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Observations on Relevant Commercial Media |
Brad Burnham has a post on the Union Square website about The Weird Economics of Information. It’s very much inline with a theme my friend Charlie O’Donnell (also the first analyst at Union Square) has pushed in his startup Path 101 calling it ‘anti-stealth’.
Almost a year ago I did a few posts on how an open ethos can re-invent an industry. It’s something I continue to think a lot about and enjoyed reading Brad’s post today.
(Found via Fred Wilson)
The April issue of Fast Company was really good! There were actually a number of articles I’ve found myself reflecting on quite a bit over the last month. (It actually felt vintage Fast Company - unfortunately May was back to normal so not sure this is a trend.) Anyway, one of the feature stories for the month was titled ‘Hotbed‘ and discussed the cluster of activity around renewable energy emerging in Iceland. I’ve found myself thinking about it regularly since reading it, so I thought I’d share some thoughts.
For background, the article explained about Iceland and it’s capital Reykjavik:
The country has no coal, no petroleum reserves, and no trees. (The Vikings leveled the timber centuries ago, leading to this bit of local wit: “What do you do if you’re lost in an Icelandic forest? Stand up.”) Rather than continue to import every calorie of fuel, Icelanders figured out how to heat their homes with their copious geothermal supply; before long, they were generating geothermal electricity as well. Today, Iceland imports essentially no coal or oil for heat and power: 70% of its energy is renewable. Reykjavik is at the center of this energy vanguard, filling all of its needs from green sources, either geothermal or hydroelectric.
It is here that Iceland’s ambition becomes clear. Having shown that it knows what it takes to move from one fuel source to another, this rocky little outpost is ready for something bigger. “We would like to be the world’s laboratory for exploring a carbon-neutral future,” says Ingibjörg Sólrún Gísladóttir, the country’s foreign minister and former mayor of Reykjavik.
The article goes on to describe some of the early progress that has been accomplished building toward that vision. As I mentioned, I’ve found myself thinking about this a lot since reading the article especially around implications for both entrepreneurs and regions.
Wikipedia defines an entrepreneur as: someone who attempts to organize resources in new and more valuable ways and accepts full responsibility for the outcome. This is certainly a fine definition - I’ve tended to simply say it’s a person who optimizes their resources based on a vision for the future. However, one of the things I’ve come to realize over the last few years is that while thinking about how to organize/optimize the resources you have is important. It is also equally important to think about what constraining factors aren’t going to change anytime soon, which forces you to optimize around those constraints. I have found this to be true, both for tactical and strategic issues.
More closely related to the Fast Company article, Iceland’s focus on exploring a carbon neutral future. I actually spent a few years working with Dr. Richard Florida when we were both at Carnegie Mellon. Rich is widely recognized as a leading thinker in economic development today. While I was focused on exploring with Richard the corporate implications of his theories, our collaboration exposed me to a number of economic development groups and the concept of building sustainable growing regions ended up becoming a fascination of mine.
The Fast Company article about Iceland resonated with something we posited regularly: regions should focus on opportunities for authentic organic growth. I wonder if things that first appear to be constraints enable optimizations that highlight paths for authentic growth. For example, the constraint of lacking natural resources for fuel have ended up creating an entirely new industry in Iceland. (With out going to far off topic, Richard has a really interesting model of how to identify these strengths, which I won’t go into now but would encourage you to check out his blog for more information.)
This is a message that I think is particularly important in places like Pittsburgh, Pennsylvania where I currently live. I often hear people in Pittsburgh compare themselves to Austin or Silicon Valley. As someone who goes to Silicon Valley at least twice a month, I can confidently say Pittsburgh is no Silicon Valley. I also travel to Austin once a year for SxSWi and again it’s not quite the same - although they are closer.
However, I do believe a path exists to great organic growth in Pittsburgh. In my opinion, we need to be brutally honest about both strengths and the constraints to be optimized. In the startup tech community, there certainly are promising signs. For example, I’ve helped Innovation Works (PA’s Venture Fund) launch a new project I’m very excited about Alpha Lab, because I really do believe it highlights the strengths of the region and realistically optimizes around the constraints.
I’ve had an idea for over a year and today’s announcement that the original Evil Empire will be joining the One Laptop per Child program is just the encouragement I needed to blog about it. (conversation here)
I’ve become really impressed with how the concept of becoming carbon neutral has really effected the dialogue around creating a sustainable environment for future generations. Apparently others much smarter than myself agree, as New Oxford American Dictionary named it Word Of The Year in 2006.
As someone whose life has been significantly altered by having computers around our house at a very young age. I really love the concept of children in developing nations being delivered laptops. So here is the idea: can we all become microprocessor neutral?
I certainly don’t have it all worked out, but I imagine when you purchase a laptop, cell phone, etc there is an option to add a OLPC to your order for a child in a third world country. Also, you could have a site that allowed you to buy any number of OLPC you wanted.
The marketing of this could be awesome. You could have stickers people put on their laptops that say “I’m microprocessor neutral.” It seems worthwhile, but certainly logistics would need to be worked out. What do you think?
PS - Thanks dreamfire (Flickr) for photo - yeah creative commons
Admittedly I haven’t lived up to the goal of writing regularly on my personal blog. If you have been reading ReadWriteWeb or listening to ReadWriteTalk, then you’ve certainly gotten more than enough of my perspective. (If not, subscribe to ReadWriteTalk in iTunes 
Also, if you’re interested in what’s going on in my personal life, my wife Jen has started a blog. I have a feeling subscribing to her posts will be a much better way to keep up with my non-professional life. Plus I think you’ll find her commentary very interesting (biased as I may be)!
Anyway the point of this post, about a month ago I was at Grove City College and spent a day talking with students in the entreprenuership program. I also gave a presentation that night on: “Why Now is a Great Time to Start a Company!” I just learned the video is availaable online, so you can go check that out here.
While probably not the most polished presentation I’ve ever delivered, it was truly what I wish I would have heard as a undergraduate. I also managed to plug my new favorite project in Pittsburgh - Innovation Work’s AlphaLab.
The slides are embedded below if you’d like to follow along:
Note: As you may remember, all ad revenue from the WPNI BlogRoll advertising program is included as part of my annual donation to Grove City’s Entrepreneurship Program.
Note this is the second part of a two-part series. The first part is right here. In my first (very long) post, I reviewed a quick definition of an open ethos and looked at a few industries that had been reinvented. Now moving on to the second part, I’ll start by pointing out a few generalizations and then cover some industries that I believe are especially vulnerable to reinvention.
From reading and thinking about it (remember these are think out-loud posts), the traits all center around how an organization can be open or accessible to their customers. Specifically, here are things that should be obvious about the organization and it’s product …
A user can understand exactly how the organization’s product or service works, in as much detail as they want. Obviously, for some levels of detail a user will need to have a sufficient level of expertise. For example, in regards to open source software a user may need to have a knowledge of the programming language the application was written in - but they can review the entire source. Another example of transparency, is the ability to audit the changes to a wiki page.
The product of an organization can be copied and built upon at any point. Again, the easiest example is open source projects that build on other project such as Nutch being built on top of Lucene. Another good example, is companies opening their APIs to other services for new applications.
While most organizations have merit based levels of access, the key concept is that anyone can interact with the organization and provide input. This is done a number of ways including: great customer support, easy access to roadmaps and schedules, and easy methods to provide feedback.
This may be the least obvious, but it seems like for the other characteristics to work out resulting in order and not anarchy - there must be brand associated with the organization (whether the brand of the leader or the organization itself) that is trusted as a thought leader. In many cases, I think the brand and individual are indistinguishable (Linux and Linus Torvalds or Wikipedia and Jimmy Wales).
With that backdrop, here are some industries that seem vulnerable to me.
Most of the advertising networks take forty-plus percent of the revenue from advertisers. Historically, this made sense when there were sales and business development activities necessary to build these networks. However, for a lot of the “long-tail” the self-service model has reduced the amount of effort necessary for both recruiting advertisers and publishers. Yet, Google & Yahoo have proven the self-service model works for online advertising.
In addition to networks, I also think the ad serving space is very vulnerable. Interestingly, there has been a lot of conversation online recently about Double Click being acquired by Microsoft or Google. In my opinion, this is a really bad idea! The ad serving market needs to be reinvented by a competitor with an open ethos. If I were either Google or Microsoft, I’d wait for the other company to acquire Double-Click and then release a completely open and free advertising server.
There is a really interesting paper reviewing the concept of the open source being applied to Biotechnology space. This seems very credible, but admittedly I don’t know a lot about the space that well.
The mobile phone industry is dominated by just a few carriers who work hard to restrict access to their devices. Yet, customers want the ability to extend their phones in new and creative ways. In many ways, I think the explosion of buzz around Twitter is really just a symptom of users finally beginning to discover services for their mobile phone.
Didn’t you see TechMeme … Apple & EMI have solved world hunger! 
In all seriousness, the music industry seems like it will certainly be reinvented in the next year.
What other industries are vulnerable to being reinvented?
A few years ago, American Express started running a campaign ‘What can OPEN do for your business?’ Over the last few week’s I’ve been thinking about what I think is a more interesting question: How would an open ethos reinvent your industry? Specifically, I’m interested in looking at the ways that new entrants into a marketplace who take an open approach have changed industries.
Wiktionary defines ethos as
The character, or fundamental values of a person, people, culture, or movement.
The most appropriate definition of open from Wiktionary is
Which is not closed; accessible
Therefore, for the purposes of this two-part post, I would define open ethos as an organization embracing accessibility as an fundamental value.
Interestingly, it seems like new entrants to the market with an open ethos have reinvented a number of industries. In the first part of this two-post series, I’ll focus in-depth on two examples where new entrants to the market have placed a higher value on being open. (I’ll also just link to a few other examples that I find illustrative.) In each case, you’ll see the organization has catalyzed significant change in their industries. In the second post, I’ll focus on a few generalizations that I think can be learned from the examples and point to a few industries that I believe are very vulnerable to being reinvented by embracing a more open ethos.
NOTE: This is more of an ‘think out loud’ series of posts, then one that I start knowing a specific conclusion I hope to reach. Therefore, I’d especially be interested in other people’s opinion on the topic - please leave comments below.
I’ll start with reviewing the keystone example, open source software. The entire software business has been changed significantly because of business models that have sprung up around open source software. Interestingly, while some businesses have been effected negatively, there are a number of new business models that have emerged. There is an excellent book by O’Reilly that came out in 1999, “Open Source: Voices from the Open Source Revolution” it included an essay by Robert Young one of the founders of Red Hat.
Robert states:
You can’t compete with a monopoly by playing the game by the monopolist’s rules. The monopoly has the resources, the distribution channels, the R&D resources; in short, they just have too many strengths. You compete with a monopoly by changing the rules of the game into a set that favors your strengths…
The benefit an open-source OS offers over the proprietary binary-only OSes is the control the users gain over the technology they are using. The proprietary OS vendors, with their huge investment in the proprietary software that their products consist of, would be crazy to try and match the benefit we are offering their customers, as we generate a fraction of the revenue per user that the current proprietary OS vendors rely on.
In 1999 when Robert’s essay was written, Linux was just emerging in the operating system market. At the time there were about 10 million users compared to 230M Dos/Windows users. Looking back it is interesting to see how insightful this essay was. Today Linux is an established player, a recent Information Week article stated “a third of respondents to InformationWeek’s most recent IT priorities survey have Linux servers on their 2007 project lists–and it’s generating increasing interest as a PC operating system, partly as an alternative to Windows Vista.”
There are obviously a number of other very succesful open source project, but that is outside the scope of this essay. If you need help figuring out what those projects are - go to SourceForge.
The entire idea of collaboratively developing material in wiki pages is an excellent example of a publisher (in the broadest sense of the term ‘publisher’) embracing an open ethos. The largest example of this is obviously Wikipedia, which describes itself as:
Wikipedia is an encyclopedia collaboratively written by many of its readers. It is a special type of website, called a wiki, that makes collaboration easy. Many people are constantly improving Wikipedia, making thousands of changes an hour, all of which are recorded on article histories and recent changes. Inappropriate changes are usually removed quickly, and repeat offenders can be blocked from editing.
In a debate in the Wall Street Journal Online about a year ago between Jimmy Wales (founder of Wikipedia) and Dale Hoiberg (editor-in-chief of Britannica), Jimmy was quoted as saying:
The main thrust of our evolution has been to become more open, because we have found time and time again that increased openness, increased dialog and debate, leads to higher quality. I think it is a misunderstanding to think of “openness” as antithetical to quality. “Openness” is going to be necessary in order to reach the highest levels of quality.
Britannica has long been a standard bearer, and they have done a fine job within their model. But it is time to work in a different model, with different techniques made possible by new technologies but the same goals, to reach ever higher standards.
While Wikipedia is a non-profit, interestingly Jimmy Wales recently started a new for-profit venture called “Wikia.” You can learn more about the project by reading it’s home-page - constructed by the community. Another recent interesting example is being led by Jay Rosen called “Assignment Zero” which is putting together a new very interesting twist on this now. Check out a description by Jay in Wired there is also a good summary by Jeff Jarvis.
This is a model that is clearly beginning to disrupting the way content is produced - similar to how open source disrupted the software industry.
The following are a few other examples that I find pertinent:
Wow, so this was certainly a LONG first post! In the second (hopefully shorter!) half, I’ll explore the unique characteristics that open ethos projects have and some other industries that my be vulnerable.
When I was a senior in college, I was asked by our institutional advancement (fundraising) department for ideas that I would support both financially & with my time after graduation. At the time, I indicated that I’d like to see the business department add an entrepreneurship program.
I must not have been the only person to mention this idea. A few years later, I was asked to join the founding advisory board of the program. I served on the advisory board for the next five years and proudly watched the entrepreneurship program grow from a vision to over one hundred students and 5 full time / 3 part time professors. Over the last year, I have become to busy to continue serving on the advisory board. (I don’t like to serve on boards which I don’t have time to really add value.)
However, my heart is still with the program and I continue to do what I can to support it. Tonight I was asked to participate on a panel for about 100 students & the program faculty as part of their 2007 Speaker Series sponsored by the Coleman Foundation. It was a real pleasure to get back on campus and meet new classes of dynamic students. The majority of the discussion was around my current venture, how I ended up doing it, and the joys/trials of being an entrepreneur.
However, I know I have a number of entrepreneurs who read this blog.
Therefore, if you can pardon the quick endorsement by a loyal alum … I wanted to point out a few things that I think are really distinct about Grove City College & it’s Entrepreneurship Program:
First, the college itself is:
As for the entrepreneurship program:
If you have a high-school age son/daughter/friend and want to learn more, please contact me at [profitablesignals at gmail dot com]
I just watched the Churchill Club’s annual panel on what it takes to build a successful start up. It was moderated by Guy Kawasaki and had the following panelist:
Lauren Elliott, Founder, Personal News Network
Reid Hoffman, Co-Founder and CEO, LinkedIn
Joe Kraus, Co-Founder and CEO, JotSpot
Daniel Mattes, Co-Founder and CTO, Jajah
Alex Welch, Co-Founder and CEO, Photobucket
It was really worth the hour & a half invested. I especially enjoyed Joe Kraus’s observations on the importance of persistence. So keep making those cold calls! (Also, did everyone know LinkedIn is profitable?)
[Found from Post on Guy Kawasaki's Blog]
A fellow NextNYer, Darren Herman, wrote a very interesting post today on his blog - I Want It To Succeed In it he describes an idea he has had for sometime to create
… a niche social network for families with the ability for media sharing and tagging. Think genealogy 2.0 and digital family archiving.
Interestingly, this is not something he can pursue. He indicates one of the reasons is his current role as a co-founder of IGA Worldwide Therefore he has decided …
Instead of shelving the idea for the future, I’ve gone ahead and listed it on eBay so a serious entrepreneur can come in and run with the idea.
It appears from the post, you’d get …
my thoughts down on paper professionally (scope doc and business opportunity) and built the first iteration of the scaleable technological infrastructure in .NET and Ajax (+SQL 2005).
Kiko’s employed a similar technique and ended up selling for $258,100. It will be interesting to see what Darren’s idea nets. Obviously, the product never made it into the marketplace & it seems even less refined that Kiko was when it was acquired. However, if Darren can get a few thousand dollars is this a win? Especially, interesting if he also gets the satisfaction of the idea succeeding.
Maybe more intriguing is the question in the title of this post … ”is eBay an Idea Banker” (in addition to creating markets for so many obscure goods?)
What do you think?
I’m very anxious tonight, but not to hear what Steve has to say at It’s Showtime.
No, I’m waiting on Brad Feld to post what he is up to next. Last week, The Wall Street Journal had an article titled Tech Bust’s Last Chapter Plays Out at VC Firms [Subscription Required] & noted that Brad Feld’s firm Mobius Venture Capital wasn’t raising another firm. The Wall Street Journal rumored that:
Some senior members have moved far from the center of the venture-capital world in Silicon Valley to Colorado. There, people familiar with the matter say, they may join managing director Brad Feld in breaking off from Mobius to form a new fund. Mr. Feld wouldn’t comment on his plans. He confirmed in an email that Mobius’s current team isn’t raising more money, but said the firm would keep backing companies in its existing portfolio.
Interestingly, the WSJ article was on September 7th. Interestingly, ValleyWag points out that Brad Feld has gone silent on his blog since the Journal’s article.
So while Apple faithful wait with anticipation for the “one more thing” Steve Jobs will introduce. I am waiting to learn about Brad Feld’s new fun. I can assure you of one thing - what Brad Feld does will shape the future of the Internet more than a Video iPod any day!
