Category: Technology

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Media Notebook Technology

$1 Billion-Dollar Valuations for Pipelines and Platforms, and for Creators?

Flipboard raises $50 million on near billion valuationI just… the insanity of this… “Flipboard, the online news magazine app, has raised $50m at a $800m valuation, which is almost 50% of the market cap of The New York Times Company at $1.75 billion.” A near-billion dollar valuation?

From Tom Forenski:

The valuation of Flipboard is an example of a Silicon Valley media company that produces no media content of its own. Its revenues come from advertising placed on its app which collects content recommended by the social networks of its users. Its revenues are not disclosed and it employs less than 200 people.

Compare to:

The New York Times Company  [$NYT] publishes two national newspapers plus 16 regional newspapers. It also owns eight television stations and two New York radio stations. It operates more than 40 web sites. It has 5,363 staff and 2012 revenues of $2 billion.

Here again, we support the pipeline instead of the content creator. As a pipeline aggregator, Flipboard “derives revenue with advertising splits with publishers for ads it places on Flipboard pages,” reports Kara Swisher. Here’s a prediction: the revenue will be enough to keep Flipboard in business, but not the New York Times. Maybe I’m wrong; startups don’t release revenues after all, not until they go public, so it’s possible Flipboard is rolling in money and sharing it with publishers. But then why raise another $50 million?

More likely is they have no idea how to monetize at scale (despite their first $50 million, they’re still only piloting advertising programs and have started to partner with sites like Etsy to get a cut of their cart). Not that it matters if a company makes money anymore, they can still IPO. If pipelines, like say, Beacon, can support content creators in a meaningful way, that would make a near-billion dollar valuation exciting. Until then, pipelines and platforms will just keep taking cuts until there’s nothing left for the creator. Oh wait, that’s now.

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Education Notebook Technology

Here’s How to Improve Education

In this interview from 1995, Neil Postman, an author and media theorist, talks about technology, information overload, and the state of being both more and less connected simultaneously (via Tom Forenski). It’s pretty fascinating; Postman could just as easily be talking about present-day, not twenty years ago.

At one point, he fortells the decline of education:

I’m one of the few people, not only that you’re likely to interview, but that you’ll ever met who’s opposed to the use of personal computers in school. Because school, it seems to me, has always largely been about how to learn as part of a group. School has never really been about individualized learning, but about how to be socialized as a citizen and as a human being, so that we have important rules in school, always emphasizing that one is as part of a group. And I worry about the personal computer, because it seems to emphasize individualized learning and activity.

Educators are worried too. Information overload has become a real issue, and with professor’s lectures essentially becoming just another thing to process, students have zoned out. “There’s so much content, and so many places to access that content, that if our burden, our challenge, as instructors is to relay that content, there’s never enough time,” Russell Mumper, a Vice Dean at the University of North Carolina’s Eshelman School of Pharmacy told the Atlantic. “And if your interaction is solely based on PowerPoint slides, [students] are no longer paying attention. They’re distracted.”

Mumper decided to flip the classroom, where the focus would return to connecting and communicating with one another, and actively participating in the classroom — exactly what Postman advocated for in his interview. Of course, it’s technology that allows the flipped classroom to exist in the first place. Mumper distributes the video lectures his students watch at home through Echo360, an educational technology company.

Still, while most technologies serve to keep us connected online, it’s good to see that many others serve to keep us connected face-to-face.

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Notebook Start-ups Technology Women

Another VC toes the line on meritocracy and innovation

There’s a reason I write a lot about women and tech. And it’s because if women do not take part  in creating our future, we will never be equal. It doesn’t matter if we have parity in every other industry, if we do not have parity at the level of innovation, we will never be equal. We need to have just as much contribution on what technologies and software and industries define our world as white men. 

It’s difficult, of course, when white men are still funding innovation, mostly because they refuse to recognize there is a problem. Nilofer Merchant reports how VC Ted Schlein, general partner at Kleiner Perkins, was recently invited to discuss race and investment in technology:

… all ears were tuned in when well-known VC Ted Schlein of Kleiner Perkins started talking… but Ted denied there was a problem. Despite the story the numbers tell — women receive less than three percent of all venture capital funding, and blacks even less than that — Ted said that the venture capital community was ‘color-blind’ and ‘operates fully on a meritocracy.’ This continued argument disregards the astounding facts that essentially 100 percent of funded founders are white or Asian, and 89 percent of founding teams are all-male.

But we know the technology industry, the current American Dream, is nowhere near a meritocracy. The industry itself is hollowing out the middle class and as one of Schlein’s peers, Sequoia Capital’s Sir Michael Moritz, said just last week, “If you’re not like us, it’s tough.” 

 

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Leadership Podcasts Technology Women Workplace

Does Marissa Mayer have an Ambition Gap?

Yahoo CEO Marissa Mayer has a vision for the company, and we have a vision for her. Does Marissa Mayer have an ambition gap? Listen to the podcast here:

[audio:https://kontrary.com/wp-content/uploads/2013/09/MarissaMayerpodcast.mp3|titles=Does Marissa Mayer have an Ambition Gap?]

Transcript of this podcast:

Earlier this month, Comscore released numbers that showed, for the first time since 2011, Yahoo beat Google in traffic; Yahoo’s unique visitors were up by roughly 20% compared to July of last year, when the company came in third behind Google and Microsoft. For Marissa Mayer, it’s a success as one of the most scrutinized CEOs in America.

Hello and welcome to Kontrary, a different take on work and life. I’m Rebecca Thorman. Today, we’re going to talk about Yahoo CEO Marissa Mayer and vision – first, her vision for Yahoo, and second, our vision for Mayer.

Let’s start with the recent profile in Business Insider, which they describe as an unauthorized biography. You can basically skip over the beginning which is really boring and not well-written at all, and start paying attention once you get to the lower bits about the transition from interim Yahoo CEO Ross Levinsohn to Mayer, and the dichotomy between their two strategies, which is essentially the decision between whether Yahoo is a technology company or a media company.

Marissa Mayer is a product visionary vs. Ross Levinsohn who is a businessman. Levinsohn was the interim CEO from May of 2012 until July 16, when Mayer took over, and was lead to believe he had the job. The strategy he presented to the Yahoo board was this:

Eliminate the majority of Yahoo’s products, increase Yahoo’s EBITDA (a fancy accounting phrase for income) by 50%, cut the workforce down to 4000 employees, and turn Yahoo into a media company. So essentially Levinsohn would be laying off 11,000 employees in order to make Yahoo profitable. From a purely economic standpoint this may makes sense, but it’s really devoid of any heart or inspiration.

Now remember, he’s been told to run Yahoo as if he will be and already is the full-time CEO. So he sends an email to all employees, and it’s this very typical rah-rah email, telling people, “I’m fired up and I hope you are too. I believe in the power of what we’re doing. We have an incredibly talented team, unparalleled strengths in key areas and most importantly, I see the purple pride building everywhere. Let’s move forward quickly with conviction and confidence.” Now, if I were a Yahoo employee, I can’t imagine getting that email one month, and then, if Levinsohn had been installed as the permanent CEO, being laid off the next month, or hanging around as one of the few remaining employees left.

The morale would have totally tanked. The purple pride would have turned black.

Levinsohn’s plan is very similar to the course of action that AOL took as well. AOL was founded in DC, I worked on their campus as part of a startup incubator for nine months in the past year. And I want to describe the campus. When you near the headquarters, there are all these identical buildings in a typical corporate park, and what you come to realize is that they all used to be owned by AOL, but now have the Raytheon logo emboldened on their side, which is a defense contractor. And there’s just one building left for AOL.

And it’s a beautiful building and workplace, to give it credit, and while the lunches aren’t free, the food is great with a lot of healthy options, there’s tons of natural light and so on and so forth. But the feeling at AOL and in the building is very dead. There are whole sections that are essentially abandoned. They’re not even blocked off, just abandoned and anyone can walk through and see the rows upon rows of empty cubicles under a set of dim lights. It’s depressing. And it’s this constant reminder that the company used to be something else entirely.

And I can imagine that Yahoo would have experienced a very similar downturn, and rather than Levinsohn’s plan bucking the system and reinvigorating the company, it would have taken a very long time to recover, because that’s just what happens with change, especially with something as drastic as that.

Levinsohn is a businessman, he’s about the content, and the bottom line.

Now, in contrast, the beauty of Mayer’s plan is that she believes. She believes in Yahoo and she believes in Yahoo products. She wants Yahoo to be a technology company. In the Business Insider piece, they describe how Yahoo employees created posters in the style of the first Obama campaign election, but instead of Obama’s face, Mayer’s face appears with the word Hope inscribed across the bottom.  Think about that. Mayer’s plan is just as drastic as Levinsohn; there will be just as much change, but it’s centered around creating something, instead of tearing something down. Mayer’s vision is about lifting up, instead of giving up.

While some people thought Mayer came off negatively in the Business Insider piece, I really thought she came off as a bit of a hero, or at the very least a compelling leader; her vision has heart and stays true to this notion of innovation, that of going after something larger than yourself or the shareholder’s bottom line.

One of the featured comments at the end of the BI piece actually says:

Yahoo is lucky to have Marissa as CEO. She has done what none of the previous CEOs could do. She has inspired Yahoo employees and [gave] them confidence…

And another:

My high school senior is devouring the article, and hopefully she draws inspiration from a talented and driven Marissa.

And I think that’s how a lot of women feel. We’ve created our own vision of Mayer, and are all looking up or at least over at Mayer to see what she does. She’s become a role model, and that brings responsibility, whether you like it or not.

And with responsibility, comes a lot of pressure. In an article on Time, Charlotte Alter writes:

Mayer still describes her success as almost effortless. ‘It’s not like I had a grand plan where I weighed all the pros and cons of what I wanted to do,’ she told Weisberg, ‘It just sort of happened.’

It’s a misguided attempt at modesty, but it’s the same ‘little ol’ me’ rhetoric that Mayer’s friend Sheryl Sandberg is trying so hard to stamp out. And it’s the same fairy tale reasoning that girls have internalized for generations; girls don’t ‘do’ things, things ‘just happen’ to them.

Pando Daily’s Sarah Lacy responds, first by defending Mayer a bit:

Marissa Mayer isn’t actually allowed to make decisions for herself, her company and her family– somehow we all read those to be decisions she is making for the world.

and then draws a line in the sand:

We’re seriously supposed to believe Mayer just accidentally landed in a top CEO job? … Not owning up to a certain level of ambition is not only disingenuous, but it perpetuates the idea to the young ambitious women reading Vogue that ambition is somehow bad.

Leaders, regardless of their position, are always role models. It is part of the gig, inescapable, just by assuming such a position. While I find it hard to believe that Mayer doesn’t realize this, I also wonder, how far can we go in deciding and assigning responsibility? Our institutional leaders are only human, but man, if we don’t wish them to be more.

While I agree with both Pando Daily and Time, I don’t agree with the people who criticized Mayer’s recent Vogue profile and photo shoot. Is it disingenuous to make judgement on one message and not the other?

To answer that, let me share what Jezebel founder Anna Holmes has to say:

Ms. Mayer’s Vogue profile make me yearn for a time when female competence in one area is not undermined by enthusiasm for another, in which women in positions of power are so commonplace that we do not feel compelled to divine motive or find symbolism in every remark they make, corporate policy they enact or fashion spread they pose for.

I’ll end there. We’ve been talking about Marissa Mayer, CEO of Yahoo, the most scrutinized CEO in America, and her vision for Yahoo, and our vision for her. I’m Rebecca Thorman, and this is Kontrary, a different take on work and life, broadcasting from Washington, DC. Talk to you soon.

What do you think? Is Marissa Mayer’s vision for Yahoo the right one? And is our vision for Marissa Mayer fair? Should she try harder or is she doing well?

Categories
Notebook Technology

Technology grows the wealth gap, profits off your free labor and eliminates middle-class jobs

Sir Michael Moritz

Sir Michael MoritzSequoia Capital’s Sir Michael Moritz gave the Tech Crunch Disrupt keynote and detailed how “data factories have spawned a golden age for entrepreneurs, but make it tough for everyone else.” While theorists like Douglas Rushkoff and Jaron Lanier have made similar arguments for some time, it’s refreshing to hear such honesty from an industry insider.

Moritz’s ideas have wider implications about where the future of funding and innovation will land as well. While Moritz doesn’t provide many answers, the fact that his ideas are even provoking questions like, “Can we keep eliminating middle-class jobs and concentrating wealth without consequence? Or will this weakening of the bottom of the pyramid lead to a global financial collapse?” is excruiatingly important, particularly because he’s in the position to fund real value instead of the next data factory. 

First, big-data factories employ many fewer people than their meatspace equivalents of yore. Ford at one point employed 700,000 people. Now Apple, at times the most valuable company in the world, employs only 80,000 people worldwide including its retail staff. Data factories don’t create nearly as many middle-class jobs.

Instead, the data factories get free labor. They distribute what seem like useful services to the world, things like YouTube, Facebook, Twitter, LinkedIn, Etsy, or Kickstarter. Those services help people share, connect, find jobs, sell their own goods, or fund a project. But in actuality, they also collect troves of data and earn tons of money for the tech giants without forcing them to do much work. That money stays concentrated around the data factories and their limited staff instead of distributing it like traditional factories.

What’s the impact? “It means that life is very tough for most everyone in America” says Moritz. That’s not just some ambiguous sense of hardship. The median American household has stagnated. The absolute minimum wage value has decreased significantly. “It’s tough if you’re poor, it’s tough if you’re middle class. It means you have to have the right education to work at [the tech giants]. If you’re not like us, it’s tough” said the highly successful venture capitalist.

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Innovation Notebook Technology

The future of funding and innovation

Tomasz Tunguz, a Principal with Redpoint Ventures, talks about how important information asymmetries will become on Quartz. This is particularly interesting because we are in the era of information symmetry. Back in the day, you walk into a car dealership and you get screwed by the salesman because information asymmetry existed; you didn’t know much about cars and the salesman knew a lot. Today, you walk into a car dealership and you’ve done a lot of research online beforehand; you likely know just as much as the car salesman. That’s information symmetry.

Information symmetry is good for all sorts of reasons. It leads to more collaborative and effective negotiations, for instance. But Tunguz is counting on information asymmetry to fund the future success of venture capital. Not necessarily bad, that’s just business, but I don’t see the every-man-for-himself approach bringing loads of innovation to the capital market. Indeed it seems counter to his next argument that VCs need to shift from being part of the financial industry to that of service, and should foster the startup community – of which, he later clarifies, will only be internal communities, of course.

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Notebook Technology The Internets

Apple announces iPhones for the 99 percent

Today Apple announced the new iPhone 5s, available in three different metallic finishes, including gold, and the new iPhone 5c, available in an array of colorful plastics for just $99. The dichotomy between the two phones is striking, almost as if they were built for the 1 percent and the 99 percent, mirroring the inequality of incomes and access to the Internet.

Make fun of the colors and plastic, but cheaper access to hardware and all the data along with it is a good thing. In 2009, twenty percent of Americans didn’t use Internet at home, work or school, or on a mobile device. In 2013, twenty percent of Americans don’t use Internet at home, work or school, or on a mobile device. After four years and seven billion dollars spent, the number hasn’t changed.

Our conversations about taste should be conversations about access. “Persistent digital inequality — caused by the inability to afford Internet service, lack of interest or a lack of computer literacy — is also deepening racial and economic disparities in the United States,” reports the New York Times.

While we guess that Steve Jobs is rolling in his grave in response to the colorful plastics, former Wall Street Journal journalist Jessica Lessin reports that in fact, cheaper phones were being considered as early as 2009. The affordable options were sidelined because of increased difficulties in the manufacturing processes, not because they weren’t pretty.

Meanwhile, sixty million people have been “shut off from jobs, government services, health care and education, and the social and economic effects of that gap [is] looming larger,” argues Edward Wyatt in the Times. So we can argue that Apple’s high-brow brand is being watered down (although surely the gold iPhone 5s makes up the difference), or we can rejoice that as technology grows the wealth gap, profits off your free labor and eliminates middle-class jobs, the industry is also providing affordable products and solutions while you make ends meet.

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Notebook Start-ups Technology The Internets Uncategorized

Your Startup Probably Shouldn’t Exist

It’s always fascinating to see why a startup fails, always useful to see what goes wrong. Not everything can or should be a huge business, or “a big hit.” For that reason, I appreciate that Pando Daily reporter Erin Griffith wades into the deadpool to bring us stories, like how YC alum Tutorspree shut down.

Tutorspree graduated from Y Combinator in 2011, calling itself an “Airbnb for tutors,” reports Griffith. Basically, Tutorspree was a marketplace that matched a tutor with its tutee. Besides the glaring pitfalls in such a model, several of which Griffith outlines in her article, we should also be thinking about whether this startup was really worthy of a $1 million investment and $7 million valuation in the first place.

Our obsession with building “big hits” hides all the other wonderful opportunities to make a real difference in people’s lives. Aggregating existing exchanges, like tutoring, and trying to monetize off the backs of others isn’t world-changing. Founders should try creating and providing real value.

Journalist Noreen Malone argues in the New Republic that tech bubbles exist, but mostly to protect the relatively young, well-off, and like-minded generation that builds apps that don’t matter. “Tech is something like the new Wall St. Mostly white mostly dudes getting rich by making stuff of limited social purpose and impact,” economist Umair Haque argued on Twitter. Malone also quotes Mother Jones’ Clara Jeffrey: “I saw the best minds of my generation building apps to send sexts and brag about fitness and avoid the poors.”

Scale, for the sake of size alone, is a small ambition. When you get investment, from venture capital or angel investors, your entire company changes. Your goal is to seek users or sales at the expense of everything else. I have been part of startups that failed – or will fail – for this reason. You sacrifice learning, and as a result, you don’t build a useful machine. You don’t build a meaningful machine. You build a marketing machine (which most people will fail at, since good marketing is predicated first and foremost on a good product). But the strongest biz dev strategies can’t save a crappy product. The best sales people won’t conceal thin intentions.

SIlicon Valley is losing its ability to inspire. “Popular culture has soured on Silicon Valley’s hotshots,” Malone argues. And that’s because long ago, Silicon Valley lost its ability to innovate.

Want to create real value? Start here.

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e-Commerce Notebook Technology

Art You Can Understand

Amazon now offers art, and has “partnered up with over 150 galleries and art dealers across the US… The site offers over 40,000 original works of fine art, showcasing 4,500 artists. That, perhaps unsurprisingly, makes it the largest online collection of art directly available from galleries and dealers.”

Creatives and critics don’t have high hopes.

“Is Amazon Art a doomed venture? Let’s hope so,” said economist Tyler Cowen. “One enduring feature of the art world is that a given piece will sell for much more in one context rather than another… What makes Amazon work for me is simply that they sell better stuff and a wider variety at cheaper prices. Why give that formula up by treading into a market where such an approach won’t make any money? Why compete in a market where an awesomely speedy physical delivery network means next to nothing?”

Well, because art and its pricing have largely been hidden and mysterious. Any time you disintermediate the secretive layers of a market, there’s value there. Despite a slew of art startups, fine art has remained out of reach both economically and emotionally for most people. The gallery experience is less than welcoming, and its traditions are largely foreign to mainstream consumers. Buying a couch, a new TV or appliance, getting a loan from a bank, or moving across the country seem easier than buying a piece to hang on your wall.

Amazon’s art initiative makes art more accessible, the pricing more transparent and straightforward, and yes, art more mainstream. Not sure Amazon’s goal is to immediately offer consumers the best price, but rather to commoditize art in a way the everyperson can understand.

But that still leaves the question of taste. Like fashion on Amazon, Wired Opinion Editor Sonal Chokshi said the art initiative won’t work for pandering to the lowest common denominator. “If you buy that the key to doing real fashion online is more merchandizing savvy than algorithms, Amazon hasn’t nailed this… Fashion — with a capital F — is inherently exclusive. You can’t be everything to everyone. It’s as much about what you cut out as what you include,” argues Pando Daily’s Sarah Lacy. Without a strong curatorial point of view, Chokshi says, art too will fail on Amazon.

Merchandising has solely existed on Amazon in the form of bestseller lists, recommendations and reviews. Amazon isn’t the expert, the algorithimic consumer is. That could be disturbing to those with a proclivity to self-ascribe taste, but it hasn’t hurt the sale of novels and books, a similar market where curation and word-of-mouth drive our current conciousness. And as far as fashion, I may discover a great shoe on a blog, but will search for the best price on Google. Consumers have evolved enough where discovery and point-of-purchase can be several clicks apart (see: the rise of showrooming). 

Worst case, however, Amazon Art adds several more chapters to the site’s catalgoue of everything, ensuring that you start and/or end every purchase on Amazon.