Silicon Valley Watcher - reporting on the business of technology and media

At the recent SDForum 2009 Visionary Awards, Vinod Khosla, one of Silicon Valley's top VCs, gave an inspiring and very humble speech.

How To Succeed In Silicon Valley By Bumbling And Failing...

Afterwards, I went over to congratulate him on his award and also say how much I enjoyed his speech. Rebecca Buckman, one of Forbe's top journalists, was also there. He then started to tell us a very interesting story, about how Silicon Valley VCs could have saved the newspaper industry--back in 1996.

Jim Clark, co-founder of Silicon Graphics and Netscape was one of four winners of the SDForum 2009 Visionary Awards. He spoke about his earlier life and how he was thrown out of school, then trying to get out of Texas, then trying to get out of the navy. It seems his instincts for an exit strategy have served him well as a Silicon Valley entrepreneur...

He also spoke about the importance of Stanford university and its encouragement of entrepreneurs. Other universities look down upon business people.

Judy Estrin: Silicon Valley Unwilling To Fix Structural Problems Around Innovation, Blame Others

Kay Koplovitz: We Need More Women Entrepreneurs

Vinod Khosla: How To Succeed In Silicon Valley By Bumbling And Failing...

Kay Koplovitz calls for more women entrepreneurs during her acceptance speech at the SDForum visionary awards.

She said that women haven't had the access to capital and she urged Silicon Valley to "open your hearts" to more women entrepreneurs.

Her Bio:

Kay Koplovitz is currently a principal of Koplovitz & Co. LLC., a media investment firm and is the founder of USA Network, the first basic cable network delivered via satellite nationwide. Koplovitz was the first woman to head a television network when she founded USANetworks under the banner of Madison Square Garden Sports in 1977. Ms. Koplovitz co-created Springboard Enterprises, a national organization that fosters venture capital investments in women-led high growth companies. Since its inception, Springboard has presented over 380 companies that have raised $4.4 billion in new capital. She also co-founded Boldcap Ventures, a venture capital fund backed exclusively by leading women executives. Ms. Koplovitz is Chairman of the Board of Liz Claiborne, Inc. and a board member of CA.

Please see:

Judy Estrin on the Gender Gap in Silicon Valley

Judy Estrin, one of Silicon Valley's top entrepreneurs, continues to sound warnings that innovation is in danger because of fundamental structural problems.

Ms Estrin again voiced her concerns during her speech at the SDForum Visionary Awards 2009. She was one of four recepients of the annual awards.

She said that Silicon Valley has been living off the innovative work that has been created over the past 30 years but that there needs to be new work done to support future startups.

"What I've been struck by, and concerned by, is that although everybody seems to understand that we have significant structural problems, few are willing to acknowledge their role in the solution. Each group tends to point to someone else that needs to change. The VCs need to take more risk, Wall Street needs to be less short-term focused, government is too involved, government is not involved enough... This is natural because change is hard. But isn't innovation and change what this valley is all about?"

She said that there is a need for "sustainable innovation" so that our future generations, our children, can experience a quality of life at least as good as we have had.

Here is her speech:

Robert Scoble has been a tireless evangelist for the real-time web and he has been spending much of his time on Twitter and Friendfeed, and less and less time on his blog Scobleizer. [Please see:  Is Twitter (and Friendfeed) Killing Blogging? Scobleizer Hasn't Posted In 12 Days!!!]

Now he has sworn off FriendFeed and Twitter, saying that those services are "hurting long-time knowledge." This about turn comes on the heels of Mr Scoble berating Kara Swisher at All Things D for not taking part in the real-time web.

It’s interesting that neither Kara nor Walt show up very often on friendfeed, which is the best example of the 2010 Web right now. Kara Swisher has made a total of five comments there. Walt is even worse, doesn’t bring any items in there, and only has six comments. How can you know what the 2010 Web is, if you don’t use it and don’t participate in it?

However, by largely avoiding the real-time web Ms Swisher and Mr Mossberg have chosen to protect their largest asset -- their web site traffic.

By neglecting, Scobleizer, a web site run by Mr Scoble's employer, Rackspace, traffic to the site has plunged.

In just two months, from March to May 2009, Compete.com reports that traffic to Scobleizer fell from 181,500 unique visitors to 91,792. That's a nearly 50% drop in unique visitors!!! If the traffic for June can be projected, it looks headed for a 75% plunge.

I can imagine that Rackspace isn't too pleased to have such a massive drop in audience for its advertising and outages reports.

I'm sure that Robert can bring back the traffic but it's clear that its going to be difficult for him to also be active in all the other places, Building 43, Google Reader, email, Twitter, FriendFeed, FaceBook. And there's a lesson here for others too. You can't do it all.

Eight top experts have joined together to launch Socialbrite - an online resource for non-profits searching for consultants and media tools to help them take their message to new audiences.

“We’re here to help nonprofits master the social Web to bring about meaningful social change,” said J.D. Lasica, a consultant and author of four books about emerging technologies. “There’s nothing else like this on the Web for nonprofits, social change organizations, non-governmental organizations (NGOs) and educators. Socialbrite's mission is to shine a light on the best practices, social tools and strategies that will benefit each of these important constituencies.”

I've been writing on this topic of "every company is now a media company" ever since I visited Dan Scheinman, head of M&A at Cisco Systems in March, 2005.

He told me that the @Cisco news site is run by journalists, and gets more traffic than the top computer trade newspapers. At the time Cisco was publishing more than 200 RSS streams. The penny quickly dropped and it was another of many "aha!" moments I have had since leaving the Financial Times five years ago.

These days more people understand the term and what it means to companies. However, not everyone understands what it takes to be a media company. If you are going to do it well It's a hell of a commitment.

Vinod Khosla is one of Silicon Valley's most successful VCs. I was at the recent SDForum Visionary Awards where Mr Khosla was one of four winners of the 2009 awards.

His acceptance speech was short and very good. Excellent advice for entrepreneurs.

Also, he talks about failure, which I have long advocated is Silicon Valley's strength.

A couple of years ago I met with a delegation of Russian diplomats, VCs, and government officials. They were visiting Silicon Valley and wanted to meet with me as part of their tour. They were looking for ways to create several silicon valley-like regions in Russia.

During our meeting, I told them I would tell them the secret of Silicon Valley. I paused. They all leaned in a little closer...

Last week my Saturday Post was about how Internet based technologies have been used to create applications and services that devalue existing business models. It's a hugely disruptive process. [The Internet Devalues Everything It Touches, Anything That Can Be Digitized]

This trend is occurring because it can occur -- because if you have the ability to significantly improve a service at a dramatically lower cost, then there will be startups that will attempt to disrupt the business models of existing companies.

One of the best examples of how the Internet can devalue business models is Craigslist and its effect on the classified ads business.

The SDForum Visionary Awards are my favorite event of the year because there are tons of great stories and contacts to make. It was good to see BusinessWeek's bureau chief Rob Hof, and also Rebecca Buckman from Forbes, but apart from them, there was very little media there -- which was great for me because it gives me more chance to get exclusive stories, which I did. I'll be publishing more stories and video over the next few days.

Here is a taste of what's to come and also some notes from the evening:

I'm looking forward to the Traveling Geeks trip to London. I'm leaving next week and we will spend a few days in London and then Cambridge, meeting with local startups and larger tech companies.

I'll be particularly interested in how the startup scene differs in the UK compared to here. I keep coming across companies that are moving here, or at least having co-HQs here. Over the next few months I'll be profiling these Silicon Valley debutantes in a special section. So please let me know if you, or a company you know has recently moved to the San Francisco/Silicon Valley area. And also if you'd like to publish a guest post on why you moved here. More on this later...

In the meantime, here is our agenda for the London trip, come join us at one of te opne events.

Also on the trip is:

I was at an event this evening and I met a journalist who was new to the profession. She had been in IT and now was working for a San Francisco newspaper. She asked if I had any words of advice for a new journalist.

I said welcome. But be careful it doesn't get under your skin because if it does, it will become a problem. It'll be very difficult to leave.

In many ways,  being bitten by journalism is similar to being smitten. It's similar to falling for the wrong person.

[Today marks the first anniversary of the Intel Insider program, which brought together leaders in new/social media. I am a founding member of Intel Insiders. Ken Kaplan, is one of the key proponents of the Intel Insider program. Intel is a former sponsor of SVW.]

By Ken Kaplan - Intel

Two steps forward and a half step back to see if we’re going in the right direction and bringing forward things that can help us leap into tomorrow. That’s how we’re celebrating the June 24 anniversary of our Intel Insiders social media adviser program.

Last year, my Global Communications teammates agreed that we’d benefit from fresh advice from people who are doing great things in the quickly advancing area of social media. We wanted to get more involved with the inspiration, talent and know-how we saw driving people to communicate and share experiences and knowledge online.

So we pulled together some long time acquaintances, invited a few new friends we admired and created the Intel Insiders.

Our goals remained steadfast, but 12 months of relationship building, meetups and feedback gathering has changed the way we think, act and plan our communications and events. Across my Global Communications team, each public relations manager has moved more time, resources and ambition toward communicating online…in addition to their work with traditional print, TV and radio.

A survey of CEOs of Fortune 100 companies by UberCEO, found that their involvement in social media is almost none existent. No CEOs blog and only two have a Twitter account.

"I didn't expect CEOs to be heavily involved in social media but I was very surprised to see how few there were," said Sharon Barclay, founder of Blue Trumpet Group, which publishes UberCEO.com. It's a San Francisco based firm that helps manage the online reputations for senior executives.

Here are some of her findings:

- Only two CEOs have Twitter accounts.
- 13 CEOs have LinkedIn profiles, and of those only three have more than 10 connections.
- 81% of CEOs don’t have a personal Facebook page.
-Three quarters of the CEOs have some kind of Wikipedia entry, but nearly a third of those have limited or outdated information.
- Not one Fortune 100 CEO has a blog.
- Twitter was the least used service by Fortune 100 CEOs, despite being one of the fastest growing social media networks.
- Wikipedia had the highest level of engagement among the Fortune 100 CEOs, yet 28% of those entries had incorrect titles, missing information or lacked sources.
- LinkedIn, a site mainly used for professional networking, only attracted 13 Fortune 100 CEOs, five of which had just one connection.
- Three CEOs stood out from the pack on LinkedIn, each having more than 80 connections. However, they are all from technology companies – Michael Dell (Dell), Gregory Spierkel (Ingram Micro) and John Chambers (Cisco).

Ms Barclays' interest in the subject was piqued recently when she was researching a senior executive at one of the largest US technology companies. Google results linked his name to a sexual offender. She was surprised that he hadn't taken steps to distance himself from his online namesake.

"A company's brand value is closely tied to its CEO and senior executives. Companies need to pay attention to managing their online reputations. Also, by snubbing social media, CEOs can appear to customers as being disengaged, disinterested, and disconnected. That's not a good message."

Ms Barclay says she will repeat her survey next year.

Here is a more data from the survey:

IBM came to San Francisco on Tuesday to announce a partnership with the city around several green initiatives and also to launch several broader initiatives that include the development of advanced battery technologies at its Almaden Research Center in San Jose.

I met with Alan Ganek, CTO and VP in IBM's Software Group, and Richard Lechner VP of Energy and Environment at IBM. Mr Lechner is responsible for IBM's green initiatives.

Here are some highlights from our conversation:

- IBM is working with cities such as San Francisco to help them reduce their costs of maintaining infrastructure. For example, in San Francisco IBM technology is being used to monitor more than 1000 miles of sewage pipes. It allows the city to predict where problems will occur and fix pipes proactively. This sewage project is the first of its kind but IBM expects many more. It is a major new business for IBM.

- IBM is also working with other cities such as Stockholm and Singapore on traffic congestion problems and re-routing traffic.

The growing influence of the real-time web, where people read more from their real-time streams on Twitter, Facebook, Friendfeed, etc, than visiting a variety of sites to see what's new, brings new challenges for PR.

The challenge comes from being able to represent a client within the real-time web on a near daily basis.

For example, a company might employ a PR firm to gain media exposure. Suppose that over the course of a month the PR firm manage to get a bunch of stories about their client placed in prominent publications, say a large local newspaper, a large business magazine, a mention in a national newspaper, and a few trade publications. Plus a few blogs.

That's a pretty good result according to the metrics of most PR engagements. But is that enough?

With the growth of the real-time web, those news articles become less valuable and have much shorter shelf lives. If a news article is posted at 9 am then it is already fish-wrap by noon -- it is unlikely to be seen by the lunchtime crowd in their real-time streams. And it will be difficult to get those publications to write about a client company again very soon unless there are very good reasons.

So what is the media strategy for the real-time web? How can a PR firm maintain a client's name in the public eye on a near daily basis?

Some in the PR community have decent sized audiences on their blogs, Twitter, Facebook, Friendfeed, they could publish to those communities. But those aren't target audiences, and they wouldn't take kindly to constant posts about clients.

PR professionals could ghost-write blogs, Tweets, and Facebook updates, but there are two problems here.

1) How do you develop a large enough real-time audience for your client? You have to build it up over time with quality content in a consistent manner.

2) How do you produce quality content consistently? You have to be genuine, and you have to "keep it real" otherwise it smells fishy and it looks like spam -- doubly unappetizing.

In the online world we know that passion communicates well. Fake passion communicates even better -- you can spot a fake a mile away.

I have some answers . . .(I'll share mine if you'll share yours :)

[Here are some ideas I've been thinking about over the past few years, I welcome your feedback and contributions.]

Ever since I first heard about the Internet and then saw its incredible development and application across industries, I've been on the look out for the economic effects of this powerful platform technology. The specific economic influence I've been looking for is a strong deflationary trend. That's when we will know when the Internet has truly begun to reach its potential.

Let me explain why.

If you look at the stars of the social media scene: in blogging, Twitter, Friendfeed, Facebook, etc, you'll notice that apart from the celebrities, they are all very social -- you could call them hyper-social. Take for instance Robert Scoble, now with Building 43.

If you want to be successful as Robert Scoble in social media -- here is what it takes:

I asked Robert how much time he actually spends on those services. He monitors them all day, he said, hitting refresh over and over on both (he doesn’t use desktop clients to manage the services, and he says he doesn’t like real-time streaming feature on Friendfeed). In addition to watching all day, he says he spends at least seven hours a day, seven days a week, actually reading and responding directly on those services.

That’s 2,555 hours over the last year.

Which is more than a full time job (2,000 hours/year).

It is more than 106 full 24 hour days interacting with those services in aggregate.

. . . What has he gained? On Twitter Robert has nearly 45,000 followers and has written over 16,000 messages. On Friendfeed Robert has nearly 23,000 subscribers.

Other social media stars put in the same kind of hours.

(Interestingly, some of them have young families. Maybe it gets them out of diaper duties :-)

But what happens if you are shy? What happens if you don't want to flood your Twitter, blog , Friendfeed, and Facebook streams with a bit-torrent of messages and posts? I prefer to post less rather than more, but that hasn't done me much good when it comes to expanding my traffic at the same rate as others.

I will cut people off if they are too loud in my streams because they push other people out. But maybe that's the best strategy for online success -- the cuckoo strategy -- become so prolific that you push the others out of people's real-time streams.

What do you think? Do you prefer less, or more?

Can you charge for news? Can you charge for social media? Two questions that show how the economics of the online world are affecting media and PR.

I've long said that the same media technologies transforming the business model for journalism are transforming the business model for PR. Yet this relationship wasn't as evident in PR for several years because the old business model was still working. The difference between the two industries has been in the timing of the disruptive trends affecting them.

Last year I spoke with Todd Defren, owner of Shift Communications. He said that social media was the tip of the spear in terms of winning new business. However, he said that it takes a lot of work and that clients often aren't willing to pay for the extra work.

I recently met with Patrick McGovern, founder and chairman of the media giant IDG. I've long been an admirer of Mr McGovern and consider him one of the savviest media executives on the planet, alongside Rupert Murdoch at News Corp.

IDG is best known as a publisher of technology titles such as Computerworld, and many others. These days Mr McGovern is leading the changes in the media world and taking advantage of the Internet's media technologies to expand his publishing empire across the world.

Traditional media can learn important lessons from IDG. In 2002 about 86% of its revenues came from print. In 2008 print shrank to 37% of revenues, with online publishing generating more than half of all revenues, with the rest from events, for a total of $3.2 billion.

Here are some notes from our meeting.

For several years I've warned the PR agencies that fundamental changes have occurred in their world just as they have in the media world.

I said it all reminded me of the cartoon character Wily E. Coyote, who is chasing the Road Runner. Everything is fine until he looks down and sees he has run out of road and there is nothing between him and the distant canyon floor.

For the past few years the PR agency world didn't know it had run out of road because it was able to charge for its traditional PR activities and also to charge extra for its "social media" expertise too. Times were great, money was pouring in, and everyone was hiring.

Now the road has run out in traditional PR for many, and the canyon floor is a long way down. These days, I can't tell you how many people from large PR agencies have been telling me "the old model is dead."

Here are a few notes from my conversations:

I recently caught up with Jurgen Popp, one of the top European angel investors. He was in town attending a VC conference and also tending to some of his US investments, including the rapidly growing Smart Health Buyer -- a US version of a very successful German startup.

From his perch in Zurich, Switzerland, Mr Popp gets to mix in European and US VC circles. And because he is an angel investor, he is often able to say things that others can't. Here are some notes from our meeting:

- I recently attended a large VC conference in San Francisco. The VCs all seemed interested in what types of new fees they could charge their investors rather than looking for new startup ideas.

- There were about five angel investors at the VC conference and it was easy to spot each other because we were the only ones asking questions about business rather than about fees. We all ended up sitting at the same table.

- The US VCs love to portray themselves as risk takers but they are not. It's the entrepreneurs that take the risks.

- There is very little VC activity in Europe right now, it seems to have virtually disappeared.

- There's a lot of activity among VC firms selling and buying portfolios, but a lot are being sold at 15% to 25% on the dollar.

- The way some of the US VCs behave they are killing innovation. They will join together to drive down valuations and take as much equity as they can from the founders.

- There are a lot of companies waiting in the wings to IPO. But I wonder if it is worth it for some of them. If they raise $50m on a $200m valuation much of that money will go in fees to bankers and lawyers.

- I believe there will be a rebound in VC investing in 2010 because by that time there will have been a rebound in stock markets -- maybe a doubling of where we stand today. That will free up money to be invested in startups.

- I'm already seeing a bit more activity. More people are calling, and there is a lot more interest in investing in small companies. That will grow over the next few months.

On my ZDNet column I recently wrote about a Silicon Valley and French based startup that had contacted me on a Friday to introduce me to its new service. I noticed that there was a problem with the javascript for its widget.

They were very glad that I had spotted the bug and promised to get back to me toot suite. They did. They said their French developer team had gone home and they wouldn't be able to fix the problem until Monday.

[Please see: Where are the French code warriors when it's "Le Weekend?"]

They did fix it on Monday. But is the French way of keeping work and non-work balance right?

This startup is launching its service and its developer team is MIA - it could have been a simple fix that took just minutes instead of nearly 3 days. Potential customers/users these days won't take a second bite at the cherry -- why risk the launch? Why not insist the team be 24/7 on this important occasion?!

I'm all about the work and non-work balance thing . . . but times have changed and it is now all grouped into Life whether we like it that way or not.

But it must be said that France, despite its 37 hour week and its stalwart support of "Le Weekend" has not yet sank and vanished below the waves. So, is the US or French work place attitude the right one?

Here are some responses to my original post (I love the last one.):

The Chinese government is blocking access to various services and web sites such as Twitter, Flickr, Bing because of the anniversary of the Tiananmen Square protests. This peaceful demonstration, which would have been allowed by our democracies, turned into a massacre as the Chinese government ordered the army to crush it.

The most powerful image of that time, if not the century, is the lone protestor, calmly walking out in front of a column of tanks and stopping them with a shopping bag in each hand. The column tried to go around him, each time he moved to step in front.

Please take 1.12 minutes to view this:

The phenomenal courage of this unknown protestor is incredible. Contrast it to the gutless behavior of Silicon Valley companies towards the Chinese government.

There are a lot of PR practitioners and social media monitoring companies spending a lot of time warning corporations that they need to monitor the online world for negative conversations about their brands.

Last week I addressed the current fashion and passion for the real-time web: The Real-Time Web - Blink And You Missed It - SiliconValleyWatcher

I made a point that there might not be much value in the monitoring of real-time online conversations about brands because if those conversations take place in real-time, they are done and dusted by the time a corporation decides to become involved. I asked how many people review their real-time streams of content on Facebook or Twitter? Which means if something nasty was said the likelihood is that very few people saw it -- only those that happened to be looking at their streams at that particular time would have seen it.

Yesterday, Mark Cuban published an interesting post on Blog Maverick in a similar vein, questioning the damage from negative online comments or posts about a person, or a company. He asked: Who Cares What People Write ?

He gave excellent advice:

When you see things written about a person, place or thing you care about, whether its positive or negative, take a very deep breath before thinking that the story means anything to anyone but you.

As a journalist I always believed that others often over-reacted to “bad” press. After all, it quickly became yesterday’s fishwrap and last week's fading memory.

Yet I've seen very large corporations getting their underwear in a twist because someone somewhere said something "bad" about their CEO or their products. Without assessing much of anything about the source.

In March 2005, I published: If a Blogger blogs in the Blogosphere . . . does anybody blog it? It addressed similar themes and predicted that there would be even fewer people paying attention to bloggers in the future.

Building a personal blogging brand and cultivating a key readership within such an increasingly noisy media landscape will become increasingly difficult for individuals. We will see consolidation as blogs become group blogs and then become fully-fledged online news magazines.

Four years on, there seems to be ever more people with a vested interest in trying to scare corporations about how unattended online conversations about their brands can blow up into PR disasters. It's true, they can, but it's rare, and as Mark Cuban points out, usually only if it came from an online media personality.

Clearly, there are conversations that have to be monitored and dealt with: either by ignoring or responding. But there seems to be few people within corporations with the ability to distinguish between appropriate action and reaction.

Silicon Alley Insider yesterday reported that New York Times and Google are in talks about introducing a new type of advertising that is embedded in a news story and travels with it when it is quoted on other web sites.

Nicholas Carlson reported that Arthur Sulzberger, chairman of the New York Times Company, had visited Google's headquarters, and a source close to the talks said "one or two models" were discussed:

- A potential agreement in which any time Google's search crawlers find a Web site carrying New York Times content and Google ads, Google would split the revenue it gets from those ads with the Times.

- Google would somehow help the New York Times actually embed ads within its text so that when blogs or other Web sites use that text, the ads go with it.

A New York Times spokesperson told Mr Carlson that the two companies had been collaborating "for quite some time."

This is the same "Adtribution" advertising model proposed by Silicon Valley Watcher nearly a year ago:

June 20, 2008: A Proposal and a Response to AP - Quote Me Freely and Carry my Adtribution Link . . .

June 22, 2008 Support the Source: Creating a New Media Business Model and Keeping the Web Open

The Adtribution model is simple: if you publish a section from a news story you would also agree to publish the ads that are associated with that content. By doing that you receive a license to republish that copy. This method takes advantage of the distribution power of bloggers and the Internet, while also rewarding the content creator because the advertising associated with that content is also distributed.

Google could produce a tool in which any section of a news story that is copied and pasted into a new web page would automatically also copy and paste the associated Adtribution advertising. The Google tool would carry Google's AdSense advertising. Other advertising networks could produce their own, similar Adtribution tools for their advertising. It could also be built into popular publishing platforms for bloggers such as Wordpress and Movable Type.

Foremski's Take:

If the Adtribution model is widely adopted, bloggers would be in the front lines of helping to save newspapers. It's an interesting twist in that bloggers have been blamed for stealing content and readers from the newspapers and contributing to their downfall.

However, there are several issues that would need to be addressed. How would the revenues from advertising be split between the New York Times, Google, and the website owner/blogger quoting the news story?

Also, how much money would this make for the New York Times? Google is very good at monetizing advertisements on its search pages with its AdWords advertising program. But its AdSense program, which places ads on newspaper sites and other content web sites, performs poorly.

SVW's analysis of the two businesses, AdWords and AdSense, shows that its profit margin on search ads (AdWords) is nearly 40 per cent; its profit margin on AdSense (content ads on other sites such as the New York Times) is less than 5 per cent.

In 2008, AdWords produced 19 times more profit than AdSense. How motivated is Google in implementing an Adtribution model? It can make 19 times more money in building out its search engine advertising.

[Please see analysis here: Google Is Really Bad At Monetizing Content Yet CEO Schmidt Lectures Newspapers]

Also, how much money would a Google based Adtribution model produce for the New York Times given the poor performance of Google's AdSense ads? Other ad networks, such as Federated Media, which produce higher revenues for publishers than AdSense, could adopt the Adtribution model and generate more money for publishers.

The New York Times has an agreement with Google that might prevent it from using other ad networks.

- - -

Please see:

Adtribution Might Be A Solution For Murdoch, A.P, Et Al, Versus The News Aggregators And Bloggers

Lifestream of Brian Solis - Tom Foremski proposes “adtribution” -...

2008 June : New Communications Review

/Message: Tom Foremski on Adtribution

My social media world is all a twhirl about corporate social media marketing. It's probably because I have a lot of contacts in marketing and communications.

And there are a gazillion social marketing "experts" out there hawking social media marketing strategies to corporations.

This is a mistake. Corporations are not people. They are made by people, and people work there, but they aren't people.

A while ago Seagate, the hard drive company, asked me to be its friend on Facebook. Then it asked me to be a "fan." I use Seagate so I clicked yes both times to see what was up. But do I really want a social relationship with my hard drive? No.

[Guest post from Georges van Hoegaerden, an accomplished entrepreneur, CEO and venture catalyst "turned conservationist of the technology asset class." His articles appear at http://venturecompany.com.]

Idiot CEOs

By Georges van Hoegaerden

That's how one of the many CEOs that contact me recently described his colleagues who submit to Venture Capital (VC).

This alternatively funded CEO describes other CEO's that seek VC funding as idiots -- with a 1 in a 1000 shot at a lousy valuation (52% Round A, 25% Round B and 15% Round C). He continues that many of the serial entrepreneurs trumpeted by VC's have no money themselves despite "successful" previous exits.

He is not alone about the ineffectiveness of Venture Capital, I frequently hear from other successful entrepreneurs about it. And the situation may get worse before it gets better. The economy is offering VCs even more excuses to turn the screws, and control of companies is gained in more ways than a simple equity stake.

I believe technology investing today is largely a sub-prime asset class as described in a plethora of sub-prime articles in this blog, and find many entrepreneurs discouraged by both the process as well as the outcome of fundraising, even when that yielded a round.

Because of the ineffectiveness of VC and the rampant false positives and false negatives I refuse to believe VCs (and the NVCA collectively), who suggest that the sum of Venture Capital equals the sum of technology innovation. We see great entrepreneurs actively pursuing more creative investment vehicles (high-net-worth individuals, private equity firms, investment bankers, sovereign funds...anyone with money), and rightfully so.

In the meantime, oblivious to recognizing their own flaws, VCs are further descending down the sub-prime spiral by restricting investments to compliant entrepreneurs, evidence that they remain clueless about the fundamental risk management of high yield returns.

Smart CEOs should simply refuse to work with many technology investors for the following reasons:

Eric Schmidt, Google's CEO, loves to tell the newspaper industry what it needs to do to be relevant in today's online world. A sample of recent headlines:

Eric Schmidt Tells Newspapers: Create Products People Want And ...

Google CEO Eric Schmidt to newspapers: Innovate your way out of it ...

Eric Schmidt wishes Google could save newspapers

Google CEO Eric Schmidt to Newspaper Association of America ...

Schmidt to Newspaper Execs: I'm From Google, and I'm Here to Help ...

Schmidt Lectures Newspapers - The Daily Beast

Yes, the newspaper industry needs to get wiser about how to adapt to the online world, but Mr Schmidt's lecturing is the pot calling the kettle black. Google is about as bad at monetizing content as the newspaper companies Mr Schmidt likes to lecture. And Google is getting worse at it! The evidence is hiding in plain view.

The BBC's Maggie Shiels finds one source: Tom Siebel, the retired founder of Siebel Systems, to come up with a long story and an eye catching headline: Silicon Valley crown up for grabs

"I think Silicon Valley has been toppled from its pedestal," he told BBC News. "I think information technology is much less important in the global picture today than it was even 10-20 years ago."

We've heard this one many times before, that innovation can now be done anywhere, and that Silicon Valley is going to be far less important. It's an old argument that has been used each time Silicon Valley goes through a downturn.

Yet each time Silicon Valley goes through a bust cycle it comes back stronger than before. I've seen several boom and bust cycles since 1984, such as the PC bubble bust; the CD-ROM multimedia bust, the dotcom bust, and the four-year bust cycles of the entire chip industry, plus periodic busts in IT, data storage, and biotech. Each time Silicon Valley rebuilds and becomes larger and more important.

Silicon Valley's success as a global engine of innovation takes nothing away from growth in other regional centers of innovation. It is not a win/lose equation, all centers can grow -- yet journalists continue to poke for holes in Silicon Valley's prospects.

Silicon Valley has its challenges but there's no place that comes close to rivaling this region. I'm constantly hearing of companies moving their HQs to Silicon Valley from all over the world. For example, at a recent SF New Tech event I met the CEO of French firm blueKiwi Software, Carlos Diaz. He was in the middle of moving himself and family to Silicon Valley.

Loic Le Meur, founder of Seesmic did the same thing about eighteen months ago, moved his company and family to Silicon Valley.

Here is an excellent view on Silicon Valley from Bill Coleman, a Silicon Valley veteran. He recently sold BEA Systems, which he co-founded, to Oracle for $8.5 billion. We met earlier this year, here is part of our conversation:

"I have a basic theory that Silicon Valley reinvents itself by inventing a new platform layer every 10 years." Bill Coleman says that Silicon Valley was lucky to develop information technology (IT), a technology that is now becoming cloud computing, a new platform. Information technology is also vital in driving the development of two additional disruptive technologies: nanotech and biotech. And fortunately, Silicon Valley leads in all three industries.

Silicon Valley also leads in green technology, a large and growing market. But green technology is different -- it isn't a disruptive technology. He says that a disruptive technology has to have a characteristic of the Peter Drucker rule in that it provides ten times the value of what it's displacing.

Cloud computing doesn't need government incentives because it is a disruptive technology, says Mr Coleman, especially the next stage, beyond what he terms "Cloud 1.0." As the cloud computing platform becomes more sophisticated, he predicts that there will be an acceleration in the use of the cloud driven by a "quadruple conversion." Video, audio, and IT data all become IP based, and productivity applications become integrated with social networks.

About 18 months ago I met with a large Russian delegation on a trip to Silicon Valley to learn some of its lessons. They have plans to establish multi-billion VC funds around several innovation centers across Russia.

They asked lots of questions about how things worked around here but they told me that they didn't want to copy Silicon Valley.

"We don't want to build a clone of Silicon Valley, we know that wouldn't work. But we believe we can learn how to avoid some of Silicon Valley's problems and eliminate its bottlenecks," said Yuri Ammosov, a senior policy officer in the Russian Ministry of Economic Development and Trade.

They also didn't want any regulations such as Sarbanes-Oxely, which they clearly saw as a very heavy load on startups.

I told them I would tell them Silicon Valley's biggest secret. I paused for dramatic effect. As if on a cue, they all leaned in a little closer.

I I told them that Silicon Valley's biggest secret is: "Failure. Silicon Valley tolerates massive amounts of failure." Less than one in ten startups succeeds.

I felt at ease sharing this vital secret because it's something that can't be stolen. Who would want to steal the idea of tolerating massive amounts of failure?!

Yet it is this tolerance of failure is what allows Silicon Valley entrepreneurs a second and seventh chance to fail again and again and eventually succeed. In other cultures, failure is often punished, you rarely get another chance. Here, failure is an important part of our culture of entrepreneurism.

Innovation centers can be built anywhere there are good universities; and small amounts of seed investment can startup a lot of companies these days because capital costs are very low. But a culture of entrepreneurism is something that can't be bought -- and it's not easily developed or transplanted.

For example, the Russian delegates said that they have a big problem: Russian startups won't disclose their business ideas because they don't trust the Russian VC funds and think the officials will run off with their ideas.

The Russians have a lot of work to do in building up their local culture of entrepreneurism. And that's also true everyplace else that's not Silicon Valley.

Silicon Valley's crown is not up for grabs. No one comes close.

- - -

Please see:

Thought Leader: A Conversation With Valley Veteran Bill Coleman About The Economy And The Business Of Disruption . . .

Turning Oil Into Innovation: Russian Delegation Seeks Silicon Valley's Lessons

The disruptive tectonic forces at the intersection of technology and media

I was at Chris Brogan's Inbound Marketing Summit on Wednesday, speaking on a panel moderated by Paul Gillin, on the subject of "Media in Transition: The Future of News in a Democratized World." My old friend Dean Takahashi from VentureBeat (formerly with Wall Street Journal, Red Herring, San Jose Mercury) was also on the panel, along with Ken Doctor, analyst with Outsell.

Media in transition is a fascinating subject, I can talk for days, for weeks on this subject.

Between the four of us on the panel, we probably have nearly a century of experience with news media. We now find ourselves taking part in an incredible transition within our industry of a like we will never see again in our lifetime.

And few people realize that Silicon Valley is the main instigator of the disruption happening in the media industry. It is Silicon Valley technologies and companies that are at the forefront of developing the new landscape of the media industry, and also transforming SIlicon Valley into a "media valley."

Take a look at some of our largest companies, such as Google, Yahoo, Ebay. These are media companies. These are not tech companies, you can't buy any tech from them, these are technology-enabled media companies.

They publish pages of content with advertising. What's not a media company about that?

Facebook, Twitter, Craigslist -- are all media companies, they publish pages of content and advertising. And so are most Web 2.0 companies.

Take a look at the Internet, it is a media technology. It allows you to distribute and publish web pages, data, to any computer screen, any computer platform. Now, in this second phase of the Internet, anything with a computer screen can publish back -- it's now two-way, it's read/write, we now use both sides of the glass screen.

It is Internet technologies and services, it is online companies such as Google, Craigslist, etc, that are helping to disrupt the media industry. Or more accurately, disrupt the business model.

When we talk about the death of newspapers, what we really mean is the death of traditional media business models.

On Silicon Valley Watcher, I often use the tag line: "reporting on innovation at the intersection of technology and media." Because that's what's happening, that's what I see, a tremendous intersection of technology and media. It's like tectonic plates coming together and crumpling the landscape into a new mountain range.

And mountain range is a suitable metaphor because there are always two sides to a mountain range, one side is dry and the other is wet and fertile. For example, the Andes protect and enable the massive, wet, fertile Amazon rainforest with its incredible diversity of life, while the west side of the Andes is dry and relatively barren.

The mountain range being created by the intersection of technology and media is a barrier to the traditional media companies, most don't seem to be able to climb and transition to the other side; most won't make it.

But, I'm confident we will have a new type of Amazon rainforest emerging in the media industry, we will see an amazing diversity of media companies and services. You can already see the tremendous amount of innovation emerging and we've only just started.

For example, Facebook and Twitter are very new, even to us in Silicon Valley, and they are spanking brand new for the majority of people today. What other new forms of media will we have a year from now?

We can create incredible mashups of media technologies and media formats that have never been seen before. How will we use them? How will we deal with the loss of traditional media? How will our society handle the transition? How will we pay for journalists and the vital Fourth Estate service that they provide? How do we sell products and services? How do we find trusted sources of information?

There are tons of questions waiting to be answered. And that's what's so wonderful about all of this, we are directly involved in figuring out those important answers. We, the people working in media, in communications, in marketing, in startups, we get a chance to help create and define the future.

This is why I love my job, writing Silicon Valley Watcher, and reporting on innovation at the intersection of technology and media.

[On my recent trip to Portland I caught up with Kathleen Mazzocco from Clear PR. I mentioned one of my old posts (April, 2006) that every company is a media company. Every company has to learn how to publish using the new (two-way) media technologies, to reach their customers, their employees, partners, local communities, etc. And one role of PR is to help companies become media companies and help them tell their stories. Here is more on this theme.]

By Kathleen Mazzocco, Clear PR

I wanted to continue the conversation we'd started regarding the future of PR. It may seem passe at this point to talk about the need for companies to give up the old PR model and innovate on communications. But the reality is that many, perhaps the majority, of companies still want PR budgets focused to land them big stories in leading print publications. But this is a short term game that doesn't even yield the same results as it once did.

Let me continue by recreating a conversation I've had lately with clients:

"It's time. No more quibbling, no more dawdling. In this age of crumbling paradigms, it is time for you to think about how to become a media company.

Here's why: your favorite print media brands are under siege and quite a few will succumb. We have reached the proverbial tipping point in terms of Internet over print as a source of news. For the first time in a Pew Research survey, more people say they rely mostly on the Internet for news than cite newspapers (35%).

The latest recession has merely accelerated a trend that was already well underway and cannot be reversed even after the economy bounces back. Think of the changes this way: your college age children will never read a print newspaper or magazine. The fact is, information consumption habits have permanently changed: news is consumed in small bites 24/7 from a variety of sites and not always as text.   

Instead of media brands, it is now brand-agnostic Google that mediates access to information.

Media guru Michael Wolf recently stated that 80% of newspapers will disappear in 18 months. That is one (expert) opinion, but you don't have to be a seer to know that most newspapers won't survive, at least in their present print form, and that many magazines will disappear, shrink or decline in relevance as audiences shift, fragment. The pressure on editors and reporters to remain relevant, competitive and simply hold on to their jobs is intensifying. The news hole is very small, with simply less paper available for stories and fewer, more overworked reporters left to write them. (There is a certain tech reporter who, after recent layoffs at his paper, was assigned a second beat: dining. Is that demoralizing or what.) If your story does make it to the New York Times or Business Week, chances are it will be shorter than you think it deserves to be, or not even in print but in one of the newspaper's blogs.

It is becoming very difficult for traditional PR to predict which stories will get picked up in print, even among very good ones. As a way of illustrating the current situation, here's what I heard from two different reporters when I pitched what I knew to be great stories last week:

Lately, I've been writing about the new laws in South Korea that impose requirements on web sites to verify the real names of users. It was an issue that hadn't been reported much by the US media until just this week. And there is lots more Korean legislation in the pipeline that is jaw dropping in its ambitions to use the Internet and mobile phone technologies to monitor Korean citizens.

For example, the government is trying to pass a bill that would give Korea's spy agency real-time monitoring of all Internet and mobile communications, and real-time access to every cell phone's GPS location data.

The government says measures like these are needed for a variety of reasons. Critics of the measures see a government hitting back in retaliation because of several embarrasing online incidents. Such as the bungled prosecution of a blogger over his economic predictions.

The Korean people have a strong culture of fighting injustice and the excesses of government. It's a culture that readily takes to the streets in demonstrations and protests. And not surprisingly, this is reflected in its online communities, where there is a sophisticated society of Internet users using their online skills to organize resistance to government policies.

To fight back, and to try to dampen the spirit of its digital opposition, the government has passed laws such as the one that requires web sites to verify the real name of any Korean citizen, before allowing them to upload files or leave comments. And it is seeking even greater powers of regulation.

These are interesting developments because they could very well be providing us with a sneak preview into our future. South Korea is several years ahead of the US in terms of how much time its population spends online and its relatively long history of access to high speed Internet services.

The Koreans are dealing with many issues that result from living in a society that lives far more in an online world than we do. It will take the US several years to catch up.  

Hopefully, the Koreans can figure out how to deal with Big Brother governments and other societal issues, before we get to the same stage.

. . .

Please see:

The Korea Times: Is Korea Turning Into Internet Police State?

"According to the draft, the National Intelligence Service (NIS), the country's spy agency, gets expanded surveillance power that allows real-time interception of mobile phone and Internet communication, compared to current law that limits monitoring to fixed-line telephone calls.

All communication operators, including telephony carriers and Internet companies, will be required to operate surveillance equipment and save call recordings and log-on records of their users.

The bill also enables law enforcement authorities to collect and monitor location-based information, or Global Positioning System (GPS) records, of civilians. Considering that GPS capabilities are increasingly included in the latest mobile phones and portable Internet devices, a fast-growing number of people would be susceptible to investigators tracking their real-time movements..."

The Hankyoreh: "[Analysis] Google chooses its credibility over profit in South Korea

"Some analysts have suggested that it would be too burdensome for Google to challenge South Korea’s Internet policies because the government had promised 1.2 billion won (911,200 dollars) in research and development support, and the possibility of more through online advertising business."

Korean Presidential Office Bypasses Real Name Law - Posts Videos On Foreign YouTube

"Google managed to avoid this law by disabling uploads and comments on its Korean version of YouTube, while at the same time telling people that they could continue anonymous uploads and commentary by accessing other countries' YouTube sites.

It seems that this is the preferred method for the Presidential office of South Korea, the Cheong Wa Dae.

The Korean newspaper The Hankyoreh reports that the Presidential office, of South Korea, the Cheong Wa Dae, has been using this loophole to post PR videos of President Lee Myung-bak."

Google Tests The Limits Of Governments - Bars Korean Users From Uploading Videos And Leaving Comments

"Rachel Whetstone, vice president of Global Communications & Public Affairs at Google, offered in a statement posted on Google Korea's Website the reason why the company has refused to comply to the real-name system. In a statement titled, "Freedom of Expression on the Internet," Whetstone said, "Google thinks the freedom of expression is most important value to uphold on the internet." Whetstone continued to say, "We concluded in the end that it is impossible to provide benefits to internet users while observing this country's law because the law does not fall in line with Google's principles.""

Updated: Google Says It Is Still Examining Korea's Real-Name Verification Law

"Google wouldn't have much to lose if it stood up to the Korean government. It's YouTube business isn't profitable, so no shareholders would be hurt. It could argue that its servers aren't housed in South Korea and therefore it doesn't have to comply with the local law.It would be a bold statement and it would focus world attention on the South Korean government and its efforts to curb its citizens from using the Internet to criticize politicians. A bold stand from Google might even discourage other governments from following with similar laws."

It seems as if it doesn't matter how old you are, kids or grownups and beyond, everyone is complaining they are having trouble focusing on tasks, and that they are constantly distracted.

I remember when MTV launched in 1981. The music videos were a big hit at the time, they were imaginative and innovative -- it was very compelling content. But there were concerns that the fast edits, combined with the seductive imagery of the music world, would shorten the attention span of viewers, especially kids. There was talk of an "MTV attention span" syndrome.

However, today I know people that would kill to have the breadth of an MTV attention span. In this world where worlds of compelling content are just a click away, it's like being in a garden of Eden and feasting on every type of fruit, a cornucopia of amazing content and knowledge. And it is all available in any format you want, at anytime, and in anyplace.

The death rattle of the newspaper industry makes it seem as if media is dying, yet there is more media being created today than at any other time in human history.

Plus, there is more compelling content today than at any other time. And it has never been easier to find because our social networks constantly tip us off on Twitter, Facebook, Friendfeed, email, sms, blogs, phone, and when we get together to talk. We are all sharing (and creating) massive amounts of compelling content, all the time.

The problem with compelling content is that it's compelling. That's why we now all seem to have the attention span of a gnat.

I've been thinking about this question for a while: In a world of compelling content what do you do? How do you deal with the distraction of its easy reach and abundance?

I have a suggestion. I'd love to hear yours, please send to tom(at)foremski.com or leave a comment.

Virtual currencies are booming, they have become the best way for gaming sites to monetize their content, and it might also offer a way for news sites to earn revenues. That's what popped into my head when I recently interviewed Jason Bailey, CEO and co-founder of Super Rewards.

This company today launched a virtual currency monetization platform to help primarily gaming sites earn money from their users. Some of Super Rewards customers are already making more than $1 million per month!

Gamers can convert real money for virtual money and use it in a variety of ways to gain access to higher levels, gain status, etc. But many gamers don't have to use real money, they earn it through engaging with advertisers.

The Super Rewards platform allows advertisers to offer virtual cash in exchange for a specific action, for example, signing up for Netflix, or applying for an insurance quote, etc.

Mr Bailey says that Super Rewards handles the entire transaction. It chooses an advertiser from a database of about 4,000, the advertiser pays Super Rewards if an action is completed, Super Rewards buys the virtual cash from the site owner and gives it to the gamer, taking a small cut (of real money) for itself.

"We've been able to help companies move out of their parent's garage and make a lot of money," says Mr Bailey. Many sites are making $20,000 to $30,000, and some are making more than $1 million per month. He says that this approach provides a much higher return than online advertising.

Super Rewards is also targeting virtual worlds, and games found on social media sites.

This got me thinking that this would be a great way to monetize news content. Online news is free but it isn't produced for free and newspapers, magazines and TV have so far failed to find an effective online business model.

The recent Pew Project's 6th annual survey painted a bleak picture of the state of the news media:

- online ad revenue to news websites now appears to be flattening; in newspapers it is declining..

-nearly one out of every five journalists working for newspapers in 2001 is now gone

The problem is not that there isn't an audience for online news, there is, and it continues to reach record numbers, the problem is that online advertising can't generate enough revenue to support news reporting.

The Pew survey soberly states: "It is now all but settled that advertising revenue—the model that financed journalism for the last century—will be inadequate to do so in this one."

Charging for the news through micropayments is a possible solution but micropayments have a poor track record of success.

Virtual currencies could offer the best of both worlds, providing a surrogate micropayments system, and an advertising model that pays more than CPM ads. Local businesses could provide wads of virtual currencies to online newspaper readers, either in exchange for some survey data, or as a complimentary service.

- Local businesses could provide wads of virtual currencies to online newspaper readers, either in exchange for something such as survey data, or as a complimentary service to build goodwill.

- Businesses could also provide virtual cash that could be associated with reading specific sections in a newspaper, say furniture sellers to the "Home" section. Best Buy could provide virtual cash for reading the gadgets pages, etc.

- News sites could reward readers with virtual cash for contributing user generated content, such as a popular column, or for photos.

- Virtual cash could be exchanged between blogs and other online publishers for republishing great content. And there are a myriad other creative ways virtual cash could be used in news media.

The beauty is that the virtual cash would be purchased from the news media publishers with cold, hard cash by businesses, instead of purchasing online ads. And the virtual cash then powers an entire dynamic economy within a news site that helps produce great content and provide other services.

Compare that to buying an online ad that just sits there, usually unnoticed on the side of the page.

How do you set up a virtual currency system? "That's our next product, a tool that manages virtual currencies for web sites, so that you don't have to build it yourself," says Mr Bailey. That would be great for news media sites.

It's these types of monetization technologies, borrowed from other publishers, in this case games publishers, that news media businesses would do well to investigate and adopt. What do they have to lose?

By the way, what should be the name of a virtual currency in the news media world? My suggestion is "lede" it rhymes with seed and it is very specific to journalism, it denotes the first sentence of a news story.

[This is a 2 lede article.]

---

Please see:

Why Small Payments Won’t Save Publishers « Clay Shirky

Pew Survey: Online Journalists See Glass Half-Full As 2009 Expected Worst Ever In News Media

25 ideas: Creating An Open-Source Business Model For Newspapers

"Google Devalues Everything It Touches" - Wall Street Journal Chief

Silicon Valley is a leader in clean and green technologies and it is counting on considerable government support through tax breaks, grants and other programs, to build a large industry. Without government incentives progress will be slowed.

President Obama has cited Spain as a reference point because of the government's strong support for renewable energy programs over many years. And he has proposed investing as much as $210 billion to create five million "green-collar" jobs as part of a New Energy for America plan.

A new study from the Spanish university of Rey Juan Carlos in Madrid, is the first critical analysis of government aid programs for green jobs. It shows that if the US adopted similar policies, it would destroy more than double the number of jobs created. The "Study of the effects on employment of public aid to renewable energy sources" shows that the US goal of creating 5 million green jobs could destroy as many as 11 million jobs elsewhere, a ratio of one to 2.2, or 9 jobs lost for every four green jobs.

The Spanish study also calculated that it cost 571,138 Euros to create each job. That's more than $755,000 for each green collar job.

With this type of economic cost in investment, and the large loss of other jobs, green tech in the US will face a tough road. If government subsidies for fossil fuel energy and jobs in other industries were removed, the comparison might be less alarming.

However, it is clear that it will be difficult to accelerate a trend towards a greener economy through government subsidies. And that will mean a cooling of private investment in many green and clean tech enterprises, profoundly affecting Silicon Valley's ambitions in these sectors.

(Hat Tip Jeff Nolan!)

- - -

Please see the executive summary: Lessons from the Spanish Renewables Bubble

"1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”

2. Optimistically treating European Commission partially funded data1, we find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.

Dell, Wednesday morning launched an early salvo in what is shaping up to be a massive battle for server markets as data centers look to cut costs by using servers based on an advanced Intel microprocessor due out on Monday.

Dell announced what it called its broadest ever family of servers, and storage systems, just days ahead of similar announcements expected from rivals Hewlett-Packard, Sun Microsystems, IBM, Cisco, and others, as Intel officially introduces a major upgrade to its Xeon server microprocessor.

The move is a key strategy of founder Michael Dell's, who returned as CEO more than two years ago to try to reinvigorate the company and move it beyond PCs and expand it's enterprise IT business.

The server market has almost ground to a standstill in recent months as customers await the first servers based on Intel's latest microprocessor architecture design, Nehalem. Intel has set expectations very high, promising breakthrough performance, while at the same time significantly reducing power consumption. Many data centers are unable to expand because they have drained their power capacity.

Dell is making a big bet on Nehalem, which is used in it's new Dell PowerEdge server family and includes several features Dell says are unique.

"We believe our design, based on industry standards and unique features, such as the industry's first built-in management software, will offer customers the lowest total cost of ownership," said Stephen Schuckenbrock, head of Dell's Large Enterprise group.

Dell said it would release pricing and benchmark results on Monday, the official launch of Nehalem. It claimed excellent performance from its Nehalem based servers, saying that each one could replace 9 servers and as many as 18 servers if customers use virtualization technologies.

Dell also introduced data storage and IT management software.

Brad Anderson, senior VP, claimed that Dell can produce better performing server and storage systems than its larger rivals because it doesn't have to support proprietary technologies, especially in the area of management software. And it offers unique capabilities.

For example, it worked closely with Symantec to create the Dell Management Console (DMC), which replaces as many as nine separate management consoles with a single interface. DMC also works with many types of non-Dell hardware and management software, allowing customers to save on labor costs in administration, which can be as much as 70 per cent of total data center costs.

[For more details please see: Dell Unveils Efficient Enterprise Computing Portfolio, Freeing Customers from Costly and Proprietary Technology]

Foremski's Take:

Dell has a lot riding on this launch because it is seeking higher margin markets. However, it is up against well-entrenched competitors such as HP, IBM, and Sun, that have considerable experience in building data systems. It must show potential customers that it is not just a PC company, assembling standard components, and that it can design high performance IT systems with unique features.

It must show that it understands the issues facing data center managers as they try to deal with their largest headaches: administration costs, server consolidation, and power consumption.

The launch is also a test of Dell's Services business because enterprise customers are motivated to buy solutions rather than boxes.

Dell has invested more than two years on developing this family of IT systems, working closely with Intel, Symantec, VMware, and large IT users to make sure it had the best overall design and performance across 15 different IT applications. Dell also said that its services group was involved from the beginning to make sure services capabilities were closely integrated into its systems.

Dell's aggressive bid to expand its enterprise IT business comes at an opportune time because of the availability of Intel's Nehalem.

Intel claims that the extraordinary performance of Nehalem based servers means customers can recoup their costs within as little as 8 months. If this is true, it will create a tsunami of demand from data centers that are already under tremendous pressure from the economic downturn to cut operating costs.

Although a rising tide will lift all boats, Dell clearly hopes its long preparation will not only lift its boats higher, but establish it as a major vendor of IT systems (. . . especially if IBM acquires Sun.)

- - -

Please see Dell Blogs:

• Dell Introduces Six New Service Offerings and New Optimized Solutions
• Bringing Sexy Back to the Data Center -- New 11th Generation PowerEdge Servers
• 11G solutions increase reliability and productivity, drive down costs

(Building from yesterday's post...)

I'm just one of many people coming up with business ideas for saving newspapers. There are a lot of posts being published on this subject.

Someone should collect all the advice because it's turning into some kind of open source business model. And the beauty of this approach is that only a few newspapers need to have the courage to try new ideas--if any one of them succeeds then the rest can piggyback. They win and we win.

Here are my 25 ideas on how newspapers might be able to survive and become innovative media businesses:

1: Focus on original content, do not rewrite wire stories or press releases. If newspapers start charging for content people are more likely pay for content they can't get anywhere else.

2: Focus on hyper-local coverage, newspapers should "own" their regional beat because they have the best contacts and the best understanding of local companies and issues. For example, SF Chronicle or the San Jose Mercury should be breaking all the top Apple or Google stories.

3: Don't run foreign bureaus unless you are the New York Times or the like, or are publishing a unique perspective relevant to your community.

4: Be a regular and visible part of your local communities by making sure journalists get out of the office.

5: Become an active teacher of media literacy and also media production in your local communities. Help teach citizen journalists how to be great journalists, editors, photographers, videographers, etc. Teach how to be effective and ethical.

6: Celebrate the best citizen journalists/bloggers in your communities, publish them on your platform.

7: Become involved in local events, organize conferences. There is a lot of money in conferences. The newspaper becomes a vehicle for drawing people to the conferences.

8: Don't let advertising networks sell your advertising. They take a huge cut for serving ads and you lose the customer connection. I often see newspapers running Google AdSense on their front page and at the bottom of the ads there is the message: "If you'd like to advertise on this site click here." That click takes prospective customers to Google and not to the newspaper. Newspapers should always own their customer relationship.

9: Develop a hybrid content strategy for search engines and news aggregators that takes advantage of the distribution power of the Internet without giving away all the content.

10: Adopt a culture of a "news organization" rather than a "newspaper." Paper or electron, it shouldn't matter how the news is delivered.

11: Offer some way for readers to pay. Every newspaper has a group of fiercely loyal readers, some more than others, but there is no way for them to pay if they want to read their newspaper online. Many people like the positive ecological aspect of reading online and are proud they are saving resources--and many would be willing to pay for this vastly improved product yet the newspapers don't offer any way to collect this easy revenue. One way might be witha PBS-style volunteer membership package? With discounts among local businesses.

12: Become the host for all important discussions about local issues and politics. Moderate the discussions to ensure civil discourse. Nothing kills discussions faster than offensive comments made by anonymous people.

13: Newspaper journalists need new publishing skills in video, audio, images, and should have some basic knowledge of HTML and CSS. Being able to type is not enough.

14: Help raise money for schools and other essential local services. Show you are part of the community.

15: Create a safe online experience, free from phishing, malware, and adverts for scam services.

16: Create a search site to search local resources and businesses.

17: Create a news aggregation site that provides your readers with access to news and other articles available elsewhere.

18: Each newspaper section should provide a search engine specific to its topic and region: Business: Company information and financial services. Home: Search for builders, furniture, decorators. Food: Search for recipes, local restaurants, etc.

19: Offer free classified adverts online and also have a free section in print. You can charge for a premium listing that offers better visibility.

20: Create informational pages to help people in your communities with common tasks such as how to get a business license. Where to find your car if it has been towed. Information for people that have recently moved into the area. In different languages. Have your web people create pages that are mashups of available online data but presented in a more accessible form, such as mapping police reports onto regional maps. School information, etc.

21: Hire additional salespeople. It is is a different sales environment today and it requires a fresh approach. Salespeople used to selling full page or half-page print ads are not the going to be able to transition easily.

22: Host web sites for important community groups in your region for free. You can run advertising on them and the groups will benefit from having an easy way to publish online.

23: Create a way of allowing readers to share in the ownership of the newspaper, or somehow give them a role in what the newspaper should be doing to become more useful to its community.

24: Create a directory of local businesses with space for user comments. Offer premium listings for a fee that also shows the business is supporting the newspaper, with a sticker. Yellow pages is a huge local business that the newspapers could easily own.

25: What are your ideas for helping newspapers transition into the online world?

- - -

Please see:

- Why Pay-For-News Won't Work: The First Mover Disadvantage

- "Google Devalues Everything It Touches" - Wall Street Journal Chief

- Bye-Bye Free News - Murdoch Joins The Pay Debate

- Saturday Post: The Inevitable Rise Of Cockroach Media . . .

- Pandora's Box 1981: The Online Newspaper Experiment

Charlie Rose today started a series on the future of journalism.

A conversation about the future of newspapers with Walter Isaacson of "Time," Robert Thomson of "Wall Street Journal" and Mort Zuckerman of "The New York Daily News"

It was a fascinating discussion about micropayments, subscription models, and how newspapers can adapt to the challenge of low online ad revenues. And Poynter.org produced an excellent transcript.

Robert Thomson, Managing Editor of the Wall Street Journal, said many interesting things that showed a deeper understanding of the issues than the other panelists.

Mr Thomson said, "Google devalues everything it touches. Google is great for Google but it's terrible for content providers." He said that Google doesn't distinguish between the quality of the content around which it serves up ads, it is concerned with quantity rather than quality.

Walter Isaacson agreed. "Also, what Google does is it allows ads to be spread all over the Web. You can go to Google ad servers and put ads on any site there is."

Mort Zuckerman didn't think that micropayments for news articles would work. He said "We're ready to be the second or third newspaper that does that."

Mrt Zuckerman placed his hope in a new printing press. "You get a premium from advertisers if you have color."

Charlie Rose said,"But you're saying maybe the only thing that your new business model has in it is a better printing press and a cheaper printing press?"

Mr Thomson laughed off camera. Mr Zuckerman said, "Well, it's not -- yes, well, it's more efficient. We don't like to call it cheaper."

Mr Thomson supported Mr Zuckerman's belief that newspapers wouldn't go away. "I think Mort is on to something. Dead trees are definitely not dead. . . the idea of spending 30 minutes with any medium, with -- and the only multitasking you're doing is drinking a cup of coffee, that does make newspapers unique. And actually if you talk to ad people, they're starting to recognize that."

Mr Isaacson said nice things about citizen journalists and bloggers. "We're getting citizen journalists, bloggers, that are adding immensely to the wealth of information that we have."

He said that citizen journalists should be paid. "I think what you are trying to do is incent good, decent people who want to cover their town planning meeting or become citizen journalists or write blogs that are actually worth reading. You want them to be able to do it not just as an ego kick or as a hobby or as a civic contribution, but have people who have to put food on their table be able to afford to be citizen journalists, afford to be good bloggers."

The most important point was said by Mr Thomson: "Every newspaper is of itself a great brand, and to have brand value on the Web is to have a great advantage."

Mr Thomson has a better understanding of the issues because he spent several years as Editor of The Times newspaper in London. British newspapers have been able to adapt to, and exploit the Internet, in ways that US newspapers are only now learning.

[I used to work with Mr Thomson when he was Editor of the Financial Times in the US. And I met with him on a recent trip to New York. He said that on The Times, they had a team of people making sure that the news stories could be easily indexed by Google, but US newspapers are only just beginning to do the same.]

- - -

Please see:

Poynter.org has an excellent transcript here:

And I begin with you, Walter. Tell me how bad is it, from all the surveys that you took in putting this piece together, and what's a modest proposal?

WALTER ISAACSON, ASPEN INST.: I think it's pretty bad, because I think we've realized after the fourth quarter of last year in which Web advertising for newspapers started to decline, that Web advertising wasn't going to continue to shoot up and form a business model where you could keep giving away newspapers for free online and hope that Web advertising would support it.

Poynter Online - Romenesko

Here is the video of the Charlie Rose segment.

CES in Las Vegas was made more tolerable because of the good company of fellow journalist blogger Paul Mooney. One late night we were discussing the media industry, an occasional favorite topic of mine.

We were discussing how the economic situation was going to accelerate the broad disruptive trend within the media industry.

Less advertising would lead to a faster rate of job losses, and lower revenues for most, if not all media companies, and that also includes many newer media companies, Gawker Media for example. Simply put, it's not a good time to be in media--mainstream or newstream.

More recently, the Wall Street Journal cut 25 newsroom jobs.

Here is part of a memo to staff from Robert Thomson, Managing Editor of the Wall Street Journal:

It is obvious to you all that we are in the midst of an unprecedented economic downturn. We are also in the midst of an unprecedented increase in our readership, in print and online, but a precipitous decline in print advertising revenue has forced a close examination of our structures and of our costs.

It points to a curious anomaly within news organizations, that readership is often rising but revenues are falling.

And the reason is that advertising is less expensive online but news creation costs remain the same. The cost of being in the news business isn't being covered by online advertising revenues.

Media companies such as Google and Yahoo can sell online advertising at low rates and cover their costs but Wall Street Journal and other news organizations cannot survive without shrinking their productive resources, which can create a downward spiral of less content, and less revenue.

When journalists lose their jobs it's tough because they also lose their publishing platform. They lose their byline, they disappear from public view, and that makes it more difficult finding a job. And even when better economic times return, the majority of journalism jobs won't ever return.

In Las Vegas, Paul Mooney and I were thinking that we are in a better position than many of our colleagues in the media because we don't have far to fall. As long as we can keep the lights on, and maintain an Internet connection, we can still keep publishing during bad times, and worsening times. If you lose your job at a news organization you lose your public persona--a journalist that isn't publishing isn't.

We joked that we represent a new type of media: cockroach media. Paul is from New York where cockroaches can be formidable in their ability to survive the harshest environments. He says, "I've given cockroaches some of my best hits and they still manage to crawl away."

Cockroach media will survive this economic downturn a lot better than old and new media companies. And cockroach media should do well once the inevitable upturn comes around.

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Cockroach media:

Paul Mooney Living, Linking and Learning

I just viewed an excellent video posted by Patrick Hinojosa. It is a TV news report from 1981 in which newscenter 4 describes a new project, involving the San Francisco Examiner and several other large newspapers, to enable online viewing of their news stories.

The newspapers published full page ads to encourage people to sign up for the experiment.

Only a few hundred signed up for the experiment in online newspapers probably because it took 2 hours to download a full newspaper and Compuserve charged $5 per hour.

David Cole, an editor at the SF Examiner is quoted saying: "We're not in it to make money . . . we probably not going to lose a lot, but we aren't going to make much either."

Prophetic words indeed! Unfortunately online news is costing the newspaper business a lot of money as it has been unable to monetize that service.

It's a Pandora's box that the newspaper business probably wishes it shouldn't have opened.

Here is the link to the 2.17 min video. I'm not sure if you have to be a member of Facebook to view it: http://tinyurl.com/dc3cn5

Tough times call for tough measures and we can see that in the increasing numbers of layoffs among large tech companies.

It must be particularly tough on staff being cut from companies with large amounts of cash in the bank. They worked hard to help their companies create large cash reserves during the good times but they aren't able to benefit from those nest eggs when times turn bad. Too bad.

Here is a look at the cash (and debt) of some top tech companies:

Microsoft (MSFT) $19.71 billion ($1.98 billion debt)

Microsoft Layoffs - 5000 Jobs To Be Eliminated

Google (GOOG) $14.41 billion (no debt)

Google Layoffs: 6000 Cut - Details Kept Off Web

Intel (INTC) $11.84 billion ($1.99 billion debt)

Intel restructuring operations in Asia and US, up to 6,000 jobs affected

Cisco Systems (CSCO) $26.7 billion ($6.87 billion debt)

Cisco Schedules Conference Call for Q2 Fiscal Year 2009 Financial Results - Yahoo! Finance

Adobe (ADBE) $2.02 billion ($350 million debt)

600 job cuts at Adobe > News > Flash Magazine

Yahoo! (YHOO) $3.2 billion ($63 million debt)

Latest rumor has Yahoo firing 3,000 workers - BloggingStocks

eBay (EBAY) $3.64 billion (no debt)

EBay cuts 1000 - MarketWatch

Apple (AAPL) $24.49 billion (no debt)

Here is an excerpt from an editorial by John Dalziel at Flash Magazine on Adobe's recent 600 job cuts:

. . . It is interesting to see a company that makes almost a billion quarterly, thinking that a possible loss in revenue of 2-4% is a great reason to fire more than 8% of their staff?

. . . Let's hope that the Adobe executives remember that they're primarily in the knowledge business. It's really their employees that makes a difference, not layoffs that are staged to impress shareholders. After all - a company that earns $130.000 per employee per quarter (!) shouldn't really be considered so unprofitable it has to fire people? In our books, that's a decent profit so the layoffs seems more like a play for the shareholders than actually making a difference. Eventually this will hurt Adobe's innovation as employees feel it's an unsafe place to work.

600 job cuts at Adobe > News > Flash Magazine

The same argument could be easily applied to almost any large tech company.

Sarah Lacy over at Business Week writes:

Big companies could lose valuable employees to rival startups if they abandon their traditional lure: job security

In December, IAC Interactive (IACI) CEO Barry Diller said the unthinkable—at least for a corporate executive amid a recession. "The idea of a company that's earning money…to have cutbacks just so they can earn another $12 million or $20 million or $40 million in a year when no one's counting is really a horrible act when you think about it on every level," Diller told the crowd at the Reuters Media Summit. In other words, if you're making money, you shouldn't be laying off huge numbers of employees to please an investor base that's unlikely to be appeased in any case.

Corporate America, Swing Your Ax Wisely - BusinessWeek

"Women in the work place are very competitive with each other and that makes the glass ceiling twice as thick," says Adriana Gascoigne. She is the founder of Girls in Tech, a 1300 strong organization that seeks to empower women in the technology industry.

Tech companies continue to be heavily male dominated and that's something that Girls in Tech hopes to change through networking, roundtables, and entrepreneurial workshops. And only women are invited.

"When women get together we can connect on a deeper level than if men are around," says Ms Gascoigne. "It helps to build confidence and it helps to create stronger relationships."

Men are allowed to some events such as dinners but they have to be a guest of a member.

A lot of women in tech tend to try to blend in, they dress in a similar manner to the men, and they behave in a similar way but this is a mistake she says.

"It is important to embrace feminity, to embrace girliness," says Ms Gascoigne. "Too many women think they need to be more like men to succeed. You don't."

Ms Gascoigne says she was lucky growing up, her parents encouraged her to be very self-confident, but that's not true for many women. Being in a heavily male dominated workplace can be intimidating.

It was this realization that led Ms Gascoigne to create the Girls in Tech organization.

The first meetings started with just five or six women getting together every other week. In March 2007 Girls in Tech was launched as an official organization.

IIn September 2008 Jessica Valenzuela and Davina Anthony were encouraged to participate as co-founders to help strengthen the presence of Girls in Tech. There are chapters in San Francisco, New York, Los Angeles, and plans for chapters in Portland, Austin, and London.

(Ms Gascoigne is the director of corporate communications at Hi5, one of the world's largest social networks.)

Please see:

» About Us : Girls In Tech :

Recent Girls in Tech articles:

» How To: Biz Dev in a Slow Economy

» Tune Out to Tune In

» Keeping your career UP in a DOWNTURN: Job Strategies for a Bad Economy

Here is an upcoming Girls in Tech event:

- - -

Thoughtleaders: Where are the women in technology? Anita Borg Institute aims to shake things up

The reason we have such a huge choice of low cost computers and all sorts of gizmos and gadgets, smart phones, and electronic toys is because of the amazing advances in chip designs. Hundreds of small chip design firms are producing incredibly advanced semiconductors that power a slew of innovative devices.

But the reason we have so much innovation in the chip industry is because of a manufacturing revolution that began more than twenty years ago. In 1987, Taiwan Semiconductor Manufacturing Company (TSMC) was founded as a new type of chip company--it was a semiconductor foundry--it made chips for other companies.

This completely transformed the chip industry and ushered in an innovation explosion. Chip designers didn't have to build their own chip factories, they could buy production time from chip foundries. Previously, chip startups had to raise hundreds of millions of dollars, primarily to pay for chip production--yet their value was in the designs.

Chip foundries led to a dramatic cut in the cost of establishing a chip company. Investment now went into chip design, not building a manufacturing line and learning how to run it.

This simple manufacturing revolution is responsible for all the innovation in electronics. And that's a model that could be effectively applied in the automotive world, and unleash a wave of innovation.

Manufacturing expertise . . .

I support a bailout of the automakers for one key reason: manufacturing expertise. If they shut down then we lose many decades of manufacturing knowledge and processes--it would be hugely expensive to recreate.

That manufacturing expertise can be used to build a Hummer, or it can be used to build hybrids, electric cars, and anything with wheels and an engine.

There is a tremendous amount of innovation in transportation that could be unlocked if you didn't have to have build your own factory to make the vehicles.

General Motors and the other car makers know how to re-tool lines to make all sorts of vehicles. They know what designs, and components work, and what doesn't; they have relationships with parts manufacturers, they have software design systems, test systems, air tunnels, algorithms...

They also know how to get through the red tape of qualifying vehicles for US roads. There is a massive amount of knowledge and expertise within the Big 3 that could be applied to producing the greenest of green vehicles.

My proposal is to use government monies to convert the Big 3 auto makers into car making foundries, in a similar fashion to chip-making foundries. That way, small startups with great ideas could quickly get their designs into production without requiring massive amounts of capital and learning how to build and operate a car factory.

Tesla Motors . . .

Take a look at Tesla Motors, one of the most innovative car companies of the past decade. The Tesla Roadster is an innovative all-electric sports car made with a carbon fiber body that has a range of 244 miles and does zero to sixty in less than 4 seconds. It received Time Magazine's 2nd best inventions of 2008.

But you have to very rich to buy one of these $109,000 cars primarily because building a manufacturing line is so expensive. It also means that Tesla had to raise massive amounts of capital to fund the manufacturing lines. This means the innovative Tesla technology will take years to trickle down to mainstream models--yet that's where it's lower carbon-footprint would have the most value.

Tesla ran into lots of delays because of manufacturing problems, and also problems with some of the components.

What if Tesla contracted with GM to make its cars? GM would know how to quickly tool up a production run, it probably would be able to help out with some of the drive-train problems Tesla had. GM would know what things work and how to avoid many problems that Tesla had to learn the hard way..

It is this kind of manufacturing expertise that could be leverage across a new industry. Small startups with great designs and technologies could quickly come to market without having to build their own production lines.

Car foundries could set off a huge wave of innovation at precisely the right time when we are searching for more responsible and sustainable forms of transport. And the US could grab a leadership position with such a plan.

Let's turn the Big 3 auto makers into foundries that can create a platform for a new type of innovative auto industry.

I've always been a little uncomfortable with the blogosphere's penchant for blatant self-promotion. However, the following videos are not completely all my doing :-)

Here is the third video in a series that SanDisk commissioned as part of its "Life Moves" series that encourages people to use flash disks to create and share videos. The series contains a mini-documentary on SVW and covers some of my work--which includes non-geek coverage of Silicon Valley/Bay Area culture with Allison Lovejoy from Lovejoy Lowdown.

The series is co-produced by the SF Media Collective (of which I am a founding member) and Bunny Production. Special thanks to Aron Pruiett, Celso Dulay, and Chris Knight.

John Roberts, the CEO of SugarCRM, seems to enjoy being a thorn in the side of his much larger competitor, Salesforce. He says Marc Benioff, the CEO of Salesforce wasn't too pleased when he found out SugarCRM was hosting its user conference at the Marriott, just a few yards from the Salesforce Dreamforce conference at the Moscone Center in downtown San Francisco.

"When Marc Benioff found out we were at the Marriott he pressured the hotel to move us out. That's how we ended up here at the St. Regis, and Marriott is paying for it." The move might have backfired for Salesforce because the St. Regis is a lot nicer than the Marriott and just as close to the Moscone.

The reason SugarCRM might be irking Mr Benioff is that it's growing very fast. "We now have more than four thousand customers, and more than half-a-million users, in 80 languages. That's in just four years."

While Mr Roberts credits Marc Benioff with educating the market about the benefits of software as a service, he says SugarCRM is winning business because there isn't any customer lock-in as there is with Salesforce and its proprietary behavior. For example, application developers for the Salesforce Force.com platform have to use a programming language called Apex.

"What is the point of Apex? We built SugarCRM in PHP and we use Internet standard technologies. We are open source, our technologies are owned by the Internet. We view ourselves as the Linux of the CRM world."

Much of the demand for SugarCRM comes from word of mouth, says Mr Roberts. "I don't have to have a big sales force that needs to travel all over the place." Daily downloads average 5,000 per day and recently exceeded 5 million total. Site licenses are $449 per user or customers can choose to the on-demand version for just $40 per month.

"The Internet has totally changed the software industry. We allow our customers to try before they buy."

SugarCRM is home grown and developed in Cupertino from scratch. "We don't off-shore development. I don't believe that you can build innovative software that way," Mr Roberts says.

The company has strong growth and money in the bank. "We raised $20m last year but we haven't had to touch it. We were planning an IPO in 2008 and we needed to show we had $20m in cash."

Mr Roberts says the company might have to wait until 2010 before it can IPO. SugarCRM was hoping that MySQL would be the first commercial open source company to have a successful IPO. But MySQL abandoned its IPO plans and agreed to be acquired by Sun Microsystems for $1bn at the beginning of this year. Now SugarCRM could become the first commercial open source public company.

Until the IPO market reopens, Mr Roberts isn't twiddling his thumbs. "There are five million businesses in the US, and only 10 per cent of them have CRM, the rest are using spreadsheets. That's a huge opportunity for us."

There is a Congo connection to cell phones and all types of digital devices...

We are constantly reminded that we live in a global community and what we do here can have sometimes unknown consequences elsewhere. That's true for the bloody war in the Democratic Republic of Congo, where 80 per cent of the world's Coltan is mined.

Coltan is a mineral that is used to produce tantalum, a metal with unique properties for storing an electrical charge in capacitors. It is used in all cell phones and in digital devices of all types and sizes.

Here is cellular-news to explain more:

Coltan, Gorillas and cellphones

A recent report by the UN has claimed that all the parties involved in the local civil war have been involved in the mining and sale of Coltan. One report suggested that the neighboring Rwandan army made US$250 million from selling Coltan in less than 18 months, despite there being no Coltan in Rwanda to mine. The military forces of Uganda and Burundi are also implicated in smuggling Coltan out of Congo for resale in Belgium.

. . .The main area where Coltan is mined, also contains the Kahuzi Biega National Park, home of the Mountain Gorilla. In Kahuzi Biega National Park the gorilla population has been cut nearly in half, from 258 to 130 as the ground is cleared to make mining easier.

. . .American-based Kemet, the world's largest maker of tantalum capacitors, has asked its suppliers to certify that their coltan ore does not come from Dem. Rep. of Congo or from neighboring countries. Such moves could lead to "Gorilla Safe " cellphones being marketed, much in the same way that Tuna meat is now sold as "Dolphin Safe".

Should we stop buying any electronics unless it is certified to be "civil war free?" Coltan buyers report that it is nearly impossible to know the original source of the coltan they buy.

The civil war that has displaced and killed millions of people in the Congo is more like a systemic invasion by six armies to exploit the mineral wealth of the country. So that people's insatiable appetite for gizmos and gadgets can be satisfied?

So think twice about that new gadget, smartphone or laptop. If you need a reason to wait, here is a good one. Another reason why living green is nearly impossible unless we get rid of inequalities and war worldwide.

Here is a news report on coltan mining:

I've been covering the venture capital community for many years and I'm always mystified why they all act like sheep yet think they are wolves.

Why is the VC community running around like Chicken Little saying the sky is falling when their horizons aren't in the now, they are in the future?

If I'm a startup, what do I care about what the economy is like today? I care about what the economy is going to be two to five years out.

If the sky is falling today it likely isn't falling one or two years out, paradoxically these are good times.

As a startup you should be investing for that future and working to line your ducks up instead of cutting valuable people and cutting back on outside services such as PR and social media relations.

The savviest Silicon Valley companies know that you double up your investments in down times because business cycles are cycles: you want to be ready when the upturn comes.

Since you can't time market swings you are better off building a company in down economic cycles because you know there is going to be an upside.

That's why the Sequoia RIP presentation is puzzling. Why are these VC veterans reacting to what has been happening now rather than positioning for what's coming next?

Could it be a that Sequoia is hoping that it can scare competitors to its portfolio companies into cutting back, pull their foot off the pedal? And that that would give their companies a fighting chance? Is it a setup? That's what I would do, but I don't think Sequoia is quite so Machiavellian.

Sequoia has been a huge influence on the VC community. I've come across many people telling me that their VCs are all the same, telling their startups to cut, cut, and cut some more. One of my contacts says: "It's interesting, all the VCs are using exactly the same language." These are the Stepford Wives of Sand Hill Road.

But there are VCs and plenty of others, prepared to call BS when they see BS, and they don't act like sheep, and they are continuing to fund.

This is a good time to invest, this is a good time to startup, imho.

Sustainability and the availability of spectrum are among the largest challenges for European telcos says Olaf Swantee, head of Orange Mobile, a subsidiary of France Telecom.

Orange is one of the largest and fastest growing European mobile carriers. It operates in 28 countries and runs 18 R&D centers around the world. It spends about 2 per cent of revenues on R&D, far more than US carriers. It is part of its strategy to avoid the commoditization trends in mobile and distinguish itself from the competition.

I met last week with Olaf Swantee, head of Orange Mobile at the Orange Labs, San Francisco:

Some highlights from the interview:

- Orange has a close relationship with Apple and co-develops certain technologies.

- It also invests in content which is responsible for about 6 per cent of revenues.

- Normal user uses 30 KB of data per month, Orange's iPhone users use abut 90 MBytes per month. Blackberry users use about 1 to 2 MBytes per month.

- Orange is very keen on building a seamless mobile internet, despite the high costs of investment in building out its wireless data networks. It is doubling the size of its data network every year.

- Mr Swantee says sustainability is one of the biggest challenges for Orange. Larger data networks use more energy, require more bay stations and will require more spectrum.

- European regulators are a problem.

- WiMAX is not seen as a solution to the spectrum bottleneck issue.

- Orange is looking at Google phone and partnering on search.

Also on camera is Yves Martin, Chief of Staff. Off camera is Georges Nahon CEO of Orange Labs San Francisco, and Pascale Diaine.

A description of Twitter: being able to send a text message of no more than 140 characters to a self-selected group of subscribers via a cell phone or computer.

That doesn't seem very exciting. Yet there continues to be a lot of chatter about Twitter and it is well deserved because this simple application has become tremendously useful to growing numbers of people.

But communicating why Twitter is so interesting is one that cannot be conveyed unless you are in it. This is one of the hallmarks of many important applications such as blogging, Facebook, etc. You can't and won't be able "get it" unless you are in it.

We have moved beyond "generation gap" differences in technology use and moved into the "experiential gap" in terms of use and understanding. Your experience with an application such as Twitter provides an understanding that cannot be communicated by reading about it or even being told about it.

Twitter is simple--another hallmark of powerful applications. Blogging is simple. RSS is simple. These are all important technologies that characterize this second major phase of the Internet--but you wouldn't know that unless you use them, unless you are involved with them.

Twitter has spawned a growing number of applications that sit on top of this simple platform and extend its usefulness. Twhirl is one of those Twitter applications--it helps organize your "tweets" with a simple user interface. Twhirl was acquired earlier this year by Seesmic, the "video conversation" site.

I've been using Twhirl but recently shifted to TweetDeck, which does a much better job of presenting "tweets" than Twhirl. (Look for some interesting acquisition news on TweetDeck very soon.)

And we will certainly see more and more applications built on top of Twitter and also Twitter-like applications. Yammer is one of those, which recently won the TC50 competition (to howls of fix).

What will be interesting is how Twitter will survive. It hasn't yet figured out a business model and its infrastructure is weak and doesn't appear to be very scalable.

No matter, if Twitter doesn't make it long term the concept will certainly survive and others will provide the platform. And someone will likely eventually roll up all the Twitter apps, or at least their functionality, and own the entire stack--maybe that will be Twitter.

For nearly four years I've been warning about huge changes in the media world and why the old media can't make it into the new media world.

There is an American expression that I love to use: "You can't get there from here." It seemingly doesn't make sense but it makes perfect sense in this context.

You can't get there from here. When I left the Financial Times four years ago to become the first journalist to leave a top newspaper job to become a "journalist blogger" I could see the economic model of the old world, and the new economics of new media.

I could see that pageviews and clicks could barely support me--a chap with a laptop and a cell phone. How could the economics of the new world support the legacy cost structure of the old, with its office buildings, printing presses, pension plans, etc?

I could also see that the transition of the media's business model would be tremendously disruptive. And that this disruption would accelerate over the the next few years, as indeed has happened.

I asked then, and I ask now: What happens if the old media dies before the new media learns to walk?

What will happen to journalism and to the hundreds of years of best practices created since newspapers were born from Guthenberg's moveable type machine, if old media can't transition to the online Movable Type of the new media world?

And it won't be able to transition. Because the economics of new media -- pageviews and clicks -- can't support it.

New media is defined by a machine-based economic model. It is cheaper to plug in a bank of servers and run software to publish content than it is to hire editors, manage journalists, and carry all the other employee related expenses of healthcare, pensions, offices, etc.

Google is machine-based media. It uses servers and software to harvest and publish content and then sell advertising around it.

Google and other machine-based media companies such as Yahoo, AOL, etc can cover their costs by selling ads cheaply. And that's what sets the price of online advertising--machine-based media companies.

Media companies that require people to generate their content can't compete. Their costs are far higher than machine-based media companies--yet they have to sell their online advertising at the same rates.

That's why "You can't get there from here."

What happens if the old media dies before the new media learns to walk?

It won't be pretty. It'll be ugly and we'll have to relearn our best practices. And there will be considerable damage done to society.

But it is not just media companies that are at the center of this disruptive tempest. Many new startup companies are in the cross hairs too.

(Continues here...)

I recently interviewed Judy Estrin, one of Silicon Valley's top entrepreneurs, and asked her about the gender gap in the valley and why there aren't more women in senior executive ranks.

Here is her reply:

Also, here is my recent interview with Ms Estrin about her new book:

Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy

We spoke for about 90 minutes, here is a highly edited version of that conversation.

- - -

http://www.theinnovationgap.com/

Here is my recent interview with Judy Estrin, former CTO at Cisco and one of Silicon Valley's most successful serial entrepreneurs. She has been concerned about the topic of innovation for many years because we aren't making the investments needed--in Silicon Valley and as a nation.

She says that the explosion of Web 2.0 type innovation is masking a large problem.

She has a new book on this topic: Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy

We spoke for about 90 minutes, here is a highly edited version of that conversation.

- - -

http://www.theinnovationgap.com/

This is a guest column written for Silicon Valley Watcher by Greg Gianforte, CEO of RightNow Technologies and a serial entrepreneur:

Raising venture capital for early stage start-ups seems to be the prevailing path for most entrepreneurs; however, most would-be founders should reconsider.

Here are some reasons why:

-If you start by selling your concept to potential prospects (rather than stock to VCs), you will either end up with initial customers or a conviction that your idea won't work. Why raise money and then find out which one it will be?

-Raising money takes time away from understanding your market and potential customers. Often more time than it would take to just go sell something to a customer. Let your customers fund your business through product orders.

-Adding VCs to the mix early gives you an additional set of masters you must serve in addition to your customers. It is always hard to serve two masters, especially in a startup.

-With no money you can't make a fatal mistake. This is a blessing. Without VC money, you are forced to figure out how to extract funds from your customers for value you deliver. Ultimately that is the only thing that really matters.

-Money removes spending discipline. If you have the money you will spend it - whether you have figured out your business model and market or not. -Raising VC money determines your exit strategy. You will either sell the business or take it public. What if you end up with a very profitable, modest sized business that you want to just run? That is no longer an option once you raise VC money.

-You sell your precious equity very dearly before you have a proven business model. This is the worst time to raise money from a valuation perspective. I know this is a contrarian view. And some of you are saying that might be fine for a small company.

Don't forget Dell, HP, Microsoft all originally started without VC funding; you can build a big business with bootstrapping and without VC money. At RightNow, we doubled our revenue and employees every 90 days for two years before we took any outside money, and even then the employees retained more than 75% ownership after raising $32m.

- - -

Foremski's Take:

I see a lot of companies that are seeking VC money, or have VC money but need more, as if that would make their business viable. VC money isn't always smart money and it isn't always the smartest thing to do. Greg's column needs to be republished from time to time because it remains relevant.

Greg Gianforte is the author of a new book:Eight to Great: Eight Steps to Delivering an Exceptional Customer Experience

His previous book is: "Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money."

If you would like to contribute a quest column please let me know: tom(at)SiliconValleyWatcher.com.

Lawrence Lessig, a Stanford university law professor, claims that the US government has prepared a type of Patriot Act that is in place and ready for Congress should a major security event occur, a 9-11 type event. And just like the Patriot Act contains all sorts of new restrictions, there is concern that this I-Patriot Act will have many restrictions and laws that may limit the way the Internet is used.

This is from Fortune Brainstorm conference "2018: Life on the Net." It was moderated by Quincy Smith, CEO of CBS Interactive. On the podium was Lawrence Lessig, professor of Law at Stanford Law School, Joichi Ito, CEO of Creative Commons and Chairman of Six Apart Japan, and Philip Rosedale, founder and chairman of Linden Lab, (Second Life.)

The full video has been featured on Boing Boing. Lawrence Lessig on the coming "i-Patriot Act" - Boing Boing

I pulled out a three minute extract from the full video:

http://www.youtube.com/watch?v=on4DPpN7GwQ

This is the relevant section where Mr Lessig talks about having dinner with Richard Clark, the government Counter terrorism Czar.

Lessig: "I had dinner once with Richard Clark at the table and I said 'is there an equivalent to the Patriot Act -- an iPatriot Act -- just sitting waiting for some substantial event just waiting for them to come have the excuse for radically changing the way the Internet works?' And he said, 'Of course there is' -- and I swear this is what he said, and quote -- 'and Vint Cerf is not going to like it very much.'"

Transcript courtesy of Boing Boing.

The full video is here:

Vint Cerf, father of the Internet and chief Internet evangelist for Google.

I interviewed Mr Cerf at the Fortune Brainstorm conference in Half Moon Bay. He often speaks about net neutrality. In this interview he says that companies such as Verizon misquoted him in full page adverts in major newspapers.

He says the Telcos are acting like little kids in a tantrum. "I'm not going to build this system unless you give me three scoops of ice cream and a pony. My reaction to this is quite negative. It's harmful to the national interest to behave in this way."

Mr Cerf wants a split in the way broadband providers operate so that they are not allowed to interfere with any applications on the Internet and that the carriers charge themselvesl, from an acconting point of view, how much bandwidth they use.

He says that carriers should be provided with incentives to make them behave differently or there should be an incentive for competitors to come into the market that can effectively compete with them and to take away their monopoly position.

Here is the 3.45 minute interview, my apologies for the lighting but the audio is very interesting.

http://www.youtube.com/watch?v=w-dLq3uIJos

Vint Cerf, who is widely regarded as the 'father of the Internet' for his contribution to the original TCP/IP specification, has lashed out at carriers accusing them of behaving like young children throwing tantrums. In an especially strongly worded attack, Cerf called for structural separation between the wholesale and retail broadband arms of carriers among other changes.

In a brief interview with SiliconValleyWatcher, Cerf said carriers were effectively saying "I'm not going to build this system unless you give me three scoops of ice cream and a pony", and provided a laundry list of changes in the regulatory environment that he'd like to see to improve the situation. These include:

The reintroduction of common carrier status;

Structural or accounting separation, with a requirement that carriers wholesale broadband at the same prices that they charge themselves; and

No interference with other providers' applications (ie, net neutrality).

The current behaviour of carriers is harmful to the national interest, he said - an observation that wouldn't only apply to the US.

"[Deregulation] is crap, especially where you have a set of incumbents," he said. Instead, we "need a set of rules that makes sense."

Consequently, carriers need to be given incentives to behave differently or (Cerf's emphasis) incentives should be provided for competitors to compete with incumbents.

"In places where there is strong regulatory control, it seems to be working," he said.
You need to keep in mind that Cerf is a vice president at Google (a strong proponent of network neutrality), but there's no reason to assume that his opinions are not genuinely held.
We can't help feeling Cerf could just as easily be talking about Telstra as the US carriers that were the subject of his onslaught.
Currently an argument is raging between incumbent dominant carrier Telstra and other smaller players, with regulator the Australian Competition and Consumer Commission sandwiched in between. Telstra, a front-runner to build a national broadband FTTH network, is pressing to have the market dregulated so it is not forced to sell competitors bandwidth at regulated wholesale prices.

- - -

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You need video services! Creation, Distribution, Attention. Contact Aron Pruiett at SF Media Collective- 415 533 4487 - Here is a demo reel.

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On a recent visit to Intel as part of the Intel Insider group, Sean Maloney, Intel's CMO, talked about online marketing.

In this clip Mr Maloney talks about sometimes feeling that he is in a "fog" in terms of online marketing because of the fragmented nature of the online world. This is a good example of the challenges facing nearly all Chief Marketing Officers, a job that has become one of the most challenging in any organization.

[Please see: Chief Marketing Officer - Toughest Job Around . . .]

http://www.youtube.com/watch?v=h0jch0hlnwM

- - -

Support the source: Silicon Valley Watcher - Save a forest! - Order the amazing Amazon Kindle Electronic Book Reader!

Tuesday I had the rare privilege of meeting the great jazz guitarist Stanley Jordan at the studio of leading Bay Area photographer Jim Dennis. Mr Jordan is in town as part of a tour for his new album "State of Nature."

I have no musical talent at all, I couldn't carry a tune even if it were super-glued to me. I enjoy talking with musicians and I'm always interested in how they think about things because they use parts of their brain that I don't.

As we were listening to the excellent "State of Nature" Mr Jordan was telling me about a project he has been working on for several years. He has developed software that can take large amounts of data and translate it into musical passages.

"I first started doing this with weather data. I've been collecting barometric, temperature, humidity data for many years and by assigning different instruments to the data I could hear patterns in the weather that I couldn't see in the numbers," said Mr Jordan.

Then he began experimenting with currency data, looking at the exchange rate between the US and Canada. "I used several years of currency exchange data and I could hear the drop in the US dollar and I knew it would continue to drop."

Stock market data . . .

Last year he loaded up with ten years worth of stock market data. "I was shocked at what I was hearing and I stayed clear of the market. This was a just a few months before the whole sub-prime collapse."

I asked how he could tell if a trend would continue or stop. "Musical patterns have a certain energy that needs to be played out and that's what I was hearing."

It's an interesting approach to interpreting large amounts of complex data. I wonder if a person such as myself, with no musical ability, could interpret that data in the same way. Or does it take a musician's mind? I'm thinking the latter.

Mr Jordan said he can tell me more about his experiments with data. "It's the opposite to computer music in which you try to create music by programming data into the computer. Here, you take existing data and map it to the music, you can assign certain data to the alto, etc."

Stanley Jordan is in town for the next few days, he is playing at Yoshi's in Oakland July 7-9.

- - -

State of Nature

Stanley Jordan's first release in more than a decade is "State of Nature" it's an excellent album. I asked him what inspired this project.

"I was thinking about nature and how inspiring it is to me. And I was getting upset at how much pollution and destruction there is, and how it often seems we can't do much about it."

He talked about how the outside world, nature, inspires our inner world and that through music he hoped to motivate people to do something about the external world.

"But I didn't want it to come across as preachy at all, it is an invitation, it's more like "here, come over here and check out these amazing things."

And that's exactly how it is, it is not a preachy album, it's inviting and motivating. The last track on "State of Nature" is a theme based on Joe Jackson's "Stepping Out." It's uplifting and extraordinary in its gentleness and its spirit. "With that I wanted to invite people to step outside and to do something in the world, to change it for the better."

- - -

Support the source:

State of Nature is a series of reflections on the relationship between Humankind and the natural world. Through music, Stanley attempts to address the fundamental questions of Man's inharmony toward self, other, and nature, and then attempts to musically express the partial answers he has found in his quest. Extensive commentary in the liner notes chronicles his thoughts on these matters and illuminates the meanings of the songs. The songs are mostly instrumentals and are intended to stand on their own, yet each contributes to the overall theme in a specific way. Using the music as his guide, he ponders the questions of how we can be so knowingly destructive to the environment and yet not change our ways, and how we might develop ourselves on the inside to becomes more harmonious with nature. To his surprise and delight he finds his own answers within, and he attempts to share these insights in the music, which is ultimately hopeful and optimistic. The key to finding the answers was to realize that his own work on this project symbolized Humankind's quest toward being in the world--not only living sustainably but also attempting to achieve and maintain a state of grace.

[Interview with Paul Krutko - San Jose's Chief Development Officer.)

When the dotcom dotbomb burst in 2001, San Jose lost 225,000 jobs over a two year period--it was a disaster, it was a larger loss of jobs than for any other US metropolitan area since the Great Depression.

Now as the economy recovers, the city of San Jose is being proactive in helping its businesses succeed in the global economy, and also to create a diversity of economies to balance out boom and bust cycles in different markets.

Paul Krutko is the architect of San Jose's strategy, working with mayor Chuck Reed to implement a broad number of changes: in how permits are granted, to building incubators for green technologies, and helping San Jose become the "greenest city" in the US through innovative housing and transportation policies.

So far so good . . .

I spoke with Mr Krutko earlier this week and asked him about the Silicon Valley economy and if there were any signs of a recession.

"San Jose represents about 60 per cent of all Silicon Valley jobs so we see trends first. So far, we don't seem to be impacted by the recession, our unemployment rate is low, 5.2 per cent, a full point below the California average," said Mr Krutko.

Since 2003, San Jose has steadily been gaining jobs, about 55 thousand, and 11,700 in 2007. Although the number is still well below the number of lost jobs, "the graph shows a steady and consistent increase which is what we like to see."

A key focus for San Jose is to make sure that its largest companies are well supported and that the smallest companies have a place to grow such as in one of San Jose's incubators.

To help growing companies, San Jose has made it easier to gather the permits for expansion. Instead of running around to several different agencies to get the permits needed, San Jose has instituted a program where in just one meeting, companies can meet with representatives of all the agencies and get permit approval in as little as a few hours.

This program has helped speed approval of about 9.1m square feet of office space, representing 15 thousand jobs, and equivalent to twenty seven 17 storey buildings (San Jose's height limit).

Similar speedy permit pre-approval has been applied to production equipment from which the city earns a property tax.

Shortening the commute . . .

With higher gas prices local businesses have sought to bring down the long commutes for their staff. San Jose has now changed some of the zoning restrictions for property that is close to the light rail corridor.

Businesses were only allowed to build on 35 per cent of their acreage."We now allow businesses to build as much as 135 per cent of their acreage, so we have a taller and denser footprint along the light rail corridor. We also have approved 32,000 residential units so that people can live closer to work," said Mr Krutko. About 3 million square feet of 29m square feet of new office space has been built, and 8 thousand residentail units have been built so far.

Eggs in many baskets . . .

It is interesting to see more PR firms launching their own blogs. This is good because I've always said that PR firms cannot claim to know anything about new/social media if they aren't using it themselves.

One way to check out if a PR firm understands blogging, etc, is to see if they have a blog of their own. Many don't, or if they do, they post very infrequently, and usually after meetings abut what they will blog about. Yet nearly every PR firm offers a new/social media practice to clients and claims that they understand this medium. This is BS imho.

To separate those that say they know all about blogging, but don't do it, I'm going to take a regular look at PR firms and their blogs or lack of them. Also, I'll be looking to see who blogs in those firms, are they junior or senior?

Here is a new blog from the Technology Practice Group at Ogilvy PR: Tech PR Nibbles. Even though Luca and his team, have been blogging a long time it is not to late to start. Seriously. Don't wait. Because if you are not in it you don't know it. And that's the truth, ask any blogger.

Luca Penati wrote the latest post: » Social Media or Socialized Media?

For the past couple of years I haven’t been in a client meeting or industry event where “social media” isn’t mentioned. Forget “mention”: it has been at the core of the discussion. But in all these conversations, what hasn’t been covered is how traditional media, in particular tech press, is evolving, changing, adapting; and what this means for “traditional” tech PR professionals.

Send me examples of PR blogs in the comments section or via email.

We visit Cybozu Labs, created by Cybozu, a very successful Japanese software company founded by Toru Takasuka, from Lunarr. Cybozu Labs tries to offer a US-like environment to incubate new ventures.

This work environment is far different from that in other Japanese companies, which one person described as "jail" with very little space per person because of the high costs of office space. This is part of Cybozu Lab's efforts to attract top talent away from the large companies.

We see presentations from Yuichi Kawasaki, from Hatena; Shimizu Ryou from Ubiquitous Entertainment; Tom Sonoda from Utagoe; and Ken Suzuki from Sargasso. We also have a discussion about the differences between markets in Japan and in the US.

One of them asks how do you take a product out of the geek community and into the consumer markets? I said that this is a problem in the US too, there are a myriad web 2 applications popular in the geek communities but are completely unknown in consumer markets. Education needs to happen buy that's a slow process.

We walk down a narrow alley and squeeze into a narrow room to meet with Mr Banganji and Mr Shimachi from a "garage" based Web 2.0 startup called Rinen. Their place seems more like a closet than a garage.

http://www.youtube.com/watch?v=TauchMpPAQ8

We hear about several projects they are working on. We also hear about their challenges, especially in finding VCs willing to invest in early stage companies.

One of their projects is called OpenTrace, a wiki-like database to calculate the carbon footprint of everything. This value could then be represented on the packaging of anything and help consumers make better decisions.

[I'm on my first trip to Japan as a guest of Lunarr - a Portland based tech start-up founded by two Japanese entrepreneurs Toru Takasuka and Hideshi Hamaguchi. On the trip with me is Marshall Kirkpatrick from Read Write Web, Bob Walsh from 47Hats, and Kristen Nicole from Mashable.]

It's raining. But we have umbrellas as we make our way to the Kanda Myojin shrine where many businessmen go to receive a good luck ritual blessing from the priests.

There are quite a few IT companies in the area and this shrine has a special talisman that is in the shape of a microchip.

We created the American Japanese Bloggers Association (AJBA) for the purpose of the ritual blessing and I was appointed chairman. The ritual consisted of prayers, drums, and the swishing of branches. I sit on a stool and am handed a small branch with leaves attached. I recieve it with both hands and place it on a small altar with the end pointing to the back of the shrine. I bow twice, and clap my hands twice, I bow again and sit down.

If you ask Japanese people which religion they belong to, 90 per cent say Budhist, and 90 per cent say Shinto. They combine the two. Shinto celebrates nature and it belives that there is a god in everything, a stone, a tree. In Shinto there are 8 million gods. I much prefer this form of pantheism to the monotheism of Christianity with its angry and evangelical "sky-god" as Gore Vidal terms it. [Please see the excellent: Gore Vidal Monotheism and Its Discontents]

After the tea ceremony we walked out from what seemed like a small teahouse built next to a peaceful garden into a hotel hallway. A jarring transition.

We then take a stroll through the high-end Ginza shopping district, where a square meter of land retails for about $100,000. It's one of the most expensive pieces of real estate in the world.

It is late afternoon by the time we head over to the Roppongi Hills Mori Tower for a 360 degree view of Tokyo from the 54th floor. The 333m tall red Tokyo Radio Tower dominates the landscape, especially at twilight.

In the morning we meet up again with Hisashi Katsuya, from IBM Japan Venture Capital Group, and meet his colleague Tsutomu Kodama. These two will be our constant companions and guides throughout our entire trip.

They used term Deep Dive into Tokyo to describe our trip because it was designed to immerse us in the old and modern cultures, in and around, Tokyo.

This morning our first stop is the Asakusa (old town) district to visit one of the oldest temples Sensoji, built more than 1,000 years ago. At the entrance gate is a huge lantern.

[Kristen Nicole and Tsutomu Kodama in photo.]

The flight from SFO to Tokyo Narita airport is just about the right length of time: 9 to 10 hours depending on direction and how the jet stream blows. Enough time to watch a movie, eat dinner, and wake up for the snack 90 minutes from deplaning.

I had barely slept the night before because I felt like a kid again and waiting for Christmas, my first trip to Tokyo. And I didn't feel tired at all when we landed and got onto the bus for the Tokyo Dome Hotel.

After a quick shower we were in the lobby and meeting with Hisashi Katsuya, an executive with IBM Japan. Mr Katsuya is a human social network, a central connector for the Japanese VC and startup communities. He works with IBM venture capital group and is often described as the most connected person in the Japanese VC community. He knows all the startups that are worth knowing.

He is also a native of Tokyo's labyrinth of streets, and knows its narrow alleyways and hidden gems very well. He guided us past ancient temples and down narrow alleys with cobblestones, and then into a tiny restaurant that could have been someone's living room that served superb food.

Here is a quick account:

http://youtube.com/watch?v=JwvvDroHYHg

More essays on Tokyo every day all this week . . .

_ _ _

Related Stories:

Lunarr: A Once in a Blue Moon Company with a Unique Collaborative App

Lunarr Launches Thought Provoking Collaboration Tool - ReadWriteWeb

The Wall Street Journal is moving to News Corp's HQ in midtown Manhattan on 1211 Sixth Avenue, just a stone's throw from the Financial Time's US HQ on 1330 Sixth Ave. This is a long circuitous journey back to the heart of the US media capital for Robert Thomson, the former head of FT US and recently appointed managing editor of the WSJ.

Robert Thomson is a long-time friend of Rupert Murdoch, both are Australian, and both have newspaper ink in their veins. Rupert Murdoch has proved himself as the savviest media tycoon on the planet, and Mr Thomson is not too shabby himself.

I worked with Mr Thomson when he was editor of the US FT, when he presided over the launch of the US version of the FT in 1999. Those were thrilling and heady times to be a journalist, the FT was pouring more than $100m into the launch, and we were taking on the Wall Street Journal in it's own backyard.

Mr Thomson had assembled a fantastic team of talented journalists and editors and we were all raring to go. We were the underdogs against the massive Dow Jones. And we were getting great stories the tough way--not with pre-briefings or stories handed on a plate--but scoops through hard-nosed journalism.

It was the best place to be bar none and I revelled in being part of the most exciting new media launch in decades. Visiting the US HQ for editorial meetings was always a high point, I would always return to San Francisco refreshed and recharged. And a lot of that was due to Mr Thomson's leadership and the people he recruited.

He could draw you into conversions and share things that he knew you would never repeat. That created strong loyalties. And it was part of a management style that helped create a great camaraderie within our editorial teams.

Mr Thomson's loyalty to the FT was shaken when one of his main rivals, Andrew Gowers, was appointed editor of the FT in 2001. In March 2002 Mr Thomson was recruited by Rupert Murdoch to run The Times - one of the world's oldest and most famous newspapers.

The Pink 'Un . . .

Most of the US watchers of the Rupert Murdoch takeover of Dow Jones and the Wall Street Journal have focused on the potential challenge facing the New York Times from a revamped WSJ. I would be less concerned about the Grey Lady and more concerned about the challenge to the "Pink 'Un."

Over the past six years Mr Thomson has delighted in hacking away at the FT, recruiting some of its best journalists. Now Mr Thomson will get a chance to do the same in the US, on the same street as the FT, and at the helm of its largest competitor.

The arch strategist of the FT's US success is now its arch rival. This will be interesting.

- - -

Please see:

Updated: Wall Street Journal To Drop, Well, Wall Street

Thomson Named DJ Editor-In-Chief, WSJ Managing Editor; DJ Head Hinton Adds Publisher Title

Robert James Thomson - Wikipedia

Robert Thomson - I Want Media

The Times - Wikipedia, the free encyclopedia

Monday morning I was down in Mountain View at the Googleplex, GOOG's HQ for a briefing on new search initiatives and to find out about Google Health - a potentially wonderful and problematic service.

[For the first time, I was using Twitter to "live blog" from the event. Twitter is particularly well suited to such an activity, plus my "Twits" served as a decent note taking device for this post. I'm tomforemski on Twitter if you'd like to follow me.]

A planet sized wiki...

On search there was a lot said about local search and how difficult it is to do because place names are not standardized and some facilities share the same address and phone number. GOOG is very excited by image search because there are about 100 billion photos taken every year and Google loves new content (after all why go back to the Internet if there is nothing new?)

Google is trying to create a 3-D virtual earth. Its satellite and street level imagery are lacking. What it wants is a 3D rendition such as the one for San Francisco, which is very impressive. But I think that Google will have trouble getting users to continue to create that 3-D content because the novelty will subside so it'll have to think up some games and incentives.

Google likes images and the geo-tags that can go with them, but again, this relies on the continuing goodwill of users to upload and tag images, etc.

What this adds up to is a wiki-earth that users create using Google tools, or other tools, and also annotate and tag the locations. It would be a massive project and on top of that it would require fresh content - good luck with that. I just don't see legions of users willing to update Goog's database time and again, and again. Businesses will-- but that's advertising and that doesn't require payments to Google, (there could be a shot in the foot here ...).

Google Health very important...

Google Health is interesting and I would say it is Google's most important business launch since its AdSense/AdWords text-link ads. Not only is this a great way to integrate health data from multiple sources by having the individual do it but it also enables Google to access billions of dollars in pharma and medical services marketing.

Government regulations on health data make it very difficult for medical practitioners to pull an individual's data from many sources. But a Google Health user can consolidate their medical records in a highly secure Google database then authorize sharing that data with their doctor or other third party, and even allow that data to cross-borders. How about MyIndianMD.com...? (Hold on one second while I visit GoDaddy...)

Google Health could reduce health care costs because tests won't have to be repeated, and individuals could choose not to have expensive procedures just because their doctors are trying to cover their legal liabilities.

The problems with this approach is that the individual is being asked to make choices which their doctors would be best at making but because of legal and other issues, they cannot. Similarly, Google has to be careful not be providing medical advice. It gets around that - it provides users with "choices and options."

I spoke with Martin Harris, M.D and Chief Information Officer at Cleveland Clinic, one of the beta test partners for Google Health. He said that one problem was that computer literate users would be the first to benefit. "It's part of what I call the Internet divide," he said. "Ideally we should be able to let people access their Google Health accounts through their TV set top box or through the phone. That will come soon."

I spoke with a couple of people on the Google Health team and they said users would in the future be able to designate "delegates" to administer their Google Health records on their behalf so that the elderly could have their families help them.

Building businesses on top of Google Health . . .

There is also a great opportunity for a range of third party services to be built on top of Google Health and it's open API. Google for example, is offering an application that allows people to monitor how much they walk and will give $100k to charity.

I can think of linking gym machines to my Google Health record, what I ate that day, even what I ate at a restaurant automatically uploaded with calories and vitamin info. How much I slept, etc. This could become many people's home page.

There are some obvious potential problems if insurance companies or employers seek permission to view health records. What about potential spouses opening their hearts . . . and their medical records to each other?

How to monetize search, Google Health . . .

Nothing was said about how Google would make money from the improved search or from Google Health.

I asked about Google's search and if it improves then fewer pages are served. . . and therefore the performance of Google ads has to improve just as fast as search improves.

I was told that the advertising teams are ahead of search, and with better search there will be more search, therefore more pages will be served. I don't see that as being true.

It would have been good to have a presentation about the business side of Google's search and Google Health.

Here is further discussion of the business opportunities: The Google Health Problem...And The Quest For Pharma Gold

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Notes: Google did a nice job pulling together top media and allowing good access to its executives and also to Google Health partners. Its PR people didn't get in the way but facilitated interviews etc. This meant that journalists could each have a chance in coming away with original quotes and material that wasn't part of the general presentation. I always appreciate the opportunity to come away with some unique content.

I spent much of last week away from the Web 2-point yawn crowd. Instead, I was at my favorite conference, New Communications Forum held this year in Sonoma county.

I was speaking on two panels, the second one included Neil Chase, VP of Author Services at Federated Media (FM) Publishing. He is a former journalist at the New York Times.

On the panel he introduced himself and FM Publishing saying that the company "ran a network of blogs." Interesting phrasing since I thought that FM Publishing sold advertising for a number of top blogs, including Techcrunch, GigaOm, VentureBeat, UberGizmo, etc.

After our panel I asked Mr Chase if he had seen my recent news analysis of the online ad/blog market and that ad networks such as FM Publishing might start to acquire content companies because that was a quick way to boost revenues and also stop the larger sites from leaving FM's advertising network. FM recently raised $50m, and this looked like a war chest to me.

"We just got the money last week so we haven't yet put it to work." Mr Chase said. He said that FM was unlikely to acquire content companies, (although he later said that if there were some good opportunities FM would make an acquisition.)

FM was interested in making an investment in content companies, taking a 10 to 15 per cent stake in exchange for a multi-year advertising contract.

This confirmed some earlier reports that FM had hinted it might take stakes in key content companies.

"If some of the blogs want to take some money off the table so that they can put their kids through college, we would be able to help them do that," Mr Chase said.

Also, if a journalist was looking to leave and start a blog FM would help set them up in exchange for a larger share of the advertising revenues.

He said that FM wasn't worried about its blog sites leaving the network and there were plenty other blogs to work with.

FM has started to see some effects from the recession, some clients are taking longer to make a decision on advertising deals.

Foremski's Take:

FM can make its money go further by taking a 10 to 15 per cent stake in a content company. And also tie up advertising revenues for two to three years into the future. It's a good strategy.

But the blogs in its advertising network overlap in coverage--that's why it can sell advertising across an aggregated audience. If FM has stakes in some of its blogs it becomes a competitor to the others--it has a vested interest in favoring one blog over another. It can channel ads to sites in which it has an ownership stake.

This could lead to a loss of blogs to a rival ad network and make it difficult to recruit new publishers.

But taking a minority stake in a blog leaves FM open to a substantial dilution of its ownership as the blog company grows and takes on new investors--unless it has a board seat.

Most blog owners are novice entrepreneurs and they should be careful about the terms of an FM investment and seek expert counsel. Taking a nice chunk of cash now is a welcome reward for their hard work but they should make sure there is no remorse further down the line.

[BTW I took a look at UberGizmo and FM was running public service ads on the site while TechCrunch was getting lucrative Intel ads, showing that not all sites are treated equally.]

. . .

Please see:

The future battle between ad networks and publishers… | Tom Foremski: IMHO | ZDNet.com

Arrington Should Watch Out Because J.B. Is About . . . Ad Networks Will Roll Up Media Companies

Battelle Turns Down $100 Million Offer For FM Publishing. Decides To Shop Around For a Higher Price.

Microsoft pays star writers to recite slogan

Federated Media’s Battelle Slams Rival, Hints At Investing In Publishers

About Us - Federated Media Publishing

About a year ago, Internet mogul Barry Diller appointed Johnny C. Taylor Jr. president and CEO of a new business group at his IAC corporation called Black Web Enterprises Inc. Mr Taylor was previously head of human resources at IAC, which owns large Internet properties such as Ask.com, Match.com, LendingTree, Ticketmaster and 54 other leading Internet brands.

Black Web Enterprises is the first business to be created by IAC rather than acquired. I met with Mr Taylor recently and he explained the background to tomorrow's launch of a new search site: Rushmore Drive targeted at the Black Internet user.

"We felt that the Black community could be better served by the Internet and so we carried out a lot of focus groups. We found that Black people in the US do a lot of search, they look at news, and they look for jobs. Out of that work we decided to launch a search site called Rushmore Drive that offers mainstream search but also something extra for the Black community." It also has its own editorial department staffed by journalists, and a jobs site where people can also network similar to LinkedIn."

Is "Black" considered a good designation? "Yes, Black designates a large number of people. Barry Diller asked why we didn't use the term "Afro-American. First of all, "afro" is a hair style and secondly there are many people such as those from the Caribbean that don't identify themselves as African-American."

IAC estimates that there are 40 million African-Americans and an additional 20 million people who fall under the designation "Black."

Suspicious of a Black web...

I asked if there was a suspicion by the Black community about a search site focused on them, because there have been many cases where minorities paid more for cars, loans, etc.

"It's interesting. When we ran focus groups I was surprised that there was a lot of suspicion from people about a large corporation targeting the Black community, because I don't really pay much attention to being Black myself. I was watching a lot of hostility through a two-way mirror. But when I stepped into the room and people could see me, they immediately changed their attitude and were much more welcoming of the idea. They also told us that they want great search, they don't want just a bunch of Black targeted search results."

Not a Black Ask...

Mr Taylor said that the site is not a Black version of Ask.com. It provides high quality search results plus more. The term Black is hardly used on the site and it won't be used in marketing or advertising.

Radio ad spots will be targeted at Black audiences only in the sense that a radio station has a Black audience, and not in the advertising message itself. "It's important to be inclusive," Mr Taylor says.

Classy...

The search site's name Rushmore Drive is based on the address of the business group, located on 1115 Rushmore Drive, in Charlotte, North Carolina. "It's like Rodeo Drive, it is a classy name." Classy is an important quality, Mr Taylor says, which is why the right type of advertiser is important.

"I could have tripled my first year numbers from just one advertiser that wanted to be part of the site but I turned down the business because I did not like the association with the product." Mr Taylor declined to name the advertiser (I would guess it could be a malt liquor brand) and said he wanted top advertisers such as Gucci and Ferragamo.

A Black Linkedin...

Part of the job search at Rushmore Drive is a network feature similar to Linkedin. "One of the first things Black people ask each other is which church do you go to, and what professional associations do you belong to," Mr Taylor says. Those two answers are key to the networking feature on the site.

Black writers...

News on the site will come from mainstream sources but there is also an editorial department with Black writers that will engage users in discussions around topics that are of importance to that community.

"For example, the recent death of R&B singer Sean Levert was a big deal in the Black community but it didn't make much news elsewhere. We would promote that news and also discuss why he was in prison for failing to pay child support. We would look at the issue of paying child support in the Black community and not shy away from uncomfortable issues," Mr Taylor says.

IAC is investing many millions of dollars in this first home grown business. "I can't say how much we are investing. Barry Diller told me to make sure that we build a quality product. I can tell you that it's not cheap setting up a search site, I've got a large group of engineers and also a large group of marketing people."

Foremski's Take:

It is certainly new territory for a search site. And maybe it will spur the development of other search sites focused on specific types of users. For example, I recently wrote about the possibility of an Apple branded search site.

Mr Taylor's challenge will be to demonstrate how Rushmore Drive can provide a better search experience that is inclusive while at the same time exclusive in its strong focus on the 60m strong Black community.

- - -

(Thanks to Steve Gillmor for the headline inspiration.)

Additional Info:

I'm waiting for Dan Farber, the new head of CNET's News.com, in a large, sun-lit foyer. People are coming out for lunch and their mood seems relaxed and cheerful despite a 10 per cent cut in CNET staff numbers made just just a few days before.

Dan comes down and we walk out to have lunch. He chooses a restaurant that has real tablecloths. "I need to eat some real food," he says. I nod in agreement, the single, blogger lifestyle, doesn't encourage good eating habits.

It is always a pleasure speaking with Dan because we speak the same language. I'm not saying this in an elitist way, but there is something that happens to you through the experience of blogging, that does change your perception of the media industry, and provides an understanding of what is going on that cannot be attained by reading about it.

It doesn't matter if you've been a media professional for decades, or how young or old you are, understanding the changes going on in the media industry comes from experiencing it first hand. You can see what I like to call the "trajectory of ideas" in the mediasphere, how media is consumed and shared.

And it is that understanding that Dan Farber brings to his new job, as editor-in-chief of News.com, one of the first online news organizations.

Dan nods as I say that we speak the same language. "Things have changed a lot in this business. There is a velocity to news media and you can see it as a blogger," he says. "There is no end to your day."

Over at ZDNet, Dan set up a large blogger network (I write there too) and he was probably the most prolific of the entire group, often writing posts late at night and many times throughout the day.

"I have to restrain my blogging these days, because we have writers with beats," he says. "But everyone now blogs at News.com, it doesn't matter who you are, even if you are in production, you blog." (Dan's new blog at News.com is Outside the Lines.)

Dan has a team of about 35 people, most of them reporters and editors plus a few software engineers. And he is leading CNET's premiere brand: News.com.

Emergency meetings...

Tom Waldrop, over at Intel (Intel is a sponsor of SVW) told me an interesting story about the launch of News.com. He said that the corporate communications team at Intel had an emergency meeting to discuss whether online journalists were real journalists and how they should work with them.

When I left the Financial Times in mid-2004 to become a journalist-blogger, about a decade after News.com launched, Intel had another emergency meeting. Tom Foremski has left the Financial Times to become a blogger. Are bloggers real journalists? How should we work with bloggers?

It wasn't just Intel asking those questions. Tens of thousands of corporations worldwide are still trying to figure out the changes in the media industry, and who is or isn't a journalist, and how they should respond...

News.com was once a leading light of the change in the media industry towards an online media world. For example, CNET's decision to drop print publications (except in China) was a bold one.

Lost the lead...

When I met with Shelby Bonnie, the former CEO of CNET, in mid-2004, he told me that the company had 5 different publishing systems, and two large data centers. It was trying to reduce the number of publishing systems.

CNET tried to create one publishing system, Project X. However, this was later abandoned, at a cost of about $60m according to one of my sources. This was not atypical, many media companies were trying to crete their own content management system. The Financial Times was shifting to a new, never before tried publishing system, when I was there. It broke down several times a day, it cost millions of dollars to develop. Some days it was a wonder that we managed to produce a newspaper.

All of this meant that News.com was not leading the next big change in the media industry: the adoption of the blogging platform as a two-way publishing platform linking journalists and readers.

Bloggers take the lead...

Upstarts such as Mike Arrington, publisher of the popular Techcrunch blog, are these days seen to be in the forefront of the new changes in the media industry, and are challenging even relatively new media companies such as CNET .

Mike Arrington recently revealed a plan to deliver a "crushing" blow to CNET by building a "dream team" of bloggers and rolling up prominent blogs into one organization.

Dan Farber smiles at the mention of Mike Arrington. "We are a better platform to roll up blog sites because we have the infrastructure, we have ad sales people, etc." I agree. I can't see the over-sized personalities of the blog world sharing the same planet let alone the same company.

CNET could potentially regain its lead in pioneering the new media world. And that's what Dan Farber can provide: the blogger publishing experience from the front lines of the business.

Among the changes Dan Farber has already made:

-Different CNET departments now publish using the same template.

- Publish a story as quickly as possible, edit it later.

- Stories are updated constantly.

- Adding the right keywords and tags to make stories discoverable by search engines. About 40 per cent of CNET traffic comes from search engines.

- Use Internet standards whenever possible.

- There is no end to the work day, you are always on call.

- Everybody blogs.

- Create synergies between news, reviews, analysis, and blogs.

- Getting journalists to put in web links to non-CNET publications. "It's about being part of the web and not separate from it," he says.

- Carrying a pad of paper and pencil is not enough. Journalists also take photos, videos, and make podcasts.

I know that some of my colleagues at large media companies are not too happy with all the extra work they now have to do: blogging, video, podcasts etc. Dan says that his team gets it and is happy with the changes.

New skills...

You can certainly teach an old dog new tricks, Dan and I are living proof of that. I've got nearly 25 years under my belt as a journalist and Dan has a few more than that.

It just goes to show that this "new media" has nothing to do with age, there is no "generation gap" it is an "experience gap." And Dan is making sure that his News.com team gets that experience and is ready for this new, always on world. (I'm finishing this at 3 am Monday morning.)

Dan Farber can bring to CNET the best practices of the new media world, but as he says, he doesn't have control over everything. CNET still needs to sell ads and control costs within a challenging time for all media: a complete revamp of the media industry business model.

As I like to say: These are the best times to be a media professional because we will never ever be at such an amazing and disruptive change in our industry in our lifetime.

The trick is to make sure you are on the right side of the disruption, and not on the sharp pointy end of it. Can CNET become a disruptor? That's part of Dan's challenge, and that's what makes his new job one of the most interesting jobs in media.

Blogging is stressful, you are always on. Matt Richtel at the New York Times nailed it: In Web World of 24/7 Stress, Writers Blog Till They Drop.

Here are some of the other dangers (tongue-in-cheek) of the rock-and-roll blogger lifestyle:

GigaOm:

Dan Farber:

Gabe Rivera:

Renee Blodgett:

Craig Newmark:

Ze Frank:

Nick Douglas (et moi):

Bloggers in training:

Apple's iPhone is still lacking a search function, which is interesting because everything comes with search.

In my post July 2nd: "Searching For Search On the iPhone I wondered if it was deliberate:

Why would Apple leave out easy to use search functions? Does it think that users can find stuff more quickly through alphabatetized directories? It's clearly been left out on purpose, right?

It was fanciful speculation at the time, I actually thought it might have been left out in the rush to market. But there have been lots of software updates over the past 9 months and still no search function. It has to be deliberate.

Which makes perfect sense because clearly Apple is readying its own search engine. It has its own browser and having its own search site makes perfect sense.

The browser and search service are the operating system for our modern times. Apple is all about owning the OS.

Take a look:

1: The Apple fanboy market would leave Google in a heartbeat. No question. That's about 5 per cent of the computer market, and then let's count some of the iPod, iPhone users.

2: Recent tests have shown little or no difference in the quality of search results between search engines. Brand loyalty is the only thing bringing people back to Google.

Since search is now a brand-based business, who has one of the the top brands in the world? Apple.

Since search has become a brand-influenced market then Apple knows how to play in that market very well. It can easily carve out a search business for itself.

And that's why there is no search on the iPhone yet. When people start using the iPhone search they will naturally start using it on their laptops and desktops. It is a ready made market.

I can see Virgin, Nike, Gucci, and other branded search engines coming in the wake of Apple Search. It makes perfect sense.

UPDATED:

Take a look at this study, which shows the influence of brand:

Study: Good Brand Can Make Search Seem More Relevant

The study showed that when a searcher was given an identical result set across Google, Yahoo, Windows Live Search and an in house search engine, Google and Yahoo came out as more relevant. Why? Because of the brand of the search engine.

Despite the results pages being identical in content and presentation, participants indicated that Yahoo! and Google outperformed MSN Live Search and the in-house search engine.

http://www.pcworld.idg.com.au/index.php/id;229165979

Part 2 is here: Since There Is No Objective Way To Gauge Search . . . Brand Will Win

- - -

This is my second essay in the Saturday Post series.

Please see: Choking On The Long Tail - The Unbearable Burden

There is a legacy mountain of content and it's becoming a mountain range.

That means expanding your data storage systems, that means more power needed to drive those systems, it means administering the storage systems, which is people intensive, the data has to be made secure, the data has to be backed up. These are the exponential rising business costs of Long Tail economics.

As the number of long tail micro-markets increases, the less profitable each one becomes. This is because each long tail micro-market competes with an increasing number of other long tail micro markets.

More of any product or service means less revenue for that product or service. A current example: more housing on the market means a lower price for housing. Same thing applies in any market.

There is no way that increases in Internet traffic can keep pace with the growing number of long tail micro-markets.

The costs of hosting long tail micro-markets will continue to increase until they exceed the profits that can be made from them.

Choking On The Long Tail - The Unbearable Burden

Early last year, Hewlett-Packard quietly added a new C-level executive position: Chief Administrative Officer, and appointed Jon Flaxman, a 27 year veteran. His mandate is to re-engineer HP's global business processes, to make them more efficient, more productive, and to improve asset management.

HP clearly expects a lot from Mr Flaxman. He reports directly to CEO Mark Hurd and he is on HP's elite 11 member Executive Council Leadership Team.

With a US recession looming, his job is going to be critical to HP's performance, if there is any industry-wide downturn.

"We spend more than $1bn a year on travel, we spend more than $16bn on procurement, we have office space in multiple countries equalling about 900 soccer fields. How do we make the best use of that real estate? And how can we improve our business process? My job is to build shareholder value," says Mr Flaxman.

If I were a HP business group manager I'm not sure I'd be happy to get a message that Mr Flaxman called. Because that could be a sign that his team is taking a close look at how business is being done and what can be improved, and what can be shifted.

Building "shareholder value: can be code for unpleasant changes such as cutting jobs and ratcheting up work loads. But it doesn't have to be that way, says Mr Flaxman. He points to HP's increasing head count and that he is looking at ways to better deploy staff, and use HP technologies to make his teams more productive.

A key chunk of the drive for operational efficiency is HP's shared services group, which consolidates many operational tasks that were previously handled in separate departments. Its shared services group is a way HP can in-source rather than outsource--and gain the same benefits and more.

Another key initiative has been to significantly reduce the number of suppliers while at the same time strengthening those partnerships to enable closer cooperation on product and service launches.

Call centers are also an important focus because that's where customer retention plays an large role. And there are other HP business groups where improvements can have a large impact on overall performance.

"You can't just take one business and analyze it. You have to consider the whole process and where it fits into the company's strategy. And how it affects our other business groups."

What are the metrics for this? "We constantly benchmark ourselves. We look at the industry and also at our competitors. But our goal is not to have the best business process in the industry right now. We want to go beyond that. Because if we just focus on today's benchmark, by the time we reach it, it will have moved on. We want to be ahead of that trend," Mr Flaxman explains.

HP uses a lot of its own technologies. For example, to reduce travel costs, it has set up 38 Halo rooms, which feature its high-definition telepresence video conferencing technology.

HP has also been consolidating the number of its data centers and using its technologies to manage the resulting massive numbers of servers and storage systems. HP's data center management tools, and virtualisation technologies, free up its IT experts to work on new projects. HP is building a state-of-the-art IT architecture to support its aggressive "everything" as a service strategy.

[Please see Essential Viewing: Chief Strategist Shane Robison]

HP's technologies can also manage its power use and control its carbon footprint.

"I focus a lot on green technologies. We have a goal of reducing our carbon footprint by 15 per cent by 2010, (compared with 2005 levels)," Mr Flaxman says.

And as HP acquires companies (Opsware, Mercury Interactive), Mr Flaxman is there to make sure that those businesses are integrated into the HP way of running a business. This speeds up their contributions to the bottom line, which is always welcome.

---

Additional info:

Chief Strategist Shane Robison on HP's Services Strategy:

[I was happy to notice that if you Google Shane Robison, Silicon Valley Watcher pops up in the number 5 slot, The Inquirer is number 4, and Forbes is number 3.]

I'm going back to using my regular Gmail account for pitches. Facebook doesn't have the tools to manage email plus it send me lots of emails to tell me I have lots of emails on Facebook.

My original post: PR Pitches Through Facebook: I Have 37, 366 Unread Emails in Gmail... 2 months ago, caused a bit of a stir. (I'm up to 44,548 unread emails.)

I was hoping that Facebook might make my life a little easier but I also realized that I was seeking something else: connection.

If we are linked on Facebook or as an SVW subscriber, you know something about me and vice versa, and that makes my professional life a lot easier. It's that connection that I want to take further:

I will give priority to PR pitches from people that are connected to me through:

- Facebook

- LinkedIn [tom(at)siliconvalleywatcher.com]

- Subscribe to the SVW newsletter:

- Subscribe to the SVW newsfeed: http://feeds.feedburner.com/SVWatcher

Subscribe to Silicon Valley Watcher

Subscribe in a reader

- Follow me on FriendFeed http://friendfeed.com/tomforemski

- Follow me on Twitter (tomforemski)

Read and sometimes leave comments on my sites: Silicon Valley Watcher, Silicon Valley Minute, ZDNet: IMHO

Because then I know that you know me, you know what I write about, and what interests me. I don't want to hear "what have you been writing about lately?"

At the very least I would like you to be a subscriber to my SVW email newsletter or my SVW newsfeed (I'll be able to see your name in most cases.)

One or more of the others would be great. I'll still be deluged and cannot guarantee anything but I will try to prioritize my "connected" contacts!

- - -

[Software engineers: If someone could create an app for me that can track my most connected contacts that would be great. I'm sure others would also find an app like that very handy...]

The Silicon Valley Irish community honored Intel Chairman Craig Barrett Thursday evening and presented him with an award for innovation.

The Irish Technology Leaders Group, a semi-private group representing Silicon Valley's Irish entrepneurs and the Irish government, held an awards ceremony at Stanford University. Michael Martin, Irish Minister for Enterprise, Trade & Employment, read out a letter from the Irish president and praised Mr Barrett for helping to create Ireland's booming economy - the Celtic Tiger.

Intel was one of the first US companies to invest heavily in Ireland, 15 years ago, building several multibillion dollar chip fabs. The Irish government estimates that Intel has invested more than $7bn in Ireland and paid more than $2bn in healthcare and social services. In addition to thousands of Intel jobs, Intel created about 9,000 jobs in support services.

Intel's lead was followed by many other US tech firms. The attraction was Irelands' entry into the European Union providing European market access for US companies for lower costs. Ireland's highly educated workforce, common language, a low cost of living, combined with a low flat tax rate--made Ireland hard to resist for many US companies.

A tide of Irish tech...

Ireland has now transitioned from poorest to second richest (after Luxembourg) in European wages. Mr Barrett commented that Dublin, the Irish capital, now has higher real estate prices than Palo Alto.

Now it is Irish companies that are coming to the US. More than 80 Irish companies have opened operations in the US, many in Silicon Valley in tech and in pharma. 2007 marked the first time Irish companies created more jobs in the US than US companies created in Ireland.

More details and information here:

Irish Technology Leadership Group

The ITLG is a group of Irish and Irish American senior executives based in Silicon Valley, active in the global technology industry, committed to ensuring that Ireland remains a strategic area of investment and opportunity for US technology companies, and who are keen to support the growth and development of Irish based technology companies.

Heritage Foundation: How Ireland Became the Celtic Tiger

As a result of sustained efforts over many years, the past of declining population, poor living standards, and economic stagnation has been left behind. Ireland now has the second highest gross domestic product (GDP) per capita within the European Union (after Luxembourg), one-third higher than the EU-25[1] average, and has achieved exceptional growth.

...One of the biggest successes of the Irish economy has been new job creation. From 1990 to 2005, employment soared from 1.1 million to 1.9 million. Economic growth, more jobs, and rising living standards meant the resolution of the emigration problem, which had bedeviled Ireland for generations.

The population increased by almost 15 percent from 1996 to 2005 in a striking reversal of previous trends. In one year alone (July 2004–June 2005), employment increased by 5 percent. Ireland is now seen as the land of opportunity by many workers from the 10 newest EU member states. Its unemployment rate of 4.4 percent is less than half the EU average. Public budgets are in balance, and foreign investment was equivalent to 17 percent of GDP in 2003.

We know what the Irish drink here is what they eat...

Get in a Stew and Make it Irish by Sheila Flynn at AP

Meat, potatoes and vegetables. It's the quintessential trio for the quintessential Irish dish - Irish stew. But don't be fooled by the one-pot simplicity; this hearty stew can pack astounding depth of flavor.

For the best flavor, the meat should be browned in lamb fat before stewing, which Allen says imparts more flavor than cooking oil. The easiest way to get this fat is to trim it from the meat and render it in the pan.

For additional flavor, the vegetables also do best when quickly browned in the lamb fat before stewing.

While the browning is done on the stove, most of the cooking is done in the oven, which allows for a slower cooking over about 1 1/2 hours, leaving the meat "virtually falling off the bone."

I'm convinced Marc Benioff, CEO of Salesforce.com will succeed Larry Ellison, 63 years old, as CEO of Oracle.

I've laid out my reasoning here on ZDNet: Tom Foremski: IMHO.

Oracle has a 100bn market valuation versus Salesforce at $7bn. Oracle profit margin is 24 per cent Salesforce is 2 per cent. Oracle revenue is $20bn, Salesforce revenue is $749m.

Salesforce could become the next Oracle but it would take a decade or more of tough competitive battles. Salesforce could become Oracle sooner than that if it were acquired. Why wouldn’t Marc Benioff want to be king of the hill rather than stuck in an online software company that is in direct line of fire from several competitors and several key internet trends?

Oracle has a lock on massive markets that won’t change much anytime soon. Salesforce is in the on-demand software market which means customers can cut and switch services much more easily than payments to Oracle.

Also, Mr Benioff has recently been saying nice things about Oracle.

Benioff takes stock of software shifts - by Charles Cooper and Dan Farber.

When I left Oracle nine years ago, Oracle's revenue was $10 billion a year. Today it's $20 billion a year. Where Oracle has innovated is in the business model. You've seen substantial growth and a substantial return to Oracle shareholders through that change. With SAP, you really have not seen innovation in the last 10 years. If you think about what is the one thing that SAP has ever innovated, what have they created that's unique to the industry or value-added technology? I have a hard time thinking about what SAP is going to be known for at the end of the day.

If I was a Salesforce shareholder I'd want a piece of the rock. If I was an Oracle shareholder I'd want someone like Mr Benioff in charge.

(BTW I don't own CRM or ORCL.)

The business of the Long Tail is the concept that there is money to be made in services and products with a potential market of just a few people.

We can see Internet companies exploiting such micro-markets everywhere, well before the concept was popularized by Chris Anderson, editor of Wired magazine in October 2004.

We see it in Amazon and Ebay, they host the many millions of small markets that are interested in obscure books or collectabilia.

We see it in Google, which monetizes interest in the most obscure parts of its index. We see it in MySpace and Facebook, which seek to monetize markets that can consist of many thousands of "friends" but are mostly groups of just a few dozen people.

The trick to success is to have as many Long Tail markets as possible. Each micro-market generates micro-profits therefore the more the better.

Selling free content...

If you can get that Long Tail content for free, that's the best kind because producing content is expensive. For example, Flickr, a Yahoo company, hosts people's photos for free. In exchange for free hosting it sells advertising around the photos.

Users come back to visit their photos, and they also share them with friends, and sometimes complete strangers are attracted to the photos too. That's a lot of free traffic and you can make money from traffic.

YouTube hosts people's videos for free and in exchange it sells advertising around that content. Again, as in the Flickr example, users created the content, and brought traffic to that content, and YouTube monetized that traffic.

Not a bad business model and one copied many times over: user generated content comes with its own viral marketing, which equals free monetizable traffic. And user generated content can sometimes catch much larger viral traffic, such as LonelyGirl15, or a skateboarding dog.

Facebook viral marketing tools built-in...

MySpace and Facebook are examples of trying to grab even larger amounts of user generated content. On Facebook I can upload my videos, photos, blog posts, movie tastes, etc.

It also provides me with viral marketing tools through my news feed which automatically informs my friends of what I've done, "Tom uploaded photos, Tom wrote a blog post," etc.) I didn't have to email, or text, or twitter anyone at all, Facebook did it all automatically.

Again, it is the same type of business model: user generated content of all types, aided by automatic viral marketing tools, creates more monetizable traffic.

This is the business of the Long Tail, making money from tiny markets. And this has been the business of the Internet in one form or another, for two decades.

How much can be made from the traffic to my YouTube videos? Not much. How much money can be made from traffic to my Flickr photos? Not much. But aggregate many millions of such tiny long tail markets and you can make billions in revenues and hundreds of millions in profits.

Profits from free content...

It's not a bad business: you get the content created for free, and you get the traffic for free. It is like having a shop with many customers buying products you obtained for free. Your cost is the store rent and cashiers to take the money.

Another cost is the warehouse space. In the online world the warehouse is your data storage systems, which is far, far cheaper than physical warehouse space. Hosting digital content such as photos, blog posts, video, digital books, etc is extremely inexpensive. That is why Google, Amazon, MySpace, etc, are profitable - their costs of doing business are less than their revenues.

As long as user generated content keeps flooding in, it brings its own traffic, and that fuels the business.

-As long as people keep creating new online content, Google will index it (and store a copy) and make money from the traffic that seeks that content.

-As long as people create content for free, and upload videos to YouTube, or photos to Flickr, the same business dynamics apply. As user generated content increases, it leads to more traffic, which leads to more profits.

The burden of free...

What would happen if user generated content decreased? Clearly, it would lead to less traffic and lower profits.

What could lead to a decrease in the amount of user generated content?

Consider this scenario:

The cost of hosting the massive amount of long tail content, all the photos, video, etc is very small. As the amount of this content increases, the hosting costs rise.

As long as traffic also rises, the costs of business remain in balance with the rise in revenue.

But traffic growth is limited. There is a limited number of people in the world, there is a limited number of hours in a day. There are fundamental limits to the rate of growth of traffic.

But the amount of content collected by Google, Flickr, or YouTube, for example, grows much faster, and there is ever more of it that has to be stored and hosted. There is a legacy mountain of content and it's becoming a mountain range.

That means expanding your data storage systems, that means more power needed to drive those systems, it means administering the storage systems, which is people intensive, the data has to be made secure, the data has to be backed up. These are the exponential rising business costs of Long Tail economics.

As the number of long tail micro-markets increases, the less profitable each one becomes. This is because each long tail micro-market competes with an increasing number of other long tail micro markets.

More of any product or service means less revenue for that product or service. A current example: more housing on the market means a lower price for housing. Same thing applies in any market.

There is no way that increases in Internet traffic can keep pace with the growing number of long tail micro-markets.

The costs of hosting long tail micro-markets will continue to increase until they exceed the profits that can be made from them.

I was recently speaking with David Scott, CEO of 3PAR data storage systems, and he pointed out why 3PAR stays away from certain markets.

I might view a photo of my grandma, and that might be once a year or less. Yet that data still has to be hosted, secured, managed, and backed up. What is the business case for that photo? The cost of keeping that photo and others like it, will continually force companies to cut their storage costs and that will lead to them to storing the data themselves on cheap disk drives.

High traffic from skateboarding puppies, or Brittany Spears photos can subsidize hosting Mr Scott's grandma photos but that is only true for now.

At some point, businesses will be chocking on the costs of supporting the Long Tail of data that makes up their micro-markets. The costs of the Long Tail will twist tighter around the neck of profitability. What happens then?

Dump the grandma photos...

Companies have a fiduciary duty to their shareholders to maximize profits. They will have to dump the data, dump the grandma photos.

That means dumping the many links that users created to their content. The idea of permalinks, links that will remain rooted forever in the concrete of the Internet will become a fallacy.

Even though the online companies make no guarantee in their terms of service that users' content will be always available there is an implicit guarantee that user content will be always be there. When that implicit contract is broken users will be less willing to spend all that time uploading and tagging their content.

They'll be less willing to tell their friends about it, to post links to it, etc, because there is no guarantee it will be there next year or beyond.

That's the scenario that will dry up the flood of user generated content to online firms. And that is the great flaw in the business of the Long Tail.

Businesses making money from the economics of the Long Tail will be dragged under by mounting costs of maintaining Long Tail micro-markets.

Maybe this should be the title of my upcoming book: "The Unbearable Burden of the Long Tail - How Internet Commerce Will have to hack-off the Long Tail to Survive."

[Saturday Post is the name of a series of essays. This is the first in that series.]

Please also see:

Long Tail Economics - Bonanza or Bogus

Have we misinterpreted the business value of the long tail?

Bear Stearns woes represent a large crisis within the investment banking sector and that means a massive impact on large numbers of M&A deals affecting startups and large companies in Silicon Valley.

John Fisher, a Silicon Valley entrepreneur who sold his company Bharosa to Oracle last year, says the chilling effect from the fallout from the investment banking sector will severely impact many startups.

"The investment banks broker huge numbers of M&A deals. This crisis means that over the next few quarters there will be many companies caught in the middle, unable to complete M&A deals," says John Fisher.

Acquisitions take between 3 months to a year to complete. Startups caught in the middle of the investment bank crisis will be highly vulnerable because they would then need to scramble to raise capital.

"You'll find many startups that won't be able to raise capital and they'll go out of business. It could be as bad as the dotcom crash for a while," Mr Fisher warns.

He estimates that as many as 1,000 M&A deals of all types of companies, not just in the tech sector, will be affected over the next two quarters.

Foremski's Take:

Such a scenario will hurt the VC funds because exit opportunities will be dramatically reduced for much of this year. The IPO market has been constrained for several years and M&A has taken over as the best way to recover and profit from startup investments.

VC firms will have to scramble to raise capital for their portfolio companies to keep them going and this could lead to less favorable terms for founders and other investors.

This could be a good time to fire up a roll up strategy to acquire startups caught up in the investment banking squeeze at fire sale prices.

More predictions of gloom at Jon Fisher Blog

More Info:

Jon B. Fisher served as Bharosa, Inc’s CEO until its successful acquisition by Oracle Corporation in July, 2007. Jon was named Ernst & Young's 2007 Entrepreneur Of The Year in Northern California and served as CEO of three software companies in the last 15 years.

Just a few days after I reported that Salesforce had approached Oracle to gauge interest in a buyout at $75 per share, Marc Benioff, CEO of Salesforce visited Cisco Systems.

A senior source close to Cisco, said that Mr Benioff was summoned as a direct result of my post. One of his meetings was with executives of Webex, a software as a service (SAAS) company acquired by Cisco last year for $3.2bn in cash.

Foremski's Take: What does this mean? It could mean that Cisco had exploratory talks with Mr Benioff about Saleforce.com being for sale.

Cisco's acquisitions such as Webex, have pushed it towards the SAAS market as it seeks new growth areas related to its network business. An acquisition of Salesforce.com [CRM] would vault Cisco into the middle of the SAAS market as a major player.

Other companies that would likely be interested in Salesforce are IBM, Microsoft, Hewlett-Packard, and SAP.

Google might also interested in Salesforce because its footprint in the enterprise IT sector is very small. A Salesforce acquisition would provide it with a well recognized brand in IT markets. And Google's computing platform could be used to scale Salesforce's applications and improve perceptions of reliability. Scaling has been an issue for potential customers of Salesforce. Google has shown its computing platform can scale rapidly by tens of millions of users.

Cisco doesn't understand the enterprise software market, at least yet. It would be difficult for it to leverage Salesforce. Microsoft is distracted by its takeover of Yahoo. SAP is too slow moving and has yet to demonstrate a viable SAAS strategy.

HP really gets SAAS. It's top strategist Shane Robison recently described a strategy in which HP sees every aspect of its future business through services:

Silicon Valley Watcher: Essential Viewing: Chief Strategist Shane Robison - The Where and Why of HP

http://www.youtube.com/watch?v=k2bFUkocthY

IBM has been determined to stay out of the IT applications business since the late 1990s and has avoided acquiring any IT apps companies. But Salesforce could be seen as a type of "middleware" play with its application platform strategy.

I think Salesforce is more compatible with the Oracle culture. And that Mr Benioff's ambitions would be far better fulfilled as an eventual replacement for Larry Ellison, the 63 year old CEO of Oracle, who is nearing retirement.

Please see: Is Salesforce Worth $75/Share To Oracle?

I'm hearing from a reliable source that Salesforce.com has approached Oracle to gauge if there is any interest in a sale at $75 a share. That would be almost a 50 per cent premium over Friday's close of $50.87. The deal would make sense: -It would provide Oracle with a strong brand in online apps and a strong transition road map to cloud computing and a software as a service business model. -Salesforce would benefit from Oracle's dominant position in enterprise IT markets, which would help in convincing corporations that Salesforce is a scalable and viable enterprise solution.

Please also see: The Influence Of The Blogosphere Boosts Salesforce By Over Half-A-Billion Dollars

The best part of visiting HP Labs late last week was the presentation by Hewlett-Packard's chief strategist. If you want to know where HP is heading and why, watch or listen to these 9 minutes of Shane Robison explaining the trends and strategy of HP.

This is one of the most lucid accounts of HP's strategy that I've come across.

http://www.youtube.com/watch?v=k2bFUkocthY

Also please see: HP Labs Reboot

http://www.youtube.com/watch?v=lVGdklaASIU

Additional Information on Shane Robison:

Tuesday I had dinner with Sophie Vandebroek, CTO of Xerox and Scott Elrod, who heads up the hardware laboratory at the Palo Alto Research Center (PARC.)

Famously infamous...

PARC is famous for developing many of the personal computer technologies we take for granted such as the graphical user interface, laser printer, ethernet networking, object-oriented computer languages, and many other advances.

PARC is also infamously known for an inability to commercialize its technologies, allowing Apple, and others, to build large businesses based on its computer technologies.

PARC spun out...

In 2002 Xerox spun out PARC as a wholly owned subsidiary. "PARC was spun out so that we could harness the entrepreneurial spirit of our staff. When you hire exceptional people you don't want to narrow their focus on technologies that are just useful for Xerox," says Sophie Vandebroek, CTO of Xerox. "You want to be able to allow them to find commercial opportunities in adjacent sectors."

PARC has been inviting VCs to learn about its technologies and it has also been bringing in visiting experts in areas such as solar cells, and manufacturing, to help its researchers create commercially viable products.

"The visiting experts program has been very good for us. They work with us for about 6 months and it is a short cut for us." says Mr Elrod. Xerox continues to be PARC's largest customer but about 50 per cent of its revenues now come from other customers.

PARC has about 170 researchers and is almost profitable, says Scott Elrod, who heads the hardware labs, one of four laboratories at PARC. One of the recent innovations from PARC is an ability to increase the efficiency of solar cells by printing fine wire connectors.

"In solar cells the electrical wires that connect the cells prevent sunlight reaching part of the cell. By printing finer wires we can increase the efficiency of solar cells by as much as 8 per cent," says Mr Elrod. "We are also incubating several startups at PARC and have one successful startup, SolFocus that has already raised $80m in funding."

Cleantech innovations...

Cleantech is a big driver for innovation at PARC. For example, it has technology for producing clean water, and for managing and coordinating the production of large print jobs. This technology is now being applied to IT data centers to power up and power down systems as needed.

PARC also has 1800 patents and is planning to go after companies that are using its intellectual property. It is targeting companies in the laser and electronics manufacturing industries, preparing patent infringement actions against them.

Xerox research...

Xerox has gone through a major restructuring of its business groups over the past few years. But it has sought to maintain its research centers in Rochester, in Toronto and in Grenoble, France.

Xerox has also been acquiring companies for their technologies, such as Amici, Global Imaging Systems, and Advectis. "We have been using some of these technologies in-house. For example, the Amici technology is used in e-discovery for legal documents, it can understand the content. We use this to help our researchers find relevant documents and comments within our organization," says Ms. Vandebroek.

She says that Xerox strives for two types of innovation: sustained innovation that improves the performance of its products and services; and disruptive innovation that changes the landscape of industries.

I've never liked banner ads much, or any of the conventional type of online ads you see most places. They are a relic from the days of print and don't make use of the many media technologies we have at our disposal. I've begun using a form of hand-coded widget for my sponsor Intel (see right).

I recently met with Peter Kim, the CEO of Interpolls, once based in San Francisco, now in Pasadena, California. Interpolls has developed a new type of online advertising it calls a rich media widget (there is an example at the end of this article.)

"We started the company in San Francisco in 1999 but then ran straight into the downturn so we had to regroup, move back into working from our apartments," said Peter Kim. "We had to change our mindset and we moved down to southern California. We've grown since then from 4 to 40 staff."

Mr Kim says that Interpolls' philosophy about online advertising has been to make it integrated into a company's marketing strategy and make it accountable. With its recently introduced rich media widgets strategy, it can integrate a media player, user polls, RSS, Javascript, and anything else. It is based on technology developed by Interpolls and the rich media widget can integrate anything that a regular web page can hold.

Mr Kim says that an important aspect of the widget approach to online advertising is that the widget can be shared, and that the sharing can be tracked.

Interpolls also hosts the widget content and pricing is fixed, that way if you do have a viral hit on your hands, you don't get billed for the millions of extra impressions etc.

The content of the widget is usually developed by an outside agency but Interpolls has an in-house creative team and offers advice on best practices.

"The proliferation of social networks is perfect for rich media widgets," says Mr Kim. "We see people embedding widgets related to movies in their MySpace pages. And we've even found that if the widget includes an intstant message or email function, people will use that to contact their friends, something which we did not expect."

There are a lot of widget creation companies around but Interpolls says its widgets are certified by the large social networks. For example, MySpace is very concerned with privacy and other issues. Widgets that don't conform to its specs risk being banned.

Marrying rich media widgets to TV broadcasts is the next frontier, says Mr Kim. "We have to continually innovate to stay ahead."

Here is an example of a rich media widget advertisement:

Intel launched its Atom brand to describe its latest microprocessor architecture designed to be used in small computer devices such as pocket PCs and ultra-light notebooks like the Asus EEE.

It's the smallest microprocessor Intel makes with the smallest transistors - 47 million. With its huge 300mm chip fabs, Intel is going to be able to produce a massive number of these chips.

The Intel Atom processor is based on an entirely new microarchitecture designed specifically for small devices and low power, while maintaining the Intel® Core™ 2 Duo instruction set compatibility consumers are accustomed to when using a standard PC and the Internet.

The design also includes support for multiple threads for better performance and increased system responsiveness. All of this on a chip that measures less than 25 mm², making it Intel’s smallest and lowest power processor yet.* Up to 11 Intel Atom processor die -- the tiny slivers of silicon packed with 47 million transistors each -- would fit in an area the size of an American penny.

Intel expects the Atom chips to also be used to make inexpensive notebooks and desktops which it has dubbed "netbooks" and "nettops." These could find markets in developing countries.

The first devices using the Atom microprocessor chips will be out later this year.

Here is a quick video introducing Atom:

http://www.youtube.com/watch?v=GQ2sZk-0UKE

I'm very grateful to my sponsors. Over the past three years they have enabled me to concentrate on reporting and have been very supportive of my work.

I'm making some changes. I want to showcase the social/new media work that my sponsors have been doing rather than just showing their logos at the top of my page. Over on the the right of this page you'll see a good example of what I mean: Intel with a video player and some links to its latest and most popular blog posts.

This can be encapsulated into a widget that can then be shared on other sites. I'm offering this type of showcase to all my sponsors and I'm talking with some large PR companies too. The PR firms will get to showcase their own new media practices and also their clients.

There will be five side widgets and a super-widget slot on top of the page. The five side widgets will be rotated daily so that each one takes turns being the lead widget above the fold. I'll be announcing additional sponsors very soon. Contact me tom(at)siliconvalleywatcher.com if you'd like to reserve a spot.

I think this is a much better type of promotion than traditional advertising or marketing because it shows what each company is publishing and its involvement in its communities.

We spend way too much time inside our small Silicon Valley worlds. It often feels as if I constantly see the 400 or so people that run this place, and that drive the main conversations here, it is like a high school cafeteria.

I liked it a lot last year, I still like the life here, but increasingly I think the best advice is to get out into the real world occasionally. Yet I know plenty of people that hardly ever, except for family occasions, spend any time outside of the closeted worlds of Silicon Valley.

And I know plenty more that would love to step outside of their geek worlds but don't know how, they don't have the contacts.

I think that's a big mistake. A business will only succeed if it understands the culture of its broader society, and that means getting outside of Silicon Valley's debates on tech esoterica. Do us a favor, figure out which end of the egg we should crack and send us an email, because the world outside doesn't care.

Heck, most of my friends on the East Coast barely will touch Facebook, let alone Twitter. Yet these are just two of our current fascinations.

I spent much of December in London and New York and I learned a lot. I recommend it.

Log off and tune in - is my new recipe for success.

Here is more at my ZDNet column In My Humble Opinion:

The key rule to startup success…

If you spend less time in the the geek world you will get a better perspective on the culture around you. The more you understand that culture the more successful will be your business.

Businesses need to become a part of their broader culture, yet I come across many that aren’t, and don’t understand this point, or understand it only intellectually. That’s why Silicon Valley Watcher reports on the business and culture of Silicon Valley because culture is important to business and vice versa. And there are plenty of interesting stories to tell too.

Geek feast fatigue…and the key rule for startup success

Ross Mayfield, the founder of the groundbreaking startup SocialText, the leading enterprise wiki/collaboration suite, made a wry comment on his twitter feed. I would gladly reproduce it except I accidentally deleted my Twitter feeds and I'm not sure how to get them back... but it went something like this: The new AJAX for social networks is AJAR and is only open for a while.

Ross has hit on something which I think will be happening more and more. There is a lot of lip service to open social and the concept of open data mobility but we all know that this type of digital level-playing-field is very far away from reality.

Why should MySpace, Facebook, LinkedIn, Google, Meebo, Skype, etc share their user data and their networks with other companies? Just on the basis of protecting their user's data privacy, each of these companies could refuse to open up their API's to the fullest extent.

Walled gardens make money, they can charge an entrance fee. Who can make money from a public commons? And who should anyway?

That's why the English Revolution happened, it was a struggle over who had the rights to the commons. Who was allowed to fence in the commons and graze their sheep? It became a violent struggle over who couldmake money from something that had previously been held equally between many groups in 17th century English society. It was a time of struggle but is also led to a flowering of cultures, arts, literature, anti-religious and anti-government movements, a revitalization of democracy, and plenty of mayhem of various sorts.

We are already in that battle, over our 21st century commons, the Internet. We can see it in: the debates over net neutrality; the right of cable companies, and countries to regulate access to the Internet; and many other examples...

It will be interesting to see who will win. And it'll be interesting to see if we get the same cultural fruits from the struggle as did the English Revolution.

Tuesday evening I had dinner with MySpace CEO Chris DeWolfe and some of his top executives about the future of MySpace.

It was organized by the International Press Club and I will have more to say on this subject in the next few days. I think I can cast some insider perspectives about MySPace and its strategy plus also some great video... Watch this space.

Here is Chris DeWolfe and myself at a MySpace party at SFMOMA late last year, photo courtesy of Brian Solis, Bub.blicio.us and Futureworks PR.

Please also see: Culture Clash: MySpace at SF MOMA - Southern California Comes to Silicon Valley ySpace at SF MOMA - Southern California Comes to Silicon Valley

It seems that the consolidation in the huge number of online video sites is beginning...

Stage6 is closing February 28. This is a high definition video site set up by DivX to promote the high quality video codec and then it was spun off as a private company in July 2007.

The problem that Stage6 ran into was that it is an expensive business to run especially when the business model for online video sites has yet to be determined. It's a problem that the other 100+ online video sites are facing each day. It's clear that many of them will make the same choice as Stage6 and shut down.

What happens to all the video work from users that uploaded and linked to the content? A lot of broken links...

Here is a statement from Stage6 about its closure:

I'm Tom (aka Spinner), a Stage6 user and an employee of DivX, Inc., the company behind the service. I'm writing this message today to inform you that we plan to shut down Stage6 on February 28, 2008. Upload functionality has already been turned off, and you'll be able to view and download videos until Thursday.

. . . In many ways, though, the service did succeed, beyond even our own initial expectations. Stage6 became very popular very quickly. We helped gain exposure for some talented filmmakers who brought great videos to the attention of an engaged community. We helped prove that it's possible to distribute true high definition video on the Internet. And we helped broaden the Internet video experience by offering content that is compatible with DVD players, mobile devices and other products beyond the PC.

So why are we shutting the service down? Well, the short answer is that the continued operation of Stage6 is a very expensive enterprise that requires an enormous amount of attention and resources that we are not in a position to continue to provide. There are a lot of other details involved, but at the end of the day it's really as simple as that.

. . . As Stage6 grew quickly and dramatically (accompanied by an explosion of other sites delivering high-quality video), it became clear that operating the service as a part of the larger DivX business no longer made sense. We couldn't continue to run Stage6 and focus on our broader strategy to make it possible for anyone to enjoy high-quality video on any device. So, in July of last year we announced that we were kicking off an effort to explore strategic alternatives for Stage6, which is a fancy way of saying we decided we would either have to sell it, spin it out into a private company or shut it down.

I won't (and can't, really) go into too much detail on those first two options other than to say that we tried really hard to find a way to keep Stage6 alive, either as its own private entity or by selling it to another company. Ultimately neither of those two scenarios was possible, and we made the hard decision to turn the lights off and cease operation of the service.

I had the great pleasure of hosting a Japanese TV crew, (the equivalent of PBS here) as they explored my idea of Silicon Valley turning into "Media Valley."

http://youtube.com/watch?v=S7sNxTlqIyI

I popped along with Allison Lovejoy to interview Peter Fitzsimmons, the head of the Fillmore Jazz Heritage Center. He told us about plans to revive what used to be a vibrant jazz scene in San Francisco. In fact, the term "jazz" was first used here, he says, not in "N'Orleans."

It is a controversial claim...

http://www.youtube.com/watch?v=7UPH5TJEIhc

Allison Lovejoy interviews Peter Fitzsimmons, executive director of the Jazz Heritage Center located in San Francisco's historic Fillmore district. The Fillmore used to be one of the world's top jazz centers and where the term "jazz" was first coined. Mr Fitzsimmons talks about the work of the non-profit organization, the art gallery, and the new Yoshi's resaturant and jazz club, which recently opened in the Fillmore.

There is a free "Living Legends" jazz concert on Sunday February 24 from 2pm to 5pm at 1290 Fillmore Street, San Francisco:
Eddie Duran, Guitar
John Handy, Sax
Frank Jackson, Piano & Vocals
Al Obidinski, Bass
Denise Perrier, Vocals
Allen Smith, Trumpet & Flugelhorn
Akira Tana, Drums

Other recent Interviews:

Beth Custer...

http://www.youtube.com/watch?v=ENPawvQ94m4

The Edwardian Ball...

http://www.youtube.com/watch?v=mP7vScwiJRk

For about three years now I've been talking about how Silicon Valley is transforming into "Media Valley" because our brightest, and our fastest growing companies are, according to my metrics, media companies.

Companies such as Google, Yahoo, eBay, Facebook, Digg are all media companies. They publish pages of content with advertising around it.

These are not technology companies but rather technology-enabled media companies. And this is a key distinction.

I've been writing about this change for about three years, and how the center of the media industry is shifting from New York city to Silicon Valley.

Our media industry is thriving and expanding, their (NYC) media industry is shrinking (as one example New York Times last week announced 100 newsroom job cuts).

Initially, only a couple of people picked up on my Media Valley concept, a couple of journalism professors at NYU. But gradually, over the past couple of years, more and more people have grown to understand this perspective.

This has been especially evident within the Japanese media community. Last year, I was featured in Nikkei business magazine, Japan's largest business magazine. And today (Wednesday), a four-person TV crew flew in from one of Japan's largest TV channels and interviewed me for three hours on this topic.

[I took some video that I will post very shortly, of them interviewing me, about the media industry. I love talking to the media about the media industry, but it always feels a little (sometimes a lot) Alice-in-Wonderland-ish, a hall of mirrors effect.]

In my world, I see everything as a media technology, and as a media strategy. I've said this before many times: Every company is now a media company to a greater degree than ever before. Even if a company makes steel, or napkins. Every company publishes to its customers, staff, partners, neighbors, to itself. It had better master the two-way media technologies that we now have or it will not survive.

Three years ago, when I would write about this, few people understood. Now, this is becoming better understood. But only slightly, which means there is still a lot of work to be done to help organizations understand this fundamental sea change.

And we, in Silicon (Media) Valley, are best positioned to help educate others about what is going on. It is happening not because we say it is but because it just is.