The problem here is not that they stole the idea, it's that they literally just took an open-source codebase and filed off the serial numbers to claim it as their own proprietary work, and they did so in the most comically inept way possible.
From the OP:
PearAI offers an AI coding editor. The startup’s founder Duke Pan has openly said that it’s a cloned copy of another AI editor called Continue, which was covered under the Apache open source license. But PearAI made a major misstep: PearAI originally slapped its own made-up closed license on it, called the Pear Enterprise License, which Pan admitted was written by ChatGPT.
> PearAI made a major misstep: PearAI originally slapped its own made-up closed license on it
This is comical but not the core fuck-up: PearAI failed to attribute, thereby violating Community’s license.
It might be salvageable if they can convince customers they aren’t dragging everyone who uses them into a legal morass. But that will likely take more funding, and “help me pay lawyers” isn’t a great pitch.
Good artist copy, great artists steal. PearAI tried and failed to copy. Y Combinator's value-adding play is in striking a licensing and indemnification deal between PearAI and Community. (If Community is smart, they'll demand an arm and a leg. They're owed it.)
There's a really great Radiolab podcast Dealing with Doubt[0] that talks about how high level competitive poker has evolved over the years.
ANNIE DUKE: Sometimes you have to be 40 percent sure. Sometimes you have to be 30 percent sure. You know, if there's $70 in the pot and you only have to call $10, you know, now you're in the 15 percent range in terms of how certain you have to be that your hand is good.
JAD: In that case, you can bet this hand that you're really not sure about knowing that while you might lose this time ...
MIKE PESCA: If I do that a million times in my poker life, the law of high numbers indicates that I'm going to be very much a winner in the long run. It might be the very long run, but you should be ahead in the long run.
ANNIE DUKE: Because it's not—it's not about winning the hand all the time, it's about winning the hand enough of the time.
Any VC is making a bet of the same nature. Because there is some intangible in the team itself, it makes sense for the VC to bet on multiples if they believe that there is a valuable problem to be solved here. Some team(s) will be more successful than others, but it's really difficult to tell at the outset.
YC is putting through 200+ companies per batch and making a tiny investment. It’s far more efficient to swallow the occasional bad bet than to do a lot due diligence… Now the VCs that came in after… that’s another story.
It doesn't matter so long as they didn't violate any licenses.
Where the product starts and where it ends will be two totally different endpoints that are sure to diverge once they find their domain and business model.
If you are so inept that copying someone else's codebase wholesale is what makes you a viable company, then perhaps you aren't worthy of investing in.
Unless, the investor is just trying to fund the most ruthless, least ethical, win-at-all-costs type of people, which as I type this seems like a sad but unsurprising move.
> Unless, the investor is just trying to fund the most ruthless, least ethical, win-at-all-costs type of people
This is exactly what VCs are looking for. They are going to hand you a check worth several hundreds of thousands to millions of dollars. They are not doing this because it's a charity; they are doing this because they are making a bet that they'll get some return on that investment.
This is the purpose of a VC: to deploy capital in a way that is likely to yield the greatest returns for the investors.
From a VC perspective, probably all the better: you've just shortcut a huge phase of R&D and can get right into marketing and sales. As long as there's some viable route to clean up any licensing issues (there almost always is).
You're thinking ethically; without the shrewdness and single-minded focus on profit that VC's have.
Spoken as if there was only one single binary option for investment!
The strategy implies that the marginal value of the lack of ethics/the personality type to do that is the thing thats worth investment. If thats true, then venture capitalism and perhaps capitalism itself is super fucked: a machine for developing and rewarding the worst impulses of humanity.
Investors cheer when Uber, Lyft, and UPS drivers are treated as contractors.
They frown when they try to advocate for more rights, better employment conditions, and better pay.
Such is the nature of modern capitalism.
The Costco's and James Sinegal's of the world are few and rare; I wish we'd see more companies and leadership teams that valued labor and were more ethical. But a survey of the most successful CEO's (Ellison, Zuckerberg, Musk, et al) and companies leads us to believe that such principles are often opposed to the machinations of capitalism.
It's business under the laws, regulations, customs, and choices of American business in 2024.
I say that because, while 'capitalism' is a significant element, many people (not you) justify or rationalize their behavior or the current 'system' by asserting it's a law of human nature or economics, not their choices that yield their behavior and the system, and both can change. It's like criminals who say 'hate the game, not the player'.
Inevitability is a lazy argument for lazy thinkers and irresponsible people (again, to emphasize, the parent didn't make it). It's the corruption of power - they can do what they want, and therefore nobody can compel them to think harder and get better results.
So I think it's essential to draw the distinction.
> (Ellison, Zuckerberg, Musk, et al)
Other than Ellison, even the others didn't act this way a decade ago. Silicon Valley was built by a different ethos - 'don't be evil'. Power corrupts.
At any rate, emergent behaviors can arise from complex systems, and thats exactly what I am alleging of (venture) capitalism at this stage of its evolution. If you have differences of opinion, by all means share them.
The American economic system is and always has been designed explicitly to extract the maximum profit from any venture at any cost.
See: children mangled in factories, minimum wage laws, the oil industry, pretty much every OSHA regulation.
If capitalism were at all capable of recognizing any externalities at all, we wouldn't have to create a vast legal system to protect workers, they would be treated safely and fairly because that is an ethically valuable thing to do.
If capitalism were capable of considering morals, ethics, or even the law in general, we would live in a much better world. However, capitalists regularly dodge taxes while extracring wealth from any natural or human resources that exist. They then simply hoard that wealth. Remember we're living in the worst wealth inequality in this country's history. Global warming caused by the oil industry is wrecking the planet. Amazon warehouse workers get docked pay for using the bathroom and AI companies are pointing cameras at drivers to measure how often they blink.
I have no clue how you can look at the world around you and not see the rampant exploitation and value extraction. The US is in a very bad way because of it. Increased poverty, homelessness, starvation.
Hell, just look at our for-profit medical industry. People regularly go bankrupt due to ludicrous and exploitative price gouging. Tell me how ethical capitalism creates a system where hospitals are owned by private investment firms who squeeze the sick and dying for every cent they have and more.
Capitalism does not, and fundamentally cannot consider ethics. Only profit.
I’ve never looked into it deeply, but as I understand it the opposite is true. I’ve read in passing that statistically the most successful sales people are kind, insightful and find ways to align with their customers best interests. Likewise, I’ve also read in passing that economies with cultures of respect and collaboration far outperform ones that are very competitive.
Maybe someone has more information about those topics that me?
That's why I pointed it out. It's a perfectly legitimate explanation for this type of behavior. (And, imo, abhorrent and where capitalism-as-harnessing-greed really falls apart.)
As for "smart," I assume there are some not well understood externalities to this kind of behavior, such as erosion of trust or other social ills that are hard to quantify until they reach a critical point.
>As for "smart," I assume there are some not well understood externalities to this kind of behavior, such as erosion of trust or other social ills that are hard to quantify until they reach a critical point.
I think the externalities may be hard to quantify but they are well-understood by now (and are things like erosion of trust, which you mentioned).
Just look at the societal attitudes towards Silicon Valley now vs. 25 years ago. VCs complain about how society now so full of negativity towards technology, but they only have themselves to blame for that. They shit the bed, and people got wise.
> Unless, the investor is just trying to fund the most ruthless, least ethical, win-at-all-costs type of people
This was probably the hardest realization I came to in business/startup world.
That's precisely what most investors (at least the ones with any large amount of money) look for. They could care less if your product is good, or if you developed it ethically, or if you treat employees or customers well.
Most would invest in the next Oracle and sleep like babies if given the chance to get in early - even if they had a crystal ball to see how badly it will impact the industry and social fabric as a whole down the road 20 years later.
Especially VCs. They exist to make money. Full stop. The rest is marketing fluff for the naive masses.
Starting off by making an obviously hamfisted move matters. It's a headwind to overcome.
Is it possible to overcome? Sure.
Yes, you can heal after shooting yourself in the foot.
(And, of course, removing attribution is violating licenses). However, they're unlikely to face litigation for this. The possible legal consequences aren't the actual consequences they're likely to face.
I can all but promise you these "headwinds" that they are facing in terms of negative PR are in fact a net positive. At their stage, any press is good press.
AFAICT, the attribution's been there since the beginning on their GitHub? (see: About section)[1].
I agree adding their own license was hamfisted, but honestly, if I'm funding a company I hope they would spend less than <$1 on legal and licensing initially. The first order of business is almost always proving whether your business should even exist.
It's claimed to be accidental, but the entire commit history is full of commits saying "remove cont....." that neuter all references to Continue. They didn't even want the name in the commit history.
> I hope they would spend less than <$1 on legal and licensing initially
They claim that they intended to make the project open source all along. Just keeping the Apache license would have been less time consuming than asking ChatGPT for one, with the added benefit of being a real license.
I mean, whatever floats your boat, but if I'm funding a company, I hope they've spent whatever they need to spend to determine whether or not what they're doing is legal and sensible, even if that involves spending more than $1.
Cloning an open source project and having Chat-GPT write you an enterprise license is not how you "prove whether your business should even exist." It's how you scam rich people into giving you money.
4. Redistribution. You may reproduce and distribute copies of the Work or Derivative Works thereof in any medium, with or without modifications, and in Source or Object form, provided that You meet the following conditions:
a. You must give any other recipients of the Work or Derivative Works a copy of this License;
c. You must retain, in the Source form of any Derivative Works that You distribute, all copyright, patent, trademark, and attribution notices from the Source form of the Work, excluding those notices that do not pertain to any part of the Derivative Works;
That's a problem to be resolved by their legal counsel and often not even a fatal problem (e.g. work out some licensing agreement).
The first job of a startup is to understand how to solve a valuable problem. If the team is solving a valuable problem, they can figure out how they want to navigate even violation of licenses.
Sure. We can break into each other's houses. It's illegal but "that's a problem to be resolved by [our] legal counsel and often not even a fatal problem".
Certainly not because one is important and the other isn't. It's because one is prosecution by the state, and the other isn't, so they have different burdens and different repercussions.
This mentality, where ethics and morals are ignored, is how we get things like Theranos.
These people stole a project, illegally changed the license, and pretended it was their own. This is basically theft and fraud, and it's kind of disgusting seeing people defend it.
There's a reason why big corps don't use copyleft software, if it were as simple as this they would be violating copyleft licenses left and right.
They lose claim to intellectual property rights over their own technology, even the risk (certainty) of a lawsuit over this is enough to kill the company.
And we are not talking about the company being sued for a breach of license. We are talking about this being used in any kind of dispute in court, client didn't pay? They can just allege that whatever they bought wasn't even the property of the startup, so they had no righ to sell it to them, boom good luck collecting your contract payments.
If you are a big company with a lot of business, sure you move on. But a company that is a couple of months old with this liability already? It's doomed.
You've got the wrong impression; I left the startup that closed the $100m C because I didn't agree with some of their practices (or lack thereof).
I'm just sharing my perspective having seen success and failure in the startup space over the last 4 years first hand from teams that have succeeded and teams that have failed.
It doesn't seem to me, by the contrary. They're describing the harsh reality whether one likes it or not. As it's stated about reality in the Cambridge dictionary: "the state of things as they are, rather than as they are imagined to be". But it seems a good idea to rethink how we use the word "success", even if it's "success" at the eyes of many.
I like the story "The Honest Farmer", retold by Ella Lyman Cabot, I found in "The Moral Compass", pg. 262, edited by William J. Bennett, which introduces the story with this: "The dictionary defines integrity as 'an uncompromising adherence to a moral code' and says the word traces its origins to a Latin term meaning 'untouched'. Here is integrity, untouched and unshaken by altered circumstances."
Anyone who uses open source software licensed under Apache 2.0 must include the following in their copy of the code, whether they have modified it or not:
1. The original copyright notice
2. A copy of the license itself
3. If applicable, a statement of any significant changes made to the original code
4. A copy of the NOTICE file with attribution notes (if the original library has one)
[...]
However, you do not need to release the modified code under Apache 2.0. Simply including any modification notifications is enough to comply with the license terms.
From the OP:
PearAI offers an AI coding editor. The startup’s founder Duke Pan has openly said that it’s a cloned copy of another AI editor called Continue, which was covered under the Apache open source license. But PearAI made a major misstep: PearAI originally slapped its own made-up closed license on it, called the Pear Enterprise License, which Pan admitted was written by ChatGPT.