Kerouac. On the Road. Book Review

 

“I Woke up as the sun was reddening; and that was the one distinct time in my life, the strangest moment of all, when I didn’t know who I was…I wasn’t scared; I was just somebody else, some stranger, and my whole life was a haunted life, the life of a ghost. I was halfway across America, at the dividing line between the East of my youth and the West of my future, and maybe that’s why it happened right there and then, that strange red afternoon.” Sal Paradise, narrator, On the Road

My favoutite comedy of the eighties is undoubtedly Down and Out in Beverly Hills with Nick Nolte, Richard Dreyfus and Bette Midler. Nolte plays a hobo who in the opening of the film losses his dog named Kerouac. “Kerouac! Kerouac!” he hollers as he ambles around Beverly Hills looking for Kerouac. Over Christmas I finally sat down and read some Kerouac, On the Road, which, entirely coincidentally, has been made into a just released Hollywood Movie . I now understand the poetry of a hobo’s dog named Kerouac.

I found On the Road to be an enthralling and unforgettable read. A great American novel about America. The book is about many things. Its about The Road, of course, the great expanse of America seen from buses, box-cars and flat-bed trucks. It’s about buddies, about girls, about growing up, about life, about poverty, about booze, about drugs, about hipsters, and about getting “beat” down by life’s hardships. But most of all, I have decided, its about Nothing.

Not “about nothing” in the Seinfeld sense of the word. But rather the Buddhist sense. The Neti kind of nothing. Kerouac, a Buddhist, provides for us an interpretation of a journey towards Nirvana, a state of being empty of one’s self and alive to the transcendent, told from the perspective of a bunch of crazy young people living purely for “kicks,” roving from one wild and irresponsible adventure to the next. Driving the frenzy is the main character’s friend Dean, a criminal, who seems on a quest to know and experience the great and ecstatic joy of utter transcendence and connection with eternal truth.

Set in the late 1940’s, the post war characters in On the Road rattle your sense of what people were like back then. Kerouac writes:

“Dean took our picture. I realized these were all the snapshots which our children would look at someday with wonder, thinking their parents had lived smooth, well-ordered, stabilized-withing-the-photo lives and got up in the morning to walk proudly on the sidewalks of life, never dreaming the raggedy madness and riot of our actual lives, or actual night, the hell of it, the senseless nightmare road. All of it inside endless and beginingless emptiness.”

This quote in a way captures the essence of the whole book. It is about coming of age and morning the loss of youth’s ability to find spontaneous ecstasy and meaning in the fleeting experiences of life. Kerouac’s characters are far from happy in the mundane sense of the word, but they embody the undeniable attraction of hedonism, the longing to wring every possible ounce of pleasure out of every moment of existence, rather than be serious, responsible and proper. Kerouac is often cited as giving birth to the hippie movement of the 1960s.

And now I know why.

 

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The None Percent; Occupy Thyself

No one can deny that the Occupy Wall Street movement was a profound expression of dissatisfaction with capitalism world-wide. A year on, the legacy of that upheaval is less clear. A common summation of the massive protests is that the outcry was long on criticism but woefully short on solutions. The manifest villains were corporate greed and corrupt money-changers, the placards read, but the way forward was incoherent, muddled, or simply not known. The battle cry of the 99% seems to have had little impact on the 1%. Income inequality remains a huge problem.

In hindsight, it’s a pity the protesters were not all issued at the outset free copies Dr.s Robert Frank and Philip Cook’s seminal 1995 book The Winner -Take-All Society; Why the Few at the Top Get So Much More Than the Rest of Us. By no means right-wing ideologues, these economics professors lucidly outline the market forces that drive up to absurd levels the incomes of a small set of “winners.” As it turns out, the role of greed and corruption in income inequality is insignificant compared to the power of the choices that we, the consumers, the 99%, freely make every day. Its the behaviour of the average person that makes the 1% possible.

Frank & Cook start off by getting readers to buy into the basic goodness of a competitive labour market. If everyone was distributed exactly equal amounts of pay regardless of their occupation or performance, there would be no incentive for anyone to work hard and strive to achieve. Without the prospect of superior income, few would spend the time and effort to become doctors or take the risks to develop innovative products. Competition is necessary, but in the case of some fields or endeavour, the distribution of those rewards becomes super concentrated at the top.

The Winner-Take-All phenomenon is most commonly and easily observed in sports, entertainment, publishing and other media intensive fields, but other fields, like the CEO market and education also display super incomes. In sports, the quintessential and now tragic example of the WTA affect is cyclist Lance Armstrong. In cycling, as with so many other sports, mere minutes, seconds or fractions thereof can separate a field of hundreds or thousands. Although Armstrong was only marginally better than his opponents, he enjoyed almost all of the media attention, resulting in fabulously lucrative sponsorships. Armstrong became a household name, whereas the runner-ups are virtually unknown outside racing circles. The spectacularly disproportionate rewards he enjoyed for being number one proved to be an irresistible motivation to enhance his performance by doping.

Consumers of television and other media have only so much mind-share, and showing the winners is a magnet for high ratings. Winning the gold medal may net a fabulous fortune for a gymnast, whereas the bronze nets negligible income.  The limited attention of the consumer also drives book publishing, the music industry and big budget films. There are only so many books we can read or movies we can go to or recordings we can buy. When making spending decisions for media, consumers are notoriously risk averse. When faced with a decision to buy tickets to a film starring George Clooney directed by a famous director and on the other hand a film with an unknown cast and an unknown director, in the absence of other compelling information such as glowing or negative reviews or awards, we choose the star-studded film because we have a reasonable expectation of quality from those who have proven their quality in the past.

The same risk aversion applies to choosing books and music. “Proven” names in media become proxies for commercial success and open bidding for these names can drive compensation into the stratosphere. Frank & Cook call this phenomenon a “positional arms race,” similar to dilemma faced by foes in a cold war. No nation on its own would choose to spend billions on arms, but the risk that another nation might outspend them and gain a catastrophic tactical advantage is simply too great and the decision to match spending become the default. This is why salary caps in professional sports are sometimes necessary. The temptation to outspend one’s opponent is intense, even when doing so may be detrimental to profits. Teams would rather lock in a quantifiable loss than suffer a crushing defeat with unknown consequences.

Driving media and sports compensation positional arms races is the power of the consumer who chooses to watch or not watch, attend or not attend, buy or not buy. We, the 99%, the consumers, it turns out, decide that if Sydney Crosby is not on the team, we will not watch. If our superstars are taken away from us, we vote with our eyeballs and pocketbooks and head for the exits.

In the corporate world, WTA markets most famously are seen in CEO compensation. Firms locked in competition with rivals can engage in bidding wars for “talent” because the consequences of losing the battle can be grave. In firms with hundreds of millions or billions of dollars in revenues, the decisions of a CEO, even if they make a difference of plus or minus 3%, can translate into staggering gains or losses. Incremental loss of market share can lead to the demise of billion dollar empires (eg. RIM). In this light, if a board of directors believes the right CEO can safeguard against massive losses and even gain on its rivals, agreeing to an extremely lucrative contract can be a trivial detail when compared with the job of getting the right person.

Aversion to risk and heightened regulation of larger firms may also contribute to runaway CEO and top brass pay. Following the decline of the technology bubble in 2000 and the catastrophic failures of Enron, WorldCom and other Fortune 500 flameouts, strict new corporate governance regulations came into place in the USA and elsewhere that greatly increased the liability of board directors for corporate failures. Under this regime, more than ever, boards have to “get it right” when hiring top executives. Any reading of the want ads reveals the frequency of the words “experienced,” “proven,” “track record” and “success.” As firms get larger, the relative field of experienced and proven candidates grows thin. Nervous boards are not going to “take a flyer” on a maverick up-and-comer, even if such candidate has manifestly superior talent. The conservative route is to hire known quantities, and such persons are often already employed at rival firms. Compensation packages need to be larded with immense incentives for the executive to remain with the firm to ward off the inevitable bidding war that will ensue if their candidate is successful.

Securities regulation is not designed to protect the titans of industry, but rather the 99%, the shareholders, the mutual fund holders, and rank and file citizens. Paradoxically, this duty to shareholders expected places boards in the position of having to make the lowest risk decision, which favours entering a bidding war, which can include golden parachutes and other lavish baubles. Ironically, the responsible actions of boards have led to their own vilification.

Frank and Cook argue that Winner-Take-All markets are inefficient and welfare eroding market failures that should be curbed by higher taxation at the top. Their primary reason for this recommendation is not that taxing the top with balance the budget, but rather that fewer entrants will be attracted to those occupations where the chance of returns is extremely remote. The fabulous success of a handful of actors leads to hundreds of thousands entering the field, 99% of which will never make a living from the craft. Similarly, a microscopic segment atop the music industry pyramid rake in virtually all of the wealth, while the rest have day jobs and perform for less than their own expenses (plus a single free beer typically).

While the taxation anti-incentive idea has merit, it is unlikely to be a cure for disproportionate participation in WTA markets. The Beatles famously fled Britain when taxation levels became overwhelming. The world is full of tax havens like Switzerland waiting with open arms for the world’s stars. There is a reason why Canada’s Shania Twain lives in Switzerland, where specific towns can cut tailored deals with the uber-wealthy to make their particular town their domicile.

From my perspective, the only solution to curbing the excesses of the 1% is for consumers to consciously amend their behavior, in which regard I have a few suggestions. In music, for example, do not download illegally, as multiplying downloads only serves as a proxy whereby the “winners” can strengthen their stranglehold on their dominant position. Sky-high concert tickets for the 1% are extracting more and more of the rents missed through piracy. Instead of illegally downloading the music of the 1%, pay for the recordings of lesser known artists. Attend their performances, pay the cover charge and buy their CDs.

In the world of film, stop supporting sequels. As Frank and Cook explain, the sequel is a means to milk the top brand status of a successful film as the audience is already “locked in.” However, to ensure audience share, sequels typically must provide exactly the same content as the original, but only in greater quantity. Transformers II must have more action, violence and explosions, even if such elements add nothing to the plot or the development of the characters and take away from the artistic merit of the film. Audiences are addicted to sequels.

In the corporate world, to counteract excessive compensation, become a shareholder, read the annual reports that are sent to you and vote your shares at the AGM or other meetings. As someone who has been involved in public companies for a long time, I am always blown away by how few shareholders ever bother to vote their stock. By law, executive compensation is disclosed in public documents. If you are displeased, write to the directors as ask them to hire talent from within the firm instead of engaging in bidding wars. On the other hand, you may be surprise that as a shareholder you will find yourself supporting the mega-bucks CEO package when the shares are up 30% over last year.

In summary, excessive income inequality adds to social unrest because undermines our sense of a fair and just society.  The anger of the Occupy movement is evidence of our desire for fairness. However, the 99% need to accept that the it is not the fault of the 1% that they have what they have, as it is the very choices of the 99% that make it possible for the 1% to exist. With notable exceptions, most of the 1% have not cheated, lied or harmed others to achieve their fame and fortune. We vilify bankers on Wall Street, but the exact same market forces that drive their pay packages also lavish riches on our beloved celebrities who we would switch places with in a heartbeat if given the chance.

As a society, we need to guard against the hypocrisy that can sometimes overtake us when we are swept up by angry mobs in search of a scapegoat. Malfeasance and white collar crime is a plague on society, no doubt, but forces that make a small group extremely rich cannot be boiled down to pure greed. As consumers, we demand the best bang for our buck, and when some folks figure out how to meet those demands, they make a ton of money. So next time we “gotta have” something, pause and think of the alternatives. We have the power to choose to buy from the little guy.

But actually, FYI, no, I’m not giving up Starbucks.

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Great Jobs!

A friend recently emailed me and asked me what my thoughts were regarding the passing of Steve Jobs, asking particularly if he really was a world-changing visionary or not. The high praise for Jobs has been almost universal, but less flattering pictures are emerging online as well. As a technology entrepreneur, here is my response, somewhat expanded.

Steve Jobs was most certainly a visionary. He was committed to ideas and envisioning how things would be in the future. Often visionaries are right about the future. Often they are wrong. What is inspiring about Jobs is that even when it appeared his vision was wrong, he did not give up on it, believing that somehow his vision was right and everyone else was wrong.

People with this kind of personality, like me, often find themselves swimming against the tide, outside the mainstream, and paying a price for it. Jobs flamed-out miserably in the 1980s, but eventually, the world changed, and veered into his vision. In this sense, Jobs did not change the world. The world changed, and Jobs was there waiting for it, like he knew it was going to happen.

Something that is missing in the current anti-corporate backlash is the realization that for every Steve Jobs there are hundreds of visionaries still waiting for the world to come around to their way of seeing things. If we are to inspire innovation and job creation in this world, we need to respect people who try and fail to create new ways of doing things. Jobs was forced out of his own company when it was on its last legs. His comeback was not a given. He could have ended up merely a noted but somewhat obscure historical figure, like Dr. An Wang.

In his book Outliers, Malcolm Gladwell was certainly right to investigate the antecedents to the uber-successful titans of the computer age, like Jobs. Jobs was born at the right time and in the right place with the right people around him. There will never be another Jobs or Bill Gates because the personal computer is already with us. Gladwell busts the myth that success comes purely from within without outside help. The expression “self-made” is a misnomer, for sure.

Jobs’ reported difficult personality I think is in keeping with the visionary mindset, which is obsessed with a “vision” of how things should be. Everything that falls outside the “vision” is an extraneous and annoying distraction. When you are utterly convinced you are right, there’s no point arguing. You just want it done they way you need it done. Period.

No company can perform admirably with only this kind of feedback to the team. This suggests to me that Jobs surrounded himself with exceptional people with different and complimentary strengths. You cannot have an effective team with a leader who never listens. It is absolutely impossible that Apple succeeded without a lot of talented team players to make things happen. It’s a testament to Jobs that his ego did not prevent him from bringing on talented people who were very different from him.

In the world of new technology ventures, it is the received wisdom that the “visionary founder” needs to be replaced when the company reaches a critical stage of growth. This is why Jobs was fired in the 1980s. They believed Jobs would “take the company down with him” with his tyrannical commitment to his “vision.” The inflexibility of “tunnel-vision-founders” can destroy a firm needing to leverage a world of new opportunities, or handle much needed changes, or so the story goes. Jobs’ career defied and crushed that story line. Jobs proved that the early, core vision of a firm needs to be retained and reinforced, not giving way to an “evolving identity.” This topic will be much discussed in business schools in the years to come, I’m sure.

I invented a technology 11 years ago that had an initial rush of success in the technology boom of 1999-2000, followed by the crushing collapse of 2000. I am still working to commercialize the invention, because I believe in it. I believe my vision for how commerce in digital goods will unfold in the future is correct, and no one yet has persuaded me that I am wrong, and I may simply ignore such proof even if it was presented to me. I have a vision and I am going to make it happen.

As a technology entrepreneur, I saw Jobs as a competitor, someone moving strategically to put his rivals out of business. On the other hand, a true visionary tends to do what he/she thinks is right, regardless of the competition, for better or worse. This is the paradox of Steve Jobs. He was not merely competing, he was changing the game, which as it turns out is hard to compete with.

Whatever you say about Jobs, he believed in his vision. Coincidentally and fortunately for him, so did billions of others.

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Book Review: Confessions of a Greenpeace Dropout: The Making of a Sensible Environmentalist by Dr. Patrick Moore

Green Pioneer Takes On the Environmental Establishment

Greenpeace co-founder Dr. Patrick Moore helped change the world, and now he wants to change it again through his highly enjoyable new book. Moore writes convincingly that the environmental movement has lost its way, and he outlines his vision for the way back to sanity.

In an engaging and entertaining style, Moore chronicles the exhilarating early days of Greenpeace, its roots in Vancouver, its improbable victories, its meagre budget, its brushes with disaster on the high seas, the media circus, and its meteoric rise to global celebrity. From stopping nukes to saving whales, the whole story is here.

But the book does not stop with tales of the Greenpeace glory days. Moore wades into the political morass that engulfed them when the organization’s growth went wild. We read about how the movement nearly failed, how it emerged in its current form, and the forces that caused Greenpeace to take increasingly extreme positions.

A scientist with a Ph.D. in Ecology, Moore explains passionately his commitment to reason, which put him at odds with an increasingly ideologically driven Greenpeace. They were ‘against’ many things, but offered few practical solutions to the planet’s challenges. Moore illuminates readers on how and why a movement about saving the planet has become, as he writes, “anti-human.”

Moore takes on one activist myth after another, debunking spurious claims with facts and arguments, offering readers an education on key topics from forestry to fish farming. For example, there’s a brilliant exposé of the trumped up hysteria over the planet’s supposedly irreversible march toward mass species extinction, which he shows to be based on statistical wizardry and dubious assumptions.

Hearteningly, Moore advocates a clear path towards a bright and sustainable future, in stark contrast to the apocalyptic rhetoric we are deluged with every day in the media. Sadly, we are seeing a generation raised on the idea that humans have doomed the planet to certain, imminent and catastrophic disaster. Moore’s sunnier outlook is welcome relief from the multitude of gloomy forecasts.

Moore has paid a high price for challenging environmental orthodoxy. Greenpeace has revised its history to erase Moore, literally airbrushing him away. “True believers” brand him as an apostate in the movement he helped create. Thankfully, Moore has taken on the challenge of reforming the dogmatic and intolerant institution that ‘environmentalism’ has become. This book could be the beginning of a new era of sensible environmentalism.

That would be a very good thing.

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Avatarred and Feathered: Mining Gets Titanic Smear Job

“I have malaria,” said one of the haggard figures that emerged from the dense tropical jungle. “I need medicine.”

It was 1996. We gave him what we had. Our tiny plane had just landed on an impossibly small runway littered with the remains of several less fortunate aircraft. As our time in the jungle wore on, it became clear that the people there needed our help. We them gave what we could, even the shoes off our feet.

Such was my introduction to exploring for gold in the emerald rain forests of the Amazon. Modern mining firms are a force for good in the world, welcomed and needed by many poverty stricken local populations. People in the industry know this, as do the various indigenous people groups I have encountered.

The makers of Avatar apparently disagree. The biggest grossing film of all time has cast an evil mining company as its sociopathic villain that remorselessly lays waste to the idyllic jungles of Pandora and its innocent inhabitants.

But why the fuss? Every decent Hollywood blockbuster needs a diabolical and unstoppable villain. Maybe it’s just mining’s turn to play the bad guy. The problem? Audiences are being told that Avatar is not just a movie.

The Avatar plot is as far from mining reality as Star Trek is from NASA. Real astronauts don’t beam down to the surface and real geologists don’t go in locked-and-loaded, hot-and-heavy, armed to the teeth. Everyone gets that, right?

Wrong. “Avatar is Real!” screams one blogger. “This is not fiction. It’s happening already in the tropical forests and mountains of Peru, Colombia, Brazil,…where big mining, oil, etc…are invading the ancestral lands of Indigenous peoples and stealing their cultures…” Environmental groups have wasted no time jumping on the Avatar “stop-the-evil-miners” bandwagon.

The Avatar message is hardly new. Anti-corporate conspiracy theories are everywhere (see my earlier blog post “Corpophobia“), fuelling a bevy of action scripts. Avatar’s ruthless miners take their place among Hollywood’s new pantheon of corporate bogymen. Rogue banks, evil defence contractors, greedy oil cartels, shadowy media cabals, and any foe that can be described as “multinational” or “global” are taken down, against all odds, by today’s savvy heroes, who are suddenly on a crusade to root out unethical business practices.

But Avatar goes further than your average kill-the-rich script. Avatar wants to save your soul. Move over Scientology, Hollywood’s got a new religion: the earth-cult I have dubbed Environtlogy.

Accept it. You (especially if you cut down trees, extract oil or mine stuff) have sinned against the earth. To be saved, you must believe and follow the teachings of Avatar. But what exactly is Avatar preaching?

Nothing new, really. It’s a mishmash of the usual new-age bafflegab about universal energy and connectedness and a mysterious life-force emanating from mother earth. What makes Avatar different, aside from the mind-blowing special effects, is that it is the most blatant admission to date that new-age religion and environmentalism have effectively merged.

Scientology, to its credit, admits it is a religion. The Scientology movie, Battlefield Earth, starring John Travolta, was financial bomb and made Scientology followers look silly. Disturbingly, on the other hand, no one admits Avatar preaches a religion, its box office haul is off the charts, and with the save-the-earth tie in, it makes its adherents look super cool.

But wait a minute.

I have been in the Amazon rain forest looking for gold and I can tell you that Avatar is not real. First of all, if there is gold there, local small miners will have already found it. Using environmentally disastrous methods (such as mercury extraction), hard working but often destitute local miners work in horrifically unsafe conditions to typically extract barely enough to survive. Malaria is rife.

Governments realize that they cannot prevent the extraction of precious metals, as it is impossible to police the vast expanse of the tropical forest. However, they can encourage mineral resources to be extracted in an environmentally responsible, safe and economically efficient manner.

This is why mining companies, of which a huge number come from Canada, are the good guys. Often at risk of life and limb (try landing a small plane on a skinny airstrip below the canopy) and certainly at huge financial risk, geologists and exploration people are often on the front lines of dealing with poverty and illness in developing countries.

In reality, mining is one of the great but untold feel good stories. It’s about a special breed of people doing extraordinary things in faraway places.

The stuff of a Hollywood movie, perhaps? Not a chance. A script like that would never sell.

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Vancouver: Olympic Winners or Whiners?

As the games draw closer, I worry that my beloved hometown of Vancouver may blow its Olympic chance to impress the world. The scenery is world class, the venues are impressive, and the organization is impeccable. The problem? The sour attitude of so many nay-sayers. Will Vancouver be remembered as a city of winners, or whiners?

The capacity of Vancouverites to see and trumpet the negative is not a laudable trait. There will be traffic. Boo hoo… There will be street closures. Sniffle sniffle…There will be crowds. Poor me. It’s costly. Scandalous! There will be tight security. Ain’t it awful?!

Out here on the left coast, it seems anything with corporate involvement is equated with fascism or some sinister plot to destroy the earth. We live in one of the wealthiest cities on the planet, we are blessed with the wonders of nature, and if that wasn’t enough, we beat out the rest of the world to host the biggest sporting event on earth: the Olympics. The reaction from a lot of sanctimonious Vancouver residents: Boooooo!!!

But there’s hope. The quite majority of Vancouverites, the people with vision and positive bones in their bodies, will rise to the occasion and let the world know we appreciate the privilege of hosting the world. No, it’s not an inconvenience, we’re actually glad you’re coming!!!

Having trouble catching the Olympic Spirit? I dare you to check out these original and amazing songs inspired by the upcoming torch relay from regular people (adults and kids) in New Westminster, BC. Believe. http://www.songsearchnewwest.com

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Web 4.0, Pay Day

The halcyon days of free online information are waning. A great reckoning is coming. In the future, if the information is any good, you and I will have to pay for it.

Web 1.0 emerged with the advent of Netscape Navigator, an easy way for the masses to look at information on the Internet. Upstart Yahoo!, using technology developed by Canada’s Open Text, provided a way for people to find the kind of information they wanted. And, boy, did they ever want information!

Humans want to communicate. The Internet provided a “free” avenue to communicate with the world. Web 1.0 was characterized by the euphoria of a world able to express itself like never before.

Surely there was a way to make money from the Internet miracle. Oddly, all the software and information was at that time being given away for free. “Information wants to be free” they said.

But the truth is, information very much does not want to be free. It wants to be paid for. There is no arguing people want free information. They certainly do. In the midst of this revenue starved tension , the “eyeball” business model was born.

Like radio and television before it, the attention of the Web masses would be monetized through advertising. The consensus was unassailable. However, unlike the heavily regulated worlds of radio and television, the Internet suffers from extremely low barriers to entry. Competitors by the thousands and millions could cheaply be eating away at your cherished eyeballs in a heartbeat.

Web 1.0 was doomed before it started. The cost of producing good quality web “content” is not low – its high, sometimes very high. With no way to collect a sufficient toll for the expensive content, and fickle viewers spread thin over infinite website choices, eyeballs proved stingy. Faced with no or low revenues, information creators turned to Venture Capitalist for dollars. Billions and billions and billions of dollars.

VC firms were happy to oblige, as investors believed in the eyeball model and rewarded VCs with glorious IPO windfalls. Somehow, magically, website visitors could be monetised, investors were told. If advertising revenues were not the goal, it was believed visitors could be sold products through other avenues. Every deal was like “the next Netscape.” The deals could neither be too many nor too big. But the end was near. The Stock Market crash of March 2000 brought an abrupt end to the venture cash cow and the websites died by the thousand quickly or slowly, as the money could not last. Monetization proved elusive. Very elusive.

There are notable exceptions in the downfall of the advertising-only business model, like Google, whose size makes them the king of the winner-take-all market for clicks. Even mighty brands like the New York Times can’t make their websites pay. Microsoft’s Steve Ballmer was reported to say recently that there will be no recovery in online advertising dollars, ever. Web 1.0 RIP.

Enter Web 2.0, our current phase. With payrolls gone, the legions of web developers, free-lance journalists, graphic artists and creative geniuses behind the explosion of web content went home, seven figure stock option bonanzas a distant and fading dream. But the Web Dream would rise again, blog style.

The humble “weblog” seemed initially to be an innocuous novelty that made it easy for joe average to post daily musings to the Internet, as I am doing right now. I, the user of the Web, am generating my own content, for “free.” Multiply me by several tens of millions and you have the rebirth of Internet content. User generated content, coupled with the eyeball model, has given the Internet a new lease on life. And it actually seems to be making money.

Or is it? Web 2.0, which started with text-based blogs like mine, became the darlings of silicon valley. However, the armies of people typing away were soon dwarfed by the onslaught of user generated photo and video content. The colossal price paid for YouTube by Google represents a pinnacle of Web 2.0, a place to monetize eyeballs from content for which they paid zilch. A guaranteed cash cow, right? Maybe.

As if YouTube wasn’t big enough, social networking phenoms MySpace and Facebook appear to be the new zillion pound gorillas on the block, their rumoured valuations stratospheric. And now we have Twitter, changing the world and gobbling up users by the billion. Given that the content on these sites is free to both the website owners and the users, surely the eyeballs can be turned to gold.

Gold indeed. Fools gold. Although private, Facebook continues to report weak revenues. Myspace has been laying off thousands. Recession squeezed advertisers are cutting budgets ruthlessly. What now?

In spite of the advent of user generated content, and much of it amazingly good, web enterprises like FB and MS seem persistently expensive to run. Ever mindful of the fickle web surfer, social networking sites need to constantly bring cool new features to their users. To maintain loyalty, Facebook needs to keep getting better and better, at huge cost.

Web 3.0 will soon be upon us. It will consist of ever tweaked and “revolutionized” social networking technologies that will make every possible attempt to make Web 2.0 pay. But it won’t.

Web 3.0 will be about bringing more Web 2.0 to your phone, Blackberry, and iPhone. It will shoehorn social networking into your TV. Into movies. Into eateries and bars. Into your fridge and stove. It will seek to have your eyeballs locked on more times and for longer times. If you think social networking is ubiquitous now, you ain’t seen nothin’ yet.

A few years from now, with Web 2.0 and 3.0 strategies failing to make money, with the grand old names of the media business at death’s door, the rebel yell of the Internet revolutions, “information wants to be free,” will finally breath its last. The once lofty proposition that the online world is not subject to economic laws will be relegated to the dustbin of bad ideas.

A year of gloom will ensue. Then a new dawn will come, brighter than before.

Picture a news stand. Picture the vendor smiling as every shred of paper is whisked off his shelves unpaid for by myriad passersby. Picture the vendor on the phone ordering up new stock as invoices pile skyward. Picture investors happily paying the invoices in hopes the passersby can be monetized. It’s an absurd picture.

Web 4.0 will be about online information consumers paying for the information they want to consume and ignoring everything else. All forms of content, from music to news to eBooks to magazines to video will be purchased on a pay-per-view, “all you can eat” subscription, or hybrid basis. The price for the content will be driven by demand.

Web 4.0 will dramatically improve the Internet by curing a host of chronic problems plaguing the Net Age, such as:

1. Information overload. Zero costs lead to over consumption. We gorge on content, and not all of it is good for us. We are bombarded with nifty websites and free newsletters. Content filters like RSS push too much stuff at us. Workplace productivity cannot be helped by more Facebook and more news. We are saturated.

The payment requirements that are coming will force us to reduce information consumption to manageable levels.

2. Quality will improve. The coming world of online payments will force consumers to be more selective and demanding, which will force suppliers to provide a better product. This trend will help suppliers whose quality is already high but are losing money, such as the NYT Online. Free suppliers will be competing not for dollars, but for that warm, fussy feeling you get for having done a good job. That feeling will fade, and advertising dollars will not bail them out.

3. Reliability and accuracy will improve. Over the centuries, scholars have developed systems to ensure that published material is authoritative. Amazingly, Wikipedia has managed to bypass the rigors of peer review while maintaining authority. Or has it? The famously self regulated online encyclopedia is receiving fresh criticism that its articles are often biased, self serving, and at times wildly inaccurate.

Eventually, Wikipedia will need money, and as we have observed, the eyeball business model is flawed. To ensure academic rigor and factual accuracy, Wikipedia will need a sizable staff of professionals. The best way to fund this is to charge the users. If the users refuse to pay, it can be concluded that Wikipedia’s popularity is driven mainly by it’s low price, not by it’s quality. People are getting what they don’t pay for.

4. Innovation will thrive. While hailed as the greatest breakthrough since railroad, the World Wide Web has been strikingly old fashioned in the way it does business. The Internet is profoundly different from print, radio and television, but for some reason there has been an insistence on shoehorning it into the old school “soap selling” format.

As discussed, the free information craze has become entrenched. There will soon come a tipping point (within 5 years) where the paid model will start to gain traction. This shift will open a floodgate of innovative business models where the consumer’s dollar is efficiently directed to the content providers they value.

5. The real new media revolution will begin. There is only so much new media that can be inspired by and paid for with venture and IPO money. Eventually, new media platforms will need to be real businesses that generate revenues above costs. Once this starts to happen, a new wave of venture capital and IPO fortunes will be made, driving a new technology boom.

There are many facets to the story of Web 4.0. Stay tuned for Part II of this series: The Real Goods on Digital Goods.

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A Different Kind of Car Company Crisis

Remember car maker Saturn’s slogan? A Different Kind of Car Company. The sad Saturn story is key to understanding the real but often overlooked problem with the North American auto sector. It’s not just about cash. It’s about the culture.

In the 1970s, products made in Japan were the object of derision, including their cars. The early imports from Toyota and Datsun were pretty lame. But they had one thing going for them: they were small. Had it not been for the oil crisis, Japanese automakers may never have established a beachhead in the US.

Detroit famously underestimated their asian competitors, whose quality improvements are now legendary. The “Energy Crisis” soon blew over and Detroit’s foray into the small car market lost steam. Despite the emerging threat from Japan, Detroit was resistant to change. But why?

For a host of reasons that are the subject of myriad scholarly papers and erudite business books, large, well established organizations have great difficulty changing, even when faced with their own demise. Endless “innovate or die” sermons fail to inspire the needed change.

Saturn was a ground breaking attempt by GM to avoid the “die” part of the sermon. Recognizing that rapid and radical change within GM was unlikely, they created an entirely new company, a different kind of car company, Saturn.

And the innovations came fast and furious. Plastic car bodies that never rust and resist dents. “Haggle-Free” pricing overcame show-room phobia. This new “user friendly” car buying experience was particularly attractive to women, whom Saturn wisely recognized was an untapped market.

Inside Saturn, managers tried to “flatten” the organizational structure, eliminating stifling hierarchies, promoting cross-functional teams and a “family” atmosphere. Saturn was a visionary experiment aimed at building a company of people who cared as much about making better cars as their Japanese counterparts.

Sadly, it didn’t work, and the failure of Saturn provides a metaphor for the failure of GM. Saturn could not match the Japanese on quality and therefor could not demand premium pricing. Smaller economies of scale for Saturn meant higher per unit costs, further hurting the bottom line. To make it, they had to sell for more, not less. But why could they not squeeze out the quality?

Japanese corporate giants have a long standing compact with their employees: give us your life and we will employ you for the whole of that life. Sacrifice everything for and you will never have to worry again. You do not work for Toyota, you are Toyota. From top to bottom, from mechanic to manager, personal goals and aspirations are interwoven with those of the firm.

In the North American corporate behemoth, by contrast, worker is pitted against management in an epic struggle for control. Company-wide egalitarianism and fair play are regarded as a delusional fantasy. Vast and excessive hierarchies fuel dysfunction in a Dilbertesque world where the incompetent lead the unmotivated. It’s a corporate culture that breeds failure.

Such is the plight of GM. It wants to change, it wants to innovate, it wants to compete, but it can’t, at least not to the degree it needed to to survive. It can’t change because it’s culture is hard-wired to resist it.

The current economic crisis cannot be blamed for the demise of GM. A company with GM’s resources and assets should have been able to weather this storm.

The solution? First of all, the focus on corporate culture needs to step out of the halls of academia and into the mainstream. Understanding organizational behavior can no longer be relegated to the status of a passing management fad. It’s real. And it’s serious.

GM should teach us that we need to rethink how human, intellectual and financial capital interact in the context of the large corporation. Smaller, entrepreneurial companies already get it. Ultra Mega Corps try to mimic the “entrepreneurial culture” of the start-up, but it’s often just gloss and showmanship. It plays well in the annual report.

Practically speaking, the reinvention of GM will need to do away with the concept of the labor union. Workers and management can no longer afford to be on opposite sides of the table. Workers will need to be company builders, not just car builders, and they will need to be rewarded like company builders, through a stake in the equity and decision making.

The CEO and top brass will need to embrace and practice a flattened management structure committed to knowledge sharing and innovation. The CEO and key managers will need to have come from within the company and enjoy the trust of all sides. A new mission and vision will need to be created, and not just some BS fluff that no one cares about. It has to be real and serious.

For GM 2.0 to succeed, it will need to be as innovative in reshaping it’s culture as it is reshaping its cars. I predict that it will. It’s do or die, again.

Story Update

Two days after I posted the above reflections, Saturn was sold:

GM to sell Saturn to Penske
Penske Automotive Group, owned by racecar legend Roger Penske, will buy GM’s castoff brand.

http://money.cnn.com/2009/06/05/news/companies/saturn_penske/?postversion=2009060511

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Crisis, No Crisis; the Case for Nuclear

As a result of pure chance, I ended up on CBC national television during Canada’s hotly debated Fall 2008 federal election. Producers of a program called the “X-Challenge” were looking for 100 “necessary polluters” to make up a studio audience for a televised political “debate” focused on the environment, with an interesting twist.

Audience members were asked their political choice prior to the beginning of the show and via nifty hand-held “vote clickers” would after each “round” weigh in, with the goal being able to see if anyone changed their mind about who to vote for based on the persuasiveness of the debaters. The results were surprising!

Each of the 100 were asked to formulate a question for the panelists, who were the Green Party’s Adrian Carr, Liberal Ujjal Dosanjh, Michael Byers of the NDP, and Lorne Mayencourt representing the Conservatives. My question, which was rather provocative, was selected as one of four to be personally delivered on camera to the panel.

I am the CEO of a company exploring for uranium, and I wanted to know if they supported uranium mining and nuclear power.

You can see the segment I was in here: http://www.cbc.ca/mrl3/8752/news/features/xchallenge2-081008.wmv . There’s a few minutes of banter and other content before I am introduced.

The responses of the politicians are very interesting but predictable. No one came out pro-nuke. What a surprise.

After the debate a thought occurred to me that I wish I had expressed on television: if environmentalists reject nuclear power as an alternative, there really is no climate change crisis. Nuclear can produce almost unlimited amounts of energy with near zero carbon emissions and no greenhouse gases. It’s non global warming. And with an abundant domestic supply, it removes the dependence on foreign oil.

The starkness of this juxtaposition is causing many environmentalists to come around on nuclear. The logic is simple. If you assume the risk of catastrophic climate change is high, the extremely low risk of a nuclear meltdown becomes a non-factor. The fact is that nuclear power is very safe when compared to other means of energy creation, such as coal, hydro, bio fuel (see my prior blog “Food for Thought” on the misguided bio fuel strategy), and so on.

I would challenge anyone to research the topic. This is a good website to start with http://www.cna.ca, the Canadian Nuclear Association. Many myths are exposed.

No sane person would suggest that uranium mining are without environmental footprint or safety risk, but the alternatives I argue are worse. There’s a growing view that man made global warning is going to “kill us all.” Carbon emitters and “climate criminals” should be thrown into jail according to some pundits.

Politically it is uncomfortable to admit one is wrong and support nuclear, but watch for Obama to quietly change his tune over the next few years and come out with a pro nuclear energy policy. If I’m wrong, come back to this blog and tell me so. If I’m right, well, I’m right.

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Crisis, No Crisis; the Case for Nuclear

As a result of pure chance, I ended up on CBC national television during Canada’s hotly debated Fall 2008 federal election. Producers of a program called the “X-Challenge” were looking for 100 “necessary polluters” to make up a studio audience for a televised political “debate” focused on the environment, with an interesting twist.

Audience members were asked their political choice prior to the beginning of the show and via nifty hand-held “vote clickers” would after each “round” weigh in, with the goal being able to see if anyone changed their mind about who to vote for based on the persuasiveness of the debaters. The results were surprising!

Each of the 100 were asked to formulate a question for the panelists, who were the Green Party’s Adrian Carr, Liberal Ujjal Dosanjh, Michael Byers of the NDP, and Lorne Mayencourt representing the Conservatives. My question, which was rather provocative, was selected as one of four to be personally delivered on camera to the panel.

I am the CEO of a company exploring for uranium, and I wanted to know if they supported uranium mining and nuclear power.

You can see the segment I was in here: http://www.cbc.ca/mrl3/8752/news/features/xchallenge2-081008.wmv . There’s a few minutes of banter and other content before I am introduced.

The responses of the politicians are very interesting but predictable. No one came out pro-nuke. What a surprise.

After the debate a thought occurred to me that I wish I had expressed on television: if environmentalists reject nuclear power as an alternative, there really is no climate change crisis. Nuclear can produce almost unlimited amounts of energy with near zero carbon emissions and no greenhouse gases. It’s non global warming. And with an abundant domestic supply, it removes the dependence on foreign oil.

The starkness of this juxtaposition is causing many environmentalists to come around on nuclear. The logic is simple. If you assume the risk of catastrophic climate change is high, the extremely low risk of a nuclear meltdown becomes a non-factor. The fact is that nuclear power is very safe when compared to other means of energy creation, such as coal, hydro, bio fuel (see my prior blog “Food for Thought” on the misguided bio fuel strategy), and so on.

I would challenge anyone to research the topic. This is a good website to start with : http://www.cna.ca, the Canadian Nuclear Association. Many myths are exposed.

No sane person would suggest that uranium mining are without environmental footprint or safety risk, but the alternatives I argue are worse. There’s a growing view that man made global warning is going to “kill us all.” Carbon emitters and “climate criminals” should be thrown into jail according some pundits.

Politically it is uncomfortable to admit one is wrong and support nuclear, but watch for Obama to quietly change his tune over the next few years and come out with a pro nuclear energy policy. If I’m wrong, come back to this blog and tell me so. If I’m right, well, I’m right.

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