Openness.  The new buzzword of the quarter, it stands for the breaking of barriers and flattening of social, political and economic landscapes across the world.  I just spent an hour driving out of the city back home to Connecticut, listening to Jeff Jarvis apply openness (or “Googliness,” as he so aptly coins it in his book, “What Would Google Do“) to the auto industry, airlines, and even toilet paper, and wondered if he’s right…is everything going to “open up”?

This is a strange question, because as much as the word is tossed around, there hasn’t been a whole lot of application—of course the exception being the Web, where the term was invented.  I understand that open doesn’t truly mean OPEN—but a step in a more collaborative direction–but come on, isn’t there still a need for some privacy, some sense of pure ownership?  I can’t help but think about my own sense of ownership, and how as much as I love sharing with all of you my thoughts, ideas, links, youtube videos and yes, even my travel experiences, there are some things I enjoy owning all by myself.  Of course, I don’t mean strictly getting credit where its due (though it doesn’t hurt…), but actually controlling all elements of a thing, be it a poem, a drawing, an inherited watch even.  Those might not be good examples (especially the latter, I’ll elaborate on that in a second), but sometimes personal just means personal, and that’s that.  I know, I know, you don’t have to share EVERYTHING, I’m allowed to keep some things to myself, there’s no rule enforcing me to open up my diary to the world (in fact, that would be the opposite of openness, as it wrenches control from the user).  But with an entirely open world, I might feel pressured NOT to share something, to keep that poem to myself.  That already exists (and has existed) in some form: “oh you wrote a song? can I hear it? no?! why not?!!”  But in that scenario, I can just say “no,” and be on my selfish way.  But if I belonged to a community where sharing wasn’t only encouraged, but was in fact the norm, it would be peculiar for me NOT to share that very personal song, and I wouldn’t like that.

Now, on to watches.  Patek Philippe is arguably the finest watchmaker in the world.  Its slogan: “You never actually own a Patek Philippe; you merely take care of it for the next generation.”  Its a touching tagline, and one that resonates with any son who’s ever inherited a family heirloom.  However, the ownership I am discussing is not that of the father or the son, but the manufacturer.  In his book, Jarvis discusses the possibility of an “open source Google-mobile,” in which the designs for the car would be open-source, that is, they would be released to the public for all to edit and improve upon.  While his description of such a world was compelling, there are some industries I hope don’t get to that point.  Watchmaking is one of them.  A craft such as Patek’s is one so refined that any collaboration–however “helpful”–would no longer produce a Patek Philippe.  Now, Pateks are not ubiquitous, they are very, very niche (probably because they are very, very expensive).  So, to take a niche business and slice it up even more by opening its process and systems to the masses is…inefficient.  And there are many industries like this…high-end guitars for one.  I love Paul Reed Smith guitars, and even though I think a third pickup might make it sound better, the end result would cease to be a PRS, it would just be mine.  And besides, I can take a stock PRS and modify it myself if I want.  If I am industrious enough, I might even make a few of those customs, and sell them on eBay.  But the product commands a premium because it is just that, a premium product.  And I still think it best for those types of niche manufacturers to retain full ownership of their product and brand, for fear of losing that unique touch.

So is openness good?  Of course.  Am I just scarred of the implications of a fully open web?  Perhaps.  But I think that in our rapid quest to transform tired business and social models into “digital” ones, we should be careful not to overstep the bounds of propriety.  Some things are just better left closed.

Quick aside: I’m writing this from a Denver Starbucks.  After trying three separate wireless networks, all which had paywalls, I of course managed to find one with excellent signal and no WEP password.  This is why paywalls don’t work: we are used to free, we will find free.  No matter what.

So, on the topic of trying to charge for something that people can otherwise get for free with just a little extra work, let’s talk pricing models.  As it stands, the easiest content to get for free that historically has been paid for in other forms, are music and video files.  P2P networks are too powerful to be stopped by lawsuits and corporate muscle (muscle that is getting more and more atrophied by the quarter), and the general Internet-using public has gotten used to the luxury of free media.  So, to go back and start charging those same people with micropayments and paywalls is quite difficult (with the exception of iTunes, which made the process of buying music exceptionally easy, enough to siphon off a good portion of music listeners/customers).  What to do? make the purchase of a product an incentive-based experience.  When I buy an album, and then go and tell 10 of my friends to do the same, that artist and its label (if they even have one) are making money not just from my purchase, but from my promotion.  Yet I see no difference in my price whether I tell 1,000 people or just one.  What I’m proposing is something like this: I agree to buy an album for X.  However, I’m not immediately charged, but instead given a short window of opportunity (a few days, weeks, whatever) to get my friends to buy the same album.  For every person who buys the album based off my recommendation, the price I pay decreases a bit.  As more people buy off my recommendations, the more my price drops.  If I get a certain number of people to buy the album in that time period, my price becomes zero.  The object is of course to reward your most loyal customers.  Pundits might say that this effectively turns everyone into salesmen, and intentions get all out of wack.  But, when you talk about a friend-to-friend recommendation, disingenuous promotions simply don’t hold water.

The difficulty in this system would be tracking who recommended what to who, and verifying that process.  But platforms already exist where people recommend things all the time (a la Facebook, Twitter, etc).  Build an app on top of them and have the whole process–from communication to transaction–occur within it.  With revenues falling off cliffs in all facets of the media business, it couldn’t hurt to at least experiment with models such as this.  Cuz I’m sure as hell never going to pay $9.99 to log onto the Internet for 30 minutes…and if everyone starts password protecting, I’d rather learn how to hack WEP than whip out my credit card.

[update: there's a company that does something similar called Popcuts, though its more based around discovering music and store credits rather than rewarding promotion.  Still awesome.]

This afternoon I sat in an auditorium at my sister’s high school and watched a live stream of Malcolm Gladwell’s speech to the students going on in the adjacent gymnasium (cool, right?).  He spoke mostly of his new book, Outliers, and more specifically about the three “constraints on capitalization,” as he puts it.  Capitalization, for him, is the success achieved by someone when presented with an opportunity (he gave the example of a football player from Memphis, who, like many of his friends, had an exceptional skill to play football, but unlike his friends, was just picked in the first round of the NFL draft two weeks ago.  If 10 students at his high school were exceptional at football, but only 5 went on to, say, accept football scholarships to colleges, that sample set’s “capitalization rate” would be 50%).  The concept of capitalization aside, Malcolm spent a lot of time hammering home his thoughts on education, specifically as it adhered to finding one’s “it” thing, the subject that you truly adore.  His research found that people like Bill Gates, Bill Joy, Steve Jobs and Eric Schmidt, had two things in common.  First, they were all born in 1955 and therefore hit Silicon Valley just as the computer revolution was taking off in the mid-70′s.  But perhaps more importantly, they all absolutely LOVED computers, so much so in fact, that they spent more than 10,000 hours of true practice with them.  These two factors played into his theory of constraints, of which there were three–poverty, “stupidity,” and attitude.  Poverty was really a distillation of the broader concept of “opportunity,” people in poverty simply aren’t exposed to as many opportunities (however you define them) as wealthier people.  For those four titans, “poverty” was eliminated by their birthdays.  The stupidity constraint was trumped by their being pioneers (stupidity usually referred to society inhibiting a person based on some stupid criteria, it is essentially bias).  However, the attitude constraint is what interested me most, and those four guys had the perfect attitude: a head-over-heels love affair with technology.

Malcolm also discussed the discrepancy between Asian students and American students on math aptitude tests.  In his book, he discovers that the reason for the Asians’ superiority is simply their discipline to spend more time on the subject, apparently excellence in math is simply a function of the amount of time and work you are willing to put into it.  That note got me thinking about the American school system, and its true failure at inspiring students to be passionate about something, ANYTHING in the curriculum.  With more and more information becoming readily available and fun to consume on the web, students might be able to discover a passion for a particular subject quicker than ever before.  What the system should embrace, therefore, is the ability for a student to pursue that subject for which they feel more passionately about to a higher degree, with more time dedicated to that than any other subject.  Of course, not every middle or high schooler KNOWS what they love at that point in their life, but some do, and if encouraged, more should.  Ultimately, my thoughts were running towards the general idea that our school system needs to be overhauled to embrace Internet learning and collaboration tools, and more progressive approaches to developmental education.  The guys over at Union Square Ventures of course already host the extraordinary annual conference, “Hacking Education,” to discuss these very changes (and many more insightful ones), but that’s still a very niche discussion.  While the tech community seems to “get it,” its 1) hard to push that thought experiment to the general public, and 2) even harder to propose, pass and integrate a new system through the government.  And maybe government isn’t the answer here, and this change needs to happen on the charter or even private school level and work backwards, but whatever the process, it needs to be discussed in a more public forum.  One thing’s for certain, if you have the opportunity to see Malcolm Gladwell speak, do it.  He’s exceptional.

I’ve been giving a lot of thought to the power of recommendation lately.  Not in the Amazon, “if you liked this, then try this other thing” regard, but rather the weight a recommendation from a friend has on a purchasing decision (purchasing here could mean the acquisition of any product or service, paid or unpaid).  The important shift that has occurred with the advent of popular networking tools is our increasingly liberal use of the term “friend.”  Our trust extends far beyond those who would be considered a true friend, and on to those who have proven themselves in some way as worthy users/followers/subscribers/connections/friends.  That guy has 250,000 followers on Twitter?  Must be trustworthy.  Scoble keeps talking about that user on Friendfeed?  I should probably subscribe and listen to what he has to say.  Wired mentioned that guy’s username in an article?  Maybe I’ll watch that video he posted.

With more of our newfound friends sharing links and media, a buildup of these recommendations is being constructed in the background, mostly without our knowledge (perhaps without the services knowledge, but the data IS there).  We may try to scour someone’s past tumblr posts to find that photo that was so crazy and show it to our friends (“i remember it was posted around the time of graduation…so around May 8…ok, looking…looking…looking, ah! there it is!”), but that process is tedious at best.  Not only is it often difficult to remember WHO had posted the object in question, but also when, and if they are on multiple platforms, was it Facebook? Twitter? Tumblr? if it was a song was it on Blip or Last.fm?  This process of searching is more like what Christopher Columbus did then what British Airways does now: we know its somewhere out there, but the options are many and the process of digging through each of them is sometimes too much work to justify the benefit.  The obvious tool that I’ve been hinting at to make this all better is social search, someone (I’m looking at you, Google, but maybe a company like Cuil) just needs to build it.

We already have the ability to search tweets, and categories often crop up with hashtags to make the job even easier.  But what this requires is foresight to know that whatever you’re posting should be categorized, a thought that isn’t always present when posting on a friend’s wall, or simply shouting to the Twitterverse that you just stayed at an amazing hotel in Chicago.  But that information is still very valuable, and should be relevant when, say, you go to Chicago next and are looking for a place to stay.  There was a post on TechCrunch a while back by guest writer Eric Clemens, Professor of Operations and Information Management at Wharton, discussing this very concept.  He said, “Rather than searching for any hotel in Chicago, or for any hotel that paid for the keywords “hotel” and “Chicago” I would like to be able to ask for the hotel where my friends stay when they are in Chicago.”  Makes sense, right?  Well I think there’s an opportunity here to help both sides of the equation, the user desiring to go to Chicago and the hotels recommended by the friend.  If the intent of the traveler is to find a more concrete recommendation for hotels than simply paid search or even natural search results, anytime a Facebook user, for instance, raves about their stay at the W Chicago, W Hotels should see value in that.  If they had the ability to say, upgrade their social search result, so maybe some rich media shows up (photos, videos, virtual tours, reviews, press, etc) alongside the text of your friend’s recommendation plus a brief description, that might make that result more appealing to the traveler.  Services are already experimenting with rich media search results.  SeeqPod (recently shoved into bankcruptcy by Bronfasaurus and others), the music search engine, has “playable”  results, and Yahoo! has started testing rich media ads in its search results (less interesting).  The crux of this whole scenario is, of course, designing a functional social search engine (no easy feat).  Lets just hope that Google’s already working on it so our lives can become a lot easier, as usual.

After a long and admittedly inebriated discussion of the economics of drug trafficking (I believe inspired by an episode of Breaking Bad, if you haven’t seen it yet I highly recommend it), my roommate and I came to an interesting realization: the illicit drug market is pretty efficient.  What was interesting about this “conclusion” is the why, and we thought it might be attributed to the treatment of risk in a typical drug transaction.  As a drug lord (or even middle-management goon) evaluates a potential transaction, I imagine he and his droogs are very close to the risk: long-term prison sentences and, worst-case scenario, death.  This, I can imagine, would cause a pretty extensive examination of all the possible variables involved, and how best to manage them.  The key there is the distance between the risk and those involved in the transaction.

I don’t think it’s a stretch to say a lot of what’s going on right now in the economy can be attributed to poor risk management (on many fronts).  There are many parties to blame in this dysfunction, but there is one fundamental flaw in the system: distance.  When the traders managing their investors money don’t have any skin in the game themselves  (and what’s more, they’ve leveraged that capital 20-1) there’s a lot more distance between trader and ultimate risk.  The risk for that trader then becomes limited to losing his/her job, and maybe the decline in value of their stock options if the company loses big-time (or worse, shutters).  That scenario puts so much space between trader and potential risk that even fundamental theorems and formulas become malleable…it’s not apparent, so it’s not recognized.  All of the at-risk capital becomes reliant upon algorithms to do their job instead of humans making basic judgment calls.  And with the potential for upside so far beyond everyone’s wildest dreams, risk (especially long-term risk) gets thrown out the window.

Now, I’m no expert by any means, and maybe measures do exist to eliminate much of what I’m claiming, but I feel like if there were, we wouldn’t be in SUCH a bad mess at the moment.  Hopefully we can shorten that distance a bit moving forward, and keep the ultimate risk in sight this time around.  I don’t think this is as much a policy or regulation issue as it is a fundamental behavioral issue, and I think enough people realize this to make a difference (or at least I’d like to hope so).

A lot has been said recently on the topic of social media in general and Twitter in particular.  The blog posts are coming in by the thousands, driving people to jump on the band wagon simply because they don’t want to be the odd man out.  I seem to remember 8 months ago my friends criticizing me for tweeting my every thought to my followers, calling it “weird” and “voyeuristic,” yet now I’m getting friend requests from the very same individuals.  The fact is, I don’t tweet my every thought, nobody should.  But that’s what’s happening, and its killing Twitter’s utility.  Last year, South by Southwest saw great publicity on Twitter…a search on the service brought up tidbits of interesting talks and responses to panel discussions.  Users were able to get an impression of the event without actually attending.  This year, however, the hashtag #sxsw was so overused, it was nearly impossible to sift through the garbage to find the “gems,” as it were.

Many speculated that this would happen, that Twitter would simply become another Facebook Status (in fact, many users are linking their Status updates to their Twitter accounts now), and the great real-time conversations that the Twitter platform enabled would be drowned out.  Perhaps its true, perhaps not.  You can of course still choose who you follow, and even organize those users into relevant categories to increase functionality (using apps like TweetDeck), but the public feed has certainly lost some of its edge, in part due to the cavalier use of popular hashtags.

This new breed of Twitterer has been criticized as seeking to satisfy narcissistic desires, rather than constructively contributing to the community.  Those who seek the most followers at whatever the cost–sometimes even using what are essentially pyramid schemes, like TweeterGetter–are probably more narcissists than brands or individuals seeking a broader marketing reach, especially since those scams don’t care about the demographics of the followers, just the numbers.  But whatever the intent, its not the psyches of these users that’s the problem, its their behavior.  A constant stream of one-sided self-promotions or drab status updates (of which we are all occasionally guilty of) that simply crowd discussion categories, is not beneficial to the community.  Perhaps that’s where Twitter is headed, and in that case, I hope a tool comes along (native or third-party) that helps filter out the signal from the noise, because otherwise users like myself may move on.

The past few days, I’ve been out of commission with the flu, and have had a lot of time to reflect, in a very sick and self-pitiful way, on the things going on around me.  What I find myself thinking of most is the typical “I take my health for granted” stuff that accompanies any fever, but its also helped me draw a parallel to the current state of economic crisis, and the times leading up to the fall from grace.

When all is well and healthy, it is only natural to want to live fully, and push your body to its limits occasionally, just because you can.  But there is a difference between pushing in a smart way and simply being reckless.  When reports come out to suggest an awful flu season, it is the foolish youngblood (that would be me) who waives the flu shot and continues to go for jogs in the cold rain and not wash his hands.  This is acceptable when you’re 22 years old and still in college, and the only thing you’re betting with is a few days of bedridden discomfort.  But those weren’t the stakes with the predatory mortgage brokers, the banks who sliced up the loans into fancy products and sold them as AAA-rated tranches, and the funds who bought them.  And now our economy is incredibly ill, and the unfortunate thing about the flu virus is there is no quick fix…simply lots of water, vitamin C and (worst of all) rest.  And that rest is causing sentiment to continue to decline, which is the exact opposite of what we need, because everyone knows the more positive your outlook, the faster you get better (something psychological, who knows).

So, we need to stop trying to figure who got everyone sick, we need to stop saying we “should have” gotten a shot, and focus on the fastest possible way to emerge healthy once more.  And right now, that means politics need to be pushed aside–after all, as a kid, if both your parents were constantly arguing over what was the best treatment, the only treatment you would receive was none at all.

The guys over at Silicon Alley Insider are notorious for their business model contests (see their Digg contest here).  With the latest fashion in Web 2.0 startups being users first, revenue model later, this type of thought experiment could even emerge as a potential model for launching these companies altogether: launch an app with great user experience and utility, but little idea of how to monetize; build a loyal user base; raise lots of money; gather even more users; raise even more money; let a community of intelligent thinkers develop your plan for you and save money on product or business development executives (for the time being, you’d probably have to hire the “winner” ultimately).

Well Twitter is the latest subject of these competitions, and it seems a winner has emerged. The model (deemed Twitter Antenna) is based on market research and brand feedback from a set of opt-in users willing to be questioned about brands, products, services, experiences, or anything else companies may want to get authentic and timely feedback on.  It is pitched as “a subscription service that gives brands access to honest, instant and cheap feedback from a large, defined group of Twitter users.”  While the model has always been leaning towards a market research/pulse detection tool due to the immense attention marketers have been giving the Twitter community over the past year, I’m not sure this makes fiscal sense for the company given the amount of early-adopters who actively tweet (and the corresponding value of that community), not to mention the amount of investment they have taken on.  Also, I could see this model being developed as a third-party app on top of the platform, or integrated into a more robust Twitter tool like Tweetdeck (instead of a native dashboard hosted by Twitter).  However, despite the obvious flaws of the pitch (such as problems getting users to opt-in, incentives for opt-ins, skewed market segmentation/representation, value of the signal versus the noise and distinguishing between the two, etc), it is headed in the right direction.  Recognizing the power of a community nearly entirely comprised of early-adopter influencers of all kinds is where Twitter’s head needs to be at, its just finding that magic packaging with that magic price (as it always is).  All in all, I think the presentation won because of its cleanliness and professional flavor (the creators run an alternative marketing firm-within-a-firm at Publicis Groupe called Denuo), but like I said, the content’s on its way.  Keep on keeping on Twitter, you’ll get there, I believe in you.

Remember those terrible in-video text ads that pop up at the bottom of YouTube videos? Or those pre-roll or post-roll spots that nobody ever pays attention to? Oh yeah, those still exist. And they still suck. Well Innovid, a start-up out of Israel has developed software to make the entire online video experience interactive, both for users and brands. Brands are able to embed essentially any message into a video. The demo above depicts a couple different forms, beginning with a Pong game, to scrolling RSS feeds, news tickers, and some animation that is reactive to the user’s mouse. The media can be incorporated real-time, and on a contextual basis; so one user could see one targeted message that they could interact with, and another user could see a completely different experience, embedded in the same video clip, and at the same point in time. Very cool stuff.

This comes at time when online video has every advertiser, platform, and network scratching its head. As I mentioned before, I think so far only Hulu has taken a step in the right direction, although their inventory (or rather the inventory of their network) is extremely thin (and I’m getting pretty sick of the same old Sprint Instinct ad).

I think we’ll see a lot of buzz about this company and its product in the near future, especially as companies like Google continue to experiment with ways to squeeze another penny out of its services. In the meantime, simply wallow in its greatness, at least the greatness of its (regrettably not interactive) demonstration.

More on Innovid on their website

TechCrunch coverage

It appears that size does matter after all, but not in the way you would think.  Thomas Pollet, a psychologist over at Newcastle University, has discovered a direct link between positive income of a male partner and the self-reported frequency of orgasm for the woman.  As you can imagine, this study did not go uncontested.  It is essentially suggesting that women are programmed to be gold-diggers, and in fact, Pollet suggests that basic theory to hold in this case, finding it to be an “evolutionary adaptation” to choose mates based on perceieved quality.

The study was conducted using data from the Chinese Health and Family Life Survey, one of the largest ongoing lifestyle studies in the world.  Simply put, he found that “more desirable mates cause women to experience orgasms.”  Oh my.  Job well done Forbes 400.