Startups are going to save us, relax everybody

In typical Silicon Valley Breathlessness Forbes published an article by Victor W. Hwang arguing the fact the Startup movement isn’t about startups. He argues that it’s actually a movement to free people from the chains of our current economic system. I definitely don’t buy this. Most people start a company for one of two reasons, they find a problem that they have a better solution for than anything provided (or a novel solution) or to make money. Typically it’s a combination of the two. No company in existence is out there not to make money. Companies that aren’t profitable cannot stay in business for long unless you’re lucky and funded by people that thing you will eventually make them a lot of money.

An opinion piece in the NY Times from 1/2/2014 pretty much sums this fact up. You’re replaceable at a startup and likely even more so than any time in the  future of the company. It’s really easy to fire people when you have no money, especially if you are open and honest about how you go about letting people go.

Furthermore, if the startup movement was in fact about bettering the plight of people we wouldn’t be seeing the social stratification that we’re seeing in cities like San Francisco, ground zero for the startup movement. In SF some of the neo-techno-libertarian-elite are upset that they even see the poor people on their streets rather than out of the way like in cities like NYC (he issued an apology not unlike Tiger Wood’s for being a sex addict). Not only are these the people that are involved in the startup movement, but they are funding it. Yes, I know that this is only one person and on the other side you can point to Alexis Ohanian of Reddit fame, which really is doing a lot of social good.

In some ways the startup movement has made it easier for people to be cogs in the wheel. They work long hard hours, large companies like Facebook and Google push and push to get more for less. In many cases this can cause depression and the exact opposite of what the Startup movement is striving for. In fact, the goal of the Lean Startup is to make it extremely easy to ramp up new employees and ensure full coverage if something goes wrong. These companies and products are designed around the idea of building in quality rather than testing or patching it in. Of course, there’s a benefit to the employee in these cases too – they’re free to really explore new problems and create new things without needing to worry about reoccurring problems.

I do believe there are many startup founders are genuinely trying to change our society for the better, but it hasn’t been a frictionless process and will likely only get worse as we move forward. The Sharing Economy, for example, has come under fire from traditional companies, neighbors, politicians, and even members of the sharing economy. While in other cases, such as Zynga, we see companies that are essentially parasites that thrive through creating addicting games and clogging a platform with their notifications (those notifications stopped and Zynga basically died).

It’s important to be skeptical of statements that glorify any portion of our culture. The article that spurred me to write this has a similar tone as many of Thomas Freeman’s, of the NYTimes, articles, fully optimistic, but missing a broader portion of the population and the long term impact. We should be wary of these articles because we’ll end up believing that it’s more complicated to calculate a median value than an average. The startup movement is to help people start companies, some founders are dreamers, some truly try to change how work is done, but they most aren’t truly changing the world in amazing ways. We’ll be fine if reddit, AirBnB, or some other services vanishes. We were when Digg, Google Reader, Palm and any other influential company vanished.

Missing out on a break through company

There are many stories in business today about how companies decide not to purchase a company that has since gone on to be a market defining company. Yahoo! is one of the worst offenders. Yahoo managed to turn down both Google and Reddit both in very different ways. In the case of Google, Yahoo realized their mistake and tried to buy Google and then Google turned Yahoo down.

A company like Yahoo is in a tough spot when approached by a novel company that’s trying to compete in a market that Yahoo doesn’t really understand. Although, this isn’t really the case with Google, but Yahoo was much more confident in the technology they knew as their search platform and didn’t understand the potential ad growth that Google was eventually able to deliver.

Reddit, according to Alexis Ohanian and his book Without their permission, an executive at Yahoo told him that reddit was a rounding error to Yahoo’s web traffic. Which so greatly insulted Ohanian that he has used this as a motivational statement to this day.

Eventually Google IPO’d while reddit was bought by Condé Nast media. I believe that because of the direction of management that these companies were both able to flourish to this day. Google is obviously, one of the largest companies in the world, while reddit has become a huge community that the members still feel as if they are in a special club no one knows about.

It is likely that if either company had been acquired and managed in a different way, we wouldn’t have the same internet we have today. Condé Nast essentially left reddit alone and has only started to push the company to become profitable – 7 years after they were bought. It was only 3 years ago they introduced reddit gold and within the last few months they included a daily target for profitability using reddit Gold. In that time reddit has exploded in user base and introduced features to increase user base and interest in the site. If you’re interested in reading more about the history of reddit Randal Olson has an amazing analysis here, it’s really interesting.

On the other hand, Google has gone on to create an amazing ecosystem in Android, Chrome, Glass, the web, and so on. They have shut down more heavily used platforms than most companies create. None of this would have happened if Yahoo had bought Google, because Yahoo doesn’t or at least didn’t think that way.

Yahoo has two fairly large social platforms, Tumblr and Flickr, and is looking to acquire imgur. Acquiring Imgur is essentially admitting defeat with Flickr, as imgur was designed to make sharing photos on reddit easier, and Flickr is horrible to share photos with on reddit. So, it’s likely Yahoo will survive and possibly thrive in the future, but why did it miss out on yesterday’s internet of the future?

Missing out

I believe that these decisions aren’t because of bad managers. In fact, it’s likely because of high quality “traditional” management. While the internet was evolving companies like Yahoo developed metrics like views, clicks, and click throughs, to measure success of a website and the growth of a platforms. As Yahoo is a platform, being approached by other potential non-compatible platforms that were smaller was something to be expected. It is likely that Yahoo turned down hundreds of other unsuccessful platforms along with Google and reddit.

Yahoo wasn’t able to understand the potential of these different platforms, because their metrics were different than Yahoo’s. Yahoo was likely looking at both volume and number of clicks within the platform, while both reddit and Google’s engagement model focused more on sending users to other websites while minimally keeping the users on their platform. However, because of the content the users would continually come back.

Using the innovator’s dilemma as a lens here, we see that the quality of these platforms is much lower than Yahoo’s. Google’s home screen is the same as it has always been. Just Google with a search box and two buttons. Reddit on the other hand is a series of blue links with little to no ads and some arrows next to each link. Very plain and simple. Very different than Yahoo.

Furthermore, these platforms were servicing different users. Google users were searching the internet more broadly, while Yahoo was trying to both allow searching and be a one stop shop. Reddit was trying to engage with the politically active techie, which is a VERY small subset of the internet user base. Yahoo was servicing a lot of the people that had fairly recently left AOL and wanted a similar portal. It makes the internet less scary to have a platform for inexperienced users.

Measuring these platforms with the same metrics and vision of Yahoo, these would have made very bad buys and likely would have been killed off, directionally changed from the trajectory they were on and led to their success. Condé Nast essentially provided a “skunk works” area for reddit and enjoyed the clicks to the other sites that they owned that redditors also visit frequently.

It is likely that if Yahoo had bought either or both Google and reddit, the end result would not have lead to internet we have today. These platforms would have been warped into very different products that many young people would have avoided. I believe that Yahoo has learned a great deal and will likely do a better job with Tumblr and Imgur than they have with Flickr.

Review of Without Their Permission

I was inspired to begin writing again by reading Alexis Ohanian of reddit fame’s debut book, titled “Without Their Permission” for those that were regular readers and know me are aware of my interest in the startup community, technology, and activism during the SOPA/PIPA days. So reading this book happily fell into many of those interests.

First of all, this book was entertaining. It’s a rather self aware book and in some cases the humor of it reminded me of Drew Curtis’s book “It’s not News it’s Fark” which is a humorous book that really pokes fun at mainstream media. There’s some of that in this book, but it’s much more playful and selfaware of how important the media has been to Alexis’s success.

During my Master’s thesis research I read a lot of scientific studies that looked at the types of businesses, industries, education, and so forth of founders. Which really focused on the technical skills of the founders. This book didn’t. Alexis wasn’t the technical brains behind reddit, he was the “other stuff” that helped make reddit reddit. I believe that this is a fantastic view point to bring to the conversation on start ups, incubators, accelerators, etc… because it’s something that’s missing.

I have to say at first while reading the book I was really annoyed by the line “every link is created equal” because in any network this simply isn’t try. Any unconnected link is equal, but as soon as the Internet is the Internet links become less equal because of interconnectedness of the Internet. At first this prevented me from enjoying the book because I was so focused on this, however after working 8 hours I forgot about it until it was mentioned later. I only bring this up, because a large portion of the book is spent discussing how important networking is to the success of a startup. It became clear to me that Alexis gets it.

I also found this book enjoyable because it is much less self congratulatory about the Internet entrpreneurs than other books such as Makers, the New industrial revolution, Micro Wikinomics and Macro Wikinomics which cover very similar topics and ideas. In fact any time it felt to be getting too overly optimistic Alexis would point out that everything comes from hard work. It’s work that almost everyone can do, but it takes dedication.

Alexis points out a lot of successes that he’s been involved with as an investor, which provide a lot of great anecdotal experience as well as a graduate’s perspective from the Y-Combinator. I think these views are all helpful as we begin to look for more unique ways to fund startups beyond the traditional VC method.

Finally, I enjoyed the section about SOPA/PIPA which was interesting as I was actively involved on reddit and blogging to inform others about what was happening. Some of that included sharing the interviews Alexis did during that time period.

In general this book is definitely a great introduction to a more realistic view of Internet entrepreneurship from a successful founder, a great introduction to many unique startups out there that are very inclusive, and a great introduction to SOPA/PIPA for people that weren’t paying attention.

Get out there and make something great happen.
5/5

Entitlement for copyright owners

Business Insider had an article today about Reddit’s FIA. In my article in the Urban Times last week I addressed some of these issues before he wrote this article. However, he raises points that I don’t mention there and I feel that it’s extremely important to discuss them.

First he says that the law would make the internet “Hugely Difficult to monitor.” This raises a few questions. What does he mean by the internet? I helped define that in FIA, which I defined it as any data network including the web, social networks, FTP, peer to peer, email and a slew of other things. If he means this; then do we want the web to be easy to monitor? He trots out the case against it as child pornography of course, which I addressed in my Urban Times article. It’s a powerful argument because it hits upon two competing sets of social norms, rights of privacy and abhorrence to child abuse.

The use of child porn is a technique that is designed to end the conversation and shut down dissent. It places supporters of privacy in a position that is not congruent with their belief system. Additionally, the connection between copyright and child porn mixes different issues and seriously different belief systems. This difference is extremely important as there have become two different competing sets of norms. The incumbent belief that copyright is stealing, and the one new that has been developed by Web Kids.I strongly suggest reading the previous link as it provides powerful arguments for the changing sets of norms that my generation and younger entail. (I’d be on the rather old side of that generation).

Using a somewhat bad analogy, we’re using the “internet superhighway” and like the real highway people don’t want everyone driving by to know what you have in your car. Even if you aren’t doing anything illegal, do you want the cops to know that you have 5 cases of beer in the back and are going to be floating down a river all day? Probably not, cause they have no reason to know what you’re doing. Now, our data is similar to those cases of beer. Using encryption puts that into the back of the trunk where a cop is required to have justifiable cause (in the US) to inspect it’s contents. The person looking at the data would know the general direction your going and some of the ways you’re getting there, but nothing more. Yes, it makes it more difficult to identify bad stuff, but it’s difficult to do that on a real highway too. Just ask boarder patrol, and they have the right to inspect whatever they want.

Second, he essentially argues that copyright owners should have their content monitored by others. This is a huge subsidy for the copyright industry that will be paid for by other services. I’m going to use a physical world comparison, it doesn’t work perfectly but it works reasonably well. Let’s say that YouTube is similar to a Wal-Mart, or even Amazon.com. The author is arguing that YouTube needs to monitor as soon as the video is put on the web to ensure it is not infringing on copyrighted material. This would be similar to requiring Wal-Mart or Amazon.com to search for patent infringing technologies.

Why does this analogy work? In both cases these rights are state sanctioned monopolies. In both cases they are protecting a manifestation of an idea. Something that needs protection because it is extremely easy to protect. However, in Patent suits things are extremely different. The owners of the patent are required to sue companies that infringe on the patent. Wal-Mart and Amazon.com are both protected from the suit.

If Apple was allowed to sue Wal-Mart for the fact that an infringing technology is being sold there, Wal-Mart would have to bear the cost of policing their inventories for infringing material. In addition it would be in their benefit to be overly caution and remove potentially infringing products before anyone can see them. Part of the cost of owning a patent is the cost of policing products that may be infringing. By removing that burden from the copyright industry we are reducing the cost of the ownership of copyright and placing it on services like YouTube. This stifles innovation in services like YouTube because they have to include the extra cost of policy copyrighted material. A competitor to YouTube has a huge hurdle to overcome before they can even open.

Finally, he argues that the bill supports file sharing. I don’t think that it does other than being based off of a different set of norms. I’d argue that the bill supports innovation over old business models. You can disagree with me on this, however it’s been shown in several studies and some anecdotal evidence that increasing legal access to copyrighted content reduces pirating. If it is easier for a company to create interesting ways to provide access to content while paying the copyright industry then everyone wins. However, as Falkvinge puts it, “I don’t care about industry profits.” Realistically, I don’t care about most companies profits, because I’m only dealing with the company to buy a product or service I want at a price that I believe is reasonable. If all the legal sources that are available to me to watch a show or listen to a song when a person wants to, it is not unreasonable for them to look for it elsewhere and then try to find it legally later if they liked it.

If the company is making bad choices for their business, why should the law change to improve their business model’s chances of surviving? Anyone that supports free market capitalism should be horrified by this sort of industrial policy making. Essentially, these companies are being faced with disruptive technologies and working to push the government to protect them. It’s similar to what has happened with the auto industry in the US.

In closing, FIA represents a dramatic change from the current norms and aligns more directly with a younger generation. This generation does not understand why companies prevent them from viewing content that they want to see. While being an open generation on Facebook, they also understand the importance of protecting the data that has been given to companies. They choose what information they share and with whom. They want an open internet so they have the ability to innovate like their parents generation. They believe that it should be a fundamental human right to have access to data and communicate with whoever they want. An industry that is not innovating should not have the ability to destroy the internet.

Crowd Source Legislation

Crowd sourcing, is a name for a group of people taking part in something from all over the place. One of the first initiatives like this is open source software, a more recent version is Crowd source funding for businesses. These started as initiatives to give micro loans in Africa and other developing countries. More recently, websites like Kickstarter have allowed everyday people to help get new ventures starting (I plan on writing more about this later).

So what’s the deal with the legislation? Well, essentially, this is building upon the momentum Reddit and other websites generated during the SOPA/PIPA protests. Members have decided to create something like an internet bill of rights. The idea is the create a better balance between content holders, private companies, governments and users. In China there’s a great deal of censorship and Google and Twitter have both announced censorship based on the location of the user. This type of censorship would have killed the Arab spring before it happened.

OK? but that’s not going to effect me in the US. Well, we don’t know that. Yes, we have provisions against free speech, but that’s against governments censoring speech. It’s difficult to know what a private company will censor when this speech is in a quasipublic/private space. Facebook routinely censors groups and speech on their site. Additionally, look at what’s happening with MegaUpload.com and their users. There was legitimate use on the website and the Department of Justice doesn’t care. The EFF and the hosting company are working to find the legitimate data held on the site.

One of the goals of the act would be to reduce the ability of sites to censor speech. It’s clear that this is an important goal of the act. Additionally, there are programs, like TOR, that have been developed to allow people behind censorship to circumvent it (See my post about how TOR works). However, there could be penalties for people that use TOR in the US to help people circumvent the censorship. These types of ideas are what the goal of FIA is.

If you’re interested in taking your anger at SOPA/PIPA into a new direction and potentially become more involved in our government check it out here: http://www.reddit.com/r/fia/

But that’s US based stuff. Yes, sure it is. It seems like most of the users interested are from the US. Many of the users involved would like to see this become a treaty instead of just a law. In that case involvement from many different countries would be ideal and requested. Additionally, there is no reason why this type of legislation should be restricted to the US. These ideas are universal.

Ethics in Politics?

“Who put the question mark there, you all know he’ll read whatever is on the prompter!” Mostly a quote from the movie Anchorman. The point is, should that question mark be there or not? In the US, the STOCK Act, designed to prevent insider trading by Congressmen, is moving forward for debate in the Senate. This type of law, even if there are debates about the need for this specific law because it should already be illegal, really drives the point home. Clearly, this is something that the majority of us would consider unethical. In business ethics courses (heh), this type of action is typically considered a big no-no and at many work places is considered very bad as well.

A personal example for me came from working at Verizon Wireless. My first co-op rotation there I was an equipment engineer, where I bought equipment and work with companies to build cell sites. For a Sophomore in college this was pretty awesome. I was buying stuff that was worth something like $40,000 like it was nothing. Pretty cool stuff right? Well, I started to deal with vendors and learned that no vendor was allowed to buy any of us lunch. Not even lunch. If anything was worth more than $25 as a gift, we had to return it.

Now, if you put this into perspective of what insider trading or campaign contributions, we can see where there’s an ethical problem. I was making $16/hour at the time, so $25 bucks was almost a quarter of a work day’s salary. Pretty big deal. Insider trading has made congress members a much higher return on their salary than that 25 bucks was for me. The perks provided by Lobbyists are even worse than lunch. They’ll buy you lunch, but it won’t be at Primanti Brother’s, it will be at some place that’s $100 a plate plus wine, then take you golfing later.

So where does this disconnect come from? If this is something that I knew was wrong when I was 20, why don’t these Congress members understand that at 50 and older? One of the problems are social norms, if everyone is doing it, why aren’t you? These social norms can be extremely powerful, as teenagers we were always warned about peer pressure to do drugs and stuff, cause drugs are bad, m’kay? The problem would become when everyone around you was doing this, and it was the only way to survive the situation there are powerful urges to conform.

Once someone has conformed, these social norms become their own self reinforcing type of “ethical” behavior. This begs the question if the end justify the means? Well, we also need to be aware if the ends are justified at all. I think in many cases, the ends are so influenced in both conscious and unconscious ways, that we don’t even know what the ends the politician set out to achieve are any more.

This is why it is important to have independent watch dog organizations and an independent judicial system. It is also why it is important to get money out of politics. Once money is out, the choices aren’t captured by the interests of the people paying you. Independence allows impartial review and a manner to determine which course is actually best for the whole.

Americans prize their rights, however, rights are threatened whenever there are powerful interests that want to limit those rights. Despite the fact that I talk about the US on here a lot, these ideas are transnational, and all citizens need to work to remove the influence of money from their political system. There are ways to do it. For the US Lawrence Lessig has proposed one idea in Republic, Lost and Reddit is working on their on PAC and Free Internet Act as another solution.

When I finish with my thesis I plan to become active in both Reddit activities and I suggest you look to find something similar.

What is the right to assemble online?

Sorry for the long delay in posts. I’ve been a little busy and I’ve had some trouble coming up with topics as well. So, if there are any topics you’d like to see written about feel free to shoot me a message.

In the US we have an amendment to our constitution which ensures our right to assemble. This amendment is important because it allows us to protest governmental action and activities we do not like. We do not always like the way that this right is being expressed, such as the Westboro Baptist Church protesting fallen soldiers, gay suicides and a range of other things. It also protests our right to counter protest the WBC.

In the case of a protest over a company, it’s possible to protest in front of their headquarters or in front of individual branches such as Bank of America. In many ways these tactics are effective because it drives media attention do to it’s location. If someone is protesting a bank in small town America, such as my home town, Grove City, PA no one is going to care. You might get a piece written about it in the Allied but it’s unlikely to attract the attention of the Pittsburgh Post Gazette which is only 60 miles south. Even if some how it did make the news in Pittsburgh, it’s unlikely to remain in the news, which that’s something a protest in Pittsburgh would actually be able to do.

Why does this matter? Well, for a company like Amazon.com much of it’s physical locations are in small town America. They don’t have large presences in many major cities. How do you effectively protest a large internet based company? How do you protest a company when the people that want to do the protesting are scattered throughout the world?

In the past I’ve written about LulzSec and Anonymous, these groups still operate and have had some interesting ideas about how to protest. The first is what is called a Denial of Service (DoS) attack, where a company’s website is overwhelmed with requests for access to the site and it kills the server. This would be the physical equivalent of creating a lined of linked arms across the doorway to the company’s headquarters or branch. Typically, these sort of attacks don’t last very long because IT departments have become very good at finding the sources of these attacks and stopping them.

It is not possible to respond by moving across the street to continue protesting where people to see you. It is also not possible to post ads in the area as a form of protest. However, it is possible to buy ads on Google or other such sites that will display something if you type Bank of America, however, I’m not sure if this is effective or not.

Another type of protest employed is the internet petition. I’ve signed plenty of them, but it’s fairly obvious that these are as worth as much as the paper their printed on (which is to say none). These really just make you feel better, without much work.

At this point, I think that when it has come to massive protests online, Reddit has created the blueprint. Redditors have worked extremely hard to protest SOPA. This has included call your senator day, getting websites to agree to an internet blackout day, where sites will completely black out all content. This is a representation of the impact of censorship that SOPA will enact.

However, this type of protest isn’t really possible for all types of government or private business action. While the denial of service attacks aren’t very effective, they do raise awareness and have lead to other types of attacks, such as hacking and the release of data that users thought was secure. Despite the fact that it is theft of data, these actions have done more to change company behavior than any other type of internet based protests.

Is that the future of assembly online? I don’t know. It’s easy to block websites that act as a rallying point, so it will be important for people to actually meet to do their protesting as protesting on the internet doesn’t really have the same impact, unless something big gets leaked. We do need to define what is acceptable as a society for online protesting. DoS might be a way to allow protests.