New Term: “Tumblr Money” (and How Can I Get Me Some of That?)

This week, Tumblr, the "light" blog-posting service, closed a $5 million C round of funding from previous investors Union Square Ventures and Spark Capital. As Peter Kafka rightly pointed out on MediaMemo, investors don't usually go back in for more unless there has been a demonstrative change (for the positive) in the company's financials – maybe even just revenue growth or an acquisition or new partnership that has a clear path to income.

But Tumblr, as both Gawker and MediaMemo mockingly note, really doesn't have much going in the way of a revenue model, and never has:

Three-year-old Tumblr doesn’t charge its 4.5 million users for the
service. It doesn’t sell advertising on the page views they generate. [MediaMemo]

The company, which is featured on the cover of this week's New York magazine, has just recently said it will start looking to earn money from micropayments by its blog users. Things like virtual goods, and a marketplace for Web designers to sell themes to other Tumblr users.

Kafka was generous to compare the strategy to Zynga, maker of the hated and stupidly profitable Facebook games Mafia Wars and Farmville, and the L.A. Times Tech blog also generously referred to Tumblr’s plans mildly as “off-the-wall” and went on to compare Tumblr to Twitter.

But the bottom line is: The no-revenue-model plan is not dead. (Long live the no-revenue-model plan.) If you can get an audience and a lot of buzz, you can get investors. You built it; they came; and the investors followed. See Google, Facebook, Twitter. And now Tumblr. The only difference with Tumblr is that it doesn't have nearly the scale the other guys do, so a revenue model is almost a moot argument for now. How much can you monetize on a user base of 4.5 million?

All this said, I do fully expect, considering Tumblr's social approach to blogs, that we'll see more interesting stuff coming out of the company. Eventually. And perhaps on a Twitter pace (remember it took four years to get to the point of carrying ads, er, "sponsored tweets").

For now, considering money's being raised on no revenue model and a relatively speaking small user base, let's call it "Tumblr money." It's a version of "dumb money," but more specific, and more Web 3.0. And I think we all deserve to get our hands on some "Tumblr money."

Goldman: Will a Spanking Do It?

Over the weekend, I chatted with a new acquaintance and former Goldman Sachs employee – back-office person, she insisted ($300K back-office person, of course). She had been mulling over the SEC’s charges of fraud against Goldman and wondering what kind of punishment might be fitting for what Paul Krugman has referred to as “looting” behavior. At one point, her 12-year-old son piped up about it, too. So, she discussed with him, what would do the trick, to reprimand as well as correct bad behavior.

“Well, when I spank you,” she said to him, “it’s to teach a lesson. But when I spank you in public, there’s a humiliation factor, too.”

Would a public spanking shame Goldman executives into never being tempted by insider trickery again? Or would a private spanking be sufficient?

I vote for private spanking. But what does that even mean? On Wall Street, where pretty much nothing other than money matters, public admonishment won’t really have any impact. Reputations on Wall Street are built on how clever one can be to grow lots and lots of money. In so many other areas of business, reputation is built on image and the ability to lead, manage, etc. Public opinion matters.

That’s just not the case on Wall Street. The only way to create pain on Wall Street is with restrictions on money. Set executive pay limits, but make sure there aren’t ways around it. Curb bonuses, and know where the loopholes are, and seal them up.

A spanking will do it, sort of. It doesn’t have to be public, and perhaps shouldn’t be; but it does have to get at what’s valued most.

Are Developers the Target of Droid Ads?

"Can a smartphone take on all comers without flinching? It can when it's operating a cargo-bay-ful of apps…that you can run while running other apps," taunts the announcer in "All Comers," one of the latest ads for Droid, the mobile phone from Google. There are no people, only machines, and made-up technologies. It's a teenage boy's fantasy dream.

Verizon has spent $100 million on the creative and media to blanket the universe with such positioning since the fall, and they're pretty inescapable on television, radio, Hulu, etc. Which is why it's somewhat surprising that the target market has seemed to be so narrow.

I'm talking about the robots, the space void, the landscape free of humans, only machines and the cold, empty clicks and whirr of this barren universe. Which mainly appeal to the boys, who don't want an easier-to-use, more instinctual device but a storyline that makes them a character in a futuristic, inter-galactic adventure. And who don't want any girls around. (Watch the ads here.)

It seems like a step back. So much progress has been made in the last two decades to make technology friendlier, easier to use, more intuitive. And this has helped to integrate technology into our lives, create more communication, more community, more opportunities for individuals to be creative, start companies, help companies save money, be more accessible, etc. Making technology easier is not a bad thing.

But if you listen to the Droid ads, it kind of is. The ads are aggressively aimed away from women. They emphasize apps that "pinpoint any location to find the star in the sky above you… and identify planets you're not on." Really? This is an app we need?

Women don't need pink, but they do want accessibility, sociability, utility. The Droid ads use technical language and insider taunts like the one about multi-tasking, which is aimed squarely at the iPhone's inability to multi-task. (You can't, for instance, run your Pandora app and then check your email. It's one or the other. And it's a pain. Thankfully, Apple has announced that the iPhone 4.0 OS, due out in the fall, will finally allow for multi-tasking.) Droids seem to want boys, not girls.

Anyway, lots of people agree that Droid is going heavy on the dudes.

But here's another thought on why: it could be about more than just share of the immediate consumer market: As a friend reminded me, these devices—Droid, iPhone, Pre—live and die on their apps. Just as a computer without any applications is kind of pointless, too. So far, the iPhone leads the pack in apps, with more than 185,000 in its App Store. The Droid counts 38,000, but growing at a clip that's expected to hit 100,000 by end of year. The Pre is not really even worth mentioning, with just 2,169.

So if the apps are the thing, it's obvious why iPhone is king. But if the Droid really begins to capture the imagination of geeky boys—I mean, even those in their 20s and 30s, perhaps nerdy programmer types—well, who's going to win the app race then? If the developers like the Droid, that's where the apps will go. And if there are enough apps that make our lives easier, allow us to be more creative, efficient with our time, connect with others, etc.—no ad will be needed to convince more of us, no matter what gender, that the Droid is the better option. (Especially if the wireless service provider also prevents calls from dropping so frequently, too.)

More: Read the full breakdown on the anti-girls approach from this reader on Contexts.org, here's a part of it:

0:04. The voice over’s question “Should a phone be pretty?” is
visually answered with an effect reminiscent of melting celluloid. The
rupture starts on top of the woman’s head, exploding her “pretty” face.

0:06. Women are beheld as dolls.

0:08. Images appear superimposed over images beneath a verbal
judgment. The beauty queen (fake) made out of plastic (fake) shown on a
television (fake) is definitively stamped “CLUELESS.”

0:10. The commercial erased its first woman by destroying the medium
of her representation (supposedly celluloid). The commercial again
destroys its second “woman” by destroying the medium of her
representation (a television).

0:10 – 0:13. Words across the screen: FAST, RACEHORSE, SCUD. Images:
Lightning, racing horse, ripping off duct tape, SCUD missile.
Combining these motifs into one single image, we see the SCUD missile
flying across the screen with the word RACEHORSE as though it were
written with lightning.

0:14. Droid applications: Reality Browser 2.1, Google Sky Map, Qik,
Mother TED, CardioTrainer, Where. While I doubt that these applications
were developed with the commercial’s themes in mind, their selections
reinforce the messages thus far enforced visually: reality (woman of
burnt celluloid, destroyed television), sky (SCUD missile), quick (FAST,
RACEHORSE), mother (a Freudian slip recognizing the infantile nature
of a power fantasy? ^_~), exercise (beef up for manliness stat +4), and
going places (which SCUD missiles, race horses, and THE MANLIEST OF
MANKIND’S MEN all do).

0:15. Word overlay: DOES. Men do things. Women are pretty and
useless.

Read the rest here.

Early Adopters: Necessary to Whom?

In yesterday's New York Times, Rob Walker wrote about early adopters in his Consumed column about the iPad. My white paper for Ad Age, "Shiny New Things," was at the heart of the piece.

Rob kind of picked apart the concept of early adopters, wondering why anyone would really want to pay top-dollar and endure bugs and glitches in a product that would likely improve and become cheaper to buy:

"What these people are likely to get for their consumption daring is a chance to experience every single glitch or flaw that will be tweaked and patched in the months ahead. Also the guarantee that they're paying full price," he wrote, and added later that early adopters are "willing to take a chance on a product with little market history, which seems tautological."

It's true, early adopters are sort of oddballs – something they even cultivate. But I'll disagree with Rob that their "'status seeking'…is not a trait that's widely admired." Yeah, that's sort of true. Status-seekers are observed as obnoxious and profiled as outsiders. In practice, status seekers are becoming much more rewarded and celebrated. Entire technologies are being built around this group, beginning with Facebook and Twitter. Status seekers on these platforms reap something – status, at the very least, if not sometimes jobs and incomes – from their activity.

So I think he's being a bit overly cynical at the least, and missing the point in general at the most. Early adopters are a necessary part of the consumption process, and not just from a marketer's perspective, as he sort of implies. Later consumers absolutely must observe early adopters as they bungle their way through a product, complaining about it, waxing poetic about it, reporting bugs and glitches, etc. It's part of the product education process. And those early adopters – he's right to point out that they're self-styled – enjoy their influence. Especially when a product hits, they are rewarded for their inside track and knowledge with increased status among peers.

Find Me a Noun That Can’t Be a Verb

Very short post today because of a very sick dog.

Or, should I say, I'm dog-caring today because Maggie's limp isn't going away.

I defy you to name a word that can't somehow be transformed into a verb. It's as though an adjective wouldn't be strong enough, or personal enough, to convey the notion, and that it's much stronger when active, as a verb. It occurs to me that it might be tough to verb-ize a pronoun, but it may still be possible.

Will begin posting a list of noun-to-verb action here as it comes up, or leave in Comments!

4/12/10
Just heard this one: "Vanguarding." Presumably a verbization on the proper noun Vanguard, a mutual funds firm, heard in an ad on NPR. "Are you just investing, or are you Vanguarding?" (Oh, excuse me, I just threw up.)

Failure: No Badge of Honor; No Lesson-Teacher, Either

It does seem that in general it's better to try and fail than never to have tried at all. However – it's possible this idea has become perverted over the years so that the emphasis has shifted to the fail part instead of the try part.

This is an issue that my friend Mark, a film producer, has come up against as he wades into the tech pools, noticing all kinds of talk of failure around him. In his role as an investor, he says, "Am I going to invest in the guy who was confronted with unexpected
challenges and failed, or the guy who was confronted with unexpected
challenges and rose to the occasion to triumph, or at the very least,
avert failure? For me, the answer is clear." Failure does nothing for him.

Me, neither. As a hiring manager and as an entrepreneur, I've never really been all that impressed by failure. I just can't see how bad habits won't be repeated, and finding the source of those failures isn't always so clear. Most of all, it has always seemed to me that if a person found themselves in the midst of a failure it's because they had bad judgment. About any aspect of it. And if they have bad judgment, I don't need that near me and my team.

When I was first starting out at The Industry Standard in 1998 (when the magazine itself was first starting out), I did a piece on how failure was "a California thing." Very much the ethos of Silicon Valley – big failures indicated a willingness to take big risks. I think it's a bit misplaced, though, and perhaps a little bit too much machismo, too.

And I think Mark's on to something very specific. A study released last year would agree with his outlook. In this study, by MIT’s Picower Institute for Learning and Memory, monkeys were rewarded and punished for success and failure, respectively. It turns out, positive feedback on success can actually transform our brains, for the better. On the other hand, negative feedback on failure doesn't teach us all that much. (The exception would be severe, severe negative feedback, such as violence and physical pain.)

Let's not quash attempts at big ideas, but let's not glorify their failure, either.

The New, New Narcissism

So check it – I've got pictures of myself on Facebook, my latest whereabouts on Foursquare, my every thought and observation on Twitter, my in-depth(ish) views on my blog – and I'll find any place I can to make sure there's a constant record of my every move. For others' consumption, of course, which surely everyone must be DYING to have.

Narcissism is hardly new – Narcissus was drowning over it millennia ago – the aristocracy had portraits painted to ensure their legacy; temples, cities, buildings, universities, so many things named for an individual or their family. "Legacy" is sometimes another term for narcissism.

But today's narcissism can hardly be cloaked in a noble desire to preserve the family tree. Not unless "Family Feud" is viewed through some comical lens of historical longevity.

What's new about today's narcissism is that it is absolutely fabulous. It's crazy trendy, it's valued and rewarded behavior, and it's exclusive not to be narcissistic. The world has completely turned on its head.

I was going to get into how the speed and tools available have democratized narcissism and then go on to blame the Boomers for all their talk of the "Me" generation, but for now I'll just leave it with this chart that my friend Sarah sent over the other day:

Content’s “Cost Center” Problem

I like Michael Wolff. Despite his crustiness, there's still something sort of lovable about him. Perhaps it's his willingness to try anything, say anything – the more unpopular, the better. I maintain an amusement for his anti-charm despite the fact that over lunch one day years ago, while clearly I was droning on about something impossibly mundane, Michael Wolff suddenly began twirling his finger by the side of his head and said, "Not listening anymore." Charming, so charming. Or, rather, preposterous, which makes it hilarious and therefore anti-charming—though someone should tell him that snark is dead.

But I hate the fact that his Newser is a stupid rewrite service. Guy Kawasaki's HolyKaw is the same: They hire lowly-paid writers or non-paid interns to cull the Web for "interesting" stories, summarize them briefly and then promote those summaries as if they were stories wholly original to their own sites. THIS IS CHEATING. It's a traffic trick, and alienating to readers. I remember a few years ago or so, there was some hullabaloo (very small hullabaloo) around extra clicks that Business Week made readers go through on their site – from a headline on the homepage to a summary item and then to the story itself. Newser and HolyKaw do precisely the same: Headline in promotional vehicle (Twitter, Facebook, RSS, email newsletter, whatever it may be), click to summary page on their site, and then, maybe over to the actual story on the site that did the hard work of writing the original piece.

Of course, I have to modify all that – I hate it as a user. As a site owner, I was thrilled when HolyKaw picked up our piece from Recessionwire on relocation tips. The link drove a ton of traffic, and on a Saturday of all days. Was this a qualified, sticky audience? I don't think it was. So, thank you HolyKaw for one good day. If you gave me more such good days, I'd probably be swayed to your side. But in general, you, and Newser, are cheapening the experience of content on the Web.

Andrew Leonard took Wolff to task for this in a piece that came out yesterday on Salon, featuring a tiff between Sharon Waxman's The Wrap and Newser, where she rightly went after him for this obnoxious rewrite behavior. Wolff and Waxman are still going at it, and Slate's Jack Shafer has weighed in. 

They will no doubt argue in circles around this until they are blue in the face (mainly Waxman – Wolff is not likely to be slowed down). But if anyone really wants to resolve this issue, it's important to get to the root cause of the matter: Content as a "cost center." If the cost of content were more manageable, transparent and predictable, the models behind it wouldn't necessarily devolve into traffic cheats. A constant pursuit of page views drives the rewrite model, which looks for any way to get audiences to the site. I'd argue that better insight into the cost of content and what it can deliver – not after-the-fact content monetization – would improve CPM rates, stickiness and general budget and revenue planning.

Some people will likely maintain that content is meant to be a "cost center," and that the only way we can achieve quality content is by giving space to the process around it. I don't think that's the case, but that's all I'm going to say for now.

Startups Not Bailouts, Yes, But It’s Already Happening

I really liked Tom Friedman's important story yesterday calling for more startups in this country in order to create more jobs.

He is right to point out that there are some insidious developments (or impairments) around entrepreneurship, such as restrictive immigration policies that keep some of the best minds in the world outside our borders and flailing attention to our university system. Not so long ago, these were actually two areas encouraged. Not so much anymore.

We may not feel the languishing of these policies so acutely now, but the erosion has already begun and likely sooner than later, we'll feel the direct effects on our economy, where there are fewer new ideas and new businesses, and therefore, a weaker economy (and then we'll be like, "recession, what? That was nothing compared to THIS.").

However — the good news is that entrepreneurship is not yet dead in this country, and despite the big-picture issues, there is a sort of mini-boom right now. There's an energy around Internet startups. The recession forced many people to think about going out on their own. Technology and social acceptance have put startups within human reach. In city after city, thanks to ever-increasing accessibility to starting a business, entrepreneurial ecosystems are seeing companies grow and hire, and nurture others so that they can do the same.

Recently, I took a look into (Internet) startup culture around the country in a series for Fast Company. Despite
Friedman's frustrations, startups are a-growing in clusters around the country. Not every city is primed for this sort of thing, but many are and here's how you can know it:

There's a university there. Stanford University has played a key role as a sort of incubator for hot ideas and talent to get funded and blossom in Silicon Valley. Other cities are likely to see similar benefits from their universities, although so far not in such a dramatic way. At the very least, universities provide talent pools.

There's local capital. It's not a requirement – Receivables Exchange in New Orleans is thriving largely on the backing of Silicon Valley investors – but local capital is more likely to invest in local startups.

There are second-timers (or third- or fourth-timers) around. Once a city has seen a crop of entrepreneurs succeed, it makes it much easier for newcomers to join in. Second-generation entrepreneurs provide inspiration, guidance and often, capital. They increase the momentum behind an entrepreneurial ecosystem, fostering its growth as mentors.

There's a culture of creativity or risk-taking, or both. This may not be felt city-wide, but it needs to be in some part of the social fabric of the town.

Further, once an entrepreneurial ecosystem is sparked, it seems to take on a life of its own. Enthusiastic entrepreneurs are finding the strength in community and gathering around events like Tech Meetups or Lunch 2.0 or forming their own groups such as Philadelphia's Philly Startup Leaders.

The cities I covered largely have all of these components, some more than others. New York is seeing a great renaissance right now, in large part because of the culture of creativity and risk-taking, the local capital, and second-generation entrepreneurs like Seth Goldstein and his StickyBits. Boulder, where I live, has a buzzing entrepreneur community, driven by second-generation entrepreneurs like Kimbal Musk, and a very active, community-minded venture capital effort from Foundry Group, as well as a plethora of entrepreneur groups, from the New Tech Meetup to the biweekly Boulder Open Coffee Club. Read about all the cities here.

Friedman is obviously trying to open minds around the idea that it's small companies, not big, that generate employment. And while he may be right about that in a sense, big companies are still the ones with more jobs on offer – they may not be creating the new ones (any MBA can probably talk in detail and with charts about how rapid growth levels out at some point, and that would include job creation), but they are still the biggest employers. (A statistic I picked up while at Inc. magazine and is here courtesy of SCORE: 99.7% of all employer businesses are small business, but they employ less than half of the workforce.)

There are definitely big obstacles in getting a business going that only the government can remove, such as: health care, taxes, immigration.

But while the hurdles remain around the long-run, there are possibilities and opportunities now, and they shouldn't be overlooked.

The End is Near if We Don’t Slow Down

Apparently, we are working too hard and being just too darn successful for our own good. If this keeps up, we're going to bring about our own Armageddon. Our collapse.

Who's collapse? According to a 1988 look at ancient cultures that failed (The Collapse of Complex Societies, Joseph Tainter), they all did so because they grew too complex – too sophisticated. They didn't have systems to keep up with their complex organization. One slight error and the whole thing can crumble. The butterfly effect.

It's a topic that seems to be bubbling up a bit. On Harvard Business Review's website, one of the current most popular articles is "The Acceleration Trap." Which essentially goes like this: In the acceleration trap, companies ramp up so fast, often with initial success, and then remain at such a high speed of development that then leads to overworked and now demoralized employees. A company that hasn't slowed down enough fails to be able to communicate with customers and clients about what it's doing. Internally, the focus is diffused and chaos begins to emerge, profoundly threatening the structure and stability of the organization.

What began as an exceptional burst of achievement becomes chronic
overloading, with dire consequences. Not only does the frenetic pace sap
employee motivation, but the company’s focus is scattered in various
directions, which can confuse customers and threaten the brand.

On a similar theme, I also just ran across a post from the other day by Clay Shirky, who referenced over-complexity in explaining the troubles of the media industry.

Complex societies collapse because, when some stress comes, those
societies have become too inflexible to respond.

He's still talking about the book here, but the point is clear: the media industry is too large and too entrenched to transform fluidly as the Internet persists in its disruption. If I'm reading him correctly, it does seem as though he thinks the point of no return has already passed, and that media companies, thanks at least in part to their hyper-acquisition mode of the last decade, have doomed themselves to complexity-driven collapse.

And if you subscribe to the notion that Hollywood is sometimes freakishly prophetic (e.g. "The Siege," "Wag the Dog," "Network"), look no further than "Idiocracy," a movie by Mike Judge about the year 2505. It's about another sort of collapse: Even if businesses overcome the warnings above, Judge sardonically asserts, they will trigger a (further?) collapse of intellectual life, devolving into a society where the president of the United States is a former WWF hero (um, might not be 500 years for that if Jesse Ventura gets back in the pols ring), and morality and individual responsibility disappears as corporate interests rise and dominate. Mostly, the film is about how stupid everyone gets.

I'm sort of jumbling up a few different ideas here, but the unifying idea is that corporate and societal success is a delicate balance. A manic desire for achievement, an excess of ambition and type-A-ness, can whirr at such a high speed that pieces splinter and break off. So what's the answer? The authors of the Acceleration Trap report say that there is an escape hatch: Essentially, it's editing. Editing out unnecessary aspects of the business. Curbing enthusiasm around opportunistic growth. In their words:

If your company is caught in the acceleration trap, you have several
ways to break free: Halt less-important work, be clear about strategy,
create a system for winnowing projects, and declare an end to the
current high-energy phase.

Sage advice for any "organization," from corporations to individuals to countries.