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.

NYC: In the Shadow of Silicon Valley

I've noticed a lot of defensiveness lately from New Yorkers in the Internet community. It's no surprise, New Yorkers don't fathom the concept of No. 2 in any sense (I'm sure almost none of them actually absorbed this sentence, even). 

A recent New York Times story called "New York Isn't Silicon Valley. That's Why They Like It," kind of says it all. Ali Wolfe's earlier New York Observe piece, "How Tech Became Cool Again," struck a similar tone. And when I spoke with Union Square Ventures' Fred Wilson about New York for my Fast Company.com series on startup hubs, Silicon Valley was the implied barometer.

And now, New Yorkers are no doubt rejoicing: A PricewaterhouseCoopers report (done with a grain of salt with the Partnership for New York City) declared New York tops for "technology IQ."

But New York is truly heating up, and the timing is right: Unlike a decade ago, it's nice but not necessary to be extremely well-funded to get a project off the ground and see some success. Two of New York's hottest startups, Foursquare or StickyBits, have in fact had bank behind them, but it's not what made them.

As for the IQ, I remain skeptical. New Yorkers are hands-down tops in EQ—geez, with so many people smooshed up against one another, one would have to be—and that could be what's more important in tech right now, in this era of social, mobile, location, blah blah.

But if the study is a form of New York throwing down the gauntlet, this is going to be fun.

Buying the Company for the Blogger

Not once, twice, or thrice, but four times in the last couple of months, companies have bought blog entities with the aim of hiring the blogger: Today is just the latest, with Rainbow Media's estimated $5 million purchase of Gothamist, a network for 14 local sites, gaining founders Jake Dobkin and Jen Chung in the deal. Last month, Gawker assumed CityFile for some amount of money I can't seem to track down. The transaction was just barely disguised as a company acquisition but with the simultaneous firing of Gawker's editor in chief in favor of CityFile's Remy Stern it wasn't like anyone was trying to hide anything.

Gothamist and CityFile are both multi-site, staffed operations, but two other acquisitions show that there's a market for buying blogs that are even leaner, and smaller. Earlier this year, Morningstar bought Michele Leder's Footnoted.org and StockTwits picked up Abnormal Returns, a one-man operation of Tadas Viskanta.

The key point in these deals is the earn-out involved. The purchase prices seem attractive enough for an individual, or even a few-person situation, but they're really not very significant sums (not that I wouldn't take it! for myself or for Recessionwire . And with the bulk of the transaction focused on an earn-out, it's clear that no one's sailing off around the world or plunking down for a Gulfstream V.

So why not just hire the blogger at an attractive salary? Because earn-outs are actually cheaper over the long-run, plus they lock in a talented employee for a number of years. Also, if you acquire the site and not just the person, you gain the blogger's following. Big companies don't need to worry about whether the traffic is all that significant — though in some of these cases it is — because they can throw marketing money at them to grow their audiences pretty easily. But even semi-established bloggers bring a base of readers, Twitter followers, perhaps even Facebook fans to build upon. It's a social media investment as well as a content and staff deal. (i.e. it's a really good deal.)

Gawker founder Nick Denton does the math, noting that the co-founders of Gothamist, Jake Dobkin and Jen Chung end up with about $150,000 per year if you consider they've already put seven years into the business and have three years in their earn-out. That's nothing to cry over. But it's not crazy money, nor what you might first expect when you see "millions" in the headline.

What's even more interesting to me about these deals, especially Footnoted and AR, is that they bear out this idea in personal branding that if you build your own platform, the reward may come. I'm not going to get schmaltzy (or bogus-self-help-y) and suggest that you should just follow your dream and a leprechaun will show up one day with a pot of gold. But Leder's and Viskanta's efforts prove out that it's possible to hang out your own shingle, build your professional persona around a focused concept and follow through with integrity and great work (and a bit of networking and self-promotion), and you just might get yourself an earn-out someday, too.

Related: Felix Salmon made similar points in February on his Reuters blog: Blogonomics: Monetize via acquisition

Health Care, the Missing Startup Ingredient

May you live in interesting times.

When isn't it an interesting time? Innovation and conflict are constants, combustibles. But what's been interesting to me in the last decade is a confluence of key trends that have allowed individuals to break out on their own in bigger ways than ever before.

* End of Lifetime Employment – The man will no longer guarantee your security and survival. This trend began in a big way in the 1980s, but has steadily sunk in since then. Next up: End of Lifetime Single Career Path. But not just yet.

* Technology & Infrastructure – The dot-com era, for all its insane over-valuations, actually yielded some extraordinarily useful tools that have changed all of our lives. Obv. My favorites have been the tools that have allowed for creativity, expression, collaboration and community – blogs, Twitter, Tumblr, YouTube, Facebook – as well as those that have made it fantastically easy to set up your own shop, from endless how-tos to easy access to registration services and outsourced operations services (many of them free). And all of these build upon the near-ubiquitous broadband Internet access and the computer in almost every home.

* Social Stigma – It's no longer oddball to strike out on your own. There are still plenty of folks who will give you a skeptical eye when you say you are "independent" this or that, but with part-time and independent workers representing 30% of the workforce, it's not like you're not going to know someone who's forging their own path. That makes it less weird. Further, a McKinsey & Co. study found that independent workers contributed a full $14.5 billion to the New York City economy way back in 2000. So people who do their own thing matter in a very serious way that has ramifications on the general economy.

But perhaps the final hurdle has been health care. With the unemployment rate still hanging out at 9.7% there are still more jobs to be created. I'd argue that independent business endeavors are a strong option to seeking out work from The Man. But without better health care coverage options for individuals, going out on one's own is very unattractive. I'm thrilled that the health care bill passed but it's not there enough to provide comfort and options for those who could contribute to the economy with independent endeavors. Here's hoping that's in the next bill!

SXSW Interactive: What Was Big

Last year, it was Foursquare. In 2008, it was Twitter. But it didn't seem as though any new technology/product got "made" at this year's event. We were all heads-buried-in-phones as we: updated our Facebook status; conversed and broadcasted on Twitter; logged our whereabouts on Foursquare; texted or group-texted to our friends and colleagues; occasionally even called them, and… I hear some people were also Plancasting, but that didn't reach my circles.

Obviously this clunky collection of social networking tools needs some sort of updating that ties them all together and I don't know about you, but I was really, really hoping to see that at this year's event — even if it wasn't the ubiquitous must-use, at least maybe it was lurking among the booths on the exhibition floor, or being tinkered with by some of the attendees.

There was some buzz around Hot Potato and Gowalla, though I personally haven't spent any time with them yet. And apparently Whrrl hit the scene too.

Some other things I saw that were kind of cool, none at all revolutionary but still somewhat problem-solving nonetheless. I liked the concept of Ignima, an app that reads bar codes. In this case, you could snap Ignima at the bar code on your badge as a way of sharing your contact/profile info stored on the SXSW registration page. Much better than business cards, but definitely not as effective as Bump. I also really liked this company called Syncapse that was hawking a thing called SocialTalk, a tool for managing social media content internally before broadcasting it out. It seems to me this has been one of the key hurdles for effective social marketing within big corporations — as someone put it, "You don't want some college kid who was out late the night before handling the messaging on your Twitter and Facebook," and yet, you actually might. You just need a better internal approval process, and this seems like a cool tool for allowing a bunch of stakeholders to weigh in in real time moments before any copy goes live.

SXSW was very much about mobile and real time. No surprises there.

And just before I left for the airport, I caught a few minutes of Ev Williams' keynote where he unveiled @Anywhere, a new "at platform" that looks in some ways like a possible run at Google AdSense, though, again, not sure how Twitter, or anyone else, makes money from it. With AdSense, the name of the game is clicks into cash. With @Anywhere, you mouse over a brand/company name in an article and you get a little box with that company's latest tweet, number of followers, and the ability to click to follow that company's Twitter feed. I think this is very cool, and a great way to build up your Twitter following, and a great further context within content — but how does anyone make money with that?

In general, the event was a great occasion for ideas and insight into some trends, but mainly it was an excellent occasion for networking — for me it also had the added benefit of seeing all of my New York pals and contacts. And Austin, its sultry weather and funky college-town vibe, was very charming. Definitely a worthy event!

Austin-bound for SXSW Interactive

I'm looking forward to hitting the road again this weekend after a nice visit to SF last week. This time: the digital crazy-fest in Austin (known as SXSW – "south by southwest"), from which Twitter and Foursquare burst onto the scene. What's going to be the hot new company/gadget/idea this year?

One thing mentioned to me was a new ad platform from Twitter. I'm hoping not – if SXSW simply becomes a Twitter fest going forward, it will lose the momentum driven by all the creativity typically celebrated there.

Sorting among the thousands of panels now, and will likely post a rough plan here in an update shortly.