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Else 10.13.14: Smiling Happy Facebook People (Not Teens, Though)

By - October 12, 2014
Facebook Atlas

Now you can buy real, smiling, happy shiny people all over the web, courtesy Facebook.

Today’s summary covers the past two weeks of worthy reads, with a strong dose of the Internet’s twin titans Facebook and Google. I’ve also been busy writing on Searchblog, so you’ll find three of my own pieces highlighted below.

Facebook’s new Atlas is a real threat to Google display dominance — Gigaom

The first such challenge in … forever.

Facebook is unleashing its ads—and surveillance—onto the internet at large – Quartz

And while it took a long time, it’s now real. So what does it mean for publishers? Read on…

A tip for media companies: Facebook isn’t your enemy, but it’s not your friend either — Gigaom

The industry seems to be slowly waking up to the fact that Facebook is more complicated than perhaps we gave it credit for. Sure, BuzzFeed has been winning by leveraging viral content, but now that Facebook is leveraging its data across the web, including the data it picks up from publisher’s sites, those same publishers are starting to do the math and realize that perhaps they aren’t winning after all.

Teens are officially over Facebook – The Washington Post

Until they’re not.

Programmatic Ad Buying to Reach $21 Billion – CMO Today – WSJ

That’s a very large piece of a growing pie – and it’s set to only increase as programmatic underpins nearly all digital advertising, period.

Some pros and cons of Google’s plan to give every “thing” a URL — Gigaom

The phsyical and digital come one step to connection in this Google-led open source schema. Browse the web, browse the world…

End-user computing — The Truant Haruspex — Medium

I love pieces like this. From it: “We increasingly live in a computer-embroidered reality, and the ability to manipulate that reality is empowering. If we can find a way to bring that ability to a wide audience, it could have an impact comparable to the invention of the printing press.”

A Secret of Uber’s Success: Struggling Workers – Bloomberg View

“On-demand has thrived, in part, because the nation has dropped a bedraggled and optionless workforce in its lap — and on-demand’s success depends in part on the idea that our nation won’t change.”

Venture capital and the great big Silicon Valley asshole game | PandoDaily

Any piece that starts with “Silicon Valley has an asshole problem, and it’s high time we owned up to it” is going to get attention, and Sarah Lacy’s piece did exactly that. Lacy deconstructs the forces driving behaviors in the Valley these days, and finds our industry wanting.

Killer Apps in the Gigabit Age | Pew Research Center’s Internet & American Life Project

What might a true gigabit Internet bring? Pew asked the experts.

A Master Class In Google — Backchannel — Medium

Steven Levy is right – to understand the world today, it sure helps to understand Google. Not sure that’s possible, but one can try.

Marc Andreessen on Finance: ‘We Can Reinvent the Entire Thing’ – Bloomberg

This interview lit up the Interwebs big time last week.

You are not your browser history. — Medium

Artist Jer Thorp launches a project to visualize what can be known from browser history.

New Statesman | The most influential tech company you’ve never heard of

Spoiler: It’s Alcatel-Lucent.

The NSA and Me – First Look

Veteran NSA watcher James Bamford tells his story.

The Next Stage of Mobile Quickening: Links Get Intelligent- Searchblog

In which I argue that what Branch Metrics is doing is a good next step toward a true mobile web.

My Picks for NewCo Silicon Valley – Searchblog

NewCo SV is next week!

Living Systems and The Information First Compan- Searchblog

Companies that put information flows at the center of their businesses are winning.

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Living Systems and The Information First Company

By - October 11, 2014
uber map

A map tracing the information flows within Uber’s San Francisco market.

One of the great joys of my career is the chance to speak at gatherings of interesting people. Sometimes it’s an unscripted, wide ranging conversation (like during Advertising Week, for example), but other times it’s a formal presentation, which means many hours of preparation and reportage.

These more formal presentations are opportunities to consolidate new thinking and try it out in front of a demanding audience. Last month I was invited to speak in front of group of senior executives at a major bank, including the CEO and all his direct reports. I was asked to focus my remarks on how new kinds of companies were threatening traditional incumbents – with a focus on the financial services industry, as you might imagine.

Now, I’m not an expert in financial services, but I do know how to ask questions, and I’ve been watching as the core assumptions any number of markets, from media to transportation to hospitality, have been upended by Internet upstarts like Buzzfeed, Uber, or Airbnb. So I started preparing for this talk by interviewing half a dozen or so senior executives at the bank. I was prepared for defensive answers, but instead found myself pleasantly surprised – not only did these executives acknowledge a threat, they also spoke eloquently about the self-created barriers which blocked their ability to respond. Some of these barriers were regulatory and therefore out of their direct control, but many were organizational – this bank had been in business more than 100 years, and its DNA was pretty deeply set.

There’s no dearth of literature and leaders with strong points of view about corporate change – Clayton Christensen’s Innovator’s Dilemma  is the classic, and there are plenty of others – Downes’ Big Bang Disruption and Moore’s Crossing the Chasm come to mind. But I’ve not made my living writing about corporate disruption, nor do I expect I ever will. As much as these kinds of books lay out specific and intelligent management lessons, I didn’t want to dole out second hand advice – after all, if the banks wanted to hear that, they could have asked Christensen, Downes, or Moore.

So preparing for this talk forced me to do exactly the kind of hard work any writer both fears and relishes – coming up with something original to say.

So I started to think about why it is that large enterprises fail to innovate. What was it about new, digital companies – which I’ve come to call “NewCos” – that allows them to so quickly pose significant threats to the incumbents in their respective markets?

It struck me that corporations – which by US law enjoy the status of personhood – act much like organisms in biological systems. Some are fitter than others, and every so often you see punctuated equilibrium – a quick reset of the ecological landscape. Further, it struck me that we’re in the midst of such a phase shift as we become information – a theme I’ve written about quite a bit (and the core thesis of my long-unfinished book).

That got me pondering the role of information in companies. I wondered, what is the role of information in biological systems? A bit of Googling reminded me of living systems theory, which I last encountered reading Kevin Kelly‘s What Technology Wants, which posits that technology itself is a living system. But I found myself pursuing a narrower path: What if we understood corporations as living systems? Might there be an insight or two to gain?

Living systems theory is the work of biologist James Grier Miller. From the wikipedia entry: “Living systems are open self-organizing living things that interact with their environment. These systems are maintained by flows of information, energy and matter.”

Bingo – there it was, right in front of me – a new way to think about corporations. The first thing that struck me in this definition was the use of the word “open” – most large enterprises are not open in most senses of the world. But most interesting was the framework of understanding flows of information, energy, and matter in a corporation. Immediately, I came up with a hypothesis: most corporations are organized to maximize their use of energy and matter, because those are the most expensive parts of their businesses. NewCos, on the other hand,  place information at the center of their business.

Put another way, NewCos are “information first” companies.  They map the flows of information in a market, and organize themselves so as to exploit or leverage those information flows, even if the flows are “potential information” – information used in a new way, a manner which may be more efficient, productive, or valuable. Put information first, and let that determine how best to organize energy and matter. Industrial era-companies, on the other hand, value their hard assets first (energy, matter), and only view  information  as a way to organize or protect those assets.

I’ve been wandering the halls of theory for a while here, so some examples are in order. I’ll start with everyone’s favorite disruptor, Uber. What has Uber done? Well, it’s stared long and hard at the information flows of the transportation business, and it’s created a service that re-imagines how, by leveraging information flows, it might go about more efficiently organizing the energy (people, gasoline) and matter (automobiles, roads) in that market. Uber is an information first business, whereas taxi commissions, rental car agencies, and even automobile manufacturers are energy and matter-first businesses.

Or let’s look at another market: hospitality. Hotel companies are energy and matter-first businesses – they look at the world as a collection of places where expensive hotels might be built, and they then spend a lot of energy and money convincing the market to come to their hotels. Airbnb focused on information flows first, and created a new approach to organizing the energy and matter of the hospitality market: it uses information to organize people (energy) and matter (people’s homes).

Once I started thinking about companies as either “information first” or “energy and matter first,” I began to see information first companies all over the place. This wasn’t hard, because I’ve been spending the past year looking at applicants for NewCo festivals around the world. GrubHub, for example, takes an information first approach to take out dining. Casper takes an information first approach to the design, manufacturing, sales and delivery of mattresses. DocuSign is obliterating paper with it’s information-first approach to trusted signatures. Hampton Creek is a classic information first company in food. On and on and on – the theory is perhaps too neat, but neat it was nevertheless.

Then I wondered – what are the information first companies in financial services? After all, I needed to bring this theory home with a strong example native to the folks who I’d be speaking to. And that’s when I remembered Earnest, a NewCo I had visited during our San Francisco festival.

Earnest

And man, does Earnest bring the point home in spades. In my talk to the bank, I laid out how Earnest’s “information first” approach allows it to entirely rethink the lending landscape. First, I explained how Earnest works: It builds an information-rich profile of a prospective lending client, using APIs from LinkedIn and the client’s own bank account. In his NewCo presentation, Earnest CEO Louis Beryl explained that the company uses more than 100 parameters of information to make a lending decision, and models that information against ever-more intelligent algorithms. It’s a process that is familiar to every information-first company, from Google to Uber, GrubHub to NetFlix.
Earnest 1

Let’s compare Earnest’s information-first approach to the traditional lending practices of most US firms. These companies lend money based largely on an outsourced information source called the FICO score.

earnest2

As you can see, these businesses are built on a relatively thin information flow – and most of it is outsourced to another company (FICO). Lenders tend to organize around three things: Lead generation (marketing cost), conversion (to a loan), and collections. Defaults are a cost of doing business. But Earnest’s approach focuses on identifying qualified clients, then servicing them in an information first manner. While still new, Earnest’s approach radically changes the game – it charges 50% less for a loan, and has no defaults to date. Time will tell if Earnest executes its game plan well enough to become a major disruptor in the financial services sector, but the company’s already convinced Andreessen Horowitz and several other major VCs to invest $15mm in its first round of financing.

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This post represents my first “thinking out loud” about what it means to be an information-first company, and it’s in no way complete. The concept isn’t original per se, but I think might add some structure to the terminology that has bedeviled our industry for years. So often we talk about “tech companies” who “leverage big data” to  “disrupt” incumbent players. I like the idea of calling these businesses “information first” companies – because in the end, any company can put information flows first. Get that right, and the energy and matter will follow.

My Picks for NewCo Silicon Valley

By - October 09, 2014

We’re more than halfway through the NewCo festival season, with Amsterdam, San Francisco, Detroit, New York, and London/UK behind us, and Silicon Valley, Boulder, and Los Angeles coming up.

Next up is Silicon Valley, which goes off Oct. 21 – 23, centered on the axis of Palo Alto. This year’s Silicon Valley festival is a pilot – Silicon Valley is more of an idea than an actual *place* per se – and NewCo tends to thrive in city centers. But we’ve found a great partner this year in the city of Palo Alto, which really is as close to the beating heart of the Valley as any city in the south Bay. After all, it’s where Google, Facebook, and hundreds of other game-changing companies started. So this year we’re piloting NewCo Silicon Valley in two parts – first with visits to a small number of legendary Valley company campuses, and second, with a full day of 30 or so companies based in downtown Palo Alto. Here are the companies I plan to visit this year, and why, along with my “runners up” – companies I wish I could also visit, were there two of me.

Day One – October 21

tesla10 am session: Tesla Motors – Who doesn’t want to get inside this company? Tesla is an exemplar NewCo – using an information-first approach to rethinking a huge market, mission driven, and an inspirational working environment. Runner up: eBay. I visited eBay early this year and was struck by how much its headquarters had changed, from a cube-driven IT farm feel to an open, information-sharing design that mirrored some of the best offices I’ve ever been in.

google1 pm session: Google – I’ll admit, I’ve been to Google a few times already, but every visit is fun, this one will be about the driverless car project.  Both of these sessions are already full, but there’s a waitlist, and past history shows that the waitlist does clear more often than not.

Evening: The VIP Kickoff. This is an invitation only event, but readers of this site can get in by purchasing a VIP ticket here.  The kickoff is a celebration of NewCos (we’ll have five or six presenting quick overviews of their sessions), and in each city we pick a speaker who is emblematic of the region. In Silicon Valley, I’ll be interviewing Ro Khanna, candidate for the Silicon Valley’s congressional seat. Read more about Ro here. Also speaking will be the mayor of Palo Alto. The event will be held in the offices of Survey Monkey, a fixture in Palo Alto with an awesome rooftop deck.

Day Two – October 2

xapo10 am – Xapo. I’m fascinated by the bitcoin story, and the impact many smart folks claim is coming thanks to the blockchain. Xapo founder’s and CEO promises a “bit coin deep dive” in his NewCo session, and I’m all in to learn more. Runner up:  HealthTap, Science Exchange, and Survey Monkey. Oh, and City of Palo Alto. What a time slot!

citi12 pm – Citi Ventures. Very large companies have been coming to the Valley for decades, eager to figure out how to learn and invest in innovation. Citi has embraced this idea for some time, but I’ve never seen how it’s Venture arm works, and I’m eager to learn. Runners Up: Mightybell and Cloudera.

medallia2 pm – Medallia. I am a sucker for any company that has at its core a promise of making customer service and experience better through data and UX. The Sequoia-backed Medallia does both. Runners Up: EAT Club and Fundly.

houzz4 pm – Houzz. I knew that Houzz was a NewCo when I asked my wife if she’d ever been on the site, and she responded “I live on that site. How did you find out about it?” – it was as if I had discovered a secret passion of hers. Runners up: Piazza and WePay.

Day Three – October 23

LI10 am – LinkedIn. I just love this company and it’s been a while since I’ve visited. To me, LinkedIn is the ultimate NewCo when it comes to how work is done. It’s almost full, so sign up now!

scanadu12.30 pm – Scanadu. This innovative health device company is all about the patient revolution – putting power back to teh patient. Oh, and the company is at Nasa Ames, how cool is that? Runners up: Duarte and Polyvore.

yahoo2.30 pm – Yahoo! This Valley legend has so much going on. How will it spend its Alibaba billions? Is Mayer’s turnaround working? Who wouldn’t want to get inside and see how the sausage is made?

If you haven’t experienced a NewCo yet, registration is free, and the experience is extraordinary. More than 10,000 people have experienced NewCo so far – it’s just plain fun to go and, to my mind, a far better use of time than sitting in a dull ballroom all day.

The Next Stage of Mobile Quickening: Links Get Intelligent

By - October 05, 2014
HowItWorks

How Branch Metrics works…click to enlarge.

Early in a conversation with Alex Austin, CEO of mobile startup Branch Metrics, I had to interrupt and ask what seemed like a really dumb question. “So, wait, Alex, you’re telling me that the essence of your company’s solution is that it….makes sure a link works?”

Alex had heard the question before. But yes, in truth, what his company specializes in is making sure that a link works in a very particular kind of mobile use case. And doing so is a lot harder than it might seem, he added. Branch Metrics, a three-year old startup that began as a way to create and share photo albums from your iPhone, is now devoted entirely to solving what should be a dead easy problem, but thanks to the way the mobile ecosystem has played out, it’s just not. (Alex has written up a great overview of his journey at Branch, worth reading here).

A month or so I wrote Early Lessons From My Mobile Deep Dive: The Quickening Is Nigh, an overview of my initial learnings as I explored today’s mobile landscape. A major conclusion: the emergence of deep linking is leading to entirely new opportunities in mobile, and the mobile marketing machine is a key place to explore if you want to understand the implications.

Since then, I’ve spent more time talking to folks like Alex, and I’ve come to another conclusion: the next step in the mobile quickening will be intelligent links.

Now, before you go Googling “intelligent links” – I’ll admit there is no clear nomenclature per se, because in the past we’ve not had a need for such a distinction. After all, on the open web, all links can be intelligent, because they can pass information from site to site via cookies, redirects, and various increasingly sophisticated hacks.

Not so in mobile.

In his wonderful post outlining Branch’s initial failures and eventual pivot, Alex notes: “The biggest growth issue we faced in our mobile app was the fact that Apple doesn’t let you track users and pass context through the install process. …To break down this barrier would mean making the mobile app ecosystem more like the functionality we’re used to on the web.”

So that’s what Branch set out to do – in essence, to make mobile work more like the web. Branch’s initial photo book product may have failed for any number of reasons, but what stood out for Alex was how hard it was for the product to self-replicate across a customer base. A customer would create a cool photo book, and then want to share it with a friend. Of course, the best way to share is via a link to the photo book – that’s the viral calling card. But when a friend clicks on the link, Branch ran into the limits of mobile apps. It gets kind of convoluted, so let me break it down in steps:

1. Customer downloads Branch and uses it to create a cool photo book.

2. Customer wants to share the photo book with her friends, which she does using Branch’s internal sharing features.

3. Branch’s sharing features generate a deep link that is sent via email (or a Tweet, or Facebook, etc).

4. Friend receives invitation via email to check out a cool photo book.

5. Friend clicks on Branch’s deep link.

6. Friend does NOT have Branch’s app installed, so is linked to the Branch app download landing page in the iTunes store.

**THIS IS FRICTION POINT #1. In an ideal world, a potential customer should not have to go through the Apple app store just to view a cool media object that’s been shared (this wouldn’t happen on the web). **

7. Friend decides to download the app, tells Apple OK, accepts the app’s terms and services, fires up the app, and….

8. Sees the generic welcome screen that the app brings up for every new user. Now he has to create a new account, set a password, etc. Confused, he wonders whatever happened to the photo book he was looking for.

**THIS IS FRICTION POINT #2. The friend just wanted to check out the cool photo book, but the information of the original URL, which pointed to the actual media object, has been lost.**

9. Friend is confused as how to actually use the Branch app to see his friend’s cool photo book. He pokes around a bit, but quickly loses interest when he sees a new notification from SnapChat, or Facebook, or whatever.

10. Friend never becomes a new customer of Branch, nor ever actually sees the photo book.

This is a deeply lame experience, and one that seriously limits any app developer’s business. “You can’t have someone have to type their password in, and go through a long install and configuration to start using the app,” Alex told me.

So Branch pivoted, and created a lightweight SDK (software development kit) that, when installed by the app maker, allows the media object in question to appear once the app is installed.

Sounds super simple, but according to Alex, it was quite complicated, not least because getting app makers to install SDKs is non-trivial. However, Branch is finding traction with scores of app makers because the company solves a major marketing problem in mobile – how to create more fluid conversion and engagement paths which ultimately lead to more customers.

This is the evolution of the intelligent mobile link – something that’s sorely needed in the mobile ecosystem. It all starts with the ability to pass data through a link – something that Apple has not allowed in the past. But Branch’s elegant hack around Apple’s shortsighted policy is one more important step toward creating a truly mobile web, one that combines the richness and device-specific capabilities of an app with the universality of an open web architecture.

“It’s like 1995″ in mobile apps, Alex concluded. “We are just figuring out how to turn on the Internet on the phone.”

When I start to think about where this goes from here, I start to get very excited – intelligent links are the beginning of a whole new mobile experience. The next step is to break down the hegemony of the app store itself – why should we have to go through an authentication, download, and configuration process just to see what’s behind a link? We shouldn’t, and soon, I imagine we won’t. Of course this has serious implications for the hegemonies of Apple and Google’s app store choke points, but in the end, both companies are all about creating great experiences for their users, right?

Take it one step beyond erasing the app store friction, and we can imagine a world where apps work like always on-call services, at the ready to execute their portion of a fluid user experience. Explaining that experience will be the subject of a future post. But for now,  amen for folks like Alex and companies like Branch Metrics. Keep up the good work.

Every Company Is An Experience Company

By - September 28, 2014
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Illustration by Craig Swanson and idea by James Cennamo

Some years ago while attempting to explain the thinking behind my then-startup Federated Media, I wrote that all brands are publishers (it was over on the FM blog, which the new owners apparently have taken down – a summary of my thinking can be found here). I’d been speechifying on this theme for years, since well before FM or even the Industry Standard – after all, great brands always created great content (think TV ads or the spreads in early editions of Wired), we just didn’t call it that until our recent obsession with “native advertising” and “content marketing,” an obsession I certainly helped stoke during my FM years.

Today, there is an entire industry committed to helping brands become publishers, and the idea that brands need to “join the conversation” and “think like media companies” is pretty widely held. But I think the metaphor of brands as media creators has some uneasy limitations. We are all wary of what might be called contextual dissonance – when we consume media, we want to do so in proper context. I’ve seen a lot of branded content that feels contextually dissonant to me – easily shareable stories distributed through Outbrain, Buzzfeed, and Sharethrough, for example, or highly shareable videos distributed through YouTube and Facebook.

So why is this content dissonant? I’m thinking out loud here, but it has to do with our expectations. When a significant percentage of the content that gets pushed into my social streams is branded content, I’m likely to presume that my content streams have a commercial agenda. But when I’m in content consumption mode, I’m not usually in a commercial mode.  To be clear, I’m not hopping on the “brands are trying to trick us into their corporate agendas” bandwagon, I think there’s something more fundamental at work here. There are plenty of times during any given day when I *am* in commercial context – wandering through a mall, researching purchases online, running errands in my car – but when I’m consuming content, I’m usually not in commercial context. Hence the disassociation. When clearly commercial content is offered during a time when I’m not in commercial mode, it just feels off.

I think this largely has to do with a lack of signaling in media formats these days. Much has been made of how native advertising takes on the look and feel of the content around it, and most of the complaint has to do with how that corporate speech is somehow disingenuous, sly, or deceitful. But I don’t think that’s the issue. What we have here is a problem of context, plain and simple.

Any company with money can get smart content creators to create, well, smart content, content that has as good a chance as any to be part of a conversation. In essence, branded content is something of a commodity these days – just like a 30 second spot of a display ad is a commodity. We’re just not accustomed to commercial content in the context of our social reading habits. In time, as formats and signaling get better, we will be. As that occurs, “content marketing” becomes table stakes – essential, but not what will set a brand apart.

Reflecting on my earlier work on brands as media companies, I realize that the word “media” was really a placeholder for “experience.” It’s not that every company should be a media company per se – but rather, that every company must become an experience company. Media is one kind of experience – but for many companies, the right kind of experience is not media, at least if we understand “media” to mean content.

But let’s start with a successful experience that is media – American Express’ Open Forum. If I as a consumer chose to engage with Open Forum, I do so in the clear context that it’s an American Express property, a service created by the brand. There’s no potential for deceit – the context is understood. This is a platform owned and operated by Amex, and I’ll engage with it knowing that fact. Over the years Amex has earned a solid reputation for creating valuable content and advice on that platform – it has built a media experience that has low contextual dissonance.

But not every experience is a media experience, unless you interpret the word “media” in a far more catholic sense. If you begin to imagine every possible touchpoint that a customer might have with your brand as a highly interactive media experience – mediated by the equivalent of a software- and rules-driven UX – well now we’re talking about something far larger.

To illustrate what I mean I think back to my original “Gap Scenario” from nearly five years ago. I imagined what it might be like to visit a retail outlet like Gap a few years from now. I paint a picture where the experience that any given shopper might have in a Gap store (or any other retail outlet) is distinct and seamless, because Gap has woven together a tapestry of data, technology platforms, and delivery channels that turns a pedestrian trip to the mall into a pleasurable experience that makes me feel like the company understands and values me. I’m a forty-something Dad, I don’t want to spend more than 45 seconds in Gap if I don’t have to. My daughter, on the other hand, may want to wander around and engage with the retail clerks for 45 minutes or more. Different people, different experiences. It’s Gap’s job to understand these experience flows and design around them. That takes programmatic platforms, online CRM, well-trained retail clerks, new approaches to information flows, and a lot of partners.

I believe that every brand needs to get good at experience design and delivery. Those that are great at it tend to grow by exponential word of mouth – think of Google, Facebook, Uber, Airbnb, or Earnest (a new lending company). When marketing becomes experience design, brands win.

There’s far more to say about this, including my thesis that “information first” companies win at experience-based marketing. All fodder for far more posts. For now, I think I’ll retire the maxim “all companies are media companies” and replace it with “every company is an experience company.” Feels more on key.

Thoughts On Alibaba

By - September 21, 2014

BN-EQ088_0919al_G_20140919145705

(image WSJ)

A caveat before I think out loud, quite possibly getting myself into a running battle I know I can’t win: I’m not a public market stock investor, I’ve never been one, and take the following ruminations at the price they’re offered: IE, free.

But this Alibaba stock debut doesn’t smell right to me, and it’s not the company- which is certainly a huge success story inside China, driven by a scrappy founder with a laudable (if manicured) personal narrative.

That said, Alibaba’s star turn smells of collective greed, with a hefty side of whistling past the graveyard.

I wouldn’t be writing this post if I didn’t have some knowledge around the deal, at least as it relates to the culture of access enjoyed by those with relationships to investment firms. I’ve missed a TON of great deals over my career, mainly due to my being a journalist (or acting like one, as it relates to holding stock) for a large percentage of my working life. But over the past few years I’ve carefully gotten into investing, mainly in early stage startups. I don’t look to invest in IPOs, but every so often, about twice a year, they get offered to me.

This is what happened with Alibaba. I was given the opportunity to – possibly – invest a small sum in Alibaba about a month ago. I figured it was a no-lose deal, so I said “sure” and I didn’t give it much more thought.

But as the IPO drew near, I reconsidered that decision. Not because I thought the stock was going to tank right after the IPO  – I knew there was far too much money at stake, at least in the short term, for that to happen. No, I second guessed myself because I realized I honestly don’t understand the company, or the powers that control it. I pinged the fellow who had offered me the chance to invest, so as to recant my investment. But in the end, it didn’t matter. His fund didn’t end up getting an allocation of precious “at the open” stock anyway.

I can only imagine what it must have been like running that allocation, deciding who amongst all the wealthy, connected individuals and firms would get Alibaba stock at the opening price. It’d be like doling out rigged lottery tickets – everyone’s a winner! One thing I am sure of – it wasn’t a fair process, and I almost ended up benefitting from it by happenstance. So here’s why I am concerned about Alibaba, in no particular order:

1. Greed. The company was considered, by everyone I’ve spoken to, a “sure bet” that would “pop at the open” just like the Internet stocks of old (and it did!).  And yet, everyone that I have spoken with also believes that Alibaba is an offering that encourages the kind of negative Wall Street behavior none of us really want to see happen again. The book closed early. The stock priced above its initial range and moved up by nearly 40% on its first day of trading. Financial institutions, uncertain if they were going to get the allocations they wanted, started currying favor and hustling and pleading and whining. There was a frenzy of money making activity going on, and it felt like…pure greed. Alibaba is the ultimate insider’s stock – pedestrian retail investors did not get access to shares at the opening price, and most likely they will be the sheep to whom the wolves of Wall Street quickly sell (if they haven’t already). Insiders – wealthy people with access to early distribution of IPO shares at the open, have already made their fast buck. And the ultimate insiders have made a huge killing: a consortium of big banks poured $8 billion into Alibaba this June at a $50 price, a quid pro quo if ever there was one for giving a Chinese company access to the US markets. This kind of behavior adds questionable value to our society. I don’t doubt that everyone who held pre-IPO or at-the-IPO shares will make money, in fact, I’m sure of it. And that smells of a rigged game.

2. Shallow understanding. If you’re reading this, and you bought the stock at $93 (roughly the price of its first public trade, up from $68), tell me – have you ever used Alibaba’s services? Do you really understand the company? I doubt it, because Alibaba is a Chinese company. Most of us here in the US don’t speak Chinese, or have a reason to use Alibaba’s services. But for some reason we all seem willing to buy into the “Chinese eBay,” or the “Chinese Facebook,” as if throwing those successful public companies’ reputation over Alibaba’s frame somehow equates to quality. It’s a “bet on China,” as most of the press puts it. Certainly that sounds good, given the country’s growth and early stages, but it leads me to wonder… will most analysts who are covering the stock have done core due diligence on Alibaba – the kind where you go to the market in question and talk to customers, suppliers, and regulators? That would mean they have access and understanding of the culture that controls Alibaba, and I’m pretty sure that culture will not ever allow such diligence to occur (more on that below). What bankers and analysts will tell you is they’ve run the numbers that Alibaba has given them, and they are fantastic. Then again, so are the numbers on Chinese GDP growth – and most well informed people I’ve spoken to say those numbers are unreliable. (Oh, and by the way, if you think the $81 billion China just injected into its own economy was a shrug, I guess you should buy Alibaba without concern). Which leads to…

3. Controlled by a corrupt government. Do you know how China works? I don’t, but I’ve talked to enough folks who have lived and worked in China to get a pretty clear picture: The economic and government culture does not hew to US standards, to put it mildly. And like every other company in China, Alibaba is ultimately controlled by the whims of the Chinese government. It’s something of an open secret that Chinese corporate culture is definitionally corrupt by US standards. So…does listing it on the US stock markets change this fact? I could be wrong (see my caveat at the top), but I don’t believe it does. At least when companies are corrupt in the United States, we have a free and open press, and a democratic rule of law, to keep them in check.  One could reasonably argue that it’s a supreme proof of our capitalist system that now Alibaba is public in the US, so it will now have to play by US regulations. I wish I could buy into that narrative, but I sense all we’ll really get is a company well versed at playing our game, rather than a company that is an active builder of value in our society and in other free markets.

Let me put this another way: Here are a list of Internet leaders who decided to forego China, because the government has made it nearly impossible for them to do business in the way that built our capital markets: eBay, Yelp, Twitter, Google, Facebook….and that’s just off the top of my head. So by buying into Alibaba, we’re buying into a system that has, through government fiat, denied innovative US companies growth in the world’s largest market, then capitalized that fiat into a stock it’s now selling back to us. Again, that just seems wrong.

4. Hazy growth outside core markets. Many observers are expecting Alibaba to come into the US and other large markets, and either buy or compete its way in, so as to fuel its long term growth. This I find to be difficult to believe, on many levels. Sure, Alibaba could try to buy…Yahoo!, Yelp, Twitter, hell, maybe even Box or Square or one of the other heavily funded “unicorns.” But…does anyone really believe it can *manage* those companies to success post transaction? To get a sense of how odd that sounds, imagine Google or Facebook buying a slate of Chinese companies and then managing them well. Sounds pretty risky to me.

Anyway, I’ve gone on long enough, and undoubtedly I’ve managed to piss off any number of friends and colleagues across multiple industries. So let me repeat: I’m no expert in Chinese markets, nor am I a professional public market stock investor. I’m just an industry observer, making industry observations. Caveat emptor.

A Print Magazine Launch? What?!!! California Sunday Is Coming

By - September 15, 2014

CaliforniaSundayMag_Logo_JPEGA year or so ago Chas Edwards, a colleague, pal, and member of the founding team at Federated Media, came to my office for a catch up. I had heard he was cooking up a new venture, but I didn’t know the details.

Little did I know what Chas and his new partner Douglas McGray had up their sleeve – a new *print* magazine built specifically for California.

But…print is dead, right? Apparently not. Chas and MacGray have a thesis that California is ready for a well-written, beautifully designed print publication, and all that was standing in their way was the cost of circulation, a major impediment in today’s market. They solved that issue with a clever hack of today’s newspapers – California Sunday is distributed free inside selected California newspapers. In essence, they’re piggybacking the launch of their brand, adding a valauble new product to what is a staid and attenuated newspaper brand.

But that’s not the only asset the team is bringing to bear. California Sunday also has a successful event strategy – it’s folding McGray’s popular “Pop Up Magazine” series into the company as well. And it has built a studio to help brands execute content marketing inside the magazine’s pages. Oh, and it has some of the best talent in the state, from Michael Pollan to Farhad Manjoo, as contributors.

Back in 1991, I prototyped a magazine called “The Pacific” based on similar goals to California Sunday. Ten years later, I taught a course in magazine publishing with Clay Felker, the late publishing legend who retired to Northern California and always dreamt of creating a pan-state publication (he tried, and failed, with New West). Now Chas and Douglas are giving it a go, and I think they have more than a fair shot at making it work. And yes, I’m an investor!

California Sunday launches October 5. You can read more about the publication here, and follow its Twitter feed here.

Early Lessons From My Mobile Deep Dive: The Quickening Is Nigh

By - September 06, 2014
chiclets

Do you really want to eat them one at a time? Me, I prefer mashing ‘em up.

Recently I began a walkabout of sorts, with a goal of ameliorating my rather thin understanding of the mobile marketplace. If you read me closely, you know I’ve been more than frustrated with what I call the “chicletized world” of disconnected mobile apps. It’s rise was so counter to everything I loved about the Internet, I’m afraid as a result I underestimated its impact on that very world.

My corrective starting point – the metaphorical bit of yarn upon which I felt compelled to tug  – was the impact of “deep linking” on the overall ecosystem. The phrase has something of a  “dark pool” feel to it, but it’s actually a rather mundane concept: Developers tag their mobile apps and – if relevant – their complementary websites – with a linking structure that allows others to link directly into various points of entry into their applications. This is why, for example, you can jump from a Google search for “Tycho” on your phone to the “Tycho” page inside your Spotify app.

So far, I’ve had more than a dozen or so meetings and phone calls on the subject, and I’ve begun to formulate some working theses about what’s happening out there. While my education continues, here are some initial findings:

1. Deep linking is indeed a Very Big Deal. Nearly all the folks I spoke with believed deep linking in mobile was the beginning of something important, something I’ve started to call…

2. The Quickening… which I believe is nearly upon us. Mobile app developers are humans driven by business goals. If the business opportunity is large, but proscribed by narrow rules, they will follow those rules to gain the initial opportunity. For example, when the convener of a new market (Apple) imposes strict rules about how data is shared, and how apps must behave with regard to each other, app builders will initially conform, and behaviors will fall narrowly in line for a cycle or two (in this case, about five years). However, once those rules prove burdensome, businesses will look for ways around them. This is happening in mobile, for reasons that come down to new competitive players (primarily Android) and to a maturation in distribution, revenue, and engagement models (more on that below). The end result: The market is about to enter a phase of “quickening” – a rapid increase in linking between apps and web-like backends, harkening a new ecosystem in which both foreseeable and unforseen “life” will be created.

2. App Installs Rule. Till They Don’t. The market for mobile apps is – predictably – driven by app installs. And unless you’re the teen viral sensation of the moment, the only reliable way to get app installs is to buy them – almost exclusively via advertising on mobile devices. Facebook figured this out, and holy cow, did the market love that. But app makers are now realizing they have to do more than get their app installed. It’s actually just as critical to get their current installed base to actually engage with their app – lest it be forever relegated to the dustbin that is our current (deeply crappy) mobile desktop metaphor.  Hence the rise of  “re-engagement advertising,” which is serving as something akin to search-engine marketing (SEM) in the desktop web.  Several folks I spoke to told me that 80% of the money in mobile advertising is in app installs, but they quickly cautioned that installs are a house of cards which will not be sustained absent the rise of re-engagement advertising.

3. We’ve Seen This Movie. Which got me thinking. Jeez, have we ever seen this movie before. It’s called publishing. You can buy crappy circulation, crappy audiences, and crappy one-time visitors, and you can also buy great audiences, but the true gauge of a publication, a service, or an app is whether folks keep coming back. And even if you have a great app/service/publication, you need to remind them of your existence more than a few times before they are hooked (this is why classic magazine circulation has three phases – marketing, sampling, and conversion). The link-economy of the open web allowed this process to happen rather naturally, but there is no such economy in mobile, at least not yet. Thanks to early decision made by the conveners of the mobile ecosystem, mobile is deeply shitty at providing business owners with a way of reminding consumers about the value of their proposition, which is why they are frantic for some kind of channel for doing just that. This leads me to hypothesize that…

4. The App Store’s Days Are Limited. Remember when Yahoo! owned Web 1.0, because it had the entire Web in its directory? Or when Google owned Web 2.0, because it put the entire web in RAM? Yep, both those models created massive companies, along with massive ecosystems, but neither hegemony lasted forever. Apple’s App Store (and Google’s) are subject to the same forces. The model may be dominant, but it’s not going to last. As one senior executive in mobile media put it: “The app store is a weigh station, not an end point.” What might replace the App Store as a model for distribution? That’s a fine question, and one I don’t have a strong opinion about, at least not yet. But I sense the Quickening will lay the groundwork for new vectors of app adoption and engagement, similar – but not identical  – to the link economy of the web. Which is why I believe…

5. Re-engagement ads open the door to new topologies (and economics) across mobile. A pretty obvious point, if you’ve managed to stay with me to this point, but one I think is worth restatement and elaboration. Re-engagement advertising is driven by a fundamental business (and consumer) need, and Facebook, Twitter, Apple, Yahoo!, and Google are all responding with deep linking topologies that enable re-engagement. This is a relatively new development, and it’s hard to predict where it might go. But one thing’s for sure – deep linking is good for both the developer and the consumer. It’s just a better experience to go directly into the exact right place inside an app that’s already on your phone. And for marketers, deep linking enables far superior “landing pages” inside their apps, driving a conversion path that is measurable and repeatable. It’s not hard to imagine that re-engagement is the beginning of a more robust economic model for mobile, one that will re-integrate much of the goodness we created when the Web broke wide open ten or more years ago. And that makes me wonder if….

6. The home screen of “chiclets” is mutable. Broadly established consumer engagement models don’t shift rapidly, and the colorful, 16×16 sudoku model of App World isn’t going away anytime soon.  But do we really believe we’ll be poking at squares representing apps forever? I don’t. A more fluid experience based on declared and modeled intent makes a lot more sense – one in which we flow seamlessly from need to need, serviced in each state by a particular application without having to pull back, chose a new app, and then dive back in. I’ve not yet spoken to many UX/UI folks, but I sense this is coming, and deep linking is a first step in enabling it. Somehow, I sense that…

7. Search is key to all of this. Hey, this is Searchblog, after all. It strikes me that search on mobile is pretty broken, because it forces the entirety of the web onto a model that has far more specific – and useful – parameters to work with. The signals emanating from a mobile phone give search entirely new use cases, but so far, we’ve got precious little to show for it. This can’t stand for long.

I’ve got a lot more thinking going on, but it’s too nascent to be of much use at the moment. Topics I’m also thinking about include mapping the dependencies of the mobile ecosystem, grokking the concept of “agency” and how it relates to search and mobile data,  the role of programmatic in mobile, and understanding the flow of money between the big platforms and the little guys.

As you can probably tell, my comprehension of this space is still very limited, but I hope this update sparks some of your own thinking, and that you might share those insights with me in comments or via email or other forms of media. I will continue my walkabout in coming weeks, and I’ll keep writing about it here. Thanks for reading.

And thanks to the many folks I spoke with so far, many of whom are working on stealth projects or agreed to our conversations on background. Hence, I’ve not quoted anyone directly, but again, thanks, and you know who you are!

Else 9.2.14: Don’t Worry, The Robots Are Our Friends. But the People?

By - September 01, 2014
Blade-Runner_610

“All these moments…will be lost in time…”

Else is back after an extended summer hiatus – thanks for taking the time off with me. I wasn’t sure if I was going to return to this newsletter, but its a good ritual for me to condense and annotate my daily and weekly reading habits, and enough of you have subscribed that I figured you might be missing the updates. I kind of was.

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The pieces I most enjoyed over the past week or so certainly had a theme: How will we resolve our increasingly uneasy relationship to the technology we have embraced? From automated newsfeeds to drones to AI, this stuff isn’t science fiction anymore, and the consequences are getting very real. To the links….

“Facebook Is a Weatherless World” (Searchblog)

In which I think about automated newsfeeds and a world without agency.

Inside Google’s Secret Drone-Delivery Program (The Atlantic)

Well, not exactly  secret anymore, as Google certainly wanted this particular story to get out, as it’s in a mad scramble for the future of “everything delivery” with Amazon and others. Still and all a fascinating look into one of Google’s many strange and disparate moonshots.

Robots With Their Heads in the Clouds (Medium)

Berkeley prof. Ken Goldberg lays out the quickening sparked by the combination of cloud compute and intelligent on the ground (or in the air) robots.

Wednesday Aug. 20, 2064 — What’s Next (Medium)

One of my favorite writers (Paul Ford) imagines what it might be like if all these drones and robots actually work in an optimistic scenario feature driverless cars, compostable made to order clothing, and, of course, budding romance.

Will artificial intelligence destroy humanity? Here are 5 reasons not to worry. (Vox)

It’s not easy to be human, so relax. The AI-driven roboto-verse will serve us, in the main.

ICREACH: How the NSA Built Its Own Secret Google (The Intercept)

Then again, we might want to worry about our own power structures. Imagine how the NSA might use the fantasy infrastructure that Ford creates in Medium. Yikes.

Why Uber must be stopped (Salon)

A few things about this piece. First, the headline is wrong. It’s not about stopping Uber, it’s about understanding the role of regulation when capitalism otherwise goes unchecked. Second, it appropriately wonders what happens when capital (Uber’s $1.5billion from Google, Goldman, et al) is used to crush competition, in particular, when the company that is doing the crushing has, as its end game, control of our automated transportation system (there are those dern robots again). A theme for our coming age. It’s not the cars, the drones, the tech – it’s the people behind their use. But sometimes, the way a society regulates people is to regulate the tech they employ.

SHOULD TWITTER, FACEBOOK AND GOOGLE EXECUTIVES BE THE ARBITERS OF WHAT WE SEE AND READ? (The Intercept)

Should journalists use all caps in headlines?! Apparently yes. This story is consistent with the others in this issue of Else, the debate is in full throat. See also The Atlantic’s The New Editors of the Internet.

The Facebook-ification of everything! Sex, authenticity and reality for the status update era (Salon)

Continuing my headline clickbait complaint, this headline is a total misfit for the unfortunately dry story, written by noted informational academic Lucian Floridi. He’s got a new book out, the 4th Revolution, which I plan to read. Then again, I have five books ahead of his…

Supercomputers make discoveries that scientists can’t (New Scientist)

See, we’ve found a great use for computers: Reading the stuff too dry to read ourselves.

Seeing Through the Illusion: Understanding Apple’s Mastery of the Media (9-5Mac)

My first job as a reporter was in 1987 covering Apple. For more than a decade after, I continued covering the company, through Jobs’ return. It never wavered in its philosophy around how it treated the press – as a nuisance and a threat. I’ve always thought Apple could have done better. This multi-part post fails to go as deep as I’d like, but it’s a decent overview of how Apple’s PR machine works.

Minecraft players build working hard drives (Cnet)

Minecraft has been on my “watch this closely” list for about a year. Here’s another reason why.

The Matter With Time (NY)

If you like your inside baseball with a side of dish, here’s a great read about the travails of Time Inc., the once great publishing house.

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NewCo New York 2014: My Chairman’s Picks To Visit

By - August 25, 2014

newcony

Last week I created my schedule for NewCo San Francisco, and wrote about them here. What many folks don’t know is that there are now nine confirmed NewCo festivals around the world. Three weeks after San Francisco, nearly 100 New York companies will be opening their doors and welcoming festival goers in our second annual NewCo New York, Sept. 30th-Oct. 2nd. If you live in NY, or are going there for Advertising Week this Sept.29-October 3rd, please register and visit some of your favorites.

With that in mind, here are my picks for New York.

Day One, Weds. October 1st

tumblr9 am - Tumblr. I knew the company back before it was acquired by Yahoo!, but I have not been back since. I cannot wait to grok the vibe of the place again. This is perhaps the most compelling part of NewCo Festivals for me – the vibe of the company you get simply by being inside the place. Tumblr has not yet uploaded its session description (tick tick, folks!), so I don’t know who is presenting, but it doesn’t matter – I want to get smart about this company once again. Runners up:  Simulmedia and Dstillery. Both are run by great colleagues of mine – so I already know a lot about their businesses. But both are worth a look – as they are disrupting media models in television and advertising, respectively.

foursquare10:30 am – Foursquare. Founder and CEO Dennis Crowley will be presenting Foursquare much-anticipated reboot, and I’m looking forward to hearing about the strategy from the founder’s mouth. Crowley has ridden the hype cycle up, down and now back up again, and I plan to learn as much as I can from that experience. Runners up: Evoke Neuroscience and General Assembly. Evoke is all about wearables and health data, a field I want to learn – but I’ll have to wait. And GA is re-thinking education in the tech space, a burgeoning market that I’m keeping an eye on.

Chartbeat12 pm – Chartbeat. I keep hearing great things about this “attention metrics” company, but know precious little about it. What a great opportunity to learn more and connect to its leaders – as with most NewCo sessions, the presentor is also the CEO. Runners up: Basno, a bitcoin blockchain company, and Glimpse, whose founder is doing a session on the ups and downs of running a startup.

retoy1.30 pm – Retoy. This is a flyer, but who doesn’t want to see a new kind of toy company? The CEO of Retoy will present on overcoming the “jar jar effect” of groupthink inside companies of all sizes. Runners up: RebelMouse and Zeel. RebelMouse is one of my investments and has a great founding team. Zeel is bring massages on demand everywhere – including the NY NewCo session!

MRY3 pm – MRY Group. I’ve always marveled at the work of agencies in the media world, but not spent much time with the creative side of that industry. MRY sounds like a new kind of agency that is rethinking how to work with cutting edge brands. Runners up: The New School and Startup Institute. Both are educational in nature, but very unique. I’ve always wanted to get to know the New School – I may change my sked, it was really a toss up between MRY and The New School. And Startup Institute sounds like a very New York place to hang.

LHV4.30 pm – Lerer Hippeau Ventures. One of the most connected and successful New York venture firms. I just could not pas sup a chance to see how they do what they do. Runners up: Yahoo! and OrderGroove. Yahoo! is always interesting, and I’d love to learn how the New York office feels compared to the Valley. And OrderGroove seems to be onto something really important when it comes to the conversation economy – connecting brands to truly loyal customers.

Day Two, Thursday, October 2

wichcraft9 am - ‘wichcraft. Ya gotta throw in a few curveballs at any NewCo. This is a food purveyor, one I’ve never heard of. But they focus on local and seasonal ingredients, and it’s always good to start your day with a company that has great food! Runners up: NYC Media Lab and NextJump. The NYC Media Lab sounds fascinating – a connector between NYC’s universities and its workplaces. And NextJump is a very “newco” NewCo – it’s mission is dead on to NewCo’s philosophy: “To change the world by changing the workplace.”

casper10.30 am – Casper. “Taking back sleep on bed at a time.” A new kind of company disrupting the totally bullsh*t mattress industry? Yes please! Runners up: Kickstarter and DonorsChose. One has redefined how projects get funded, the other is one of the most powerful and agile philanthropic orgs around. So many great choices!

pave12 pm – Pave. A better way to borrow money for a generation that grew up with the Internet. Fascinating. Runners Up: Parse.ly and Atavist. Both are editorial companies, the former focused on editorial analytics, the latter (and I am an investor) on story telling platforms and quality narrative product.

purpose1.30 pm – Purpose. How do “movements” come together? I hope to learn that and more at Pave’s session, which includes case studies on movement-building around gun safety, the Syrian humanitarian crisis, marriage equality, climate, and more. Runners up: MPOWERD and Aviary. My kids use both these companies’ products, one to solar power his phone, the other to edit her photos on her mobile device.

sprinklr3 pm – Sprinklr. Companies like Sprinklr help brands manage their content marketing streams. As someone with a bit of history in the field, I’m looking forward to finally meeting the team behind Sprinklr. Runners Up: SeatGeek and Animoto. SeakGeek helps fans figure out if they are getting scalped for tickets, and Animoto helps anyone make great videos (I could use the help!).

grubhub4.30 pm – GrubHub. Did anyone think food delivery would be a massive business after Kozmo fell down? Well, it is, and I want to see how GrubHub did it. Runners up: Kenshoo and Capital One Labs. Kenshoo is a very smart marketing automation company, and I’d be quite interested in learning how an old school credit card player is innovating these days….

Once again, 12 companies in two days. And consider this sked subject to change, there are so many great choices, I may well move it around a bit. Then again, as with last year, sessions will fill up quickly, so if you haven’t already, go register and fill out your sked now! NewCo New York promises to be an incredible experience.