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The Next Cuban Revolution

I wrote this for today's Huffington Post.

I was in Havana this past Friday when Yoani Sanchez was snatched by Cuban police and brutally beaten.  The officers didn't draw blood this time--after all, they are professionals--but they left enough bruises and welts to remind her and others that using the Internet to defy the regime can get you hurt or worse.

Sanchez, 33, is an award-winning blogger whose site,Generation Y, provides one of the best glimpses of what it is like to live in Cuba today.  I had returned to Cuba to gain a better understanding of how Sanchez and others were using the Internet to change the country.  The beating speaks volumes.

The fact is, Sanchez has a loyal following; her blog gets more than a million hits per month.  But, too few of those visitors are from inside Cuba.  Only foreigners, select government employees and some academics are currently permitted home Internet service. Many Cubans turn to the black market for expensive, slow dial-up accounts. The government blames the lack of Internet, like everything else, on the 47-year old US embargo.  The real barrier is the limited infrastructure and the exorbitant cost to surf the web.  The price of a personal computer is beyond the reach of most Cubans and at 10 Cuban pesos (CUCs), a single hour at an Internet cafe is equal to nearly one month's salary for the average worker.  Like rent, liberty and the freedom to dream, the Internet is a very expensive proposition in today's Cuba.

The state of the Cuban economy is much worse than when I was there a few years ago.  There is also more despair and cynicism among the people.  The hope of quick action by the new US Administration is giving way to a deeper pessimism that they may be in for years more of hell.  If a Noble Peace Prize winner won't act who will?

The one bright spot for the economy is the growing wealth of Cubans with help from family members outside of the island.  Easing by the administration of restrictions on money transfer by Cuban Americans has had a tangible change--for some.  This has created a stratum of the few who are starting to live more modern lives.  It is also producing a tense dichotomy.  Since the revolution, there have always been a small slice of people with money, but they were the politically connected.  And, there are good jobs that pay well in the country, but they too have been reserved for the politically connected.  That reality has been baked into the resignation of the masses.  But the idea of regular people with family wealth is another matter.  It says ordinary people can get ahead without dark ties to the regime.

It was a small, safe step perhaps (in keeping with the Obama style), but freeing up the flow of money is proving to be a disruptive act: freeing up the flow of information would be even more disruptive.  If we want to change Cuba for the better, improve the human rights record and flush out the corrupt in the government open it up to the light of the Internet. 

In a white paper to Congress earlier this year, the Cuba Democracy Public Advocacy group advocated some specific steps to make a difference.

The Administration should use the existing authority to issue specific licenses to U.S. carriers wishing to provide service to Cuba, as long as a fair market price is negotiated and the transaction benefits the Cuban people. Moreover, the Administration should eliminate license requirements for NGOs working to provide everyday technology, such as cell phones, DVDs, camcorders, computers, flash drives and printers, to support civil society. The Administration should also provide a general license for U.S. relatives of Cuban nationals to pay for the internet and satellite services of their family in Cuba, as well as to send them applicable technological equipment.

With a stroke of his pen the President could make these things happen overnight, make no political enemies at home and still be competitive in Florida in 2012. 

Truth is, connecting Cubans to the rest of the world is bad for Fidel Castro (still very much in charge) and his two henchmen, fear and ignorance.  The people, armed with information, will break the chains that hold them down.

Lying in the street after her beating Sanchez recalls in her blog the next day "I managed to see, however, the degree of fright of our assailants, the fear of the new, of what they cannot destroy because they don't understand, the blustering terror of he who knows that his days are numbered."

Perhaps the Internet Age demands a new kind of Noble Peace Prize winner.  Someone like Yoani Sanchez.

The Ten-Year Century

Mike Malone and I wrote this for the Wall Street Journal today.

In computer jargon, when your hard drive becomes overwhelmed with too much information it is said to be fragmented—or “fragged.” Today, the rapid and unsettling pace of change has left us all more than a little, well, fragged.

We watch 60-second television commercials that have been sped up to fit into 30-second spots, even as we multitask our way through emails, text messages and tweets. We assume that these small time compressions are part of the price of modern living. But it is more profound than that.

Changes that used to take generations—economic cycles, cultural shifts, mass migrations, changes in the structures of families and institutions—now unfurl in a span of years. Since 2000, we have experienced three economic bubbles (dot-com, real estate, and credit), three market crashes, a devastating terrorist attack, two wars and a global influenza pandemic.

Game-changing consumer products and services (iPod, smart phones, YouTube, Twitter, blogs) that historically might have appeared once every five or more years roll out within months. In what seems like the blink of an eye one giant industry (recorded music) has been utterly transformed, another (the 250-year-old newspaper business) is facing oblivion, and a half-dozen more (magazines, network television, book publishing) are apparently headed to meet one of those two fates.

Call it the advent of “the 10-year century”: a fast shuffle that stacks events which once took place in the course of a lifetime compressed into the duration of a childhood. To understand how this his happening—and what it will take to cope—take a look at the underlying forces:

• Faster computation. “Moore’s Law”—the doubling of semiconductor chip performance every 18-24 months first observed by Intel co-founder Gordon E. Moore—has become the metronome of modern times. Yet the extraordinary changes we have seen since the invention of the transistor in 1947—all of the way to broadband Internet, smart phones, iPods and supercomputers—are only a prelude to the emerging world of single-molecule silicon gates, nanotechnology and advanced bioinformatics (which uses information processing in molecular biology).

• Quicker access. “Metcalfe’s Law,” named for electrical engineer Robert Metcalfe, says that networks grow in value exponentially with each new user. The biggest network in the world is the Internet; and thanks to the advent of cheap, Web-enabled cellphones, the Internet is about to see its “jump point”: the arrival of two billion new users from the developing world, nearly tripling its size.

Now consider what may happen with faster computation speeds and global broadband wireless coverage, which means full access from anywhere on the planet, anytime. What counts here is not the sheer size of the Internet, or the richness of the experience, but the life-altering access to any information we need, delivered with unprecedented sophistication, almost instantly.

• Shorter decision cycles. Think about what quicker access to vast caches of information, available instantly almost anywhere, to be crunched and analyzed using ubiquitous and powerful processors—all with the knowledge that competitors are doing the same thing—means for business enterprise. The emerging environment is not one for reflection, or “letting things play out for a while.” It means bold, impetuous moves, all while betting that the information is not just complete, but accurate.

True, when a computer chip goes through as many computations in a single second as there are human heartbeats in 10 lifetimes, a 10-year year century seems positively pokey. But we humans have a slower metabolism, which will make this rapid fire of events ever more difficult to comprehend, much less manage.

More disturbing, we have few safeguards—software shut-off switches, virus protections, firewalls, etc.—in place to check or repair our new global über-system when it misfires or goes completely off the rails. When felons with lousy credit histories can sign up for inflated mortgages in a matter of seconds over a computer; when nervous shareholders can panic over a fake blog and dump millions of shares online in a matter of minutes; and when an Internet rumor can provoke a virtual “run” on a bank, then bubbles and cascades and crashes become inevitable.

So how do we control this increasingly out-of-control, interlinked world? Venture capitalist Bill Davidow has proposed the equivalent of online “surge protectors” to stop run-ups and panics on the Internet, the same way stock markets stop runaway trading. At the least we need better analytics to predict where change is taking us next.

Most importantly, trust will become the critical factor. Without the luxury of time, trust will be the new currency of our times, whether in news sources, economic systems, political figures, even spiritual leaders. As change accelerates, it will remain one true constant.

English Dominates the Web? My Money is on Globish!

“We have to open the Internet to more languages!”  That was the the lament roiling about this week’s meeting of ICANN (Internet Corporation for Assigned Names and Numbers) governors in Hyderabad, India.  The arbiters of all things Net were complaining that English, followed by Mandarin and Spanish, are the dominant languages on line, accounting for one-half of all users.  Use of the world's other 6,912 ^[1] known living languages (many with no written form) account for the other half of the traffic. 

The implication seems to be that allowing English to be the lingua franca of the Web is somehow acceding to American cultural imperialism.  It is hard to believe that people who should know the Internet the best are still so ignorant of how it works.  

First, the Internet remains a young network, as networks go.  And, like any network in nature, it operates along a biological pattern: it grows by being spread from one receptive person to another. The Net was born in the USA and most of the early adopters were American or English-speaking academics from around the world-and at its release to the PC-using public (as you may recall the computer used to be the tool of choice to get on the Internet) was greatest in the industrialized corners of the globe where English is the de facto language of business.  So, the early start by English speakers online is hardly nefarious even if you could control such things.  

Second, per trajectory, by growing at 700 percent a year, Mandarin will soon become the most-used language online.  Will we see a sturm und drang over Chinese cultural imperialism?  Doubtful.   Third, what is growing faster than the diversity of languages used on line are the many ways to translate text to any language you like (albeit not quite perfectly yet).  Downloads and services like Babelfish ^[2], Babylon ^[3] and Free-Translator ^[4] are examples.  Why learn every language on earth when the massive computational power at our disposal can do it for us?

Okay, so even with the power of the web to provide your translations, you still want to become multilingual for your personal growth and amusement-don’t decry the Web-use it.  Check out a fascinating new service called iTalki.com ^[5] which allows the world’s poor to teach their local languages to others for a few small fee.  More than any effort to dictate the wider adoption of languages on the Web, iTalki deomnstartes the best of Net culture: the service may promote wider use and even preservation of local languages and dialects; it will help the world’s abject poor make a little money; it may promote better awareness and understanding of the world’s-and the Net’s-many cultures.  

 Finally, if you’ve ever received a text or a Twitter tweet from one of your kids, you know that English per se is not really the language of the Net, but rather is just the basis for a new bastardized language that is being born as we speak.  One real contender to be the new lingua franca of the Net era is Globish: it reduces the 260,000 words of the English language down to a 1,500 word lexicon.  Globish is easier to learn for non-English speakers and fits perfectly into the fast-paced, micro-blog culture that is naturally forming around the Net.   

No, the governors at ICANN need not despair over the diversity of languages being used on the Web.  But, what should get their attention is how little control they have over any of it anyway.  

Entrepreneurs Can Lead Us Out of the Crisis - WSJ

Mike Malone and I wrote this for the Wall Street Journal today.

The passage of the $787 billion stimulus bill has so far failed to stimulate anything but greater market pessimism. This suggests to us that the strategy behind the American Reinvestment and Recovery Act is wrong -- and worse, that the weapons it is using to fight the recession are obsolete.

Just as generals are notorious for fighting the last war, Congress and the White House seem intent on fixing an economy of hidebound and obsolete companies and industries, while ignoring the innovative ones rising before us and those waiting to be born.

Missing from this legislation is anything more than token support for the long-proven source of most new jobs and new growth in America: entrepreneurs. These are the people who gave us everything -- from Wal-Mart to iPhones, from microprocessors to Twitter -- that is still strong in our economy. Without entrepreneurs, we will never get out of our current predicament.

This recession is more than a business-as-usual downturn caused by bad lending practices, government incompetence and Wall Street avarice. A greater, underlying dynamic is at work, a fundamental change taking place in the global marketplace. The U.S. economy isn't built for this new world (indeed, neither is any other nation) which is why our problems are racing out of control, while our solutions are proving both slow and inadequate. The danger now is that by merely fixing the old economy we will leave ourselves even more unprepared for the new one.

Only entrepreneurs have the flexibility, the freedom and the risk-everything ambition to find the path back to prosperity in a rapidly changing, technology-driven global economy. Here's how to help them:

- The biggest problem for new start-ups is the lack of capital. Here in Silicon Valley, investors are paralyzed by a lack of faith in the future. Solutions? First, kill Sarbanes-Oxley or make it voluntary. Right now.

When brilliant young companies can once again go public without the prospect of being stuck with a massive, expensive reporting infrastructure, they will do so -- creating new wealth, important new corporations, and reigniting venture capital investment.

- Nontraditional means of capital formation need support to let the brave risk takers of today build the future. So allow entrepreneurs to more easily tap tax-free retirement accounts -- or better yet, let them create tax-free accounts specifically to fund themselves.

- Eliminate payroll taxes, which unnecessarily burden young companies. Many small companies don't hire full-time employees because of the payroll tax burden, and this inhibits the creation of new jobs.

- The marquee venture capitalists have little time nor inclination anymore to invest seed capital in early stage companies. The real heroes these days are the nonprofessional investors -- the "Angels." These folks aren't always the high net worth people we imagine, and often they aren't as sophisticated as we think. So make the tax system more forgiving for them -- or allow the creation of tax-free investment vehicles similar to what we now see with nonprofit foundations or 529 college savings funds.

- Business blogger Sramana Mitra has suggested a novel "tiered" tax structure to promote a return to risk-taking. VCs would pay lower capital gains taxes on investments in early stage companies and higher taxes on later stage deals. This would be the venture-capitalist equivalent of long-term versus short-term capital gains rates, supporting both strategies, but giving a bigger break for the greater risk.

- Help big business think small. The stimulus legislation is packed with incentives for large companies, but not one incentive is designed to encourage companies to create new jobs rather than merely preserving the ones they already have. To restore lost jobs, big business is going to have to take risks again -- and that means investing in both internal, "intrapreneurial" ventures, and, in a venture mode, also investing in external new start-ups.

- Convene a presidential summit on entrepreneurship and small business. The last president to do so was Ronald Reagan in 1982, and the chief topic was the impact of the fax machine. We are long overdue. There is no better time for President Obama to listen to the folks who hold the fate of this economy in their hands.

At its best, the stimulus legislation is an immensely expensive attempt to restore what the U.S. economy has lost in the last few months. But the world is already moving on. The only way the American economy is going to regain its lost health and vitality is to lead the world into the future. Entrepreneurs are the only people who can get us there.

Next Up for the Internet: The Attention Rights Movement

In shorter supply than either fossil fuel or ozone, attention -- our cognitive ability to focus on information -- is being squandered, even stolen, everyday by desperate marketers, their bad advertising, unrelenting spam, and old imposition models.

The most recent report by leading IT media, research, and exposition company IDG shows that the Internet has now passed TV and print media in hours of attention consumed. Users polled exceeded 32 hours online per week compared to 16 for television and 4 for print. This is good news for the world of online media, but we are approaching a critical "jump point" in the power balance between producer and consumer.

As marketers and advertisers hungrily explore ways to monetize online attention, they face mounting challenges. Consumers have migrated online precisely because they want more control over the media they consume. The old bargain -- content for attention -- is broken. Empowered viewers now reject TV’s standard promise of 22 minutes of content in exchange for eight minutes of brain-dead ads. With place- and time-shifting technology at their disposal, viewers, listeners, and readers do not want, nor need they endure, advertisements. As a result, online ads, be they behavioral, contextual, or declarative data-based, are all falling short. Give consumers the choice, and they would rather get information from a trusted friend or expert. This is giving the old Hollywood/Madison Avenue nexus fits. The ROI on a dollar of integrated advertising today, even when measurable, is dismal.

Worse yet, the information-overwhelmed prey are getting restless, even hostile. And for good reason. In many ways, unwanted interruption-based advertising is nothing short of a misdemeanor. Run an absurdly out-of-place banner ad over my page views, or punctuate my ballgame with, say, a feminine hygiene product spot, and I feel violated. You have wasted my attention, pilfering precious time and focus I could have reserved for dearer claims on my bandwidth, such as my family and friends. Simply put: Attention theft is a crime.

People like Michael Goldhaber have been writing about the Attention Economy for ten years. The very idea of an economy implies an exchange of value for value. It is not clear at this point what advertisers need to do to sweeten the attention bargain, but the current jig is up.

The global resistance movement is gaining steam, and, since the publication last week of my new book, Jump Point: How Network Culture is Revolutionizing Business, I have become an inconvenient truth-teller shedding light on the mounting consumer backlash. There are many efforts feeding the energy.

Over at my alma mater, Boston University, Professor Marshall Van Alstyne has advocated “attention bonds,” whereby emailers would post bonds on the promise not to waste a recipient’s time and attention with unwanted spam. At AttentionTrust.org, they are proposing an attention management utility that gives the user control over the deluge. Globally, we should pay heed to efforts in São Paolo, where all outdoor advertising has been banned as a blight on the landscape; or in Germany, where the "Informationelle Selbstbestimmung" (literally, Information Self-Determination) campaign has already resulted in national consumer-rights legislation. And, I suspect that SEO (search engine optimization) is next up in the cross-hairs, with practices like link farms, keyword stuffing, cloaking, and automated content generators and duplicators getting more consumer fraud scrutiny.

I am sure you'll want to debate me on this: Get in line. But first consider the following manifesto I am offering for the movement. Hard to disagree with these simple dignities:

• I am the sole owner of my attention.
• I have a right to compensation for my attention, value for value.
• Demands on my attention shall be transparent.
• I have a right to decide what information I want. And don’t want.
• I own my click stream and all other representations of my attention.
• My email box is an extension of my person. No one has an intrinsic right to send me mail.
• Attention theft is a crime.

The End of the Internet as We Knew It

The biggest take-away from last week’s Consumer Electronics Show is that every device in our lives is rapidly becoming a computer connected to the Internet.  That new reality means the Internet will soon transition from the conspicuous to the unconscious-from something you go “onto” to something you never go off of-and in fact hardly even think about.

Much the way electricity did a hundred years ago, the Internet is segueing from near-magic to life staple.  And much the way electrified homes and cities revolutionized our culture and economy at the turn of the 20^th century, the Internet as core utility will do the same for this century.

Light on actual new gadgets, the CES was a watershed for showcasing network ubiquity.  Machine-to-machine communications, what some used to call the Internet2, will mean that modern life depends on connectedness in a whole new way.  In fact, we may soon stop referring to the developed and undeveloped worlds, and instead talk about the hot and the dark worlds-the online and the offline hemispheres.  And as I write about in my book, Jump Point, by 2011 more people will be online than off as the Internet crosses the 3.5 Billion user mark that year. So it makes sense that the CES this year looked more like the consumer shows of the 1950s in demonstrating the new wonders and conveniences of the modern home.  Almost every booth featured models of the digital lifestyle.  For example:

• By 2011, 90 percent of all Sony ^[1] products will connect to the Internet, Howard Stringer ^[2], the chief executive of Sony, predicted.
• New televisions from LG, Samsung and others will now let viewers seamlessly watch movies from Netflix ^[3] and other Internet sites.
• The Palm Pre phone promises to make it easy to call your friends by looking up their phone numbers on Facebook ^[4] for you.
• A new version of the Ford ^[5] F150 pickup truck will let contractors check service manuals by browsing the Web from an in-dash computer.

The new drive is to embed computer chips with Internet connections– all of which keep getting cheaper and smaller–into more and more everyday products.  Sony introduced an Internet-connected alarm clock that will wake you up with your favorite music videos and traffic forecasts for your commute.  Asustek, the giant Taiwanese electronics company, showed a touch-screen computer that hangs on a wall and a TV remote with built-in PC and keyboard that lets users surf the Net on their TVs. According to Jonney Shih, the chairman of Asustek, soon everything in your house, even your bathroom mirror, will be a computer display.

What’s the big idea from all this connectivity?  For one thing, if you still see the Internet as a plus-market or mere conveyance, you’d better rethink the future of your business.  If you think the Internet is just for downloading digital products, you had better watch out for the coming revolution in distribution and supply chains.  If you think the Internet is just for the young, hip and adventurous, try going dark and see what happens to your business.  One thing is certain; the world on the other side of this economic downturn will be very different than it is today.  And, that helps explain some of the pain and fear.  What we are experiencing now is as wrenching a transition as the change-over from rural to urban or agrarian to industrial.  A century ago a brave world hailed the electrification of Main Street and ushered in the modern consumer economy.  Last week we celebrated the connectivity of Main Street and welcomed the start of the real Internet era.

In the New Networked Economy, Authenticity Is a Category Killer

By 2011, the world will reach the Jump Point and three billion people -- the world’s entire workforce -- will be connected for the first time in a single, seamless, networked economy. That means more people will conduct more business every day with people they do not know and will never meet. In this coming world order, the most authentic brands and companies -- the most genuine and the most trusted -- will win. Phonies beware.

In an age when long-tailing economics mean that anything is available anytime, purveyors of bona fide stuff will prevail: People hunger for authenticity.

In fact, in the Network Economy, authenticity is not only a competitive weapon, it is a bunker buster. Even in price sensitive markets, in head-to-head competition, the brands perceived as more authentic will always win.

Take Langston’s for example. Langston’s Western Wear is an institution in Oklahoma. Since 1913 it has provided denim, boots, hats, and accessories to the working men and women of the Southwest. We’re talking the real McCoy here: durable, well made cowboy and rodeo clothing -- not that bedazzled junk you get in SoHo boutiques. Now, through its Website store, Langston’s is gaining the attention of a rabidly loyal global audience -- customers in far-flung places like Osaka and Shanghai who hunger for a genuine slice of the American West. Knock-offs they can get locally, with "Made in Malaysia" labels discretely sewn in. What these newly minted middle class consumers crave, what they will pay a premium for, is authenticity -- the killer app of the Internet era.

That quest for the genuine -- and the mistrust of traditional marketing -- helps explain the growing power of peer-to-peer friendcasting sites like ThisNext. People trust each other more than they do the slick pitches of Madison Avenue. But, in a world where billions of people sell to and buy from each other directly, something more than word of mouth is going to be needed.

To help consumers discern the genuine from the ersatz, an “authenticity economy” is sprouting up around the net. Organizations like the California Certified Organic Farmers help you tell whether your veggies are truly organic. At GreenSeal they can help you be assured that your products are environmentally friendly; and RugMark will reassure you that no child labor was involved in that Nepalese rug you want for the dining room.

The gold standard of product certification is TransFair USA. The Oakland-based nonprofit is the only third-party certifier of Fair Trade products -- such as coffee, tea, chocolate, grapes -- in the United States. According to Kim Moore, Director of Business Development-Coffee/Tea & Beverages, FairTrade USA audits transactions between U.S. companies offering Fair Trade Certification™ to products and their international suppliers in order to guarantee that farmers and farm workers aren’t exploited; that farming practices are sustainable and don’t promote pollution or deforestation; and that overall the authenticity of "fair trade" is upheld.

Expect non-government authenticity-certifying organizations like FairTradeUSA to grow in importance as people-to-people trade increases online. But don’t think the importance of authenticity is lost on governments. In January, the European Union enacted its Unfair Commercial Practices Directive, which imposes a general ban on unfair business practices in the EU, including false blogging, fake reviews, and astroturfing.

Whether or not a legislative ban in Europe can do much to police the Internet is not the point here -- the real issue is that the market itself will decide. These are transparent, information-rich times. The Networked Economy favors those brands that define "true blue" in their respective spaces, and those companies that become the authentic standard-bearers in their segments.

To paraphrase Hemingway, consumers now have built-in BS detectors. Be phony and you will be found out. Cut corners, lie, cheat, or hurt others, and you will be shunned. And no amount of marketing spend will wash away your sins. In fact, as they might say down at Langston’s in Oklahoma, the worst thing you can be today is “all hat” and no credibility.

Marketing in the World of the Web

Mike Malone and I wrote this for the Wall Street Journal today.

Retailers will eventually recover from the consumption tailspin that threatens this holiday season. But quite apart from the recession, there are other, profound changes underway in the retail sector. As the evidence mounts about the power of social networks to reconfigure individual behavior, the crucial question facing industry is: How to leverage this phenomenon into actual profits?

The second generation of Internet ("Web 2.0") companies such as MySpace, Facebook, Linked/In and YouTube exploded upon the scene three years ago. Today, MySpace and Facebook together have more users than the entire U.S. population; and the online community concept is already becoming a powerful tool for everything from creating customer loyalty, to assistance in product design, to a sounding board for company strategy.

Corporations from IBM to Toyota and Johnson & Johnson have been rushing to establish their own affiliated social networks and bind their customers ever more closely. There isn't a smart company today that isn't implementing some kind of online community, wiki or blog strategy.

But companies with millions of members of online communities are now asking: What next? How do we sell them products and services, or mobilize them into massive de facto R&D, manufacturing and sales departments? We have been studying the challenge and have concluded that very few of the traditional techniques of classical marketing (call them Marketing 1.0), or even of eCommerce (Marketing 2.0) will work in the world of social networks. A very different set of tools, concepts and practices is needed. Call it Marketing 3.0. Here are five:

- From loyalty to attention. Before you can win consumer loyalty, you have to capture and reward consumer attention. Old propositions -- network television's tired offer of 22 minutes of canned sitcoms in exchange for eight minutes of untargeted commercials -- won't cut it. Consumers are demanding a better deal.

Some brands are starting to flirt with better exchange rates: Virgin Mobile gives a minute of free phone time for every minute of advertising a customer accepts. Ryan Air recently announced it would offer $15 coach tickets from the U.S. to Europe, subsidized by passenger attention to advertising and in-flight sales pitches.

Smart marketers will of necessity become obsessed with customer attention in the way they once obsessed over customer loyalty. The shrewd brands will create elaborate attention-rewards programs, and incentives to break through the noise and make that critical initial connection.

- From crowds to clouds. Once you get that attention -- once you generate heavy traffic to your site, gather a large league of "friends" on MySpace, or spawn a dedicated following on Twitter -- how do you monetize the crowd?

Smart brands are turning their crowds into "clouds": organic, self-forming and often self-governing communities of interest. Companies such as Hewlett-Packard, Frito-Lay and Harley-Davidson use their clouds as feedback loops to get better faster by obtaining good, timely, often brutally honest customer insights. And the members of clouds can become true believers; they don't just watch your commercials, they make them.

Right now, few companies are emotionally equipped to wring the best benefits of a cloud, because the most valuable voices out there usually belong to the malcontents. In the old model, customer-service departments aimed to placate or jettison disgruntled customers. In the cloud model, the idea is to cultivate and reward them. That's not an easy transition.

- From places to spaces. Consumers are increasingly organizing themselves into new communities -- not just the big generic social communities, but myriad idiosyncratic slices of narrow, passionate interest (i.e., BlackPlanet, Inpowr and MomsCafe).

These new market spaces, or "meganiches," may seem small, even strange at first. But when they're efficiently targeted, they can be highly responsive, lucrative and loyal. Well-established meganiche Web sites include Gamefaq.com for video gamers, Dpreview.com for digital photography aficionados, and Howardchui.com dedicated to mobile phone zealots.

With this shift toward self-organization by consumers, national advertising campaigns as we know them will increasingly become a waste of time and money for many companies. The trick for brands is to cohabit social spaces with these consumers. Social media, and its verb form, "friending," requires entirely new forms of advertising: bottom up instead of top down, personal rather than public, and subtle rather than full frontal.

- From memes to bemes. In the Age of Broadcast, good advertising could occasionally manufacture memes of tremendous social impact. Think of "Where's the Beef?" or "I can't believe I ate the whole thing." If you can't recall an irresistible or effective turn of phrase of late, it's because it is exceedingly difficult to spread a meme in today's fragmented media environment. Marketing 3.0 is now the science of devising and managing directed business memes: call them bemes. Bemes are sent by members of social communities to each other and typically contain a reward or exclusive offer, which, when redeemed, also results in a reward coupon for the sender. This encourages members of social communities to propagate a "viral" ad. One well-documented beme was "The Subservient Chicken" from Burger King.

Brute force marketing won't work inside social networks. The best online marketing now takes place among people who know and trust each other. Consider how rumors work. Like a rumor, a beme is a bit of useful information that rewards each person who passes it along. Want to be a sensation? Create a beme that consumers willingly accept and share with others.

- From silos to simultaneity. Too many retailers today persist in believing that online shopping is merely a virtual extension of real world shopping. That is a big mistake.

Rather, online and offline need to coexist, and we need to rethink how they relate. For example, to their surprise, companies like BestBuy (which even encourages customers to shop the aisles but buy online from in-store kiosks) and Macy's are discovering that physical retailing is a perfect way to move units online. That is, the physical world has become the showroom for the virtual realm.

Retailers now must reimagine a world where consumers experience products in stores but ultimately buy them on the Web: Stores are for experiences, the network is for inventories. And what in turn prepares potential customers for what to look for in stores? Online communities.

All of this suggests that Marketing 3.0 is not only different from its predecessors, but actively undermines them. If your marketing program fails to adapt to this new world, it won't just become irrelevant -- it will actually work against you.

Forget Red or Blue State: Are You Wireless or Wireline?

Nip and tuck.  That’s what most political polls describe the race between Barrack Obama and John McCain.  Might as well throw the polls in the trash.  Turns out that standard political polls exclude cell-phone only voters-those young, tech savvy, largely Democratic (but not always)  voters-who no longer bother to install a landline in their homes or apartments.  If that is the case, we know every little about true public opinion and this presidential election is probably not close at all.

By excluding cell phone owners from their surveys, political polls ignore the young, tech savvy voters and do not give us a true picture of this election or of the new America.

I know at least a dozen people who don’t have phones in their homes.  Don’t get me wrong; these folks are very connected and often have multiple cell phones in their lives; they simply no longer bother with a redundant landline in their homes.  And my friends are not alone. More than 32 million American adults have now ditched landlines for cell phones, up from 5 percent in 2004, according to a recent federal study.  Problem is: the opinions of these people are not captured by current political polling.  That’s right, the pollsters don’t call cell phones.  As a result of this structural flaw, a giant swath of American opinion is missed and as a result we have no idea where this race for the White House stands today.

This oversight is another example of how the political process has failed top keep up with our changing culture-a culture being rapidly reshaped by technology.  Just as political operatives everywhere were overwhelmed by Senator Obama’s ability to raise a quarter of a billion dollars in $100 increments via the Internet, the polling professionals failed to appreciate that a big and growing block of Americans don’t see the logic in having both mobile and landlines.  It’s a new mindset created by our emerging mobility and technical power.  And frankly, even if pollsters started calling cell phones tonight, they won’t find the same kinds of people at the other end of the handset.  First, the young, tech savvy voter isn’t going to stop the car or leave the restaurant to take a survey.  They probably aren’t going to take your call, at all, frankly, because they don’t know you.  And they certainly won’t be solicited by some stranger to think or act or vote in a particular manner.  Instead, he or she is getting all the information they want from a small coterie of friends and associates who share ideas, review and recommend products, and gossip about stuff they have already decided to care about.  They likely prefer to chat via IM, maybe a leisurely email, more likely a Twitter or Pownce blast.  As such, their attitudes and opinions probably won’t be the same as the land-bound phone owner.   

Nope, even if the political pollsters start calling the cell-phone only households right now, they would probably be amazed by how out of touch they are with the new America.  Forget Red State or Blue State, the question is: are you wireless or wireline?

The Future of Business is More 'Perfect'

For a century economists have tinkered with the theory of the "perfect market," a state of equilibrium where both sellers and buyers share access to all information, act with cool rationality, and enjoy barrier-free entry and exit.  According to the hypothesis, the perfect market would be a highly-efficient, highly-stable, highly predictable nonzero-sum world without scarcity, crime, passion or want.  In other words, a pipe dream.

Like most theories, notions of a perfect anything are doomed to failure in practice as soon as you add in the human element.  Trickier still, imperfection has a long history of being profitable.  From the earliest trading posts to the NASDAQ to the tony storefronts of Shibuya, the dance of supply and demand, the gravitational pull of scarcity, the down card dealings of insiders and other inefficiencies are long-accepted characteristics of organized trade.  This imperfect market operates on the tension created by imperfect information exploited by a carnival of arbiters, middlemen, and every stripe of snake oil hucksters.  At least, that was true when one side of the counter had the upper hand.  Today, the game has changed with the potential for a better deal for all.

The concept of a true perfect market remains theoretical, perhaps unattainable, but that doesn't mean we cannot adapt and evolve to a more perfect model.

The idea behind the idea, is that perfect markets operate to both sellers' and buyers' maximized ends.  Like a bakery that sells out its confections every night, or an open source software project, the fruits of which belong to all who contributed.  In other words, a win-win world.  Today's social technologies are taking us closer than ever to such a theoretically perfect marketplace.  The emerging social media landscape is creating a new type of market, one that operates on a more perfect syncopation than we could have ever before known.  The emerging Network-driven markets are self-selected, self-organized, self-serving.  Buyers and sellers are on equal footing.  In the new schema, there is heightened awareness for symbiosis and mutual benefit; often consumers are also producers, and prosumers respect each other in ways transactional relationships can't imagine.  Transparency and shared information are keystones, as are systems of trust and reciprocity.

Good for both buyers and sellers, the new milieu makes less profitable the old world exploitation of imperfection and unfair advantage.  As is often true, markets are ahead of organizational response.  The new dynamic creates change that ripples through our industrial age, mass media traditions.   Affected are tired ideas about distribution, marketing, customer relations and even product design.  Organizations that cling to the old will come under increasing pressure to change-or they won't; they will simply become artifacts of an era past.

For a good example of perfect market transparency in action, consider the national real estate brokerage group Redfin.  To the dismay of old school brokers, Redfin breaks the mold and exposes the often unsavory underbelly of the real estate brokerage process, demystifying and debunking the once-hidden details of how agents operate and make money.  Armed with more perfect information, consumers can buy just the services they want, know the implications of choices they make and can get a better financial deal when they buy or sell a home.  At the same time, brokers win by having more and happier clients with right-sized expectations.  And, thanks to its Consumer Bill of Rights and the growing ranks of fellow brokers who have signed the Bill, Redfin is helping to change the real estate world for the better.

Another characteristic of a perfect market is freedom to enter and exit at will and a great example of this total latitude comes from Amazon and its Mechanical Turk job matching site.  A twist on the growing "elance" movement, according to its FAQs, the service gives "businesses access to a diverse, on-demand, scalable workforce and gives workers a selection of thousands of tasks to complete whenever it's convenient."  Basically, Mechanical Turk recognizes that there are still many things humans can do better than computer programs or bots and the platform allows people to earn nominal sums for small tasks that  they perform whenever they want to. 

Giving the customer a role in product development and support is another perfect strategy.  In the era of the Wiki and crowd-sourcing, it is easier than ever for companies to tap the wisdom of their customer communities.  Motorola, for example, allows its customers to substantially rewrite the User's Manual for the new Q phone.  Since every customer is a test lab unto themselves, this gives the Q community the benefit of more and better information, and it gives Motorola a massively-dispersed, cost-free development lab.  Everybody wins from this "perfect" partnership.

Yes, the perfect economy remains a theoretical notion.  But like pure democracy, that doesn't mean we shouldn't aspire to it, or strive to approximate its virtues.

Undeniably, Network-driven markets are becoming more perfect.  No matter how out of balance things may become short term, the long-term trend is in the right direction: more transparency, more choices, better quality at lower prices, increased productivity and efficiency and greater customer satisfaction. Businesses must become more perfect too.  The smart companies, the more opportunistic companies-the profitable companies-of the future will adopt more perfect practices.  In fact, perfect is the only viable business strategy for the long term.

The Next President Must Be Tech Literate

“I do understand the importance of the computer,” Mr. McCain reassured in The San Francisco Chronicle last week. “I understand the importance of the blogs.” He said, “I am forcing myself — let me put it this way, I am using the computer more and more every day.” But keeping up with technology “doesn’t mean that I have to e-mail people,” he said. “Now, I read e-mails.” The staff is “constantly showing them to me as the news breaks during the day.”

Does that make any of you uncomfortable?

A recent piece by Mark Leibovich in the New York Times on Senator McCain’s unabashed ignorance of all things digital has me alarmed.

Now, I am not saying that John McCain (or Barack Obama, for that matter) needs to know HTML, or explain what sputtering is, or even follow me on Twitter (although it’s a good idea).  I am saying that he should be a little more respectful of what technology means to our world today.  At minimum, he should be less proud of his ignorance. 

After all, the Internet is no longer a mere convenience of the global economy–it is the global economy:  some 183 billion emails–2 million per second–are sent every day, there are 80 million bloggers roiling in the blogosphere, and many Americans spend more on connectivity every month than they spend on gasoline.  No, I don’t think the Senator needs to be a geek-in-chief, but he does need to show that he understands the paradigms of technology, because they are to a large extent the new forces behind the world we live in. 

Ours is a complex world today made ever more so by the very technologies Mr. McCain diminishes.  If elected he will find no blinking red phone on his Oval Office desk connecting him directly with the leader of the Other Side.  Instead, he will need to link into a distributed world of shadowy networks(like the all-Internet Al Qaeda, Hezbollah, Harakat ul-Mujahidin, Abu Sayyaf, and on and on); where policy decisions are fraught with hyperlinks and jump points and track backs and easter eggs; and urgent emails lose their oomph when printed out and bound into a briefing book.  Mr. McCain aspires to lead in a world where 1000 days from now more people will be online than off, where every citizen owns a printing press cum TV station cum intel network; where the political landscape is an always-on lattice-work of data indicating either immediate dangers or imminent opportunities.  In this new world, the US is a node–a big, vital, beautiful node to be sure–but a node nonetheless.  Navigating that landscape is more challenging than ever and it helps to think in sync with these fragmented times.   It will clearly be a handicap to be an analog thinker in a digital age.

And, if for no other than practical reasons. Mr. McCain needs to get keen on computers and the Internet right now.  Consider the game-changing role the Net and Blogosphere are playing in this year’s election.  For one thing, Senator Obama has raised more money than any candidate in history largely from small donations via the Internet.  Perhaps he’d be a more competitive fundraiser if Senator McCain embraced the technology behind the coin of the realm.

If Mr. McCain needs a quick primer on the bedrock ideas behind today’s technology–and he is, I understand, a quick-study–I urge the Senator to reach out to Silicon Valley.  Regardless of political stripe, the geeks here will gladly, proudly help him.

Nobody wants to be a pencil in a world of Blackberries.  Certainly not the leader of the free fast world.

Corporate World Needs to Address Four-Day Work Week Movement

The remote work imperative--"Third Place Thursdays"--is a way for corporate America to co-opt the four-day work week movement.  Better to get in front than to be dragged from behind...

A Way to Cut Gas Costs and Auto Emissions by 20%--Third Place Thursdays

In my new book Jump Point, I argue that Internet "culture" is going to change the way we live, work and play in the next 1000 days.  I want to offer a specific opportunity right now: companies should set aside one day a week for employees to work remotely.  Let's call it "Third Place Thursdays."

At $5 for a gallon of gas, it is no longer a rational approach to business resource management to impel most office employees to spend time and gas (not to mention spewing millions of pounds of carbon compounds into the air) commuting an hour each day to an office complex where we warehouse them--heat them in the winter, cool them in the summer--only to have them spend the day emailing to (or otherwise networking with) colleagues in next door cubicles.  That is more than dumb, it is irresponsible.

The fact is, we have the technology today to reinvent the way we work.  We simply need to change our thinking.

Third Place Thursdays (Don't like Thursday? Pick a day) pays recognition to the possibility that technology can improve the way we work--and maybe save the planet too.

Thanks to the ubiquity of notebook computers, BlackBerrys, readily available WiFi, plain old mobile phones--it is now practicable to do productive work from a remote location.  Those of us who travel a lot do it all the time.  Why not take a day--20 percent of the work week--and allow employees to work from a "third place"--not the office, not necessarily the home.  Keeping employees off the highways and byways saves time, gas and the environment--and in all likelihood, will produce a better work product.  The effects could be life- and economy-changing.

Sample HR Policy:

Unless business conditions dictate otherwise, and at the discretion of supervisors, employees are encouraged to work remotely on Thursdays.  Please check with your managers and work teams to be sure remote work is both appropriate for and possible within your group.

Come gather you information workers and symbol manipulators: instead of inching along in mind-numbing freeway traffic just to attend an endless series of phone or online meetings, you could walk down to a neighborhood Starbucks, stroll to a nearby park bench, or take public transportation to the beach, crack open a networked computer and do the best work of your week.  Work long, work hard, get out of the house, avoid the office commute, be a human.  As an employee, what's not to like?

The benefits are even greater to organizations--and most are ready to adopt a remote work scheme.  In my career as an executive at companies like HP and Applied Materials, I have had hundreds of employees who worked away from me geographically.  In fact, in more than a few cases, due to geographic distribution I had never (ever) met face-to-face with some of my best, most loyal, most productive employees.  But, I interacted with them routinely throughout the day.  Being under my thumb didn't make people work harder or better.  Respect did.  And now technology can make remote work easier to imagine.

Progressive companies like Intel and US Cellular have implemented Email-Free Fridays, as a means to manage information overload.  That idea seems to be gaining traction.  As a way to tap technology culture to improve our lives, Third Place Thursdays goes that idea 10x better.  Propose the idea to your company management and let us know what happens.  It only takes an intrepid few to change the world.

Have an opinion or want to start a movement; write to me at tom@edgelings.com

Rapid Cell Phone Adoption Accelerates Arrival of the Jump Point Economy

Great item from the New York Times on the rapid adoption of cell phones leading up to the Jump Point.

To get a sense of how rapidly cellphones are penetrating the global marketplace, you need only to look at the sales figures. According to statistics from the market database Wireless Intelligence, it took about 20 years for the first billion mobile phones to sell worldwide. The second billion sold in four years, and the third billion sold in two.

How to Get Rich During this Recession

Recessions always tell us something.  This one is telling us that the world economy is changing and we are not ready. 

While disruptive, recessions often have a silver lining.  The upside to this slow down is that we get a needed breather to rethink and retool for the coming Jump Point economy.  In the transition period leading up to the 2011 inflection year, the way forward is less about what to do, more about what to change.  Want to get a leg up on the next economic boom?  Here are some major thematics from Jump Point: How Network Culture is Revolutionizing Business:

• The convergence of personal computing and communications has created a worldwide network that allows people to connect directly to each other without middlemen, brokers or arbiters between them.  This is a lousy time to be a middleman, broker, or arbiter.

• Consumers, overwhelmed by information overload, struggle to reconcile the many competing claims for their attention in daily life. This is a bad time to be an attention-stealing, interruption advertiser.

• People don’t want anyone dictating when they do something, buy something, or watch something. This is an unfortunate time to be in an inflexible or time-bound business.

• People don’t want restrictions on how they use, enjoy, manipulate, store or share their property. Trying to command and control information rights is a losing proposition.

• Consumers are acutely aware of their power to change the equations, flip the ratios and obliterate the old market rules. Provide mechanisms for customer influence and expression . . . or go home.

• People don’t trust their governments, large corporations or political parties; they have an inherent trust in each other and in authenticity.  This is a dangerous time to be untrustworthy or shifty or phony –   especially if you are a large, established institution.

We are not in a business-as-usual recession.  This is the trembler before the tsunami.  You won't succeed by continuing to do after the recession what you did before it.  Use this period to rethink your business model, refine your value proposition, rework your go-to-market strategy, and get ready for the Jump Point and beyond. 

Coming up, we will look at some of the new strategies companies are adopting to win during and after this recession.