Investor Dave McClure: ‘Open is for losers’

Updated

A group of investors argued heatedly about the value of open versus closed technology on a panel today at Google’s I/O conference in San Francisco. Dave McClure (pictured), who oversees the seed investing program at Founders Fund, kicked things off with a provocative statement: “Open is for losers.”

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McClure was answering a question from moderator Dick Costolo of Twitter, who noted that one of the big values celebrated in the tech community is openness, yet one of the hottest platforms, the iPhone, is completely controlled by Apple. In fact, McClure couched his answer by saying he was “channeling Steve Jobs.” He said that it’s important to have open standards as a foundation for technologies, but after that, proprietary technology motivates people to pursue “cool products and cool ideas.”

Many of the other investors on the panel immediately grumbled about McClure’s response, offering the Internet and Google as examples of successful open technologies. Hunch cofounder Chris Dixon, who invests as part of the Founders Collective, said that having a certain degree of openness ultimately leads to “more private net wealth creation.”

Paul Graham of incubator Y Combinator took up the question again when asked about the viability of building a website that works on multiple phones through their mobile browsers versus native applications that are built for specific platforms like the iPhone. Graham said he hopes that mobile websites can win.

“I’m very afraid of a world in which we are all Steve Jobs’ slaves,” Graham said. “If anything can save us, it might be Chrome.” When Costolo asked whether he would invest in a company building for the iPhone versus Google’s Android platform, Graham answered, “Of course, iPhone. I’m talking about what I hope will set us free, not what will generate opportunities.”

On the specific question of native apps compared to web browsers, several investors said that’s looking at things too narrowly. If a company’s success depends on one over the other, it’s probably not a great investment.

“Five years from now this question wouldn’t be a relevant question because it’s going to shift again,” said the Foundry Group‘s Brad Feld.

Update: McClure left a comment below that’s worth pulling into the article (I’ve standardized his capitalization):

While I was being intentionally bombastic, I do believe some open standards foundations generate network effects & benefits for all… HOWEVER, all things equal I believe the default case is that proprietary IP is useful to preserve some value for the IP creator, and thereby provide sustainability the company.

Open standards are great once you get there, but the initial climb to get there can be long & expensive (for the climber), and when you get to the summit the benefits are usually for everyone. While that’s good for most everyone, the costs of climbing are usually borne by the climber alone…

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