social networks

Defining media moments in The election

What a ride! On December 24, 2007, for the customary but risky New Year prediction game, I wrote: “Barack Hussein Obama will be elected the 44th President of the United Sates of America on November 4, 2008. Why? Because he’s smart, he’s new, he’s clean, he’s authentic and because he is, by any measure, the antidote to the Bush era”… At the time — this was prior the bitter primary season — the outlook was grim. According to a CBS poll, Obama was trailing Hillary Clinton by 27% to 44% in the voting intentions, and only 41% of the registered Democrats considered the Illinois senator experienced enough against 83% who thought Hillary was ready to take the job. And she had the best chance to win the election by 63% versus 14% for Obama. More

What Now?

On November 4th, watching the election results at home in Palo Alto, I’ve seen tears in the eyes of reputedly and professionally cynical French people assembled for the momentous occasion.  We were proud of the country that hosts us and adopts us in its generous melting pot tradition.  Now, we are prouder, even, of its ability to stare at its old demons and to heed, instead, the invocation of its better angels.  One convincing, resounding vote ends eight years of appeal to fear, to mediocrity held up as virtue, of fake religiosity, of destroying liberties at home and lives abroad, of making the Statue of Liberty weep.  All this with a fittingly absurd coda: financial ruin and the socialization of the financial system by rigidly free-market ignoramuses.
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So, Barack Obama (see the unusually good) won the 2008 election.  He raised hopes to heights never seen since … I’m not sure when.  I don’t believe JFK rode into the White House on such a combination of despair and hope, of war and recession.  Now, Obama (Barack for “blessed”, if we are to believe dueling Semitic languages) is cursed with winning and having to run the US government, with answering the sky-high expectations his campaign and his person have raised.
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Can he deliver?
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From a Silicon Valley, VC perspective in my case, there are reasons to see a light at the end of the proverbial tunnel — the light one local wag said George W. Bush had turned off to save energy.  I’ll start with the return of meritocracy vs. the self-defeating, falsely populist mediocracy of the W years. Even the Republican columnist at the NY Times, David Brooks, ended up chastising his fellow conservatives for their low pandering.
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In practical, actionable terms, we’re likely to see an overt (and real, let’s not get confused) insistence on science education, high-tech investments in infrastructure, energy and, I’m not holding my breath, high-efficiency vehicles.  Of course, most of us in the Venture Investing biz will have to pay more taxes.  Personally, I want to pay more taxes my way: by making more money, that is by making investments in successful start-ups, that is young companies that sell a lot of their products. And, for this to happen, beyond good products, good entrepreneurs (and visionary but modest investors), we need customers with money to spend on our wonderful innovative products and services, we need a prosperous middle-class.
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We tried the trickle-down trick: taking middle-class money to give it to the top 2% of the population. The theory was, you will recall, the 2% would both invest wisely and spend a lot.  As a result, more consumption, more jobs for the middle class. There are no guaranties the new (old, actually) theory will work better. There are plenty of reasons to fear a recession will make the new administration impotent or, worse, that an overly powerful Democrat Congress will keep at its old corrupt games.  Remember, Democrats voted for the catastrophic deregulation of CDS (Collateral Debt Swaps), the most likely trigger, not necessarily powder, for the financial explosion.
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No, the real reason to hope was outlined to me at breakfast this last Thursday by an Apple insider. The individual gave money to Obama using the MyBarackObama social network.  Our Monday Note has already sung the praise of what is the most exemplary, most efficient, most grassroots Internet political campaign tool – so far.  What this person told me is the morning after the election, the network was already pinging him, sending him news, calling for action, asking for volunteers to help the Transition now and the new Administration later. Actually, if you want a job in the Obama White House or government, go to change.gov and fill a preliminary application.  I did.  I’m not holding out many hopes of being named Treasury Secretary or Internet Czar, but I’m curious to see what’s going on and if I could help.  Perhaps volunteering as a “good BS” teacher to high-school kids.
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Even more seriously, the real point: Obama has built a direct democracy machine second to none.  He’ll have to make real decisions soon.  In plain English: he’ll have to disappoint some people, he’ll have to fight entrenched interests, some very legitimate ones, some richly “lobbied”.  In many cases he’ll have to fight his very own Democrat Congress if he is to perform effective surgery on the tax system and on the country’s spending.  For this, he’s built a network to speak to his supporters over the heads of heavily lobbied, I’m being polite, I won’t write “corrupt” Congress.
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Let’s remember: according to Bloomberg, Obama raised the most money, $650M, from more than 3 million Web donors, with smallest average donation, around $200 per person.
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I can’t wait to see the Internet Obama machine in action again. –JLG
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Learning from the Obama Internet machine

From the very beginning, the Obama campaign met the standards of modern entrepreneurship: a clear goal (get to the White House), a strong leader (Barack), a simple pitch (Change) — and it needed cash, lots of it. And, unlike the Iraq war, it had a preset deadline, the close of business Tuesday November 4th. Not an IPO’s variable price, but a binary ending: either a milestone in modern History or a hard, highly visible failure.
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Before we go any further, a few facts:

  • $401million raised by the Obama campaign – so far.  ($245m  for Hillary Clinton, and $171m for John McCain).
  • $200 million from the website alone (as of June 08)
  • $45 million were raised on the web in February alone
  • > 1 million user accounts on My.BarackObama.com
  • 75,000 local events organized through the site
  • 2 million phone calls originated from the site
  • $4 million have been invested (so far) in the site, including 1.1 million for Blue State Digital and about $3m for Google
  • 38 million people watched Barack’s acceptance speech at the Democratic Convention in Denver (YouTube viewership not included).  A new record.  This is more than the Beijing Olympics opening ceremony.  In 2004, Kerry got 24 million viewers and GW Bush 27.5 million
    4 million people watched Obama’s March 18th speech on race on YouTube
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Based on revenue, return on investment, popularity, penetration rate, brand recognition and any other business indicator, Barack’s Internet operation, MyBO (MyBarackObama) is a roaring success. For our humble media business, are there are lessons to be drawn from this incredible (but retroactively logical) ride? After all, we, too, live on popularity and meeting financial milestones.
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Lesson #1: extract the best of a social network application. Above all, MyBO is a barebones version of a Facebook or a MySpace, focused on two goals: money and message. A detailed look shows how every single feature is designed in accordance with those goals. On the Obama social net, you give the minimum of yourself: you don’t share you tastes in music or reading. But you’ll find all the tools needed to fulfill your dual mission.

You want to organize a door-to-door campaign in your neighborhood? Everything’s there: scripts, ready-to-print flyers, and even video footage of the Illinois senator to be transferred on a DVD for handouts. You feel like throwing a fund-raiser on your block? Set up your fundraising page in a few clicks, assign yourself a financial target, a nice thermometer will track your results.

I spotted a group close to a place I used to live in New York (postal code 10011). I see “Downtown West Side Manhattan for Obama”, as it is called, counts 113 members, hosted 812 events, placed 10,722 phone calls, and raised $59,631.06. That is $527 per head. Not bad. Better that “Chelsea4Obama”, a few blocks north, yielding a mere $358 per member. You can track, compare, and peek at all the 8000 groups created that way. This amazing machine explains how the Obama campaign is able to raise two million dollars a day at its peak performance.
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Lesson #2: Reward, involve, empower. In a YouTube video a black, middle-class woman summarizes the general feeling: “Grassroots Financial Committees mirror Senator Obama’s broader mission, [that is] people owning a part of the campaign and later, a part of the government…” Simple as it sounds, this view echoes the feelings of hundreds thousands of volunteers, donors and fundraisers: being part of the action now and after the election.  And doing it the fun way, because everything in the Obama site is designed to link, connect, share, stimulate and finally reward its contributors, no matter how modest.
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Lesson #3: Don’t improvise, execution is key. No tinkering in the Obama site (unlike John McCain’s). It is engineered by pros, in that instance a small company called Blue State Digital, founded by alumni of Howard Dean’s 2004 campaign, the one that marked the first real debut of Internet fundraising.

Early 2007, BSD picked up some of the best skills available in the social networking space by hiring Chris Hughes, a co-creator of Facebook. Interestingly enough, the 24 year-old gent is not a techie. He majored in history and literature at Harvard and he’s responsible for many non-nerdy features of Facebook such as its privacy policy. Speaking of it, MyBO is fully loaded with all the state-of-the art tracking systems you can think of. To sum up, all members are now part of a big database, a pollster’s dream-come-true. Equally important is the high-level involvement of the Internet operators: at the Obama campaign, a BSD partner attends all senior staff meetings.
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Lesson #4: Use Best-of-Breed interfaces and tools. Donating to the Obama-Biden ticket is roughly comparable to the One-click purchase on Amazon. You can even donate few dollars every months, and pay through Google Checkout.  Spreading the message relies heavily on always precise and relevant SMS, as well as social networks messaging.  No phone banks, this is for traditional (read old folks like McCain) campaigns. Calling for donations is decentralized and organized through the site (two millions calls placed so far). Blue State Digital has created a broad set of tools specially designed for political action, the ultimate form of promotion — and petition.
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Lesson #5: Find the right balance between top down organization and anarchy. Of particular interest is  how the system is both directive and self-reliant. On MyBO blogs look (and are) true blogs, but it also looks like the organization’s gestalt instinctively directs, disciplines content. The site’s architecture and the ways tools work all converge towards providing clear direction. (I suspect a powerful monitoring system is working behind the curtains as well).
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Lesson #6: TLA (Test, Learn & Adjust), more than ever. Once the basic infrastructure (one capable of handling massive traffic) got up and running, MyBO switched to constant improvement mode. One large scale instance of the test and learn approach: a year ago, the staff introduced a point system to track member activity. Three points for a phone call, fifteen for hosting an event. Predictably, people started racking up points for the mere sake of it, regardless of actual impact. The system needed adjustments. Early August, MyBO rolled out an upgrade called the Activity Tracker. It replaced the brute force point accumulation with a more detailed breakdown of activities: Events hosted,  Doors knocked, Number of blog posts, Calls made, Groups joined, and of course, Dollars raised. To encourage sustained effort, another dimension was added: the Activity Tracker became time-sensitive. The more recent the work, the higher the member’s Activity Index becomes. Of course, all of the above happens in everyone’s full view, thus creating peer pressure. This is just one example. Over the course of the campaign, many such features were added, modified or dropped.
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What’s lies ahead. The Monday Note will stick by its December 24′s predication: Barack Obama will be elected. Now, one of the most interesting features of his presidency will be how all the lessons gathered while operating MyBO will be translated into a powerful public governance tool. No doubt that Blue State Digital will work on it soon.  How an Obama administration balances grassroots induced policies with the bulky (but essential) legislative apparatus is sure to be closely watched by all mature democracies — as well as big corporations.  –FF

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The Valley loves Obama

by Jean-Louis Gassée
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Well, not everyone, we have our contingent of Republican believers who still think Obama is a socialist.
Which reminds me of the way we, the French and the Americans, are on occasion equally knee-jerk bone-headed.  In my country of birth, painful reforms are tarred as “libéral”.  There, the label means right wing free-market ultra-conservative.  Here, in my adopted country, painful reforms are called “liberal”, meaning left wing, bleeding heart, big government tax and spend socialist.  Logomachy.  Why think when you can maim an idea with a label?
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We’ll see a lot more of that in the two months remaining before the November 4th vote, one many of us here think it will go Obama’s way.  Why?
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In the first place, we despise the Bush administration. Never in the Valley’s history have we seen an administration so anti-scientific, anti-liberties, xenophobic, intrusive, profligate, dishonest, harmful to America’s standing in the world and in many ways an obstacle to what we do, a counter-example of what we stand for.
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Yes, we’re capitalists, we like to make money. But, with few unfortunate exceptions, we do it because we help entrepreneurs realize their dreams, because we’re behind Google, Cisco, Yahoo!, Apple, Jupiter, BEA, Facebook and many, many others.  We don’t strip people from their home ownership with trick subprime loans, throwing the country’s financial system into a spin it hasn’t yet recovered from.  Yes, there was the Internet Bubble and, like the current crisis, it was aided and abetted by Wall Street con artists while Washington looked the other way, or took from the other hand.  To do what we do, to continue helping innovative companies start and grow, we need a stable financial system, not the biggest deficit this country ever dug itself in.
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This administration condones the re-invasion of religion into public education: some schools in the South now teach creationism, holding the Bible’s account as a factual description of the beginnings of the Universe.  Not poetry, symbolism or a meditation on the mystery of our origins, no, fact.  The same intellectual honesty presides over discussions of climate change.
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Here, we live in a nice oasis: the color of your passport, of your skin, the thickness of your accent, the way you pray or roll in the hay, none of that matters.  What can you do?  How can you help?  Those are the questions we ask.  As a result, entrepreneurs love to come here from all over the world, Russian programmers, Chinese Ph. D, even French Polytechniciens.  I remember the July 2001 day when I became a US citizen.  There were 996 of us in the San Jose Civic Auditorium.  The federal judge who administered the swearing in told us there were 80 nations in the room.  Tiny Chinese grandmothers, Hispanics, Slavs, Swedes, Indians, Iranians…  And, with tears in my eyes, tears that come back as I write this, I thought: This is how my dear Silicon Valley will continue to be this oasis of meritocracy and entrepreneurship.  The same judge kept telling us to use our new civic rights, to register to vote.  The ceremony came to an end and, as we exited the auditorium, we saw a big table and volunteers ready to help with the registration paperwork – for the Republican Party.  The Democrats were at the beach.  That’s how I became a registered Republican –  soon to re-register as an Independent and thus able to vote either way.
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Back to the Bush administration, what does it do to help Silicon Valley continue to attract entrepreneurs from all over the world? Getting work visas becomes much harder.  This in a country where 25% of high-school “students” quit before graduation, when graduating is so easy all you have to do, in some of the worse schools, is fog the proverbial mirror.  In all fairness, that very problem, the state of high school education, the resulting lack of qualified “intellectual manpower”, pardon the oxymoron, and the ensuing need to import it, that situation is not Bush’s fault.  We blame his cavalier indifference to it.  But it predated him and secondary schools are but an example of a more general case of systems so entrenched, so powerful they can’t be reformed with politics as usual.
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Let’s face it, it’s our problem.  We keep electing solons who, once in Washington, run into the arms and wallets of lobbyists and sell us down the river to telecom, Big Pharma, healthcare and Wall Street interests.  The executive, Bush, McCain or Obama can’t win against Congress and lobbyists.
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Unless…
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Obama, once elected, displays the charisma and willpower to connect with the electorate over the heads of Congress. In other words, we need a President who gets our support, channels our willpower.  Then, together, we put legislators into a vise and squeeze them into working for us instead of being on the payroll of lobbyists and their clients.
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In his column, Frédéric explains how Obama used the lessons and the people from Howard Dean’s successful Internet operation.  Obama has shown the will and skill to use technology to empower voters like no one before him.  That’s how he won against the “inevitable” Hillary.  Too bad for her supporters if they stay angry at Obama for beating their champion, they should be furious at her for her entitled behavior and for not paying attention to what the “inexperienced” competitor was building.
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This is dangerous, of course.  Political scientists will rightly remind us of the dangers of direct democracy. It can lead to dictatorship, to a rump parliament, to the disappearance of checks and balances.  But this is a democratic 50-50 country and I don’t see a dictatorship happening here.  Unless, of course, we look at the Stalinist labeling of human beings as “enemy combatants” in order to torture them, to deprive them from the right to habeas corpus and to a fair trial.  A French communist once lectured me on the constitution of the Soviet Union, it guaranteed civil rights, personal liberties.  Unless, of course, you were an “Enemy of the People”.  No rights for you, then.  Off to the gulag.
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With this in mind, for many of us here, Obama looks safer than playing the same Washington game with barely different players. We could be naïve, we know there is the “small matter of implementation”, of the ugly reality of governing once you’ve won the contest.  Still, we hope this mestizo of John Kennedy and Martin Luther King (minus the women and the pharmacy) will restore faith in our government. — JLG

Wait, Wait, This Is My Stuff!

Social networks and PC becoming an arranged knwoledge network

Let me start with an example. Hopefully, the concept will emerge.
Facebook. The latest fracas is their conflict with Goggle’s Friend Connect,
technology that gives any web site simple tools to acquire social networking features.

As a result, users of my organic gardening site connect, share ideas, recipes, pictures with their friends on other participating sites, such as Facebook, hi5, Orkut and many others (social networking or not). The point of Friend Connect not being forced to become members of other sites, just sharing. A side-effect is it becomes easier to take my personal data from Facebook and move my information elsewhere.
No, no, says Facebook. After initially agreeing to the Friend Connect interchange, it blocked access.

This raises the question in the title: Is my Facebook information mine or not? The company has spent upwards to two hundred million dollars building a “free” service. The value Facebook counts on to generate advertising revenue is what they felicitously call the social graph. As the name suggests, this is information about me, about the people I connect to, what we like, picture we share, music recommendations, games we play, purchases we make, invitations to events.

Everything about everyone, arranged in a knowledge network. Slight exaggeration, but you see the idea. Not just tons of details about me but a web of such details. This leads to the advertiser’s wet dream: ads focused on one individual, at the right time. Gee, Joe just told his friends he’s got a new job, let’s see if he’s in the mood for a new car or a new suit, or inviting his best friends to a celebratory dinner. For you, special prrrrice today!

Facebook is currently investigated by Canadian authorities for its ways with user privacy and we’ll recall last Fall’s stumble with Beacon. Users weren’t pleased to discover Facebook passed information to merchants without their knowledge and consent. The plan was creepy: even when users weren’t logged on Facebook, some of their moves were recorded and passed on to “partners”. There is a pattern here: Facebook thinks it owns my data. This is the gold mine they want to exploit and they don’t like the idea of the data flowing somewhere else (read Google).

They are not alone. Many suppliers in our PC/Internet life clearly think they have extensive rights on our machines and our data. I recall the incessant Orwellian demands to download Windows Genuine Advantage (nice bit of newspeak) to enable operating system and Office updates. But I already proved last week I have a genuine copy of Windows! Never mind, do it again. In ironic ways, it gets worse with companies such as Symantec and their security products. Once installed, they are exceedingly difficult to remove. This is for your safety, you see. We conceal key bits so the virus bad guys can’t remove them. Well, no, you keep insisting and Symantec will reluctantly tell you where to download a removal tool the bad guys can use as well. –JLG

Facebook’s maturity problem

Like many startups, Facebook is confronted with a growth problem. Its outstanding traffic (30-35m unique visitors a month) is no longer growing; newcomers tend not to stay with the service as much as the early adopters still do; the Google-induced OpenSocial protocol is a threat and advertising has not taken off as promised. Recently, the investors in Facebook imposed teenage supervision of a kind: they hired Sheryl Sandberg, a former Google executive (see her interview at the D6 Conference)

Facebook is under more pressure from its investors as explained in New York Times DealBook. There, a professor of economics brilliantly reminds Mark Zuckerberg what are the rules of high tech funding. (For an overview of the social network current situation read also the story in Fortune)