Jaron Lanier on the Human Side of Technology

July 26, 2011

“I’m disappointed with the way the Internet has gone in the past ten years.  . . . I’ve always felt that the human-centered approach to computer science leads to more interesting, more exotic, more wild, and more heroic adventures than the machine-supremacy approach, where information is the highest goal.

“At the South by Southwest Interactive conference, in Austin, in March of 2010, Lanier gave a talk, before which he asked his audience not to blog, text, or tweet while he was speaking.  He later wrote that his message to the crowd had been:  “If you listen first, and write later, then whatever you write will have had time to filter through your brain, and you’ll be in what you say.  This is what makes you exist.  If you are only a reflector of information, are you really there?”‘

— From a profile of Jaron Lanier, author of You Are Not A Gadget and one of the pioneers of virtual reality technology, in Jennifer Kahn, “The Visionary,” The New Yorker, July 11 & 18, 2011, pp.46-53.

Excerpt: The Spark for Groupon

July 12, 2011

The following excerpt is from “Groupon Therapy” by Lauren Etter in the August 2011 issue of Vanity Fair (available on newsstands now), in which Groupon co-founder and CEO Andrew Mason shares how his work in developing an earlier social action website called the Point, the cost of which had been underwritten by investor Eric Lefkofsky, evolved into Groupon, which is considered by many to be the leading group discount buying site on the Web, after:

“I’d always thought with the Point that I’m going for the big win and changing the world,” Mason says. . . . But the socially conscious efforts didn’t attract enough subscribers, and they fizzled.   By October 2008, the Point was on the verge of being shut down.

“Eric [Lefkofsky] was pressuring me to think radically differently and figure out a way to monetize the site,” Mason recalls. 

Mason had noticed that the most popular campaigns on the Point involved group buying.  He decided to set up a sub-business dedicated to commerce rather than ideals.  At first, Mason say, he thought the new business would just be a way to pay the bills.  His friend and co-worker Aaron With came up with the name Groupon — a fusion of the words “group” and “coupon.”

Mason credits Lefkofsky for the shift in his focus:   “He just created a splinter for me.  It was that agitation that he created that ultimately led to the formation of Groupon.”

Skype Stock Options Flap

July 9, 2011

Interesting column earlier this week by Steven Davidoff in the NY Times’ DealBook column on the seeming differences between venture capital firms and private equity groups.  It seems that just before its sale to Microsoft, Skype, which was then controlled by the private equity firm Silver Lake, gave notice to Yee Lee, a former employee, of its intent to exercise its right to repurchase at their exercise price shares of stock that might be acquired by Lee upon his exercise of vested stock option awards.  The situation received widespread attention in Silicon Valley following Lee’s rant on his FrameThink blog about how the practice was contrary to start-up company norms, at least by Silicon Valley standards, and the rant was subsequently picked up on by a writer at Fortune magazine.  Davidoff concluded that Silver Lake’s emphasis on maximizing every dollar even at the expense of its reputation for fairness being pilloried provided a key contrast with the focus by VCs on entrepreneurial creative and relationship economics.  Skimming the reader comments propmpted by the former employee’s blog post and the DealBook post, makes clear that such distinctions may be more in the eyes of the beholder than real. 

The same is true with whether the practice engaged in by Skype with its stock options repurchase program is typical.  From my own experience, it appears atypical and counter to the goal of employee retention, at least if the way the options agreement clauses work in practice was not made clear to subject employees.  Had they been aware of the potentially aggressive approach to repurchase employees may have chosen to stay longer (or, of course, possibly not have joined Skype in the first place).  You have to read the letter — Lee has handily posted the letter — that Skype sent to Lee to appreciate the almost comical nature of the situation.  Davidoff makes the point that sympathy is difficult where the employee did not ay close enough attention to the specifics of the underlying contract.  That may be partially true, but when one doesn’t read the contract and finds out that things were not really as one expected, that is sometimes as much about the abnormality of a situation as it is about making carefree assumptions.

When to Throw in the Towel on a Business Venture

June 26, 2011

Within the past month, I noticed a couple of articles about businesses voluntarily choosing to call it quits that are worth highlighting.  Businesses go bust all the time and in many cases either quietly wind down and dissolve because they weren’t profitable or get run through the wringer of bankruptcy process to sort through who will salvage the parts worth saving.  The situations with Bling Nation and Google Health are interesting and contrasting variations on the usual tale because these undertakings didn’t truly flame out.

Google’s decision with its Google Health is the more traditional of these two stories.  As reported yesterday in the NY Times, the effort to gain traction with consumers adopting electronic health records was fraught with challenges.  This was best summed up by an analyst at IDC Health Insights by her observation that “Personal health records have been a technology in search of a market.”   So, sometimes the lesson that even major enterprises learn is that even with a boatload of financial, technology and people resources to throw at a business venture success is not assured and  sometimes the best thing to do is just accept this and move on.

Bling Nation’s decision is more interesting because it’s less typical.  The company is (was?) an early stage mobile payments services provider that had raised a significant amount of capital (over $33 million) to execute its business plan and had gained a significant following among both target consumers and community banks.  Blig Nation was among the first to deploy near field communications (NFC) in connection with mobile payments.  The American Banker on June 8 ran an in-depth story about the company and its Achilles heel, which seems to have been tying use of their widely praised payments solution with a mobile marketing solution called FanConnect, as to which both banks and consumers balked because it was seen as an unwelcome obstacle to the desired mobile payments solution the banks had already been using with success.  Result: banks started dropping the service causing an abrupt comeuppance of sorts for Bling Nation.

So, in a gutsy move that may have been dictated as much by realism and necessity as anything, Bling Nation chose to press the reset button by temporarily suspending its service and regroup.  Matthew Murphy, the company’s General Manager noted, “We found it easier to pause and fix [our business model] than try to tweak and market.”   While there are frequently second chances in business and, to its advantage, Bling Nation has substantial capital in reserve for a “relaunch” if that’s what it decides to do, it will be interesting to see whether its lost footing can be regained. 

Both Google and Bling Nation are also notable examples of the adage that innovation often requires not being averse to the risk of  failure and the key is to learn from the missteps and then go in a different direction (as with Google Health) or recalibrate (as with Bling Nation).

Innovation Comes In Many Forms

May 22, 2011

Innovation frequently is the result of looking at an old problem in a new way.  Case in point, although far removed from the realm of technology, is an anecdote related in an article from last weekend’s The New York Times Magazine about Yukon Territory residents Shawn Ryan and Cathy Wood, who are among those leading the charge for what is turning into another Canadian gold rush.  

While the article’s author, Gary Wolf, who is also a contributing editor for Wired magazine, focuses most of his attention on their ups and downs at prospecting, the innovative resourcefulness of this couple is best summed up by the following excerpt:

“It is tough to be penniless in Dawson in the winter. Wood cleaned some houses and served as court bailiff when the judge came to town, but in February 1993, they were down to their last $5. At the employment center, Wood saw a notice for a job removing the snow from the roof of Diamond Tooth Gerties, the local casino, which opened for a brief winter season coinciding with a dog-sled race. The job was usually taken on by a team of local residents for thousands of dollars. Wood bid 500. Townspeople came out to see how the low bidders were going to do it. She and Ryan cleared the edges of the roof with shovels, then Ryan climbed to the top and jumped up and down like a monkey. Gravity did the rest. The expressions of surprise on the faces of the onlookers made Wood laugh. People in Dawson had to acknowledge that for people at the bottom of the status hierarchy — and there aren’t many rungs beneath mushroom picker — they had some unmistakable gifts.”

 Link:  Gary Wolf, “Gold Mania in the Yukon,” NY Times Magazine (May 15, 2011) 

Photo Credit: Finlay MacKay, NY Times

Object Lessons in Business Failures

January 31, 2011

Catching up on some posts here, a piece from an early January issue of the NY Times (“How Six Companies Failed to Survive 2010,” by Eileen Zimmerman, NY Times, Jan. 5, 2011)  in which six business are profiled that failed in 2010 is notable for the to-the-point candor exhibited by the subject entrepreneurs.   Hearing explanations for why their businesses failed directly from the people that ran them is akin to the clarity that comes from viewing a picture in place of the proverbial thousand words.   The businesses range from a web-based personal finance portal to a gourmet baby food company and their problems range from inadequate financing to unexpectedly intense competition.   Very useful reading on pitfalls to avoid. 

A useful adjunct to the above piece is the related NY Times “You’re The Boss” blog post by Jay Goltz from the same date entitled “Top 10 Reasons Small Businesses Fail.”  Goltz’s list applies equally to larger businesses and includes the “math not working”, owners who can’t get out of their way, and out of control growth.  The reader comments are also good stuff.

Twitter’s Challenge of Capitalizing on 160 Million Users

October 19, 2010

As is proven over and over again in the arena of early stage companies, just because such a company has developed a nifty piece of technology does not mean that the world will actually beat a path to its doorstep — at least not with money in tow.  It takes lots of hard work, skillful execution on a good business plan, and a fair amount of trial and error (and some luck) to bring that reality to bear.  So, it’s interesting to see the recent attention being devoted to the diligent efforts of the microblogging phenom Twitter as it finally seeks to define a viable revenue model for itself, much of which hinges, not unsurprisingly, on various forms of advertising. 

There are many lessons here about which any growth stage company can take heart.  In particular, I found the following observations, from a piece in last week’s NY Times, to be especially candid and revealing about the challenges faced by Twitter in its quest for an as-yet elusive revenue strategy:

“But many advertisers and executives say there are questions to be answered and experiments to be done before Twitter becomes a must-buy, if it ever does.

“Agencies are uneducated, brands are uneducated and, to a certain extent, Twitter is uneducated,” said Ian Schafer, chief of Deep Focus, an interactive marketing agency.  “There are no best practices.  There are just hunches about what will work.””

(NY Times, 10/11/10, p. B1)