others.
  • Vacation money (“Lomalta paluu raha”). When you go on vacation that is more than 3 weeks (or have used more than 3 weeks of your vacation for the year) you get an extra 1/2 month of salary. If you don’t keep your vacation the vacation money is payed at the end of the year under ‘get a life‘ bonus plan.
  • When an employee is leaving they can buy out any Company equipment bought under the hardware allowance. The price is min(market-price, ‘initial-price’ * max(5 – years_old,0)/5) (i.e., the price of the equipment is reduced by 1/5 each year).

The Rules of the Company

  • The Company is primarily created to generate bonuses for the employees (not to get sold).
  • The Company should make it as fun as possible to work for the Company.
  • The Company will be a distributed entity and strive to be small and efficient. If growing too big, it will split into separate business units or companies.
  • The Company will employ people based on their merits. They will not be discriminated based on their gender, race, religion, location, marital status or whom they have married.
  • The Company will not require people to work on weekends. The Company has the right to ask the employee to work on weekends, but the employee has the right to refuse without any consequences.
  • The Company will, whenever it’s possible, largely let the employee choose their own work, instead of being told what to do. By letting the employee set their own goals, he is more likely to meet them. When working on a chosen project the employee needs to work with the team lead, but after the project is done, the employee should decide on what to do next.


The bonus for each employee is calculated as follows:

employee_profit_hours = employee_working_hours*VIP

bonus= profit/(SUM(all employee_profit_hours))*employee_profit_hours

The higher an employee VIP number, that employee will get bonus multiple times higher based on that number as weight.

My 2 cents

I personally think this is a very efficient business model for a lean company or a startup. High performance is expected and with so much freedom for the employees, only those who work efficiently and knows what they are doing will help the company to grow.

As stated by the rules that the company that it will remain small, this will ensure that the environment is open, and communications among employees is effective.

This business model would not be applicable for bigger companies such as a Fortune 500 company. I’m pretty sure it will be abused.

I’m not too sure how many companies are willing to adopt business model as this, but I would personally like to participate (either as employee or creating a startup) with such business model.

The only thing different would be the level of transparency. Not everything is meant to be opened.

What do you think?

business, Open Source, Software, Technology , ,