Eric Nehrlich, Unrepentant Generalist

[Disclaimer: I received a free advance copy of this book for review, but would happily have bought this book from Amazon.]

I have been a fan of Clay Shirky since I first found his work. Several early posts on this blog were commentary on his articles covering topics such as process, situated software, and the semantic web. As a faculty member of the ITP program at NYU, he writes incisively about the impact of new social technologies on the communications of many to many, the title of the group blog where he posts. So I was thrilled when he mentioned that he had written a book. And after blasting through the book over the weekend, my expectations have been exceeded.

Shirky starts off with the story of a lost phone. The phone was left in a taxi in New York, but eventually ended up in the hands of a teenage girl. When asked politely to return the phone to its owner, the girl responded with taunts; after all, what could the owner do? A friend of the owner started a web page to tell the story of the lost phone. Since the phone’s data was mirrored on the cell phone website, he posted pictures that the girl had taken with the phone as well as the email address she was using from the phone. The story went viral, and thousands of people started emailing with advice, including members of the New York Police Department, and eventually the girl was found and arrested for holding stolen property.

How did this coalition of people come into existence? How could this story of a lost phone reach thousands of people and convince many of them to help find the phone? Shirky provides a guide as to how and why the world has changed in response to evolving social technologies such that the lost phone could be found in a way that would be unthinkable even ten years ago.

Shirky sets the stage by discussing the work of Ronald Coase, who wondered why companies existed. Free markets suffice to connect buyers to sellers, so why were markets unable to connect individual workers together to make products? He suggested that transaction costs explained this inconsistency. Transaction costs are the externalities associated with a market transaction, the time spent finding the appropriate people and “making and enforcing agreements among the participating parties”. If the transaction costs are high to find coworkers (as anybody who has spent time interviewing potential employees will attest), then companies make sense so that the transaction cost is a one-time cost of hiring rather than having to find coworkers for each new project.

Shirky posits that in such a world, there exists a Coasean floor, below which there are types of interactions that are impossible because the transaction costs are too high. Such activities “are valuable to someone but too expensive to be taken on in any institutional way, because the basic and unsheddable costs of being an institution in the first place make those activities not worth pursuing”. Shirky uses the example of the Coney Island Mermaid Parade. Hundreds of people take pictures of the parade each year and share them with friends and family, but had no way to share them with each other. In 2005, Flickr appeared and now it’s trivial to find pictures of the Mermaid Parade taken by dozens of people. A company would never find it profitable to organize this sharing of pictures, but Flickr enabled it by letting people organize themselves, an activity that would previously have been below the Coasean floor.

These newly possible activities are moving us towards the collapse of social structures created by technology limitations. Shirky compares this process to how the invention of the printing press impacted scribes. Suddenly, their expertise in reading and writing went from essential to meaningless. Shirky suggests that those associated with controlling the means to media production are headed for a similar fall. Twenty years ago, achieving an audience of more than a few dozen people required signing a deal with a publishing house, getting on TV, working at a newspaper, etc. With the global audience of the Web, everybody is a publisher, and the concept of a professional publisher or journalist or broadcaster is disappearing.

This collapse of institutions comes at a price, as it has become increasingly difficult to find the “good” stuff. Under the previous regime, quality was implied by publication, as the costs of publication meant that institutions would filter material before publishing it. With publishing costs dropping to zero, anything can be published, so we must find ways to filter for quality after publication. We are quickly developing the tools to handle this filtering, starting with Google, whose PageRank algorithm rewards pages that are linked to by others, and continuing with our communities, where we check out links that our friends email to us or post on their blogs, but we are still learning to live in this paradigm.

These new social tools are enabling new social patterns. Shirky suggests that group activities are being enabled at three levels:

• Sharing, with tools like Flickr and del.icio.us allowing us to share things with others
• Collaboration, with a primary example being Wikipedia or Linux
• Collective action, where a group of people forms to pursue a larger purpose, and uses social tools ranging from web pages to discussion groups to email lists to enable them to stay connected with each other and stay unified.

The rest of the book is filled with wonderful examples of each of these activities, such as Egyptian activists using Twitter to keep each other updated of their activities and confrontations with authority, or Belarussian protestors using LiveJournal to organize flash mobs.

I started to write up all the bits that I liked, but realized that I was just repeating everything in the book, so you should just buy the book and read it yourself. To whet your appetite, I’ll include his practical advice on how to form a sustainable social group:

Every story in this book relies on a successful fusion of a plausible promise, an effective tool, and an acceptable bargain with the users. The promise is the basic “why” for anyone to join or contribute to a group. The tool helps with the “how” – how will the difficulties of coordination be overcome, or at least be held to manageable levels? And the bargain sets the rules of the road: if you are interested in the promise and adopt the tools, what can you expect, and what will be expected of you?”

Shirky’s book is a terrific introduction to the world of social technology, with an overview of both the social and the technological and how they are interacting with each other to form new mashups. I highly recommend it to anybody who has the faintest interest in how new tools are giving us more power by multiplying the number of ways in which we can interact with each other.

P.S. Some quotes I particularly liked:

• “Communications tools don’t get socially interesting until they get technologically boring.” (with the example that people my age know that the fax machine predates the Web, but have no idea about the ordering of radio compared to the telephone since both of those technologies preceded us. Similarly, teens today have always lived in a world with always-on Internet access, so the Internet is not technology to them, it’s just the world.)
• “Cities exist because people like to be near other people, and it is this fact, rather than the mere trading of information, that creates social capital. (Anyone who predicts the death of cities has already met their spouse.)”
• “The groups now adopting social tools form the experimental wing of political philosophy, a place where hard questions of group governance are being worked out.”

P.P.S. If you prefer to watch rather than read, check out Clay Shirky’s Long Now talk, where he covers some of the same material. In particular, he discusses the power of tagging to organize the world’s information without anybody actually taking responsibility for the organization.

Charlie O’Donnell has been taking an anti-stealth approach to his new startup Path101, where he’s blogging everything that’s going on with the company, from meeting agendas to funding strategies. His strategy sparked a great thread on the nextNY mailing list about the advantages of being anti-stealth versus being secret. I contributed to the thread, and I’m going to steal my email to be the bulk of this blog post, because I think it’s a great topic.

I’m going to start with Marc Andreesen’s premise that “The only thing that matters is getting to product/market fit” where he defines product/market fit as “being in a good market with a product that can satisfy that market.” Marc points out that it doesn’t matter how great your operations are or how good your people are if there’s not a market. And if you tap into a previously unexploited market, you can have terrible operations and mediocre people, but if your product basically works, “customers are knocking down your door to get the product”. So how do you find that fit between your company’s capabilities and a good market?

One possibility is planning. This is the myth of the MBA, where the MBA analyzes the market, plans out the strategy with fancy frameworks like the 4 Cs or the 4 Ps, does revenue projections, and the plan is executed perfectly, leading to market success. Yeah, right. As military leaders have known for centuries, no plan survives first contact with the enemy (or the market in this case). But this myth of planning leads to the emphasis on secrecy – keeping your plans secret makes sense if you are sure that you know everything about what you’re doing, who your audience is, and what the market is.

But in the real world, you know none of those things with certainty, so it makes more sense to be anti-stealth. You need to test your ideas in real markets as soon as possible. That will tell you if there’s a demand for the product, and if your potential customers believe that you can deliver a product that meets their demand. Being anti-stealth will get more people giving you feedback on your product, and the changes necessary to meet market demand.

If the most important thing is to find a product/market fit, then companies have to quickly find that fit. Taking a cue from Beinhocker’s Origin of Wealth, evolution is a good model for finding a niche in the battleground of competing business models. Going into stealth mode with your business idea is like hiding in an area with no predators – like large mammals in prehistoric North America, you can be very successful in such an area until a real predator finds you and destroys you (as humans did to those mammals). Being anti-stealth means getting out there and taking on all competitors; if you survive, your company will be the stronger for it. You have to change and change and change again to adjust to the environment, and if you don’t do that, you’ll fail.

There’s also an element of rapid prototyping and experimentation here. Test early, test often. If you’re going to fail, it’s better to fail earlier when you haven’t spent as much money. This is certainly true in engineering and development, and I think it applies in this arena as well – you have to identify the assumptions that are critical to your company’s success and test whether they hold true. You can’t fail if you are keeping everything secret. That may be why some companies stay in stealth mode so long, but it’s pointless because the company would save time and money by failing sooner.

I think an anti-stealth strategy also has real benefits from a publicity standpoint. Unless your network is phenomenal to begin with, you’re not going to know everybody who might have something to contribute to your project. Being anti-stealth gets your name out there, and gives you the opportunity for people you don’t know to contact you and give you help you didn’t even know you needed.

If a company is going to be successful in the market, it will have to have capabilities that nobody else has. There has to be a fit between what its employees can deliver and what its customers want; otherwise, any other company in the space could swoop in and take those customers away. Keeping the company’s strategy under wraps only delays the inevitable if the company has no differentiation from its competitors. Like security through obscurity, you are probably doomed if you are depending on keeping something secret. In other words, secrecy is not a competitive advantage.

A couple weeks ago, we had a discussion over on the nextNY mailing list about how to use social networking software such as Facebook, MySpace, LinkedIn, etc. What was interesting to me about the conversation was how it broke down generationally – us older folks were struggling to figure out what we were supposed to do with these sites. Charlie O’Donnell suggested that for older people there was nothing to do – we have settled into our lives and already have our social networks in place, whereas younger people use such software to expand their networks while they sort out their social identity. That makes sense, but I think there’s more going on here.

For one thing, when one grows up with a technology, it is part of the environment rather than “technology”. It reminds me of McLuhan’s quote that “We don’t know who discovered water, but we know it wasn’t the fish.” and Douglas Adams’s take on technology adoption. People use media and technology in different ways when they consider it the natural order of things. These “new” social network sites aren’t new to the kids using them; the sites are seen as just another way to talk to one’s friends.

The expertise with which such sites are used by these newcomers is partially a result of being embedded in a community. They aren’t reading help files to figure out what to do. They see what their friends are doing, copy and adapt what they find useful, and learn as they go. The site does not stand alone, but instead demonstrates the social life of information. Those of us who are the first of our communities to explore a site have a more difficult time, as we have to figure out usage patterns from scratch.

The churn of technology also contributes to lowered adoption rates by older people. I’ve been on the Internet since 1990 and have spent time with email, mailing lists, MUDs, instant messaging, discussion boards, web pages, Usenet, blogs, RSS, LiveJournal, etc. Several of these technologies have been superceded by later ones. Having been through several such cycles, I’m less likely to invest in learning a new technology until it has moved past the hype stage into mainstream adoption. Somebody new to the scene is more likely to believe that the new thing is world-changing.

Part of the churn of technology is because each new generation seeks to differentiate itself from the one before. Baby Boomers adopted rock music and television and created the beginnings of the car culture with their efforts to escape their parents’ influence. My generation thrilled at the ability to escape from our hometowns by talking to people around the world via the Internet. Now kids see their parents using email, so they think email is for old people and use texting or Facebook messaging instead.

Learning a new technology can often mean giving up an old one. Because of the time I have spent mastering various media technologies and integrating them into my life, I am loath to give them up even if better technologies now exist. For instance, I resisted buying a DVR for years because I was convinced my VCR was good enough. Meanwhile, people entering this environment can choose the technologies that best fit their lives without considering sunk costs, much like developing countries are now skipping wired telephone networks and going straight to cell phones.

As Charlie observed, those of us with established careers and social networks have less time and desire to experiment with new technologies and integrate them into our lives. So we reject them in favor of technologies with which we are already comfortable. Charlie describes how bloggers are rejecting Facebook after using it in a unrealistic way based on their experience with blogging. They didn’t take the time to go “native”; without a community in which to observe how others were using the technology, they failed to find a use for it.

The mix of technology and community is an intoxicating one for me – I’ve been fascinated by how virtual communities form and use technology since I first logged into a MUD in 1990. With more experience, I realized that the technology matters less than the community in the process of technology adoption. A technology without an associated community withers away. A technology that can be adapted to serve communities (like Twitter) will thrive.

We’re in a time of great innovation in social software. The technology to create social networking applications is available to anyone, either through building it with open source software on a hosted server, or through sites like Ning. While I’m no longer one of the early adopters, I am watching them closely to see how new technologies are being used by those communities, so that I can adopt them later myself.

P.S. Having said all that, I still don’t “get” Facebook. Anybody want to give me a tour of how they use it?

After enjoying my last outing with them, I went to another nextNY event this evening. This one was PitchCamp. Keshava recruited several investors and entrepreneurs (including David S. Rose, the pitch coach written up in BusinessWeek) to serve as coaches while volunteers tried their pitches.

The first hour was three companies doing 2-3 minute elevator pitches with feedback afterwards. The second hour was spent with a company doing a 10 minute pitch presentation with PowerPoint, then taking 10-15 minutes of questions from “investors”, before feedback from the coaches. At the end, two of the three elevator pitches delivered a new version of their pitch incorporating the coach feedback, and results were noticeably improved.

I jotted down a list of the recurring questions and advice from the coaches: