Digital Kapital
The Summer of My Content (n., adj. and v.t.)

"I have an open way that easily insinuates itself and gains credit on first acquaintance. Pure naturalness and truth, in whatever age, still find their time and their place... My freedom has also easily freed me from any suspicion of dissimulating by its vigor -- since I do not refrain from saying anything, however grave or burning, I could not have said worse behind their backs -- and by its obvious simplicity and impartiality. I aspire to no other fruit in acting than to act, and do not attach to it long consequences and purposes. Each action plays its game individually: let it strike home if it can."—Montaigne

In the past few issues, I've talked at length about how to measure the value of a Web site. Figures and philosophy don't always lend to clarity. Since I can discuss my work without betraying others' confidences, here's my take -- based on personal experience -- on how to create a successful Web business, whether yours is a corporation or one-person Web site.

There are a set of skills, call them habits of mind, that prepare one for success as an entrepreneur; a separate, but related repertoire of traits makes for success in Internet business development. Openness to opportunistic collaboration, as compared to striving
for establishment of exclusivities is the most important difference between pre- and post-Net business thinking. Skills like listening, leading by following and convincing people that they thought of the solution you've suggested are vital to Netrepreneurial growth.

Yes, these are all traits that have been waxing in business theory since the 1970s, but that makes sense to me. I am not a technological determinist, who believes that technology gives rise to new forms of
social organization; rather, society prepares itself for new technology, providing incentives to inventors and marketers of mechanisms that speed established human practices. So, without Prussian bookkeeping,
there would never have been ENIAC, nor Oracle SQL. We've been paving the mental roads for the distributed, collaborative workstyles of the Web since the Electric Kool-Aid Acid Tests.

At each step along the way, Net businesspeople must thrust themselves into gaps in the economy while simultaneously yielding to the forces that shaped the opportunity. Net business is much less like war than the establish-a-proprietary-beachhead approach of General Motors or, even, IBM. Owning a market
segment is not accomplished by simply grabbing the lead and holding it by brute force (more marketing, more advertising, price-cutting). Rather, it is a privilege paid for again and again through accommodations to the demands of customers and the rest of the value chain.

The habits of the Netrepreneur, then, are like that of the freelancer in the paper media market -- you are only as good as your last project or the current relationships with editors (who, because they assign work, are the primary "influencers" in the print market). A less flattering comparison would be the mutually beneficial relationship of a parasite and a host organism; as long as the parasite serves a purpose the host will allow it to remain.

Who decides if the Net company can stay put on the belly of the shark? Despite all the emphasis on corporate financial performance, people spending money, paying their attention to advertising or providing valuable personal information are the source of value companies must obey. Without the customer, there are no finances to perform on. Too often, however, what we see is a company's ability to raise more money from investors. This isn't bad, but only if the company is raising more money to continue a successful strategy or to start a new one. It is bad when the money is raised to resurrect a failing strategy, and most of the time this is the case.

I've got customers, for published products and consulting services. In spite of my best efforts, I have somehow succeeded in creating what John Cleese recently described as a "portfolio career." I've
assembled two professional roles and have an interesting, profitable life. The two sides, business development and writing/publishing, feed one another, creating the sort of constant variety that most folks are waiting for retirement to achieve. And I owe it all to the Web, which I stumbled into like the rest of us, because I happen to have been born at the right time and embraced the computer and a modem as an avocational tool. The gang that invented the
personal computer loved circuit boards and code, Web people are fascinated by the weaving paths of human connections that make a network meaningful. I'm not a hacker, but I can hack great relationships, as Montaigne would have said of himself, had he been born a few centuries later.

As a friend of mine said in his office high above Seattle's Elliot Bay recently, "We're just lucky this industry came along, or none of us would have a job." Perhaps, but I tend to believe that most business school graduates would have some sort of job, or else they'd be burnt out drug cases sitting in twelve-step groups hoping to find something that they could benchmark and turn into a gimmicky self-help book. In my case, I'd have a job, but I'd hate it.

I was a bartender for 11 years prior to joining MacWEEK, even when I worked a day job as vice president of a small advertising agency in the East Bay. I even managed to publish a fair amount of poetry and short fiction during those years. I couldn't stand bartending, because I had to act as though all
these pathetic barflies were close friends of mine, all to earn the tips that help put my wife through the San Francisco Conservatory of Music. I was really good at appearing to be friendly and made a pile of money off tips. It's a skill that's paid off over and over as a reporter and businessperson.

Another conversation got me to thinking about the whole matter of what one must do to succeed on the Web and, more importantly, in life. A partner of mine in a company that has grown some 6,000 percent over the past nine months, lamented to me that he wasn't doing precisely what he wants to do, all day, every day. This guy is young, just 24. When I was his age, I had another six years of bartending ahead of me. So, I found myself giving him advice about sticking to
his current duties, even if it hurt a lot. "We can always find ways to reorganize responsibilities within the company to make your life tolerable," I told him. Of course, tolerable to a 24-year-old programmer is a hell of a lot different than say, the possessor of a well-balanced perspective on the meaning of life (yes, he'll read this).

So, anyway, there I was giving the "You have to pay your dues" speech to this kid. You could say I was exploring my inner old fogey. It got me to thinking about what I am doing, where I've come from, and how the past five years have led me to a place I could not have imagined when I began. This trip, long and
strange though it may be, is typical of the sort of renaissance mindset that produces good Web businesses. So, I get out the dissection tools, pull up my shirt and start cutting....

When I wrote above that I've succeeded "in spite of my best efforts," I don't mean that I've tried to fail. No, I've wanted to succeed for myself and my family. Lately, the portfolio part of my career has shifted into high gear, as many of the projects and risks I've taken
finally turned into substantial business opportunities. Sheer fortitude, however, isn't the recipe for success.

Every one of these projects springs from an interest I've developed, rather than an assignment I've accepted. Okay, this may be the "do what you love" speech, but stick with me. In some cases, I could seem to be downright prescient, having picked subjects
that were on the verge of a breakthrough into the public consciousness (for instance, I just closed a deal to produce Ziff's Year 2000 Web site, after months of prodding and development effort). Foresight and luck have had very little to do with it. I've cultivated many different interests and, as some proved worthwhile,
honed my efforts to focus on the most profitable.

Take a look back at the past couple issues, where I discussed the cascading Pareto analysis you must perform to isolate the most attractive Internet investments. Periodically, you have to focus on the top 20 percent of possible efforts. Eventually, after you've eliminated 99.07 percent of the things you could be doing, you get to the really valuable investments. An
analysis like this depends on the existence of a larger population of projects early in the life of a company, and a constant renewal of the developmental project queue to ensure new opportunities will exist in the future. Call this portfolio prospecting or portfolio
cultivation business development.

A "portfolio" approach to business development, in which all opportunities are periodically questioned and eliminated if they aren't performing, is nearly ideal within a company; it is essentially the same process that provides a return to a venture capitalist. But
most companies aren't very good at this. They write a business plan and try to follow it without deviating. When they do deviate, it's a crisis, rather than an advantage. In life, every time you get to choose a new path, you have a new chance to succeed. For some
reason, it is not the same in business -- every path is punctuated by a failure.

The culture of business in only beginning to adjust to the idea that a change in direction is good. If more companies were refinanced based on what they weren't going to do anymore, because it hasn't worked, it would be, in A. A. Milne's words, A Very Good Thing.

Within a company, these projects must arise organically, as a function of the interests and enthusiasms of the people working at the company. If an Internet company doesn't have that kind of staff, one that grabs ideas and works on them out of pure fascination, then it's got the wrong staff, wrong plan, and wrong attitude to succeed. How do you test for this habit? Ask to see the email that started a project. If it says something to the effect of "Let's start a [fill in the blank] project," that's a bad sign. If the early mail is a string of enthusiastic comments about an idea, that later turns into a project, this is a sure sign the right psychology exists. Should you find that a manager said "I don't care if this is boring to you, go do it," then you should put one foot out the door.

A little context: As I sit here at home, I am working on three computers, each one "dedicated" to a different project/business. In the past couple months, I've taken on the launch CEO duties for Powerscourt Broadcasting Services, a video conferencing monitoring/hosting company -- essentially, a private beat cop service for Web sites and companies that want to establish video communities. On one of these computers, I am logged into a virtual office, complete with video, having a pleasant but firm argument with one of my colleagues at PBS. At the same time, a non-profit I've helped to found, the Data Fitness Initiative and Coalition, which will provide information about, and assistance with Y2K compliance to small business, non-profit and government, is launching. That project has led I/MS into a new relationship with Ziff-Davis, to produce its Year 2000 Web site. This is the second site that we are doing in collaboration with Ziff, the other being eCommerce Alert. And, to top it off, I've become the Number 3 best-selling author on the Audible Network, with which I/MS is planning some neat new projects that, we hope, will produce a library of entrepreneurial wisdom. Not my wisdom, but other people's.

This is how I like to work, though you may be thinking I'm crazy. But this is also how I got the equivalent of a Masters in coursework during college while holding down two jobs, and how I managed to co-author three books and freelance while working at MacWEEK. My approach to life is to see connections and make them where possible. At the very least, I revel in what I see. As Teilhard de Chardin wrote, "our
spiritual being is continually nourished by the countless energies of the perceptible world." Well, I've drunk from life like it was a fire hose, and I feel constantly renewed by the fantastic variety of life.

Fortunately, this has prepared me for the Net. The constant stream of new technologies and, as a result of those technologies,new values and services that can be delivered by wire or wireless connections, challenges the Netpreneur to evolve a business strategy that is responsive to the demands of the environment.

Surely, you say, Yahoo!, Amazon, Lycos, Excite, and many other companies have identified a singular strategy and are pursuing it with dedication? Well, yes and no. They may be pursuing a mission and a general goal, the most important one being the growth of their audience, but they veer all over the map according to the direction that the needle of popular logic is pointing. Currently, it's the portal strategy. Last year it was the monopolize-the-desktop strategy of push technology, the year before that it was the give-away-software-to-lock-in-customers-strategy.Each of these faddish business models has merely diluted the initial genius of the Net leaders.

What genius? A straight-forward insight on someone's part that resulted in a company. At Yahoo!, it was the recognition that Web surfers crave context. Amazon's Jeff Bezos identified the basic elements of Web retailing. Lycos and Excite both began as "better" search technology and evolved based on the founder's enthusiasms for certain features of parsing logic that helped to improve the context delivered to customers. It was only later that new hires at Lycos and Excite introduced the idea of combining community elements with the search tools. By contrast, AltaVista remained a technology-in-search-of-a-humanizing-factor for two years longer than its rivals and suffered for it.

There are a lot of hyphenated phrases in this story, because the Net requires them to adequately describe the amalgamations of concepts necessary to produce a living, thriving Web business.

A portfolio business strategy, like a portfolio career, is the right mechanism to produce these hyphenated companies. It's only when you need to summarize that it becomes necessary to put what a company does into one or two words: Yahoo is a "portal"; Amazon is a "book marketer"; and so on. And, of course, the
description varies depending upon the audience. Yahoo! is a retailer on one level and a provider of services to would-be retailers on another, which one depends on who from Yahoo! is doing the talking and to whom.

It's at this juncture that we come back to difficult questions about how to conduct oneself or one's company in the Net Age. If every company and every employee is going to proceed with the intention of pursuing any idea that strikes their avocational fancy in order to cultivate the widest possible portfolio of features, how does anyone develop trust?

Like I told my impatient young programmer friend about growing a company, trust takes time. Recognizing that there is no exclusive property in an idea, except for the unique perspective and style of presentation, helps the process go more smoothly.

Since most of Internet business I've discussed is about content and service, there's almost nothing preventing someone from replicating a concept in their own style, label and content. Yahoo!, Lycos and Excite are simply different flavors of ice cream, not different products with fundamentally different ingredients. Ski Magazine, Skiing Magazine and Powder were all about the same thing, too, but that didn't prevent them all from coming to market and thriving, each in their own way, for a time.

In Silicon Valley, the non-disclosure agreement, or NDA, has been a staple of life for three decades. Yet everyone knows the cross-pollination of information among companies through the violation of NDAs has provided a major impetus for development. Every meeting is potentially an act of corporate espionage, a thrilling and dangerous encounter among potential competitors or collaborators. The art of the give-and-take is practiced each time companies meet, and there is always the chance that, after several months, the idea shared during a meeting will appear as the other company's idea. And, usually, it is the other company's idea, tempered by the talk they had with you and ten other people developing similar concepts.

The unwieldy aspect of Net business development is that, except for patented technology, almost all new businesses are dependent upon ideas that are eminently reproducible. However, since technology has achieved a level of sophistication that it can really support distributed work and organizational challenges that many new businesses naturally add value through service, not technology. The Pentium II is plenty fast to add processing power to any mundane human task and network connectivity is sufficiently ubiquitous to reach any high-worth clientele -- though this is not to say that technical progress will halt, or that it should.

Almost all the business plans that I see and pitches that I read are service oriented. Most of the entrepreneurs that contact me are living in the grip of paranoia, because they fear someone will hear their idea and execute it without them.

Now, it may be that there are simply too many entrepreneurs and not enough ideas. But I don't think so. In fact, in the midst of the first major wave of consolidation in the Web industry, more projects should be launched within companies on a portfolio basis.

In this environment, the would-be netrepreneur should be more willing to join a firm and firms more willing to offer equity and a salary to nascent competitors. The NDA, or just a conversation, needs to be the starting point of a wide-ranging discussion about collaboration. Intra-company entrepreneurialism is critical to the growth of the Web, because the boom market in Web IPOs will give way to a more normalized distribution of value once the Web becomes a more ordinary part of the economy. If the speed of change in corporations and economies is any indication, the Web will reach a point of substantially lower novelty value in just a year or two. Then, it will make a lot more sense to find non-employee or intra-company entrepreneurial modes of investment and collaboration. At that point, the content of a site, a career, a life and a company's intellectual landscape will be of paramount importance.

And that's the story for part two of this commentary.

Random Notes

My Dinner with Windows 98

Like a lot of people, I dismissed Windows 98 as a pretty useless upgrade to a remarkably annoying operating system. But, I have to sing a praise here, since Windows98 pulled my butt out of a sling. The story, however, is full of irony, as any tale involving Microsoft seems to be these days.

I had a Windows 95 machine go completely haywire after my wife and kids installed a game on it. Somehow, the game not only erased the CD-ROM driver, it also disabled the PCI bus controller that manages the storage devices in the computer. For several days, I tried everything to get the system working right again, including formatting the disks and starting from scratch. In the process, the installer screwed up the display drivers and just about everything else. It got to the point where I could only get the system to see the CD-ROM drive on the bus after de-installing all the controllers, loading them each in turn, rebooting after installing each driver and finally bringing the CD-ROM online. The next time the machine shut down, though, the CD-ROM would disappear, again.

I'd given up on Windows 95 by the end of the third evening of futzing with this computer. I almost bought a new computer instead of wrestling any more with the broken one. However, rather than cursing Microsoft, I bought some more of their software to resolve the problem with the old software -- and Windows 98 fixed everything with a single install.

Don't get me wrong, Win98 still has many problems. For instance, it doesn't shut down right, hanging before it powers down the computer. But, considering that the new OS was able to recognize every Plug-n-Play device on the system and install the correct drivers, with the proper settings, it was well worth the $97, including tax.

Now, the irony. This is what Windows 95 was supposed to do, right? So, instead of laying out the cost of one upgrade, I've really paid for the original OS, plus the Win98 upgrade to get what I was promised three years ago by Microsoft. Nevertheless, I find that I am happy. That, folks, is the power of marketing overcoming the force of frustration.

Quitting Gracefully

Donald Norman, author and ease-of-use guru for Apple and, most recently, Hewlett-Packard, has quit his job. In a note that is extraordinary for its humanity, Don announced his departure from H-P without laying any blame anywhere. He explained that the people he worked with were nice, the company profitable, but the mindset shared by his colleagues was, without saying it explicitly, demoralizing. I think we all know this feeling, because there isn't an organization in the world that doesn't create the spine-tingling sensation of ennui from time to time.

Living with ennui day in and day out isn't tolerable, and who can blame Don for quitting? As he explained in a note to me, someone said to him on the eve of his departure something to the effect of, "I don't get it, you could just settle in and have a very comfortable life here at H-P." That would ennui with skin and bones.

Don chose to suffer daily discomfort, which more of us ought to do, rather than pursue an indifferent comfort. If computers crashed as gracefully as Don quit his job, this would be a happier world. I won't republish the note, because he ought to use it as the forward to a book, but you can ask him for a copy at don@jnd.org.

Amazon Does Something Interesting

Jeff Bezos and Amazon.com made a really interesting purchase this month, with the acquisition of PlanetAll and Junglee. The two companies, PlanetAll is a sort of directory of personalized Net contacts and news with about 1.5 million customers and Junglee a comparative shopping tool, will make a compelling source of shopping assistance for the consumer.

But, if as the interviews with Bezos and company seem to indicate, the company plans to expand its offerings into other areas, this is a disastrous move. The company has not achieved profitability in books, has much more work to do to build economies within the book market, and expansion into other fields is an invitation to vast increases in expenses.

Should Amazon content itself with using Junglee to build PlanetAll into a centralized guide to buying on the Net, without trying to lever itself into new channels, like cars and computers, the project could be wildly profitable. Perhaps so much so that it will make real profits by off-setting book and audio CD losses with new PlanetAll revenue.

It may even get away with positioning its products to dominate Junglee comparisons, if it maintains strict disinterest in other
categories. Consumer Reports, after all, promotes its products and services while objectively rating everything else in the commercial world. Amazon can package books to answer questions for PlanetAll users without compromising editorial values or even attempting to compare its prices with other booksellers' prices.

I've used PlanetAll for about a year now, and I can't say that I find it in the slightest bit useful. Most of the time, I get updates asking me to do something, rather than connecting me with information or people I want to find. The prospect of using PlanetAll to narrow my shopping research almost makes me want to answer more personal questions.

Junglee has followed a circuitous path. For a while, it was competing with Electric Classifieds, where I was on the board of directors, then it was a potential collaborator with Electric Classifieds. Amazon needs to do two things to succeed with Junglee: open the system to vendors who want to enhance their listings and information for comparison shopping purposes; and create a toolset that plugs into catalog and classifieds servers to automatically extract comparative shopping data for use by the PlanetAll service. These actions lay the foundation for many joint venture and partnering deals without erecting barriers to multi-party competition within the context of relationships with Amazon/PlanetAll.

Basically, this is an open systems forever strategy that magnifies the value of the approximately four million shoppers who will use the post-Amazon service (that would be Amazon's customer base plus PlanetAll's customer base minus redundant customers). This doesn't require any additional physical overhead to accommodate added lines of products, which Amazon simply can't afford.

Amazon must keep the PlanetAll brand, or whatever they end up calling the new service, separate from its book/music franchise. Dilution of focus in Amazon's content or among its customers would be disastrous, since the company has successfully engaged people with a specific activity, buying books. Readers are a testy bunch, because they actually think. They don't want to buy books from the same people that sell them tires, because they crave the literate touch. Jeff, bubby, let PlanetAll be your Wal-Mart, if you have to try to be Wal-Mart.

Sites on my mind:

Far Eastern Economic Review
Doc Searls
Bill Martin
WebTalkGuys
Manufacturing Dissent

Copyright 1992-2002 by
Mitch Ratcliffe and
Internet/Media Strategies Inc.
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