Archive for business
Grasping at golden straws
Yesterday Barbara and I attended a panel discussion at the Kerrytown BookFest called “The Future of Print Journalism”. I’ll leave the details to others; what I found of particular interest was the thrust of the discussion among the panelists, who were all editors of one sort or another who’ve survived in transition from being old-fashioned newspaperfolk.
On the face of it, the narrative was about the future of print journalism in a world where the business model has been undermined by free online content. There was talk of aggregation by Yahoo! (and Google, though nobody mentioned them by name once) and how it undermines the authority of newspapers. There was a stern comment from the audience about how bloggers stealing content from papers without citing it should be sued. There was a lot of realistic-sounding exploration of paywall protection of content and the apparent failure of newspapers to fathom micropayment approaches. A lot of discussion of “free models”, and what came across as antagonism from the folks still at the big plop-on-your-steps papers at the notion of free content.
I started being bemused half-way through, though. Because four of the five panelists explicitly described the economics of their business, talked about it worriedly, and then wandered away again into how crucial good writing is, and how expensive professional journalism can be, and all the other stuff that justifies their special credentialled sociopolitical role in whichever Estate they used to be.
I’m sure the fifth panelist would have acknowledged the business facts in an instant… if it only been brought up explicitly: Modern newspapers don’t sell journalism. They sell advertising. During the 20th Century, newspaper revenue has come primarily from advertisers.
And from about 1900 to about a decade ago, newspapers sold print advertising at monopolistic prices. They were essentially a cartel. Ads in books never took off; ads in magazines reached only widely-distributed subscriber demographics. Only the local newspaper reached the walk-in traffic that retailers sought; coupons really don’t work well in telephone campaigns; TV is ephemeral, leaves no record.
Yet nobody says of the Internet, “Those unqualified online advertisers are undermining our professionally-trained crack advertising team,” or “Do you realize what it costs to pick an ad to run next to an article on a foreign war?” or “Photographs of ham can’t just be downloaded from some website you know; you need professionals on staff 24-7 to get the quality our customers deserve.”
No, the discussion was about “the economy being bad” and “readers out there expect content to be free” and bloggers and customer bases and the threats and uses of aggregation.
I’m sure if there had been time to drive the conversation my way, somebody would have jumped in and said, “Yes, of course we know print advertising pays the bills, but nobody would buy the advertising and get the bills paid if it weren’t for the high-quality reporting we generate using all that revenue.”
But: Maybe people are still buying advertising. Just not from you.
Here. We’re friends. I’m just as predictable as anybody else: I’m going to talk about history now.
Pick up an actual print newspaper from 1820, from 1840, from 1860, from 1880, from 1900, from 1920, from 1940, from 1960. From 1980. Count the ads. Think carefully and look at the books (if you have access to them) and estimate the proportion of the income of each newspaper that came from advertising revenue. Yes, I know in the early days they were small, local affairs with maybe a thousand subscribers each.
But they got their bills paid. What proportion of those bills were paid by monies coming from the sale of print ads?
I’ll bet you a Get Out of Disintermediation Free Pass right now that the earlier papers had almost no advertising (including the money from articles somebody was paid off to print), that the proportion bloomed into a majority in the days of Hearst and Pulitzer and the Great Syndicators, that it became a cash crop paying 80% or more of the bills in the latter-day cull that killed all second papers in cities.
Print advertising was a monopoly. Still is, one supposes.
You can’t buy ubiquitous home-delivered print advertising anywhere else. Sure, you can pay sub-minimum wage people to wander neighborhoods and rubber-band flyers to front doors, or wait a few days and send out coupons in the Clipper thingie.
And yet. And yet. Everybody knows (and for once I mean it unironically) we all love the visceral quality of print, the solidity, the ability to page back and check, the clipping, the passing it around, the crosswords, the comics. The biggest fuss when a newspaper shuts down comes not from the advertisers (who are already gone by then), but from the subscribers. The people with the blue paperboxes lining the country roads. The ones willing to trudge out to the roadside in winter, before breakfast, and take in the paper and sit and read it in their homes.
Physical paper. People love print. People live print. If they get sad enough at the diminishment of print journalism, do you think they will let it die?
Don’t be a fool. They’ll pay somebody good money to pass it out to them.
Are people buying ads? Shut your stupid marketing department’s yammering up and look. People don’t want ads, they want printed information. Even the people who clip coupons would be just as happy to pay you if you just listed the prices of every item at every store in town. They don’t want the coupon, they want the information about pricing.
And so what’s the future of print journalism?
In many cities in this country, the one newspaper is facing financial crisis. In smaller towns and wannabe cities (like ours), “the one newspaper” is dying. Yes of course in all those places there is probably also a superlocal paper about high school lunches and church meetings, and an edgy counterculture free monthly, and a free coupon collector, and a free real estate listing in the supermarket foyer….
Like I said, The One Newspaper is dying.
You might think this is what it will be like: Like 1882. Or 1860 or 1900 or 1930, even. The Empire of news is dying, not news itself. Not journalism itself.
The advertising monopoly is dying. The ecological niche occupied by The One Paper is a goner, not papers themselves. Specifically, the One Paper’s national-scale ad revenues are a goner.
Printed newspapers will have to start relying, again, on the revenue streams they enjoyed in the 19th century.
And because it’s how I always do it, let me jink suddenly from historical analogy over into biological metaphor:
Big animals get big not because they are specialists in what they eat, but to take advantage of economies of scale in their eating. The biggest cats are obligate hunter-carnivores just like some shrews, but have very special characteristics of gigantism and complex lifestyles to keep from wandering around all day burning calories hunting. Big whales eat very special meals (giant squid, krill), like many other marine species do, but are huge so they can avoid flashing around in big schools all over the place. Big dinosaurs probably got big so they could reach or manhandle their very special meals, but littler species could as easily have climbed trees or ganged up. And marsupial lions and wolves? Giant carnivorous birds, or moas? Giant sloths and mammoths? Specialists, but big because of economies of scale in their diets.
In the big picture—in the course of evolutionary history—megafauna come and go. As a type, following a particular specialized strategy that depends on being gigantic, they’re often driven to extremes by the presence of a small fruitful slice of resources in their environment. Unlike their smaller cousins, they go out on a limb and optimize their energy use and lifestyles so they can spend as little as possible to get as much food as possible as easily as possible.
But eventually the limb is gone.
And there you are, you big pile of yummy meat. Surrounded by other kinds of specialists, who didn’t invest in becoming huge.
The future of print journalism is a feast, not a famine. The One City Newspaper, the national newspaper, the Inherited Newspaper Empire: that is the main course.
A decade ago I would have predicted we’d see the industry roll back all that expensive infrastructure the One City Newspapers have developed, in setting themselves up as megafaunal ad-eaters, and we’d end up back in a situation about like 1880. A dozen papers, each with a slice of the subscriber pie, with a little advertising revenue each to keep them afloat.
Now I’m older and not so sure. Now I see a lovely chaos, a bloom of strategies, a roil of useful collaboration and competition.
What I wonder though, is what was never asked yesterday: who will be the first to fire the marketing department and keep the writers and editors?
That’s the next wave. That’s the immediate future of print journalism.
Working out the details of a real options framework
Suppose a prospective client approaches you to do work for hire. In many contracts for technical work, there will also be a requisite nondisclosure agreement (NDA), which may be unilateral or bilateral, but which in either case specifies that you (the contractor) will keep secret certain information regarding the client and contract.
Lacking such a nondisclosure agreement, it’s commonly understood that you could whenever you wish disclose whatever information you like about the name of the client, the nature of the work proposed or done, or even trade secrets you learned in the course of the conversation. Depending on the character and values of the client, one or more of those facts will probably be subject to nondisclosure clauses in the contract they want you to sign. And those clauses may (if you’re not thoughtful or careful) have no expiration date.
I’m thinking of one former client—a large Midwestern corn hybridizer—who made us sign an indefinite nondisclosure agreement that promised we would never state the name of the company. That’s it; just the name.
At any rate, let’s look for a moment at what you’re signing.
As we understand the law, until you sign that contract you possess the option to disclose whatever you want, at any time you want. Within certain extreme limits (libel, slander, state secrets, and so forth).
Let’s give you the benefit of the doubt as a contractor, and assume you’re not interested in revealing the pre-existing trade secrets of your client. Let’s just say you shouldn’t ever do that, and that they have a clear right to keep you from doing that before any are revealed to you, and that therefore the deal is broken if you demand the ability to tell anybody anything.
But common nondisclosure language also covers the broad range of knowledge and information that arise during the course of the project: not just the stuff you make together, but the name of the client, the terms of the contract, the outcome of the project… all kinds of new information that many clients would like to keep you from passing along.
What is the value of that option to speak about your collaboration with one another? Financially, I mean?
Well, the value to you might be substantial, especially in the current business culture: Assuming you’re a consultant, contractor, advisor, or other nonemployer firm, the relative marketing value of adding this information to your public portfolio of work may be huge, depending on the nature of the client and work. If you had completed contract work without the burden of the NDA, you would have the option to brag about the name of the client, the nature of the work, the details of the tools and cunning solutions you brought to bear, the amount you were paid… all inarguably useful information to trot out the next time you’re speaking with a similar client.
Lacking the ability to share any of that information, as an individual contractor or consultant, you have inarguably limited your ability to market yourself. Who did you work with? Can’t say. What did you do? Can’t say…. And (again, give the current business culture) that marketing value is not diminished even if the project was a total technical failure. So from the side of the consultant, it’s clear the ability to promote one’s own expertise has positive value.
Now suppose you do sign an NDA that restricts your ability to pass along this information for one year. In real options terms, it seems that you’re postponing the exercise of your implicit right to market your business. In exchange for compensation, of course: the payment you receive from the client, and whatever general knowledge and experience might be accrued during the course of the project.
So at this point it seems that the amount you should charge the client just to sign an NDA depends on the expected loss of revenue you will experience from limitations of your ability to market your work. If we pare away the decision to work on the project together, we cannot get looped into ridiculous conundrums like, “Well, if you don’t sign the NDA we aren’t going to have a contract.” The value of the NDA is not the value of the entire contract; the work you do for the client is what causes them to pay you.
The NDA’s value must be separable.
But there’s where I get hung up, somehow, so I keep mulling it over looking for a way to model the transaction that captures the risks and benefits of disclosure and nondisclosure so they can be made more explicit. Maybe because in this combined deal (contract-plus-NDA) there is also a set of complex options being created, sold and exercised by the client, I admit I get tied up.
I’m encouraged, though. Consider that a well-formed contract for work is above all an aid to the planning processes for both participants, in that it reduces the uncertainty regarding possible outcomes. As a contracted worker, you have more assurance of income in the near future; as a contracted client, you have more assurance that the project will proceed, and you have a better handle on the costs.
Still, the value of nondisclosure within one of these contracts feels complicated, though not necessarily from the standpoint of the contractor. What are the sources of value and uncertainty on the client’s side of this planning process?
Surely the client believes that by engaging you and applying your expertise and effort there will be positive business value compared to what they would achieve without your participation. Or perhaps your presence reduces the risk of failure by a detectable amount. In any case, let’s limit the scope of the analysis by assuming there is a clear-cut case in terms of risk and return for them to engage you.
But they clearly also believe—whether or not it’s true—that public disclosure of certain information will put them at a competitive disadvantage. As if you didn’t know it already, this is the assumption I’m most prone to challenge. It’s clearly the reason current practice so often makes nondisclosure a dealbreaker: it’s common knowledge that the revelation of trade secrets is expensive.
Now I confess there is a tendency among those of us who have been entrepreneurs or analysts or modelers or IT professionals or experts of any sort who type and draw on whiteboards a lot to imagine that the sort of trade secrets that a client might want to protect are the same kind of simple innovation that we create almost every day: better software, working analytics, cunning and insightful reports, graphic designs, improvements in institutional structure. Insights, call ‘em.
These “secrets” are the kind of thing we joke about around here by saying (quite accurately), “A good idea is born worth minus $25000.” Because ideas are cheap to formulate, but each one has real costs to implement. Over the course of a decade one inevitably hears the same idea pitched a dozen times in whispered tones as if it were made of gold: a real estate aggregator, a stock prediction system, a social site for book lovers, a killer app on the iPhone….
These are, in my experience, the most common kind of client projects: the sort any moderately smart professor or middle-manager or graduate student stumbles across in the course of their “real work”, sees unbounded upside potential of, and (without exploring the practicalities) pursues optimistically. And thus tends inevitably to overvalue.
In the case of such trivial secrets, let’s assume that the client’s model of the risks from disclosure of their “secret” greatly overestimates the chances or the losses, or both. Your model, or perhaps “the market’s” model, would produce a much lower risk for the client, and therefore a lower price for [non]disclosure.
But as an expert contributing skills to completing the project, the ability to promote the sort of work you are brought in to do is no less valuable to you—independent of its validity as a “secret”. You write, you type, you answer questions, you contribute insights whether they are building a hugely innovative first-mover, or a bog-standard also-ran.
So it strikes me that the problem in these cases lies with the quality of the client’s models of their intellectual property and competitive landscape. They overestimate the recoverable value (or underestimate risks) associated with the project, and as a result the realizable long-term value to them of keeping the secret appears to be greater than the immediate value to you—and to them—of promoting the work.
Because we shouldn’t disregard a qualitatively different model of the contract: Suppose instead of being client and customer you are partners, and you are faced with the decision whether to promote your project or keep it secret together. There is marketing value to both of you, but also risk from competition to both of you upon disclosure. And disclosure is irreversible, don’t forget.
So from a real options perspective if you can postpone the decision to disclose until the benefits of promotion definitely outweigh the risks of competition, you both win. Whether you’re partners, or consultant and client.
Hopefully you can see the same real options structure I do. At some point, if they’re paying attention, the client will eventually improve their model of the real value of their “secret information.” We just don’t know when that will be, externalities and uncertainties of life being what they are.
So suppose you enter into a suite of simple options contracts regarding disclosure in which (a) you cede your right to disclose the information for a fixed length of time (say a year) in exchange for a certain sum of money to offset your lost marketing value; (b) your client is granted an option to renew that contract for another year at its end; and (c) your client is granted an option to abandon the entire nondisclosure structure (including scheduled payments) at any time. They should exercise this option, obviously, when they’re out of the money: when the costs they will be paying in future outweigh the realizable benefits given new information.
What is the price for nondisclosure, here? It can be estimated as the loss of revenue you as contractor will experience from failure to market yourself. If your client receives new information at any time that reduces the perceived value of secrecy to the point it no longer seems to be worth paying you for it, they can abandon the agreement and your right to irreversibly disclose the information reverts to you. If at the end of a contract period they still perceive positive value in secrecy, they may renew (perhaps at a new price).
Now it’s been pointed out to me that there’s more than just this sort of “naive secrecy” I’ve sketched. While it’s common in startups and small businesses, a larger or more capable client probably has better models of the risks and values of disclosure. If nothing else, larger firms are more likely to be aware of real competitive landscapes and best practices, and tend to outsource development as opposed to research projects.
The secrets in these cases are not so much innovations as they are well-defined functional practices and information that’s been tried and tested. In many cases there are smart accounting models of exactly how much they’re worth.
But I don’t see how this negatively affects the calculation of the cost of secrecy. Indeed, it should improve matters and simplify for all involved if the components of the contract regarding secrecy are separate from those regarding work-for-hire. Give the customer the benefit of the doubt here, and assume we’re now at the opposite extreme from “naive secrecy”: now the least accurate predictive model is probably the contractor’s, in that it overestimates the value of marketing (disclosure).
What we do in this situation? I’m not sure.
And uncertainty is the key: that’s what real options pricing is all about. So maybe (after I think about it for a while) we can work the rest of the model out, and maybe slap some probabilities and prices on there.
In general, here’s where I feel like I am: The presence or absence of an NDA clause in a contract should not materially affect the expected cost of the actual work performed, and therefore it can be separated away from the work-for-hire clauses. Further, the matter of disclosure of pre-existing trade secrets (in either direction) is not what I’m thinking about here, and that should be separated as well; I’m talking about novel information material to one particular project, ranging from the existence of the project, to statements of the goals of the project, to descriptions of the particular techniques applied, to news of the eventual outcome.
This information would be of value to the contractor (and arguably the client, but we’ll ignore that) for marketing purposes, who therefore expects a financial advantage when it is disclosed. But the information is also (arguably) of value to competitors of the client, who therefore expects a financial cost should it be disclosed.
There is uncertainty associated with all these valuations, and with the probabilities of the events occurring. How do we model that in such a way as to make it simpler to separate agreements for work from agreements regarding nondisclosure?
It’s simple refactoring, really: The modules have very different functions, and yet they’re too often interconnected.
UnitedTalk #001: The Wisdom of Fun workshop, September 19, 2009
Because some folks may not follow me on Twitter, and I’m probably not going to advertise on Facebook:
THE WISDOM OF FUN: HARNESSING GAMES & PLAY FOR USEFUL WORK
Humans are habitual problem-solvers, so obsessed with puzzles and patterns that for millennia we’ve posed riddles and created games to fill our “idle time.” But these obsessive problem-solving habits are traditionally seen as a distraction from the “real work” of business, scholarship and public policy.
That is no longer true… if it ever was.
This is the first of a series of three open-format workshops scheduled for 2009 & 2010, where we’ll gather to explore the new ways game play is becoming “useful” work—useful for people and institutions.
On September 19, 2009 please join us for an open-format meeting in which the attendees set the schedule and specific focus for each session. In this first of three workshops, we hope to discuss
- immersive economic games and MMORPGs with developing social norms and virtual economies larger in actual value than some real nations;
- serious games designed to use humans’ innate skills to support search and optimization;
- prediction markets and related collective intelligence systems that harness the wisdom of crowds for robust business decision, forecasting and policy-making;
- crowdsourcing systems that divide up otherwise insurmountable complex problems so that thousands of distributed human solvers can incrementally attack them;
- agent-based simulations used to understand emergent behavior, and game-inspired classical artificial intelligence systems for exploring decision-making and analytics;
- changes in the business and technology of game design within the entertainment industry;
- Second Life and similar game-like virtual platforms, and the social worlds developing there, in which real institutions are struggling to discover their role.
…
Full information is available at the EventBrite registration site. Please consider passing it along or joining in if you’re able.
Watching things come together
You’ve not heard much from me recently because I’ve been busy volunteering and helping Mike Kessler and Matt Lewis set up the Workantile Exchange, a new coworking membership organization in downtown Ann Arbor.
I’ll have more to say on that in a few days. Still some work to do.
Meanwhile:
- Flickr feed of photos tagged “Workantile” or “WorkEx”
- Twitter feed of tweets including those terms
- Vimeo feed of time-lapse imagery of self-organizing open workspace
- Google Blog Search results for “workantile”
There will be more, soon. That’s a promise.
Brief pause
(even in the linking)
I’m in the middle of Ron Jeffries’s and Chet Hendrickson’s CSM training class.
Worth the effort, if you’re wondering.
Hey, I checked our records. You didn’t say you wanted a revolution after all. Sorry!
Clay Shirky wrote the other day, in what might be the most-linked item in my voluminous and wide-ranging delicious stream:
When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.
As I’ve come to expect when reading Shirky: yes, that’s what I’ve been trying to tell people for years. [You know, if that Cassandra chick had been a smarter cookie, maybe set up with some agents or a PR firm or something, I bet she coulda made a fucking Fortuna. [Ba-dump-bump]]
As part of the “guerilla economic development” work I do at our company Vague Innovation, LLC, I spend a lot of time meeting with the nominal movers and shakers of the local business development community: folks from the Ann Arbor Chamber of Commerce, the Ann Arbor SPARK, marketers and Realtors and landlords and bankers and people who publish shiny color magazines have sunny offices in tall buildings.
I hate to stand alone against the stream of bigoted invective I hear from most of my New Economy peers, but people who wear suits and work in offices are good folks. They’re trying their best to help their town and region, their towns’ economies, to identify and shore up the entrepreneurs they recognize as the future of their local worlds.
They’re good people.
That said, a lot of my conversations revolve around the future of these nice folks’ careers. Like all of us, these are plain old human beings armed with the standard human cognitive heuristic toolkit. You know, the same one you have: some stupid mapping of your personal experience onto the whole world, the 5 ± 2 most memorable cultural norms they can bring to memory unconsciously, and the sense of massive importance of all that Received Wisdom they’ve been exposed to in their canalized plummet through life. Just like yours, you know?
As part of my work I keep a foot in both worlds (and a couple of others, too; you don’t want to know how that feels). And so:
- I mention seeing something in the Newspaper the other day, and an up-and-coming local banker doesn’t understand I mean the paper I read, the one that actually talks about local government and salient events, not the sports-filled fishwrap some dude in Grand Rapids deigns to publish. This leads to deep confusion; hijinks ensue and we both part shaking our heads in embarrassed but ominous disbelief.
- As part of a challenge exchange, both the CEO of the Chamber of Commerce and a dude for the local “tech development” firm promise to get their folks to edit the appropriate ArborWiki entries… and months later I hear that one of them has “hired a person to do that.”
I could go on. Hell, I did already. But I felt bad.
I deleted them all because they got more egregious and far more embarrassing for the “traditional business” folks as I totted them up. A list of searchable terms (and teachable moments) might do: “coworking”, “commercial insurance”, “business plan”, “admission price”, “intellectual property”, “next Google”, “corporate blog”, “personal brand”, “online marketing”, “open source”, “boot camp”.
Every one of those represents a little checkbox on the octagonal paper titled “Decommissioning Schedule of Battlestar BizDev.” A defaced gravestone in an overgrown family plot on a dirt road somewhere in ten years. A milestone on the road to obsolescence.
[And someday, when whatever is next comes along, the nanobio revolution or whatever, that will make people like you, you old fart, into stupid conservatives who still type into inorganic computers using some kind of "formal language". And you'll say you learned business sense the hard way on Facebook and with Google, and you'll say you've looked at the Senso but you can't figure out why people want to smell crap on other planets all day. And then you can look this blog post up "by Googling" on your stupid octagonal DVD of the "blogosphere" and be reminded: this has all happened before.]
These are good people. They try, really. But they’re crippled by insularity, by the people they hear and choose to listen to, by their distance from the Actual World. Hell, it’s a handful of them that even know the world exists as it does. No sense of the timescale “we” use, or of “our” means of action. A lot of these folks have heard about blogs and Facebook and Twitter now they’ve been in Forbes and NPR and stuff, but they don’t possess the cultural infrastructure with which they can parse what they’re seeing as relevant communication.
At least three people in very nice suits have made in my presence the joke about “Twitter is about what you ate for dinner” in the last month. So there you go. It’s no surprise that these people still aren’t welcome in the “tech community”. Which is sad.
And to be pragmatic about it all, and think about how cities and communities actually work in this capital-driven world we inhabit, kindof stupid: They have all the fucking money.
Ah, well. Cultural diversity gets short shrift these days. On both sides of that particular line: geeks and suits don’t get each other, though they often assume they do. [And Cf. "don't get me started on the other ones."]
Which, by a long and ranting road, brings us to our milestone parking spot for the day: Parking Data.
This won’t take nearly as long as the preamble.
We have a bunch of parking structures here in Ann Arbor. The Downtown Development Authority contracts with a commercial firm called Republic Parking to manage them, and parking is a huge source of income. The DDA also gets taxes from new buildings, as I understand it, and manages liquor licenses and oversees new developments and stuff. There’s more involved: it’s complicated and political.
[As a symptom of my own increasing frustration with culture clash here: If you're a geek? And you self-identify as an Interwebz-using computery person? And you're thinking or saying that politics or business practice is "unnecessarily complicated" or "opaque" or "useless"? That sounds to me like you're one of those assholes who say they "don't get math" as an excuse for not paying attention to it. Business practice and the law and local government infrastructure are complicated because they deal with real-world public-good complexity, dumb-ass. I don't care if you run some kind of "alternative community" or you're Lord High King Open-source Maven or a Libertarian Fundamentalist or whatever: don't dismiss "politics" or marketing or these other people's culture as trivial just because you're not familiar with it. It really undermines the argument you're "smart" whenever you do that in public. And when you do it in "private", thinking somebody like me isn't there as well, it makes me treat you like the child you are.
Or, shorter: Don't diss "the Man", monkey-boy. We're all man.]
If you’re tired by now, here’s a timeline of what happened.
Some time back, the DDA started putting counters on the parking structures, and around that time they started publishing online feeds that updated as the numbers of cars parked in the structures changed.
This was cool and geeky. We want a cool and geeky town, and this was a good step. +2 points for transparency, and for actually experimenting.
Then some folks I know, including these guys and Ed Vielmetti, did what good modern Internet culture people do: they created a handy open source software package that took the public data and repurposed it into a free way to use your phone to call a number and find out how many spots are available.
This was cool and geeky. We want a cool and geeky town, and this was a good step. +5 points for mashups, repurposing public domain data, open source, and some others.
Then the geek points added up to the point that the Ann Arbor News wrote a cover story about the mashup.
This was cool and geeky. We want a cool and geeky town, and this was an unusual good step from a typically clueless newspaper (Cf. “fish-wrap”, above). +2 points for cultural crossover to the MSM, and promoting the local geek culture to a mainstream audience.
Cue fan. Cue shit.
Apparently this is where the DDA first heard of the cool, geeky thing that had happened as a consequence of their publication of the data. As far as I can tell, they reacted just like anybody in the 1970s would have done: they noticed belatedly that their cultural role as gatekeeper was being undermined, and so they shut down the phone service access to the numbers.
This was neither cool, nor geeky. Burn –10 points for reinforcing stereotypes on both sides of that goddamned line I mention above, and throw in an extra –10 points for the ongoing online shitstorm of bad publicity and even newspaper publicity this is building into.
And here we are, today.
We’ve got people who are core members of the geek community up in arms about it. Folks are stepping around the stupid and ineffectual blockade the DDA started off with. They’re writing open letters that smack of outright political threat. They’re bringing in the big guns from outside town. They’re submitting FOIA requests for the numbers.
It was a simple little thing. A triviality, really. Susan Pollay’s email clearly misses the fact that this was an experiment, the very sort of thing that the phrase economic development means today in this agalmic open-source world.
But it brings the two cultures together in what are probably the worst possible circumstances: The old-skool scarcity-driven infrastructure probably didn’t know these people even existed. Or if they did, they had wildly inappropriate expectations about demographics and values and potential impact on the status quo. And the scarcity-avoiding geek culture that didn’t until until now give a damn about what “suits” did is now suddenly swinging the full measure of its attention to bear on this affront, and they’re processing it on fucking Internet timescales, without old-skool handicaps like “business hours” or “weekends” or “face to face meetings”.
To any of us who are watching with one foot on either side of this line, this is quickly turning into what you might call “spectacle”. No joke: hairs standing up on my arms as this little fooferaw started to come into focus. This (to paraphrase what the cool kids say) is what we call the fire we brought you long ago.
I wrote an email to a colleague from the Chamber of Commerce Friday, as soon as this dynamic became obvious to me. A heads up, mainly, since he’s not directly involved.
For a few weeks now (non-Internet time, remember?) he and I have been talking about what the Chamber and the old-skool infrastructure might able to offer “the 1099 community” or the “independents” or the “Not An Employee crowd” in the coming months. Admittedly we’ve spent a vast proportion of our meetings trying to reconcile our dramatically different assumptions about work and community, and last week we were just getting to a place where we could say stuff that didn’t make the other one smirk or look confused.
[Though he made that confused face when I mentioned glibly the bit about tearing down the hideous mid-century bank building at the center of town and getting a Town Square back. I'll win that bet, too, by the way.]
He’s framing what he sees as the future role for the Chamber in the coming decades in terms like expansion and cultural adaptation so that it can cope with the different lifestyles “we” NAE folks represent. He’s trying to help, and to make what has traditionally been perceived as a useful and necessary business support infrastructure available to more people who need help. Maybe he doesn’t see 100% that they don’t need that help, but he’s trying. He wants to help out and reach over the line for the sake of the city, the region… and to some extent to drag his organization into the 20th century [sic].
In our conversations I find that I’m framing what I see as the future role of the Chamber using concepts I’ve mentioned here already: as a safe decommissioning, as an opportunity for outreach between cultures that are fundamentally irreconcilable, as a model of what to do and what not to do in a nonoverlapping organization… and frankly because I like people and also money, and there must be some way of ameliorating the damage this whole thing will cause in the next decade (Cf. bank tear-down).
But I look at that list of benefits, and I realize that neither I, nor any of the people I know, want any of those “benefits”. But just like my friend in the Chamber, I also want to help the city… so it doesn’t end up abandoned when us New Economy people just leave in disgust. And the region… because I want there to be trains and convention centers and some non-provincial buildings built, and fuck “human scale” I want to see the bleeding edge of posthuman scale. And to some extent to drag out the useful salvage from the wreck of his organization and set it up and dust it off and introduce it to the 21st century [sic].
And in that email I sent last week, in which I explained briefly what I’ve said here in this rambling blog post, I pointed out that this little parking fiasco has something to do with the balance he perceived between our different views of the local landscape.
I said to my friend two things, and I hope I’ve set this up so they might make sense when I repeat them here in public:
(1) That it will probably seem from “his side”, among the suits and hallways in which people come and go according to agenda and business hours and rely on telephone conversations, that nothing much has happened. Some extra phone calls to the DDA maybe, some annoyance felt as this pissant internet crowd throw their weight around and complain about something this trivial. That in the long term this tempest in a molehill will look like it blew over and disappeared, and then “his” folks can get back to business as usual. Or maybe that things will get smoothed over, and the data will be free and things will get all geeky and fun again and all the frowns will turn upside down.
…but also, independent of how it plays out on his side: (2) When we look back years later, this will be the week we say the ground shifted. Or if we don’t identify this exact “triviality” as the turning point, then it’ll be one of the seventeen cued up and waiting in the wings.
Last week it was a decent and smart thing, an appropriate use of his time, for my friend to be paying attention to his goal of “outreach to the independent tech community”. It was good that he was musing about how the two cultures might mutually adapt to fit together for one another’s benefit.
Today, though, a switch is thrown: it’s now possible—no, it’s now the most likely outcome—that folks from the Chamber of Commerce will be watching in a year, or two, or five as all the businesses rush to join something else. Some other organization, not the “answer” to them because it won’t be set up in response to the Chamber or the SPARK or the DDA. Something new that just doesn’t give a damn about any of that old junk, or even recognize its existence.
An orthogonal institution.
Because of this fiasco about the parking, or maybe because of any one of the seventeen other accidental clashes that could function just like this, whatever rises up will not look at all like a partnership founded on principles of outreach and mutual support.
It won’t be founded on anywhere near the kind of cooperation it might have been.
The New Thing is not fully formed yet. It shambles on towards its Bethlehem, independent of what’s happening under its feet. But its eyes are open briefly, and today it’s paying attention to the friendly, helpful people in the suits who only want to help. And I suspect what’s moving though its collective mind are appraisals, a kind of sizing up that should make the friendly business development old-skool institutions pause. A look that increasingly feels like a brief consideration for salvage, of food value. Not a spirit of friendly symbiosis, but a glance that takes in all the hinges, all the convenient places for a pry bar to lodge.
I suspect these things happen too fast to respond to, when you insist on keeping your eyes to the path you started on, when you listen to the cues you’ve learned long ago.
And to be frank, maybe that’s best for everybody.
Mutual Business Coaching?
I find myself disenchanted with what you might call “traditional” business culture lately. Now you, a savvy Interwebz reader, may be the sort of person who lives on a Coast near a Valley or in a town with a Needle, the kind of town with lots of people and loads of young up-and-coming goateed creatives and stuff. Living as I do in the middle of flyover country, I’m not sure “traditional business” means for you what it does here: lots of golf, inordinate striding, breakfast networking meetings, calling important people by their first names, and—the kicker, for me—a tendency to assume that people who made money in the last business cycle, or the one before that, or one a Long Long Time Ago, that those people are rich now because they are good businessmen.
This is the kind of self-reinforcing unexamined mythology that leads young entrepreneurs to their doom. You get an economic development infrastructure in place, you get boards and angel and VC investors all used to what they’re used to and standing by the claim that “business is always essentially the same no matter what the domain.” They set up boot camps and training seminars and they arrange these networking lunches and earnest young people in black suits or khakis show up and eat slices of pizza (at Tech Startup Events) or hors d’oeuvres (at Future Of Our Region Events), and they listen to that crap.
When I invest in a company, it’s the team I’m looking at. And by that I mean: I want to see somebody who reminds me of me when I was a kid.
When I hear an pitch, I need to understand it in the time the elevator door takes to open. And by that I mean: (a) we live in a town with stringent “human-scale” building height restrictions, so (b) you can tell we’re pretty fucking provincial so use only a few small words I’ve known since I was on the football team.
When you’re getting ready to launch, you need to get your business plan ready and make a convincing case for your market and your prospects over the next five years. And by that I mean: nobody ever reads the damned things, but at least we know we can tell you what to do and expect you to listen to your betters, sonny boy.
When you’re trying to raise serious money, you need somebody in charge of the firm who’s familiar with the language of business, of marketing, and the culture of startups. And by that I mean: When somebody paying more attention than me tells me you have a clue, I’ll stiff you with some tried-and-true club buddy of mine and you’ll fucking do what he says if you know what’s good for you.
And so forth.
Of course, I know you don’t live in this imaginary town I do. These are all straw man exaggerations. I’m just resorting to hyperbole to stage my own pitch. Right?
You betcha.
That said, and strawmen aside: I think smart people are actually smart, and that dumb people mess up new businesses.
There’s a sign on the administration view of every website I’ve run for ten years. It’s on my laptop’s desktop, too. It’s a reminder to me, as a manager and a meddler and a planner and a guy who’s trying to help and at the same time make a buck. Every one of these reminders says the same thing: This doesn’t work the way you think it does.
The biggest danger, in my mind, to a person starting a business—whether it’s some hare-brained entrepreneurial thing, or a nonprofit, or a “lifestyle” business (a term I despise)—is taking advice from people who assume they succeeded because of what they did.
The core of my advice to folks wanting to found a business is simple enough to pass along here: listen to “coaches” and “bootcamps” and economic development people only enough to convince them you respect them, and to learn what they expect so you can use that to your advantage, but don’t let them fuck with your money or ideas.
Notice I didn’t say stay away from them: I said be nice, try to really listen, do your best to learn, and along the way do the minimum amount necessary to ingratiate yourselves to them. If you can’t do those things, you actually do need a “people person” around, because it’s all about risk amelioration, not financial returns. Because you’re doing this to minimize the disruptive influence of their received wisdom.
Here’s why: These people succeeded by chance. Quirks of fate. They happened to sell off their companies or execute some other exit strategy just before some random economic downturn. They had rich relatives. They happened to be in the room when some dude wanted to invest in a startup. They had a smart administrator who kept them out of the research wing. They were middle managers in some global giant fucking firm and (more’s a pity) never heard a real human idea in their lives, and now they think they can tell you how to run your business. They go to meetings with their own clones and nod and shout Hallelujah whenever somebody utters a mantra about “invest in the team” or “business savvy” or “demographic targeting”. They not only imagine, they will say outright that every business is essentially the same, and that what matters is making the right mystical passes in the right order and also running it by your guts.
Bullshit. These people are human beings.
That said, they’re the small fraction of human beings who have the goddamned money. It’s not your customers who are going to make your new idea into a company, Startup Grrrl: it’s those fools with all the money.
Let me be as precise as I can be: human beings are stupid. You are too, by the way. But they are moreso, because they’ve had success after navigating an uncertain course through the ratmaze to their perceived cheesy Winning State. And when that happens, our intrinsic human mental wiring kicks in and all of a sudden they’re doing pattern-recognition on scant data. They’re superstitious. They are poor at modeling. They suck at generalizing, and for the most part their culture is founded on principles of reinforcing their notions.
[Like yours is, and mine is... but leave that for another day.]
Risk, reward, reinforcement. So strong, they don’t even have to repeat it to get it engrained; they just play off one another.
This doesn’t work the way they think it does.
Here’s what I think, instead.
Save your money, if you can, and don’t burn it at the altar of the priests in black turtlenecks and sports coats. Hang out with the ones you can, as stated above, but don’t waste money. Don’t risk your money or your time on them.
Instead, find five other startups. Seriously.
Form a Guild. Form an association that lets you each do what you want, spread the work around, support one another. Form a community of 30 people, not three, that can demand the attention (when needed) of one rare but actually useful business advisor at a time, and aggregate your risks across all your firms, and kick the bastards out when you’re done with them.
Coach each other.
I believe smart people, people with ideas like you have, are actually smart. And I think people with new ideas are more likely to understand the one true thing I plaster all over my own sensorium: This doesn’t work the way you think it does. This doesn’t work the way they tell you it does. This doesn’t work by formula, by superstition, by the novel application of pat anecdotal hand-waving or ritualized networking or in-group marketing to people who can’t bother to learn the difference between a social network and a website before telling you how to run your company.
There is no heuristic.
What you need is advice on how to fill out forms. Names of people who give out money, and what they expect. Examples, hard and factual, of business plans that have actually been followed. Access to people who are running businesses like yours, and right now.
What you don’t need is pabulum. You don’t need obfuscation, a gatekeeper who will let you get access to the people they convince you will help, or who wants to dabble and sees your idea as a good starting point. You don’t need people who are a bad match for your culture; any asshole who tries to change that culture you have now, no matter how much a n00b you think you are, without first convincing you beforehand that there are measurable returns and you can undo the changes if things go wrong? They gonna fuck you up.
Hell, you don’t need anybody at all whose advice doesn’t come with a warranty and a money-back fuck-off clause that kicks in when they give you bad advice backed by misleading credentials.
In other words: Sure, you need expertise you don’t have, but treat your “advisors” the same way you would treat your accountant: protect yourself from stupid people.
Any human being is as good as another, when it comes to common sense. Unless they’ve presumed they are winners because they did something a long time ago, under completely different circumstances.
When that’s the case, they’re a liability.
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