JOURNAL: Open Source Networks and Heroin

The boys of Xalisco, Mexico have built a heroin business that now spans the US.  What makes it interesting are the loose network dynamics that drive its growth (from Sam Quinones writing for the LATimes):

In contrast to Mexico's big cartels -- violent, top-down organizations that mainly enrich a small group -- the Xalisco networks are small, decentralized businesses. Each is run by an entrepreneur whose workers may soon strike out on their own and become his competitors. They have no all-powerful leader and rarely use guns, according to narcotics investigators and imprisoned former dealers.

This decentralized organizational structure has allowed the businesses to focus on other forms of competition: customer service and price.   

Their success stems from both their product, which is cheaper and more potent than Colombian heroin, and their business model, which places a premium on customer convenience and satisfaction. Users need not venture into dangerous neighborhoods for their fix. Instead, they phone in their orders and drivers take the drug to them. Crew bosses sometimes call users after a delivery to check on the quality of service. They encourage users to bring in new customers, rewarding them with free heroin if they do. 

One potential reason why it remains decentralized is due to the community from which it originated:

The county consists of the town of Xalisco and 20 villages with a total population of 44,000 -- about the size of Los Angeles' Silver Lake neighborhood. Landless sugar-cane workers, eager to grasp their version of the American Dream, provide a virtually endless supply of labor for the heroin networks, one reason the system has proved so hard to eradicate.... one reason the system did not evolve into a cartel controlled by one person or family is that Xalisco County is made up of ranchos, small villages famous for their independent spirit and intense rivalries. "We're real envious of each other. Families cannot work together," he said.

In short, while there is intense competition, it's limited to business operations.  Since everyone knows each other, violence isn't a default option.  Further, due to these social connections, drivers are paid very well at $1,000 a week (plus expenses).  The high pay for line workers likely allowed them to save enough to start their own businesses, which in turn drives the expansion of the aggregate network.  Another big driver is the high levels of innovation due to an open source sharing of techniques:

Returning frequently to Xalisco, immigrants compared notes on how to improve the business model.