Why Diaspora will fail

If a nascent founder group raised $170K from hundreds or thousands of small and unsophisticated investors by traditional means (i.e., by offering them stock in the company in exchange for their small investments), and if those founders did so based on public advertising and without offering those investors any opportunity to learn the material facts about the startup's finances, product plans, founder backgrounds, etc., such an offering would be illegal, plain and simple, and every investor would have a right to get his money back not only from the company but also from each of the founders who controlled this offering. There is a valid reason why securities laws exist, and it is precisely to protect innocent investors from being induced to part with their hard-earned money based on fast and loose pitches that may or may not correlate with reality.

Now, I am not saying that Diaspora has done anything wrong here, or has misled those who have contributed, or any such thing.

My point has to do strictly with the crowdsourcing funding model as a legal tool for raising money. That model attempts to bypass the securities laws by using a donor model, and the key to its attempting to remain legal is to avoid at all costs having the contributors be characterized as "investors." I think that Kickstarter does this legitimately and appears therefore to be operating well within the bounds of the law.

But here is the Achilles heel of crowdsource funding: if the cause being supported does amount to some sort of hustle job (hypothetically speaking and not intending to impugn Diaspora), crowdsource funding enables those who might operate with less than pure motives a loophole by which they can make a mass appeal to potentially thousands of unsophisticated persons who might fund a venture without having to be accountable to those persons in any significant way. In effect, it is like an open ticket (legally speaking) to take their money and do what one will with it.

When there is no legal accountability ultimately for how such funds might be used, that means that the founders of a crowdsource-funded company basically are telling the public "trust us, we're good for it," which may or may not bear out in reality. This is a genetic weakness with this model of funding that is bound to lead to problems at some point down the road, however well it might play out in the Diaspora case.

1) the decentralized architecture: people won't install servers

2) not concrete enough: they only pile buzzwords and money for now. See also the 37signals criticism http://37signals.com/svn/posts/2330-diasporas-curse

While I mostly agree with (2) I think that we can't criticise (1) based on the current situation on the web because the whole innovation -- if it happens -- is precisely the way all this will be done. Just saying "people having servers? crazy!" is just as pointless as saying "people having personnal computers? crazy" was 3 decades ago ago: people sort of already use servers all the time: DSL boxes and smart phones on the hardware side, bittorrent on the software side. So of course it is not easy, but don't forget that if there is a need for such a thing, it will eventually made easy to use. And concerning diaspora, it's not even about servers, it's about standards: think rather about something like email. The question is rather if will we go towards more decentralisation of the data and more autonomy for the users on the net.

That's such a bizarre criticism. It's a donation. The server is a thank you gift for your donation. It's not supposed to match that cost of your donation, or else what's the point of the donation?

Incidentally, when I saw this server offer on the Diaspora website, I thought that was too big a gift for only $2000. Not only is there the cost of the hardware, but also configuration time, and probably support time too.