Archive for January, 2008

OnMedia: Raising Money From Strategic Corporate Investors

paulballen — Wed, 30 Jan 2008 16:51:50 -0800

Moderator: Mark Stevens, Partner, Fenwick & West
David Horowitz, Principal, Comcast Interactive Capital
Seth Haberman, CEO, Visible World
Dan Beldy, Managing Director, Steamboat Ventures (a $400 m Disney fund with 16 investments)
John Edwards, CEO, Move Networks
Andrew Cleland, Executive Director, Investments, Time Warner

John Edwards says Move Networks paid dues by spending a lot of time with corporate customers, and then we got investment from Hummer Winblad and Steamboat Ventures, and then the corporate investors wanted to help us too, and the whole thing has snowballed. He says VCs and strategic investors operate on different timetables and principles. Having a good mix there gives you a chance to build momentum in the marketplace. I sometimes see it as kind of like the Orbitz model where they kind of gathered together all the players in the industry to make something happen.

Mark. Let's talk about suitability for corporate investors. What are the indicators that an entrepreneur should call you?
David. We have a venture fund structure, a commitment from Comcast. Many say he looks like more like a financial investor than a strategic. We just have one limited investor. But we really look at the business and the market, and the growth potential. We try to be the advocate of our portfolio companies, helping open doors at Comcast.
Dan Beldy. We want to be in the top 25% across all venture firms. We are independent. We can be 100% aligned with the portfolio companies. There is no guarantee. We can't tell ESPN or ABC what to do, but we can get companies introduced to them. How do you know the "option value" of our being able to open doors is worth anything--we have an open door policy where you can call any of our CEOs and ask them.
Andrew. We also act like a lot like a financial investor.

Mark. What is the path to reach you guys?
David. There is no requirement to have an operating sponsor.
Dan. Steamboat started in 2000; there was an education phase across our company. Business units now know what we are looking for. Online video is a big area, we decided to look at the companies emerging in that space. And John and Move Networks were already deploying tests with ABC, so that was nice, but it is not required that companies be doing business with us already.
Seth. We have relationships with 3 operating units of Comcast, as well as with the venture unit. Sometimes the operating units had difference with us, but the venture unit really backed us.

Andrew. We choose each year our key investment categories where we have pre-approval to consider investments. For 2007 they were things like new forms advertising, content, social networking, games, virtual worlds. For anything outside of those areas, we need to have a business unit sponsor the investment.

John. It takes a lot of time, energy, and effort, and travel to do this right and get the job done. It's a very noisy marketplace out there. To make decisions rapidly, it's helpful if the operators know if the financial side of their firm would invest in this company because it's bigger than just them. And to be able to bust through the noise and create momentum is really helpful for the entrepreneur. If you're out there by yourself, it's a lot more difficult to break through all the noise.

Seth. It does take a lot of time. Napolean said "land I can recapture, time I cannot."

Dan. Plus we're nicer and friendlier than traditional VCs. (Laughter).

John. It takes a lot of time to raise money, and it is good to surround yourselves with VCs who can take some of the decisions on; so you don't take your eye off the ball for so many months. The VCs who have assisted us have been extremely helpful in sharing the load and working with us. And entrepreneurs need to know how the VCs are going to work with you over the course of the business--what if a big ugly thing happens, how will they respond? You want people who can stand up and help you change the world. We have people with a long-term short-term combination of viewpoints to help us deal with issues we face.

Dan. Building shareholder value is the goal for corporate investors; that includes syndicating the investment, recruiting, building diversified revenue streams (not tied to just one company).

Mark. What if you go a strategic for an investment, and it is likely that their competitor might want to someday buy you?
David. Entrepreneurs tend to get concerned--they wonder if they take an investment from us, will we let them sell their services to Comcast's competitors. So we point to investments where our portfolio companies have sold to Comcast competitors. As an investor, we want to see a company that has multiple markets, large customers within those markets.
Andrew. We welcome our portfolio companies to sell to any company. Also, on our investment terms, we don't ask for rights of first refusal or first look--that tends to complicate investments. We don't impose those terms; don't like others to impose them either.

John. The VCs gave us advice that protected us from deal terms that would make going forward difficult. VCs wanted us to have all exit strategies available to us.
Seth. All the VCs are reviewed based on how well the investments do, not how well the corporate parent does.

Dan. Steamboat last year invested in Quigo (an AlwaysOn company from last year), which was recently acquired by Time Warner.

Mark. You guys are "enlighted strategic investors" who care about financial returns, but there are many strategics out there who want to protect against their worst nightmare--waking up and reading in the Wall Street Journal to see that you have been sold to their biggest competitor.

Mark. What about board membership? What is it like to have a customer on your board?
John. I don't feel like they are treating it that way. I have never felt like it is a customer. I haven't worried about pricing strategies or anything else. There has never been a conflict, as I recall. As our advisors and board members sit around us, they are trying to help us succeed. They take our side on issues.
Dan. It's an integrity issue. The information that is discussed at the board level does not flow back to headquarters. We report financial stuff to the CFO of Disney. You have to maintain a wall between those two entities.
Seth. We were paranoid about this when we started. But as Dan said, it ultimately comes down to someone who has a legal and fiduciary responsibility as a board member to keep things confidential, so it works.

Audience question: do you look at investing in companies so that you can acquire them? The VCs on the panel made it clear that they don't have Corporate Development or M&A responsibilities--so that would be different people in the company.

Audience question: please give guidance on valuation. How do you determine the valuation of a company?
Dan. That is a negotiation everyone goes through based on risk, capital required, work, effort, and the value you place on the capital.
Audience. How about from the CEO point of view?
Seth. It is less important than you think it is. Many people fight over valuation. Focus on who partners are and the fundamentals are far more important.
John. I tried to imagine capital needs over the next 3-4-5 years; and anytime I took money, I could return a minimal amount of value back. Usually people are looking for 5-7x valuation after 5 years, a 30-40% annual return....you can make a mistake by getting valued too highly up front, and then you can't bring more money in. But of course, you can also leave a lot of money on the table. I use the 5/5 principle, which I won't go into right now--how you look at where and when you need money.

Mark. There are questions that come first: can you get financed, can you get good people around then table, only then ask about valuation. But if you are so focused on valuation, you won't get the first two questions answered.

Dan. We don't trade business for equity. Be very careful about that.

Seth. One company offered us bandwidth for equity.

Mark. Famous deal was done by AT&T where they put minutes into Tellme for equity. It gave a high valuation, and got in the way of their next round, because it was kind of funny money. But it ended up working out okay.

Seth. A lot of networks gave advertising time for equity in internet companies--a lot of those deals had to be unwound.

John. These kinds of things muddy up your future. Keep it as clean as possible so you don't have traps down the road.

Chief Marketing Officer of the Future

paulballen — Wed, 30 Jan 2008 15:56:01 -0800

Roger Wood, Senior VP, GM of the Americas at Amobee Media Systems, made the most interesting comment so far at OnMedia when he suggested that sometime in the next 36 months there will be a watershed event, when the first Chief Marketing Officer of the Future is hired by a Fortune 1000 company. I captured a few of his ideas about what kind of CMO this will be. It will be a person who started their career at Facebook or CBS Mobile, who grew up immersed in interactive (not just learning about it after they were an adult) and it will also be a person who grew up connected to friends of all ages, without a narrow geo-centric local worldview, but with friends from different countries, races, religions, and someone who is conversant with all mediums, and can oversee marketing strategies that use all of them.

OnMedia: Venture Capital and Angel Investing Workshop

paulballen — Wed, 30 Jan 2008 15:23:27 -0800

Here are some highlights from the workshop that featured two lawyers (Sam Angus and Mark Stevens of Fenwick & West), two VCs (Will Price of Hummer Winblad and Dan Beldy, Steamboat Ventures), and one entrepreneur, Jed Simmons, COO of Next New Networks whose company raised $8 million from non-Silicon Valley investors for their content business:

Will said he thought the Charles River Venture Quick Start program (which provides seed capital of up to $250,000 for entrepreneurs) is a terrible thing for entrepreneurs, and he explained why. With their convertible note, they have an option on the next round. If you run through their capital, and need more, and then they decide to pass on your next round, then basically "you're dead." No other VC is going to want to touch your deal if the first VC that funds you decides to pass on the second round. As a counter-point, Dan Beldy said if you are an entrepreneur and have no other funding options except this kind of VC Quick Start program, so your decision is to not have a company or to have a company under these conditions, then of course, you take this money. But Dan said you may be able to take the money without giving the VC the predetermined right to your next round, or you try to get others in the round, so the signals to the market, if the VC passes, aren't quite as strong, so you aren't quite as dead. Will said he said Charles River just wanted to buy deal flow so they put out a "honey pot" to attract entrepreneurs, but that this isn't a good deal for entrepreneurs.
Jed was asked why he took $8 million instead of doing a $1-2 million Series A round and then going back for more after he had proven his business could get traction. He said that his content/community strategy was to launch 10-15 properties he could get scale in the world of distribution through MySpace and YouTube. If we had only taken $1-2 million, so we could only launch one property, and we had been successful, the VCs would have then said, you're a one-hit wonder, so how do we know you can repeat this success, and we didn't want to do that--we wanted to prove by hiring young video talent that we could create multiple successes. So we raised enough to do that.
Exit possibilities are very different if you take $2 million from angels, where a $30-50 million acquisition looks attractive, than if you take $8 million from a VC fund.
Most interesting quote from Sam of Fenwick & West, "It's unusual now to see angels doing convertible notes." I guess there are enough sophisticated angels these days that deals that are priced are more common than deals that are going to be priced later.
Only take money from VCs if you believe they will add value. Don't do it if you view them as a "necessary evil." Many serial entrepreneurs in Silicon Valley go to VCs even on their 3rd or 4th startup--not because they need the money, but because they know having a team with experience and connections actually improves the likelihood of success, and of creating a bigger pie.

OnMedia Panel: Monetizing Online Video

paulballen — Wed, 30 Jan 2008 14:17:28 -0800

Moderator: James Montgomery, CEO, Montgomery & Co.
John Edwards, CEO, Move Networks
Adam Berrey, SVP Marketing & Strategy, Brightcove
Iaain Scholnick, CEO, ImageSpan

James asked what video business models are successfully being rolled out in 2008.

Adam said there has been a lot of experimentation around ad-supported, paid content and subscription content. The model that is sticking most is ad supported. The top tier Hollywood and prime time content can support consumer payments, but for 60 years consumers have been trained to turn on the TV and get free, ad-supported content; and many content producers can make more money this way. We are finally seeing more long-form content coming online. The consumer behavior is different with short form and long form.

James asked how business models change with scale.
John Edwards said Move Networks deals almost exclusively with long form. We could do short form, but our partners mainly have long form. So we haven't gone after the long tail. We felt we could get sustainable revenues from the popular, mass audience content. The vast majority of what we do is live or long form. But it's a significant volume--the largest in the world (of viewers). People will come to watch prime time TV shows online. You can try a number of different ad formats. If you can deliver a high quality experience, consumers will stay longer. Quality stimulates usage. We track everything that goes on during an episode--is the mouse moving, etc. We send that data back in real time so content publisher can measure it. This is the first time this has ever been possible. If you can know who's watching and what they are watching and what they like and what they are skipping, it allows you to do more intelligent programming, and also more intelligent advertising. Across 100 fox properties, you can target different ads to different locations. You have to have great content, have a great quality delivery, and keep the costs down. Many companies come to us paying 35c per gigabyte, we get the costs down to under a dime, closer to 5 cents. So you are looking for average margin per viewing hour. Our properties (partners) are profitable in what they are doing with us.
James: like Fox, ABC?
John. Exactly. We provide the service to content partners, a transaction fee, we don't share in their revenue. We hope to show them how to get a profitable business model.
Q. What kind of ROI are they seeing? One year payoff, or less?
John. If you look at our stations, they are at 40-60cents per hour in revenue, and under a dime in costs, that would be the average, and we're talking about targeting premium content that has a good strong audience with substantial views. If you look at any of our properties today, there will be a million people watching the TV shows right now. So our scale is significant. We allow that because of the way we treat the video.

Adam from Brightcove said that what John was talking about what you can do if you have a property like Grey's Anatomy, but most people don't have a property like that. Consumers are sitting less and experiencing the web more. The internet is a different medium. It's also a delivery infrastructure. We can broadcast television; but it can be a lean forward experience with people participating with communities. Our publishers are taking a multi-layer strategy. Adam said there are three major segments of content, and different ways to monetize each:

1. The highest interest long-form content; you ad sales force can sell sponsorships. But this is a small slice of web audience and content.

2. Next band of content, also often sold direct,

3. Remnant content, either fragmented content, or fragmented audience, or peak demand that you didn't forecast accurately. Then you look at whether you should integrate into ad networks. The whole ad networks scene changed in 2007 when all the major ad networks were acquired. Microsoft, Yahoo, Google and AOL are all in the mix. There are announcements every week with especially Microsoft and Google trying to get into the sales opportunities. So media companies have to decide what to sell direct, what content to partner with someone else to sell. Goal is to maximize revenue off this content. The big trend this year is how to integrate with the changing landscape of ad networks.

John. There are a lot of content people out there with publishing tools. But if you break down where the
460 billion hours of television watched in US, 920 billion in world. That is driven by about 50 entities. When you look at pure volume and where ad inventory is going to come. The mass inventory is going to come from properties that have audience now. As we move forward, yes, other content flavors will deliver volume later, but for now, the major opportunities are in a few properties. Or they're in this mass thing like YouTube that we don't know how to get our hands around it and collect it into something that advertisers will buy.

We carry about as much traffic as YouTube in the U.S. They have small, scattered content. Ours is 50 properties that deal with massive volumes of content; and yet ours have a very straightforward revenue model. So companies are trying to make long tail work, but it's a difficult problem. All the greatest ad networks in the world are not going to bring audience.

Q. Let's go to the long tail.
Iain. (ImageSpan) You have millions of different silos of content that have to be threaded against a demographic so you can sell advertising. We are working on this problem. On the video side, we are dealing with Nokia. They have a lot of video content. They are identifying the most popular downloads and trying to sell ads around that; and they want to pay the content producer something.

The panelists all seemed to agree that video on mobile is further out. It will require enabling advertisers to buy a demographic or a psychographic. But that is not available right now.

John Edwards said that Move Networks' system allows for the content on a single pass to be prepared to run on any viewing environment, set top, Mac, PC, mobile. And it will always deliver stellar quality. That's what we do--the video preparation. I'm not bullish on the mobile video experience soon, I think the game platforms will be an opportunity sooner.

Adam said he'd like to see an open platform for video on TV and mobile devices, like a web browser that would allow anyone to participate in this.

John said that in the US you have to get the cell phone networks to open up, but even then there would be a technical challenge since every handset is different. If Apple opens up their platform, we'll be there in a nano-second. We're ready from an infrastructure standpoint.

But there are 3 billion handsets; next to the TV, the mobile phone is next in number of units. Since there isn't a standard, software developers can't write to this. There is so much fragmentation, which prevents pulling it together and marshalling it for business purposes.

James asked if all the ad dollars are just going to follow a few highly popular properties, if the web is really going to change anything, or if we are just seeing more of the same.

John. We have a 50-60 year old TV industry that is doing well, and will do well for some time. Report to Congress last February said average time watched actually went up a little. As we move to new models it's a little like when TV started and radio programs migrated to TV, with someone standing up reading. Then new varieties of TV started up. My daughter loves to minimize the screen and type and do other things all at the same time. We're going to have to target the audiences, and recognize there will be multiple types. We can't generalize everything into one great whole, and call it it. If we do that, we'll miss the opportunity.

Adam. It's also different times of day where people behave differently. At work someone might be on a broadband connection, and might not have time to watch a 43 minute show, but they may want to access something around a show. Most of our customers are big media companies, top brands that dominate the industry, and all of them have a multi-platform strategy. They are going to use all the different day-parts across all the different mediums.

James said AT&T just announced a test in Texas to throttle the bandwidth, and charge consumers who use more bandwidth more money. What would this do to your business model if consumers have to pay more for video?

John described how Move Networks would benefit under this scenario because its video delivery system is not centralized, but allows for caching every step of the way. It is the only video platform that works this way. They don't use a central Flash server or anything like that, so they can inexpensively scale to tens of millions of viewers.

Adam. Consumers don't like metered pricing.
James. That's why they're testing this in a small town in Texas.
Adam. We found out recently from one ISP that 1% of the ISP's consumers account for 40% of bandwidth usage. ISPs will want to address this.

James asked for predictions for 2008. Adam said he is excited about the evolution of web properties that are run by large media companies, who are starting to produce "snackable media" that is mixed into their long-form strategy. John said this year there will be a lot of progress made in creating standardized ad formats, which will make it easier to finance new content, leading to a much better business for online video.

James asked about the next president. Adam said it was interesting how online video is affecting the campaign: Barack Obama announced his candidancy online on video; we're working with several others to tell their story online. John Edwards said he dropped out of the race so that he could attend this conference. (Laugh).

Blogging AlwaysOn OnMediaNYC

paulballen — Wed, 30 Jan 2008 13:17:07 -0800

I'm here in New York City today for the final day of the AlwaysOn OnMedia NYC conference. The first session is on monetizing internet video. John Edwards, CEO of Move Networks, is introducing himself right now. The panel moderator is James Montgomery, Montgomery & Co CEO, and the other two panelists are Adam Berrey, SVP Marketing Strategy of BrightCove, and Iain Scholnick, CEO, ImageSpan. I'll be taking notes and posting throughout the day.

CNN: Glenn Beck Tribute to President Gordon B. Hinckley

paulballen — Tue, 29 Jan 2008 05:58:30 -0800

Mormon Church President Gordon B. Hinckley passed away at his home last night at the age of 97, after serving his church for decades, travelling the world to witness for Jesus Christ (here are links to 77 sermons he gave as church president), and reaching out encourage everyone to stand for something and to try to be better. Glenn Beck, who appears nightly on his own show on CNN says that President Hinckley was his "shining city on a hill," the person who made him want to be better. You rarely see television that is this real and this personal. Glenn's message is simply this: find a good example in your own life that inspires you to be a better person. Gordon B. Hinckley was that person for Glenn Beck. He will be sorely missed by millions in more than 150 nations who considered him to be a divinely inspired leader and prophet, including me. Take five minutes and watch this clip--it is well worth it.

video of McCain endorsing Romney

paulballen — Mon, 28 Jan 2008 23:41:49 -0800

When Mitt Romney ran for Governor of Massachusetts, Senator McCain couldn't say enough about how great he was for the party, for Massachusetts, and what incredible integrity and honesty he had. It is one of the finest character endorsements I have ever seen. This is the kind of video clip I'd like to see broadcast by a major news outlet like CNN or MSNBC. It's pretty funny, given the current race. Or maybe Romney should have used this in his Florida TV advertisements! (Thanks for the two friends who sent it to me today.)

Social Networking Strategy for Utah Companies

paulballen — Fri, 25 Jan 2008 20:10:01 -0800

I recently organized a Facebook group called Utah CEOs with a Facebook Strategy. Now I wish I had named it better. It should be something like Utah Executives who Have or Want to Have a Social Networking Strategy. The first event had more than 30 attendees. One of them blogged a summary of the Facebook Strategy lunch that we held this week, and said it was very worthwhile.

If you want to join this group which already has 125 members so you can be notified when we schedule our next event, click here.

As we (at FamilyLink.com) increase our expertise in building applications and making them both viral and scalable (which has taken us months of effort and investment) we are planning to select some key strategic partners--companies who have content or services in the family space--and develop some co-branded applications with them. These applications can generate revenue and click-throughs for both our partners and our own web sites.

We will sign our first co-development deal next week and announce the application shortly thereafter. We believe this new application is unique and will spread to millions of Facebook users, and that is related to our business of connecting families. Our We're Related application has had more than 2 million installs, and our next two applications are growing very, very quickly. Both should reach into the hundreds of thousands of installs within a month.

If you are interested in talking about partnering with us, please use the Contact Me form on my blog, and I'll get back with you shortly.

Romney Can Win

paulballen — Fri, 25 Jan 2008 19:57:29 -0800

The Republican debate last night on MSNBC was quite friendly between the five Republican candidates. Chris Matthews and many others felt that Mitt Romney absoluted dominated the debate, which should help him shore up his recently acquired lead in at least three Florida polls. It feels great to see momentum shifting to the candidate that I believe can help the US deal with hard economic times and global competition better than anyone else in US history.

But debates, like most TV these days, are much more about entertainment than about substance. With 90 second responses it's pretty difficult for any candidate to lay out their economic policy, or their national security plan, or anything substantive at all. The media are always looking for big fights, personal attacks, and insults, and they didn't get much of that last night. (Although everyone was obsessing over the Mitt Romney quip about not being able to imagine Bill Clinton back in the white house with nothing to do.)

Between the mainstream media, the blogosphere, and the candidates web sites, it's really difficult to figure out what is really going on, what positions people really have, and who really has a chance to win. The book "Amusing Ourselves to Death: Public Discourse in the Age of Television" by Neil Postman is a must-read if you want to see how the medium of television has changed politics and elections. "The Revolution Will Not Be Televised" by Howard Dean campaign manager Joe Trippi forecasts that the internet will change everything, but I think it will take another election cycle or two before it really happens.

No one wants to waste their vote, but it's really tough with all the various voices out there to make sure that your vote is cast for the best candidate and is not wasted.

I found a great web site last night that links to major articles about Romney from all over the country.

It reminds me of one of my top 5 favorite business websites, Newslinx.com, a simple chronological list of key news articles in the high tech industry that I have been using for about 7-8 years now. I like it as a starting point far better than Google News (even their business or technology sections) because whoever chooses the articles is really smart about what is important. The only thing I rely on more is my Google Reader with all of my hand picked favorite sources. But I keep going back to Newslinx.com because the editor finds a bunch of major articles that I wouldn't otherwise see.

So anyway. After last night I'm completely convinced that Romney can win. Thompson is out and Giuliani will probably drop out if he loses Florida next Tuesday. Romney has raised more money than any other Republican candidate, plus he has personal funds from his successful business career that he can also use to compete in every state and go on to win the Republican nomination. He will be a very formidable opponent in the November election, especially if the economy continues to be the major issue. No one is more qualified than he is to create a government environment (lower taxes, less regulation, etc) that is friendly to business growth. As he said, he can rally fiscal conservatives, social conservatives, and national defense conservatives with his message of strengthening the economy, the family, and the military.

I've maxed out my donation for the primary election. And I would encourage everyone who cares about the country's economic future to read all these articles about Romney and see if you agree that he is the right person for the most difficult and important job in the world, and if he has the growing momentum and support to rally the Republican party and win in November. If you think he does, as I do, please contribute to his campaign.

My Amazon Kindle is almost here

paulballen — Thu, 17 Jan 2008 20:00:30 -0800

Received from Amazon today:

"We now have estimated delivery dates for the Kindle order you placed on 12/17/07. We are now estimating that your Kindle will arrive between January 25 and February 1, 2008. We'll contact you again to let you know when your order is shipped."

When the Freakonomics blog asked back in November if the Amazon Kindle would be the next "must-have" technology, the iPod of ebooks, about 95% of the comments were attacks on the device or the business model behind it. That surprised me a bit. I went ahead and ordered one anyway.

I'm very anxious to try it out. My two biggest reasons: the incredible ebook selection that Amazon will be able to provide, and the whispernet service that allows me to download content from anywhere, without paying for a connection.

When my Kindle gets here, I'll let you know what kind of user experience I have with it, and then predict whether it will finally be the ebook reader that everyone has some day hoped would appear.

Some investors are bullish on Amazon, in large part because of the Amazon Web Services now have 290,000 developers signed up, up from 25,000 the previous quarter (FamilyLink.com is a big fan of Amazon Web Services) and also because the Kindle will be a "money spinner" in 2008.

When Amazon releases its quarterly earnings report on January 30th, there is a good chance we will learn something about how many Kindles have been ordered so far, and whether this platform will become a major channel for publishers and consumers in the future.

Yahoo Go on my Blackberry

paulballen — Wed, 16 Jan 2008 15:19:11 -0800

I switched to GMail about 2 years ago, but I have kept my Yahoo email account around so it can forward everything automatically to GMail.

But today, because of Jerry Yang's CES Keynote, which makes it clear that Yahoo is going to become very friendly to third party developers, and because Yahoo Mail still has more users (I think) than GMail, I decided that I would download Yahoo Go! to my Blackberry, and start using YahooMail again, so I can keep my feet in both camps.

My company email will still be GMail based, but I've got a ton of contacts in Yahoo that I never transferred to GMail, and there are a lot of Yahoo Mail users that I could instant message with, from the 7-8 years that I did use Yahoo Mail as my primary email account.

The Yahoo Go features on my blackberry are very impressive, but a little less intuitive for me than all the Google applications that I have on my blackberry. Yahoo installs everything as one app. Google has about 8 or 10 icons on my blackberry, and their Mobile Application updater just automatically updates their apps for me. I can delete the ones I don't want. So in terms of taking over my blackberry real estate, the Google strategy is much better than Yahoo's.

Facebook Strategy Lunch for Utah Executives

paulballen — Wed, 16 Jan 2008 15:14:02 -0800

I organized a Facebook Group for Utah CEOs who have a Facebook strategy or want to develop one. I wish I could change the name of the Facebook Group, but Facebook doesn't allow that. I can see why. What if someone set up a group called "Mothers Against Drunk Driving" and got a million members, and then arbitrarily decided to change the name of the group to "We Love Beer." The creator of a group can control a lot of things, but can't change the name after people have joined it.

If I could change the group name I would broaden it to include any Utah Executive (not just CEOs) and also to broaden it to include Facebook, OpenSocial, and other major web sites such as Yahoo that are opening up their platforms to third-party developers.

At CES I heard a forecast that 1.2 billion people will be using social networks by 2012. On Wikipedia's excellent list of social networks I count 26 that have nearly 10 million users already.

There are opportunities everywhere you look to build social networking applications or widgets that can spread throughout the web. And there are companies that can help you get started:

Widgetbox, a VC-funded company (Hummer Winblad), helps companies build and distribute widgets. They claim that 10% of the Facebook applications started as widgets that have migrated to Facebook. They announced last week a Bebo accelerator that can help a widget turn into a Bebo application. (Bebo is a massive social network that opened up last week to third party applications, just like Facebook.)
KickApps has raised $18 million to date. It provides widgets and social networking components for a fee. I spoke with a KickApps executive at CES. He said they charge for their applications and widgets based on page views/usage. So if you need a video player with social networking functionality built it for your web site, you don't have to build it from scratch. It also appears that they can provide you with your own white label social network like Ning.
Ning allows anyone to quickly build their own social network on its platform. Founded by Marc Andreesen, Ning reached 100,000 social networks hosted back in September.
FBFactory.com claims to be the first company that exclusively builds Facebook apps for customers. They have a growing list of applications they have built.
So, if you are a Utah Executive and you would like to learn more about how to develop a strategy that can help you reach the 1.2 billion people who are going to be using social networks in the next 4 years, and how to do it inexpensively and virally, sign up for this Facebook group, and plan on attending our lunch meeting next week in Provo.

Needed: Transparent Government and Transparent Media Coverage of Elections

paulballen — Tue, 15 Jan 2008 16:13:12 -0800

I am tempted sometimes to wring my hands in despair at the sorry state of the Federal Government, at our $8+ trillion national debt, at our incredibly low popularity ratings around the world, even from our allies, at our lack of global competitiveness in some key industries, of our economic slowdown, and most of all, at the incredibly biased and inane media coverage of politics and elections.

But then I think about how the internet is changing everything, and how the ideas of openness and transparency and collaboration for the common good are powerful and viral and may never be able to be caged again. And my discouragement melts away. I look forward to the time when these concepts infuse our electorate with the information and tools they need to make better decisions than we have in the past few decades, when the power of the media has been concentrated in the hands of a few people within a few companies.

In 2006, a law was passed and signed by President Bush that is a first step towards helping every US Citizen learn how the government spends tax dollars.

Here's what Edwin Feulner of the Heritage Foundation said in 2006 about how to reduce federal spending, as he reported on this ball:

There's a simpler, cheaper and more permanent solution: Allow 300 million Americans to review how government spends our money.

That's the idea behind the Federal Funding Accountability and Transparency Act, a measure co-sponsored by an unlikely duo: conservative Sen. Tom Coburn (R-Okla.) and liberal Sen. Barack Obama (D-Ill.), with strong support from Sen. John McCain (R-Ariz.).

The bill would require the Office of Management and Budget to build an easy-to-use Web database containing detailed information about all the grants and contracts the federal government hands out. This database would allow virtually anyone to see how much money a federal program received and how it spent that money.

As I understand it, the web site expectmore.gov was supposed to be the place where we can learn how much money is being spent on every federal program and every federal contract. Currently the site has an Alexa rating of about 11,000, so it is quite popular, but it seems to simply report generally on the efficiency of each federal program. Many federal programs are currently rated ineffective, meaning that they aren't demonstrating results and therefore are a waste of taxpayers money, but I can't seem to find anything on this web site that tells how much money we are spending on each program. I actually thought that was the main point of the new law.

In fact, I searched for "site:expectmore.gov dollars" and "site:expectmore.gov million" in Google and found fewer than 10 hits for both terms combined.

If we ranked the ineffective programs by dollars wasted, instead of alphabetically, and if we allowed for citizen input as to the qualitative effectiveness or ineffectiveness of various programs, rather that just letting the government do all the ratings, then this tool could be a powerful way to combat waste and to shrink the federal budget, as one wasteful program after another faces the scrutiny of an informed populous.

Another hopeful sign is that transparent government is being pushed in several states, and many are beginning to publish their entire budgets online. Of course, it would be easy for any state government to publish the budget in such a way that the average person wouldn't even begin to figure it out. But I assume that overtime some best practices will be adopted by state and local governments, or that some private enterprise will figure out how to take the raw data from state and federal governments and roll it up into a very user friendly interface, allowing citizens to provide feedback to elected officials on all their fiscal decisions.

Okay, so the trend towards transparent government is already underway. But what about transparent media?

I would love to see media companies and reporters to stop pretending to be objective.

Anyone reporting on stocks is required by federal securities law to disclose their position in a stock so that their "reporting" doesn't influence the value of the stock.

But no one, to my knowledge, in the political arena, is required to disclose any bias whatsoever. A major news anchor could be a sworn enemy of a particular party or candidate, and could be using all of his/her influence to bias the elections against them, but no one knows.

Now I'm not someone who believes in a grand media conspiracy, where the boards of directors of all the major media companies get together to decide who the next President of the United States will be.

But I believe that everyone in the media has a personal bias, and that very few individuals take their journalistic calling seriously enough to be able to report on news in an unbiased way. I remember seeing a sign on a university professor's door (he was a communications professor) with a quote from about 1910 by the Dean of Columbia's School of Journalism to the effect that the profession of being a journalist basically "went to hell" when students stopped studying history and started studying communications. So now, instead of having deep content expertise, many journalists and media company employees understand entertainment and psychology, and know how to create certain reactions among their viewers/listeners/readers with attention grabbers and sound bites. Instead of having deep knowledge so they can inform us, they have skills so they can manipulate us.

Is that completely unfair? Or do you think is actually true?

One example: if anyone in the mainstream media really wanted Mitt Romney to be elected the next President, don't you think someone would have reported that he actually won in Wyoming, and that he actually leads in the delegate count so far?

Instead, everyone is saying Michigan is his last stand. The media seem to want to declare certain candidates have lost. And voters can easily be affected by this. No one wants to "waste" their vote, by voting for someone that the media declares has no chance to win an election. So Giuliani is clearly losing momentum in Florida.

The young people in the country, who seem to avoid the mainstream media and get their news almost exclusively online, from all kinds of sources, including millions of blogs and from their social networking friends, don't seem to mind wasting their votes for Ron Paul. Any online poll, any poll that uses cell phone text messaging for voting, and both the MySpace and Facebook "primaries" overwhelmingly went to Ron Paul and to Barack Obama. And yet the mainstream media for the most part ignores this.

But as the social networking generation get older, every four years the mainstream media will lose more influence, and more and more voters will be informed in other ways.

I think there is an opportunity for a media entrepreneur to embrace transparency and emerge as a trusted source for a generation of US citizens that don't trust government or media to be objective. I think someone could launch a news company where EVERY reporter's bias is revealed in every report that is made.

Sometimes the bias is so subtle:

a silly picture of John Edwards next to a handsome picture of Obama. So who chose those pictures and why?
Ron Paul gets the same percentage votes as Giuliani in New Hampshire, but his name doesn't show up on the pie chart because there isn't enough room for it.
Romney wins Wyoming but no one reports it.

Again, I'm not saying there is a single media conspiracy underway, but I do think that transparency is coming. Either the mainstream media will embrace it, or someone else will emerge that really does create a trustworthy media company, and will eat their lunch as the social networking generation increasingly ignores CNN and Fox News and goes elsewhere for their information.

Until we get transparent media here in the U.S., I find that often times the best source of news is from the UK. I am impressed by the journalism in the Economist magazine, the Financial Times, and sometimes get good information from the BBC. In a recent search, the best explanation I could find on the confusing delegate counts for the Republican and Democratic primaries was from the Guardian, another UK paper.

My New Personal Facebook Strategy

paulballen — Mon, 14 Jan 2008 17:32:00 -0800

I have been a serious user of social networks since joining LinkedIn several years ago--the fourth person in Utah to join, as I recall. My friend Michael Tanne, now CEO of Wink.com, turned me onto it. Of my 858 connections, I think I personally know about 98% of them. I have turned down a ton of connection requests because I really did want to be part of a trusted network. But I read that you should connect to a couple recruiters and a couple of the most networked people in the world, and I did, and it has dramatically expanded the reach of my own network. I am three degrees away from 3.74 million people. I use LinkedIn all the time to make contact with people from other companies.

I tried many other business social networks early on, including Ryze, Spoke, Xing, ZeroDegrees (first caught on with entertainment execs in So Calif) and Tribe.net but nothing had the ease of use of LinkedIn, so I've dropped them all except Xing, which is strong in Europe. Someday I'll beef up my usage of that site.

I'm not a fan of MySpace, but have been active in Facebook for quite some time. I have about 300 Facebook friends, but probably 90% of them are just casual acquaintances, and the reality is that less than 10% of my actual close friends use Facebook. So how useful is it to me really? I'm married and have kids, so much social life is pretty much limited to work, family, church, and my kids' school activities. The vast majority of Facebook apps are useless to someone like me. For business I rely on LinkedIn, and for family stuff, my own family and my wife's family still use MyFamily.com, the social network for families which I helped build in 1998.

With all of that in mind, I've decided to dramatically change my usage strategy of Facebook. I've got 130 friend requests that are pending--almost all of them from people that I've never met. Many of those requests are from people in different countries. I am certain that many of them think I'm the Microsoft Paul Allen so they friend me. Or maybe they are entrepreneurs or members of the same Facebook groups that I belong to, and they just want to beef up their friend network.

During last week's Robert Scoble controversy, where he was using the new Plaxo tool (in Alpha) to mine email addresses from his Facebook friends, I learned that he has about 5,000 Facebook friends, apparently the upper limit of what Facebook allows. I read recently that one person with more than 1,000 Facebook friends uses it to get a first hand glimpse of how Facebook apps spread, and who is using what apps. I got to thinking...maybe my Facebook connections can become as valuable to me for market research as I watch what they are doing and ask them questions using My Questions or other surveying/polling tools, and I'll get a much better sense of what my own company can do in Facebook.

I see some serious downsides.

My newsfeed will become interesting mainly as market research, kind of my own mini zeitgeist, and not very satisfying in terms of keeping up with people that I really care about.
Reputation comes in large part by association--you are judged by the company you keep. So anyone who knows me and then clicks on any of my "friends" may assume certain things about them, based on what they know about me, and now, that trust by association will be almost completely lost. In fact, my own reputation, may be damaged.

I am quire worried about the reputation thing. Just last week a friend of mine told me should couldn't believe I ever worked with so-and-so, who had tried to defraud her and take credit for her idea, and there was clear guilt by association. Thankfully I told her that I had met with him a couple of times and talked about doing something together but had such serious disgreements with him that we never actually worked together.

But the upsides are interesting also. I envision getting 5,000 friends like Scoble, with most of them being international entrepreneurs and older consumers. FamilyLink.com's products and services are primarily of interest to family historians, who tend to be older, often over 50. Canada has more Facebook users over 50 than the U.S. does, with only about 1/9th of the population.

I'll publish my blog into Facebook and attract more comments since I'll have more readers. I highly value reader comments, and love to get 10-20 comments per post.

When I travel internationally, I often have very few good contacts in a given country, and it is hard to have a successful first trip when you don't already have some kind of network there. I usually use LinkedIn to make some initial contacts and to set up some meetings, but now I may have some Facebook "friends" who may be willing to give me advice about where to stay, how to get around, and who to meet with.

For the last few days I've gone back and forth about the value of meeting new people through Facebook vs. the risk of a damaged reputation and the possibility of friends trusting people that aren't trustworthy.

I've decided to go ahead and try an experiment. I'll accept the 130 other friend requests that I have, and actively start seeking friends in countries that I'm planning to travel to this year. I'll try to find a way to "warn" my own friends and acquaintances that I'm using Facebook in this way, and that they can't instantly trust people in my friends list. I'll also start using the new Friends List feature of Facebook, so I'll have my own way of communicating instantly with all my real friends.

I was on the fence for several days. But I finally decided to go ahead and get a zillion Facebook friends when I realized that if this experience turns out badly, I can just reboot. I can delete my Facebook account and start over from scratch.

So, tell me what you think about my decision. I'm starting right now, and if you really think this is a bad idea, post a comment and tell me so, and maybe you'll save me from a disaster. Or if you have any advice for me, please share it.

World Vital Records record visitors and page views

paulballen — Fri, 11 Jan 2008 00:38:56 -0800

World Vital Records President David Lifferth keeps the company well informed about our key metrics. I got this information from him yesterday in an email:

"Yesterday, Jan 8th, we set an important traffic record on WVR. For the first time ever, we surpassed 300,000 page views in a single day. We had 336,665, which was a big jump over our previous best of 294,000. The last record was set in Nov 27th, 2007. We had come within a few thousand page views of that record for every day so far this month. I knew we were going to break that old record any day. The newsletter and the chatter about our 2 million We're Related users was enough to push us into record traffic territory. We also set a new unique visitor record at 22,272. The day before on the 7th, we had came in 2nd to beating the previous record of 20,630 with 20,174. This new traffic has Omniture projecting an 8.2 million page view month. December was our previous best with 6.3 million."

Our Worldvitalrecords.com Quantcast chart should look really good when the Jan. 9th numbers come out. We should pass 400,000 monthly unique visitors for the first time.

A year ago, we averaged 50,000 unique visitors in January and February, so our overall traffic has grown eight-fold in the past year. Perhaps we will be able to double or triple again this year, and reach more than a million visitors per month by the end of the year.

Also, our FamilyLink.com site traffic (a social network for genealogists) has nearly doubled this year, and our new development team in India is close to rolling some significant improvements to the site.

Finally, our whole company is working hard to get ready to launch an important collection of international databases. You'll hear more about that later this month, but I think a lot of genealogists will be really happy with our new collection.

I never get over the magic of the internet and the power of internet marketing that allows a small startup company to launch a web site and build something valuable for consumers, and then to watch the traffic pour in.

At CES eBay ads said nearly a quarter of a billion people buy things on eBay and Yahoo talked about 500,000,000 users worldwide. I can't imagine being a part of a company that size; but I'm still thrilled by small numbers like "millions."

$100 laptops, $2500 cars

paulballen — Fri, 11 Jan 2008 00:05:03 -0800

In this morning's post I mentioned low cost cars coming from India. Today Business Week reported that Ratan Tata's new $2,500 car, called the Nano, is being met with "extreme enthusiasm" and is going to put India on the map in the auto world. CrunchGear indicates that Tata plans to introduce the Nano to other low income areas like Africa and South America in the next four years.

Maybe they should bundle the $100 laptop from OLPC foundation with the vehicle, so the kids can have something to do in the back seat? (I know it's more like $199 in quantities of 10,000 right now, but I'm sure prices will drop over time.)

Imagine how fun it would be for kids to play multi-users games over the XO mesh network in the back seat of the Nano while racing down India's highways. Someone could build some great software for that.

Seriously, could Tata be the Henry Ford of the 21st Century? Will the Nano, the world's least expensive car, sell more units than any other car in this century. India is poised to become the world's most populous nation after all.

"The Model T was a great commercial success, and by the time Henry made his 10 millionth car, 9 out of 10 of all cars in the entire world were Fords. In fact, it was so successful that Ford did not purchase any advertising between 1917 and 1923; in total, more than 15 million Model Ts were manufactured, more than any other model of automobile for almost a century." (Wikipedia)

The model T Ford cost $850 in 1909 and prices dropped over time as the assembly line lower manufacturing costs. (According to Wikipedia, "The assembly line was introduced to Ford by William C. Klann upon his return from visiting a slaughterhouse at Chicago's Union Stock Yards and viewing what was referred to the "disassembly line" where animals were butchered as they moved along a conveyor. The efficiency of one person removing the same piece over and over caught his attention.")

By 1915, Model T Ford's cost only $440, and Ford was paying his workers $5.00 per day. He hoped that any of his factory workers could afford a car. "In 1914, an assembly line worker could buy a Model T with four months' pay." (Wikipedia)

Ford sold 15 million Model Ts from 1907 to 1927. The U.S. Population reached 123 million by 1930, so Ford sold to about 8% of the U.S. population. (I don't know how many were sold outside of the U.S.)

India's population will hit 1.3 billion by 2020. And the Nano costs less than the Model T did by the 1920s, adjusted for inflation. Wikipedia says: "By the 1920s, the price had fallen to $300 (about $3,400 in 2006 inflation-adjusted dollars) because of increasing efficiencies of assembly line technique and volume."

If Tata can sell to 8% of the Indian population over the next 20 years, it would sell about 104 million units. Those numbers are staggering.

According to the Guardian, the Indian middle class will grow from 50 million now to 583 million by 2025, so anything is possible. But Tata projects selling up to a million Nanos per year. The initial manufacturing capacity is only 250,000 units per year from a factory near Calcutta.

After low cost laptops and cars, what industry do you think will be revolutionized next by a legitimate low-cost manufacturer that is building products for the poor in developing nations?

Notes from Nicholas Negroponte Keynote at CES (1-9-08)

paulballen — Thu, 10 Jan 2008 17:28:29 -0800

Thanks to my brother Curt who taught me to be inspired by visionaries, I always make an effort to hear the great thinkers and movers and shakers in person. It is so much different and better than hearing about it later. Nothing, for example, was better than attending the Facebook Platform launch event in May 2007, and even meeting Mark Zuckerberg afterwards in person. I've heard Marc Andreesen in person (2001), Bill Gates (2003ish), Larry Page (2005), Jerry Yang, Guy Kawasaki multiple times, Mary Meeker (2000), Bill Joy (2001), and many other influential VCs and entrepreneurs.

One of my former college students actually took me seriously when I suggested that he take all his tuition money for four years and invest it instead in meeting all of the industry's thought leaders in person and learning from them directly when they speak, and also buying all their books and tapes, and that it would be a better use of money than sitting in the classroom for 4 years learning from academics. I'll have to see if he is actually following through with this. He's probably too busy working. For future entrepreneurs, this advice may actually be good. If you're going to spend tens of thousands of dollars on a 4-year education, why not make the world your classroom and handpick all your instructors?

Anyway, the highlight of my CES trip was hearing Nicholas Negroponte discuss the purpose and progress of the One Laptop Per Child foundation, which he spun out of MIT Media labs about 3 years ago, I think, and which is now manufacturing laptops which are being sold by the millions into the developing world.

I have heard a lot of hearsay about the OLPC effort, mostly skepticism and disbelief in media reports, but Negroponte's talk blew me away. I think this may be one of the most important initiatives in the modern era, with amazing consequences.

He gave credit to Seymour Papert for inspiring the idea. The overriding goal of the project is to leverage children to bring the world out of poverty. He has observed (as have nearly all parents that I know) how our current education system takes bright kindergarten and first-grade children whose faces are bright, and who are eager to learn, and by the fourth grade they are bored with school and not interesting in learning--they can't wait for recess. I know there are magical schools and teachers that are good counter-examples, but as a whole, I think he is right.

I don't believe just giving computers to kids will solve this problem, and neither does he. (He gives examples in the developing world where the only software on the computers is Word, Excel, and Powerpoint--which he thinks is ridiculous.) I think his approach is a holistic and open approach that will attract a lot of companies and individuals to the cause. Making OLPC a non-profit was the best move they ever made, he said, because heads of state know the real motive and it melts away resistance.

The most interesting thing I heard him say, and I'm going to be thinking about this for a very long time, is that the biggest failure of modern education in this country is not teaching kids computer programming at a young age, because that is a superb way to teach kids how to think and how to learn learning. Debugging a simple computer program that you wrote to draw a circle, will help a kid learn more about circleness than anything else.

I learned Basic programming when I was 12 or 13, when my Dad bought us an Apple II computer, with a cassette player as its memory. I remember my first "Hello, World" program that I learned from the Basic computer book he bought me. I remember all the Goto commands that I used to use. My magnum opus was a 2800 line Dungeons and Dragons program. I stopped programming a year or two later, but picked it up again in 1988 and wrote utilities for data preparation for about 6 more years.

Programming definitely changed my world.

Negroponte doesn't understand why kids can't all learn to write simple programs, so that they can learn learning. There was a programming language for kids called Logos developed in the 1960s. For some reason, we stopped teaching programming in this country and maybe around the world.

His lecture was very eye-opening and mind-expanding. There are a lot of disruptive technologies that were developed for the XO Laptop that the foundation is producing. The fact that a non-profit will be building tens of millions of laptops for the developing world is certainly disruptive. I bet one of the most popular web sites that these millions of kids will be accessing will be from another non-profit that created Wikipedia, in most languages. I like how these two projects will work together to provide knowledge for children worldwide.

Negroponte talks about how for-profit computer manufacturers are driven every year to bloat their machines with the latest of everything, so that they can keep the prices relatively high, rather than letting Moore's law driving prices down by 50% per year. It took a non-profit with a goal to manufacture a $100 laptop to start causing some disruption. The prices still need to come down, but I see no reason to think that they won't do it.

He highlighted a similar problem with auto manufacturers. Instead of a simple vehicle that focuses on transporting people from one place to another, now cars expend most of their fuel in transporting the vehicle itself. Reminds me of a contest I read about a few months ago where a (100hp souped up) 1921 Model T driven by a 70 year old man beat a Hummer H2 in an uphill race with its low horsepower, because the weight to power ratio was so much in favor of the Model T.

Makes you wonder if anyone will ever create a non-profit One Car Per Family foundation to manufacture a low-cost self-reparable vehicle that uses very little fuel to provide transportation for families in the developing world. I remember reading something about an Indian auto manufacturer that was aiming to build cars for a few thousand dollars.

There are so many industries ripe for the kind of disruption that will come when the developing world is the target of the innovation. I refer you to the excellent book, The Fortune at the Bottom of the Pyramid. If I recall, it describes the business opportunity for for-profit companies, not non-profits.

Here are my complete notes. Sorry they are so rough. (About half of Negroponte's slides were just a few words in a list on a white background. Interesting way to do a powerpoint. I've tried to capture the content of those slides when I just list a few words/topics in a row.)

Nicholas Negroponte, author of "Being Digital", board of Motorola, partner in VC firm, founder of MIT Labs, angel for more than 40 startups

Purpose of One Laptop Per Child:

The world doesn't look great right now, not just wars, terrorism, etc--but the promise is a bit gloomy if you look at children as being the greatest resource. Pakistan and Nigeria--50% of the children don't go to school. Education outlook is pretty bleak. If you look at any big problem: poverty, war, environment--part of the solution includes education. Sometimes it can be done with just education. I can't think of anything that can be done without an element of education. After years of the MIT Lab and seeing how children learn, we decided to spin it out of the labs and focus on a particular kind of learning.

Goal: eliminating poverty

Means: Education
Learning learning

This gets misinterpreted as meaning that our PCs are anti-school....that is not right. In the world, first grade classes, eyes are wide open. There is in the room a kind of eagerness in their eyes; by the 4th or 5th grade, the kids will be excited because you come in, but in general the heads are down and kids are waiting for recess. A little bit of the passion is taken out. When we think kids in the developing world are dropping out of school to help the family financially, care for younger children, that's part of the story, but school is actually boring and quite irrelevant.

Time machine
Hard fun vs drill and practice
Relevance
Programming
Leveraging children
Immunization against ignorance

If you take a time machine that can go back in time and look at something like medicine, 150 years back and look at operating theory, whatever doctor was performing that operation and bring them forward to today--that person wouldn't recognize a single thing except the human body. If you play that same game and bring a teacher forward 150 years, in any country, that teacher could be a substitute teacher, they would recognize everything. Nothing has changed. What is changing is what kids are doing outside of school, not in. Maine state program was quite good 7 years ago, but kids there now say they have another real computer at home. The school supplied laptops are left in the dust.

Computers should be fun but hard work, like kids learning to program VCRs.

To me the biggest tragedy that has happened in education worldwide is that kids aren't introduced to computer programming anymore. In 1968, logo computer language was developed for children. It wasn't just simple, but it used basic elements that led kids to think about thinking. It's not so you can be a computer programmer. The act of programming is the act of learning learning. Example: if you write a computer program to draw a circle, it turns out that child will understand circleness in a much deeper way than you and I did. We learned about circles in an abstract way. When you write a program that draws a circle, it will have bugs, so what does the child do. You debug the program.

What happened? In the 1970s, we found the children who engaged in that kind of programming transferred some of the concepts to their own learning. We saw this in spelling bees. If I got 8 of 10 words right I was happy. That was a B. The debuggers were fascinated by the two that they got wrong--they didn't sweep them under the rug like I did. Their passion was for the two they got wrong.

In most developing countries school is two shifts, 7-12 (with few recesses). Average child spends 12-13 hours per week in the classroom. That is not many hours.

1982: first year that Seymore Pappart and I tried to bring computers to developing country schools. Steve Jobs gave us several hundred Apples. These kids from Dakar (Senegal?) had more computing power than the government.

My family helped set up a school in Cambodia in 1999. In 2001 my son was living in Italy and had girlfriend and startup problems, his name is Dmitri, I said if you can suffer the indignity of working for your father, why don't you go to Cambodia and wire this school and I'll send laptops. I bought laptops on eBay. The kids started taking these computers home. First english word was "google." When they took the laptops home, the parents asked the kids not to open the laptop because they looked expensive and fragile--every one. Dmitri had notes for them to take home the next night--so the kids were able to open their laptops at home. The parents loved them because they were the brightest lights in the house (no electricity.) Parents started getting the kids to do things for them. The second year of this school--100% more children showed up for first grade. The kids told other kids how cool school was. Every child who started 7 years ago is continuing.

I think connectivity is coming in the developing world; but what bothered me is the laptop issues. Prices of electronics keep dropping, but if you keep handing savings to the consumer, then there won't be a high price or margins. So manufacturers keep adding features, so the price can stay the same. Laptops, cell phones, etc. So an obesity occurs and turns most things into SUVs. Most of the gasoline is used to move the car, not the person. So we said, can we revisit this? 1) not be an SUV any more. 2) make something that is child-centric. What do kids do? They are not office workers.

If you see 6 and 7 year-olds in villages, they are learning Word, Excel and Powerpoint. They shouldn't be learning particular programs, but learning to learn.

One Laptop Per Child
XO computer
A non-profit was our best decision we made. We were advised from day one not to be. We were told to make a lot of money and give it away. Or to follow the Paul Newman model. We said we needed to be a non-profit to keep the moral purpose absolutely clear. When I visit a head of state or minister of education, there is no question in that person's mind what the project is about. We have no shareholders. It makes no difference if a country launches 1 or 2 million. We need numbers to get the price down; but when the volume is there, there is no reporting to shareholders. Kofi Annan announced this 26 months ago. We presented a strategy to get the bigger countries to launch it and the smalle rones to follow.

Everyone who saw the original model remembered only the pencil yellow crank. Today's model has a crank, pedal, solar. 50% of the children in this world have no electricity at home or at school. If you are really serious about laptops and learning, you can't use the power regimes.

4 things we really had to do:

1) <2 W
2) Dual mode, sunlight display
3) WiFi mesh network
4) Rugged

Why less than 2 watts? Your laptop is somewhere between 30 and 40 watts. How much power can a child's upper body generate? At peak with major movements, you can generate 10 watts, but if you have a 10-1 ratio , 1 minute of cranking, 10 minutes of usage, it's pretty good.

When I'm outdoors my laptop is impossible to use. Many of the kids we're talking about go to school under a tree. Mary Lou, our CTO, invented some display technology that reads very well outdoors. I prefer to use it outdoors and in bright light, the resolution is higher.

People are fascinated by Facebook. Kids have to be able to have their own network, independent of the internet. If you open the laptop, they all make a network. Yes, the technologies are all somewhat disruptive, but the main thing is thinking about the kids and learning.

Rugged goes without saying.

Design matters. Two ways to make something inexpensive. Most common is to take 3 components: cheap labor, cheap components, cheap design and make a cheap laptop. Second approach is to take very advanced manufacturing, very large scale numbers, very cool design, and poor chemicals in one end and spew out ipods on the other end. We've gone in that direction.

You can't have holes in this. USB and PCMCIA. Think of dust, sand, mud. There is one hole in it, to plug in the crank, or solar panel or AC adapter. When it converts into a games machine or electronic book, you are using it in a very different way. Games, ebooks is at the foothills. It is going to have an impact in several years that is quite large and quite unexplored. If folds up and become a laptop. Everyone smiles when the little ears go up. They are the wifi, network. By being steerable you get very good reception. I have been in meetings where 20 laptops come up, and no one gets a signal, but I do, because of the steerable ears.

Quanta is the manufacturer of the laptop--they make 40% of the world's laptops. Having a partner like them is very important. 18 months ago people said they can't do it, or it couldn't be done. When Quanta raised hands and said we'll build it, the questions went away completely.

3000 people; minus open source is 500; minus partners help is about 60.

Brightstar (mobile phone company) is doing the distribution/logistics from HQ in Florida.

Maintenance: how do you do this?
Design for it.
Laptop hospitals.
Wiki's
Teacher preparation

The display is 50% of the parts cost of almost any laptop. In the case of the XO, you take out 4 screws and take out a bar of LED lights, that cost less than $1, and you have a new display.

The XO has to be a little bit more like an auto was designed 20 years ago. You could see things and make repairs. Today you have to hook it up to the computer to diagnose.

In Nigeria we developed idea of laptop hospitals run by kids. 95% of the maintenance and repair can be done by the kids themselves.

Most products have labels or messages--if you open this up, warranty no longer valid. I'd like to label ours: warranty not valid until such time as you open this up!

Most companies ask visitors to sign a non-disclosure agreement. We ask you to sign a disclosure agreement! We want to get the word out!

Wiki's are people supporting each other. We released it in this country a few weeks ago; that was daring. It wasn't designed for kids in this country. There is a growing community of wikis with kids supporting each other.

Our Chief Education office is in Argentina.

Teacher preparation not training. When someone says, who is going to train the teachers to train the children, I wonder what planet they are from, because there's no a person in the room who doesn't ask their child about their computer, cell phone, etc.

1,000 kids can share a satellite dish

Laptops are always connected

If a kid bicycles home or walks 3-4 miles, they will lose contact; so there are devices you can nail to a tree and boost the signal that cost $10.

Software on the laptop is designed with social networks in mind, it looks as children as friends, buddies.

12 keyboards in hand: english, arabic, thai, west african (nigeria), portugues, spanish, amharic (ethiopia), urdu, cyrillic, mongolian, devanagari, kazakh

6 more keyboards coming. Two weeks from design to being deployed.

Current launch countries: Uruguay was first, Peru, Rwanda, Ethiopia, Mongolia, Afghanistan, Cambodia

Peru understands constructionism, is a student of it as well.

We launched Give One Get One as a financing mechanism. It ended Dec 31st. 162,000 laptops were sold.

The Intel fracas gets a lot of attention, but we have other great partners and the foundation will continue on.

Partners:
AMD, Marvell, Google, eBay, Nortel, Red Hat, Brightstar, News Corp, Citicorp, SES/Astra, two others

www.laptop.org

One of the fastest growing websites, the wikis in particular. The community growing around it is in multiple languages!!! The mishaps of last week have caused a lot of press to come out. If you look at the laptop or more importantly at education, more widely than just the classroom. It doesn't mean you're anti-classroom. If you ask how you leverage children, you can't do it just in the class hours.

CES 2008--for me, it's about Facebook

paulballen — Tue, 08 Jan 2008 14:45:06 -0800

I'm in Las Vegas for CES 2008. Last night on my drive from Provo I listened to some podcasts in the Stanford Entrepreneur Lecture Series. (You can download them for free from iTunes or from Stanford's web site.) The most interesting was Mark Zuckerberg's talk 2 years ago when Facebook had 5 million users and was still limited to authenticated college students and invited high school students. It was growing by 20,000 member per day, was generating $1 million per month in revenue, was cash flow positive, had taken money from Accel by then, and had more page views already than Google. Mark said the key metric he looked at most was the percentage of his users who used the service every day.

The most interesting moment was during the Q&A where a Stanford student asked if Mark (and Jim Breyer, a board member and VC who was also there) had thought about opening up Facebook (which Mark had been arguing was an online directory utility, not a social network) to other developers and turning it into a platform. Mark's answer was immediately: yes, and if you have experience coding operating systems, etc, then come and help me do it.

So that was a long time ago, in internet years. Mark had just turned 21. This was 2 years before the May 2007 official launch of Facebook Platform, that Mark indicated that Facebook wanted to be open to third party development.

I also listened (for the second time) to Marissa Mayer's lecture on nine ways that Google fosters innovation and creativity. She joined Google in 1998 and has managed its consumer search business for years. This is a fantastic lecture. She describes the 20% time at Google and how it works in practice. She indicated that in one recent six month period, 50% of the new products launched at Google resulted from employee 20% time. The most interesting moment for me was her description of a 3 am brainstorm session back in about 1999 when a bunch of developers were staying late to lend support to Harry, the sole guy in charge of running the 3-4 day web crawl updates using 500+ command line commands, and during a brainstorm at that time they came up with what is now Google Book Search--the idea of scanning all the books in the world. She describes the magical moment that it was for all of these early employees at Google, but then she indicated that Google continues to recruit people who want to change the world and that creative moments like this continue to happen every day or night at Google around the pool table as incredibly bright people try to imagine what Google could possibly do next.

So now I'm finalizing my plans for today using the excellent My CES online planning tool. It's definitely the best online experience I've ever had looking for speakers, companies, exhibitors, and products that I want to learn about.

Facebook, it appears, has a booth at the Sands/Venetian, and they have about 20 employees registered to be here this week. This is a bit surprising since the major search engines and web sites don't usually exhibit at CES, although they participate in keynotes and on panels. I'm very curious to see if this is really a booth or just a meeting room.

I'm hoping to meet up with some other Facebook developers and thought leaders today or tomorrow. Our first Facebook app We're Related now has 2 million users (our press release announcing this should hit today.) Since our company's mission is to creative innovative tools for connecting families, we intend to develop apps for other social networks and to create widgets that operate on major web sites (like Google and Yahoo) and on mobile devices, that will help family members communicate and share information with each other. Yahoo made a big annoucement yesterday at CES about Yahoo Life! which apparently will allow third-party developers to create widgets that can be utilized in the new combined search portal/social network platform that Yahoo is building by combining its key tools into one user experience. I don't quite understand it all yet (I wish I had seen it in person), but my main interest is in figuring out how we can deliver utility to families who are using any major web site. The more open large companies are to third party development, the more likely we are to focus on creating value for their users rather than trying to build destination web sites ourselves.

Before I head over to the first keynote, I'm going to use LinkedIn to attempt contact with 6-8 people in the social networking industry that I hope to meet tonight or tomorrow at the show, and see how it goes. When I travel I can't believe how useful LinkedIn is in getting last minute meetings set up.