Author: Brad Feld
I loved this quote by Tristan Harris in the New York Magazine article The Internet Apologizes …
“We cannot afford the advertising business model. The price of free is actually too high. It is literally destroying our society, because it incentivizes automated systems that have these inherent flaws. Cambridge Analytica is the easiest way of explaining why that’s true. Because that wasn’t an abuse by a bad actor — that was the inherent platform. The problem with Facebook is Facebook.”
The article ends with a parallel quote from Tim Berners-Lee, creator of the World Wide Web
“The web that many connected to years ago is not what new users will find today. The fact that power is concentrated among so few companies has made it possible to weaponize the web at scale.”
I just read the article and all of the attached long-form interviews. I think my favorite, only because it’s so provocative, is the one with Roger McNamee titled ‘You Have a Persuasion Engine Unlike Any Created in History’
There are a few mentions of Zynga (which we were investors in) in the various article chain which caused me to reflect even more on the 2007 – 2010 time period when free-to-consumer (supported by advertising) was suddenly conflated with freemium (or free trials for enterprise software). The later (freemium) became a foundational part of the B2B SaaS business model, while the former became an extremely complex dance between digital advertising and user data.
Tristan’s quote “the price of free is actually too high” is important to consider. What is going on here (“free services”) is nothing new. The entire television industry was created on it (broadcast TV was free, supported by advertising, dating back well before I was born.) Nielsen ratings started for radio in the 1940s and TV in the 1950s. The idea of advertisers targeting users of free services based on data is, well, not new.
Propaganda is not new either. The etymology of the word from Wikipedia is entertaining in its own right.
“Propaganda is a modern Latin word, the gerundive form of propagare, meaning to spread or to propagate, thus propaganda means that which is to be propagated.Originally this word derived from a new administrative body of the Catholic church (congregation) created in 1622, called the Congregatio de Propaganda Fide (Congregation for Propagating the Faith), or informally simply Propaganda. Its activity was aimed at “propagating” the Catholic faith in non-Catholic countries From the 1790s, the term began being used also to refer to propaganda in secular activities. The term began taking a pejorative or negative connotation in the mid-19th century, when it was used in the political sphere.”
So what? Why the fuss? A cynic would say something like “this is not what the hippy-techies of the 60s wanted.” True, that. But the arch of human society is littered with outcomes that diverge wildly from the intended actions. Just watch Game of Thrones or Homeland to get a feeling for that, unless you struggle with conflating fact and fiction, which seems less of a problem for many people every day based on the information we consume and regurgitate.
I think something more profound is going on here. We are getting a first taste of how difficult it is for a world in which humans and computers are intrinsically linked. Tristian’s punch line “The problem with Facebook is Facebook” hints at this. Is the problem the leadership of Facebook, the people of Facebook, the users of Facebook, the software of Facebook, the algorithms of Facebook, what people do with the data from Facebook, or something else. Just try to pull those apart and make sense of it.
I think this is a pivotal moment for humans. I’ve heard the cliche “the genie can’t be put back in the bottle” numerous times over the past few weeks. Any reader of Will and Ariel Durant know that the big transitions are hard to see when you are in them but easy to see with the benefit of decades of hindsight. This might be that moment of transition, where there is no going back to what was before.
I have a Cray-2 showing up at our Carriage House in the next few weeks. It’ll be a permanent fixture there and, while it’s not functional, it’ll be fun to have around.
I’m now on a quest to find a Thinking Machines CM-1 or CM-2. Every supercomputer needs a friend after all.
If you know where I can get one (I’m happy to buy it), or display something publicly that is hidden away in storage somewhere, drop me a line.
In the meantime, if you want to learn more about the CM-1 or CM-2, the following promotional video is a nifty walk through memory (see what I did there?) lane. Yup – enjoy the parallel universe (sorry – I couldn’t help myself.)
Tonight, the New Venture Challenge at CU Boulder is having its 10th anniversary. It’s happening at the Boulder Theater from 5:30 pm – 7:30 pm and is open to the public. Register here to attend if you are interested.
My partner Jason is leading the judging panel, which includes:
- Abby Barlow, partner and director of Investment Research at Crestone Capital
- Stephanie Copeland, former president of Zayo Group and current executive director of the Colorado Office of Economic Development and International Trade
- Anthony Shontz, managing director of Private Equity at Partners Group
Dan and Cindy Caruso and Amy and I contributed the prizes, which total $100,000.
A decade ago the creation of the NVC was inspired by the MIT $100K Entrepreneurship Competition. I was involved in the early years (1992 – 1996) as a judge and funded a number of companies that went through the MIT $100K (which was called the MIT $10K at the time.) The entire experience was foundational for me, both as an entrepreneur and an early angel investor (I started investing in 1994 after I sold my first company at the end of 1993.)
Over a decade ago, Brad Bernthal and Phil Weiser were putting real energy into Boulder Startup Community. I discuss their efforts, and impact, in my book Startup Communities (which was published in 2012). One of the things I suggested was doing something like the MIT $100K. I remember a longish discussion with Brad Bernthal and my partner Jason about the history of it and how it unfolded over the first decade.
Bernthal and Jason grabbed this and ran with it. A decade later, that discussion now seems like ancient history. But, for anyone who knows my rant about having a long-term view around startup communities (at least 20 years), we are now 10 years into the NVC journey. And, it has really hit its stride.
I’m excited about tonight’s event and am really looking forward to seeing the companies compete! I hope to see you there if you are in Boulder.
My dad, brother, and I are now doing a monthly book club together. One of us chooses a book, we all read it, and then we do an hour-long video conference and talk about it. We’ve done this for about six months now and it’s wonderful.
A few months ago Daniel chose Waking Up White, and Finding Myself in the Story of Race by Debby Irving. It was a powerful book that started off strong.
“I can think of no bigger misstep in American history than the invention and perpetuation of the idea of white superiority. It allows white children to believe they are exceptional and entitled while allowing children of color to believe they are inferior and less deserving. Neither is true; both distort and stunt development. Racism crushes spirits, incites divisiveness, and justifies the estrangement of entire groups of individuals who, like all humans, come into the world full of goodness, with a desire to connect, and with boundless capacity to learn and grow. Unless adults understand racism, they will, as I did, unknowingly teach it to their children.
No one alive today created this mess, but everyone alive today has the power to work on undoing it. Four hundred years since its inception, American racism is all twisted up in our cultural fabric. But there’s a loophole: people are not born racist. Racism is taught, and racism is learned. Understanding how and why our beliefs developed along racial lines holds the promise of healing, liberation, and the unleashing of America’s vast human potential.”
I found myself nodding many times as I read this book. When I finished, I wandered around the web and found this TEDx Fenway talk by the author which does a great job of a high-level summary of the book.
I particularly liked this framing:
“What I’ve learned is that thinking myself raceless allowed for a distorted frame of reference built on faulty beliefs. For instance, I used to believe:
- Race is all about biological differences.
- I can help people of color by teaching them to be more like me.
- Racism is about bigots who make snarky comments and commit intentionally cruel acts against people of color.
- Culture and ethnicity are only for people of other races and from other countries.
- If the cause of racial inequity were understood, it would be solved by now.”
Dad, Daniel, and I talked extensively about the notion of “Good intentions, bad information.” While it applies to many situations, it’s especially key in applying critical thinking to a complex, or deeply challenging situation, especially one where there is a visceral bias (emotional or intellectual) that appears. Consider applying Curiosity, Courage, and Tolerance by doing the following.
- Curiosity: Ask yourself silently, “Why did I just think that thought?” Force yourself to chase down the “why” before you go on.
- Courage: Resist feeling terrified that you will say the wrong thing. There are lots of different ways to say something with a qualifier that you don’t have any idea whether what you are saying is going to be offensive, interpreted correctly, or correct.
- Tolerance: Tolerate your own feelings of discomfort, anger, grief, and embarrassment. Take a deep breath and calmly press through into the situation.
There’s a lot more in the book that both challenged me and helped me. I’m sure I interpreted plenty of it wrong, but, in the same way that I’m reading and exploring a lot of feminist literature, I’m going to include explorations of race and ethnicity in the stuff I’m reading.
Daniel – thanks for choosing Waking Up White, and Finding Myself in the Story of Race as one of our monthly books.
I’m a fan of spring break. I’m a believer in regular vacations. I love it when people I work with get away and disconnect. And, I do it at least four times a year.
Spring break feels like it has gotten out of control. Rethinking it could be interesting. This year, at least 50% of the people I work with regularly are on spring break this week. I think the other 50% go on spring break next week. Easter seems to be the pivot point for this.
Unlike the week before Christmas, which moves around every year, if Easter is the pivot point for spring break, life would be better if everyone in the US decided the week before (or after – I don’t care) Easter was spring break. Then, the rhythm of work in the US would slow (or at least change) for that week, just like it does for the week between Christmas and New Years.
And, everyone who goes on spring break with their family and kids could actually disconnect, rather than what I’m observing, where some people disengage, but others keep one foot in, probably ruining the real value of a week-long disconnect from work for them
I’m not at all cranky about this. I’m at work this week – and next week. Amy, on the other hand, is on spring break with a girlfriend who is five years recovered from a serious illness. While I miss her, I’m using the time as an excuse to stay up late watching silly television shows.
While I know a blog post from me isn’t going to affect anything, imagine a world where we had a real, synchronized, completely off spring break in the US. It would be a better world for everyone.
The first accelerator, YC, was founded in 2005. The second, Techstars, was founded in 2006. Wikipedia has a good summary of the history of accelerators.
Now that we are 13 years into the accelerator journey, an accelerator is a well-established construct that is part of the global startup ecosystem. They have evolved over the years, and many new approaches have been taken.
The question of the efficacy of accelerators has regularly been asked over the past decade. A number of academic papers have appeared in the past few years exploring this. I was asked if any existed the other day by an LP, so following is a list of papers I am familiar with.
If you know of any others, please put links in the comments or send me an email with the info.
Accelerators and Crowd-Funding: Complementarity, Competition, or Convergence in the Earliest Stages of Financing New Ventures?, Smith, Hannigan, and Gasiorowski, 6/13
Accelerating Startups: The Seed Accelerator Phenomenon, Hochberg and Cohen, 3/14
Accelerators and the Regional Supply of Venture Capital Investment, Fehder and Hochberg, 9/14
Swinging for the fences: How do top accelerators impact the trajectories of new ventures?, Winston Smith and Hannigan, 6/15
Investment Accelerators, Bernthal, 8/15
Startup Accelerators and Ecosystems: Complements or Substitutes?, Fehder, 9/15
Do Accelerators Accelerate? If So, How? The Impact of Intensive Learning from Others on New Venture Development, Hallen, Bingham, and Cohen, 7/16
How Do Accelerators Impact the Performance of High-Technology Ventures?, Yu, 8/16
Who Needs Contracts? Generalized Exchange within Investment Accelerators, Bernthal, 11/16
Business Incubators and Accelerators: A Co-Citation Analysis-Based, Systematic Literature Review, Hausberg and Korreck, 3/17
How Do Accelerators Select Startups? Shifting Decision Criteria across Stages, Yin and Lau, 12/17
Whenever someone tells me about the progress humans have made, I remind them that since the beginning of humans, man has been trying to kill his neighbor to take over his backyard. And yes, as Amy likes to regularly remind me, it’s often men doing the killing.
Simultaneously, governments around the world have spent zillions of dollars building surveillance systems since the beginning of – well – humans. Or at least since the beginning of governments.
In 14 years, Facebook has created the most incredible and effective surveillance machine in the history of humankind. And we, the humans, have given the machine much of the data. John Lanchester has the best article on this I’ve read to date titled You Are the Product in the London Review of Books. It’s long – 8674 words – but worth reading every one of them. The magical paragraph is in the middle of the article and follows.
“What this means is that even more than it is in the advertising business, Facebook is in the surveillance business. Facebook, in fact, is the biggest surveillance-based enterprise in the history of mankind. It knows far, far more about you than the most intrusive government has ever known about its citizens. It’s amazing that people haven’t really understood this about the company. I’ve spent time thinking about Facebook, and the thing I keep coming back to is that its users don’t realise what it is the company does. What Facebook does is watch you, and then use what it knows about you and your behaviour to sell ads. I’m not sure there has ever been a more complete disconnect between what a company says it does – ‘connect’, ‘build communities’ – and the commercial reality. Note that the company’s knowledge about its users isn’t used merely to target ads but to shape the flow of news to them. Since there is so much content posted on the site, the algorithms used to filter and direct that content are the thing that determines what you see: people think their news feed is largely to do with their friends and interests, and it sort of is, with the crucial proviso that it is their friends and interests as mediated by the commercial interests of Facebook. Your eyes are directed towards the place where they are most valuable for Facebook.”
Jean-Louis Gassée, always the provocateur, is blunt: Mark Zuckerberg Thinks We’re Idiots. It’s another article worth reading, but if you just like pull quotes, the best one shows up early in the article.
“As Facebook’s leader, Zuckerberg resolves to get things straightened out in the future (“it’s my job, right?”) while he delivers a callcenter-style broken record reassurance: “Your privacy is important to us”. Yes, of course, our privacy is important to you; you made billions by surveilling and mining our private lives. One wonders how aware Zuckerberg is of the double entendre.”
For a more balanced, but equally intense view, Ben Thompson at Stratechery has a long post titled The Facebook Brand. It explains, in detail, how easy it was for any developer to get massive amounts of data from the Facebook Graph API between 2010 and 2015 (where Ben suggests that Facebook was willing to give everything away.) If you don’t want to read the article, but are interested in an example of the Facebook Graph Extended Profile Properties, here it is.
Ben’s conclusion is really important.
“Ultimately, the difference in Google and Facebook’s approaches to the web — and in the case of the latter, to user data — suggest how the duopolists will ultimately be regulated. Google is already facing significant antitrust challenges in the E.U., which is exactly what you would expect from a company in a dominant position in a value chain able to dictate terms to its suppliers. Facebook, meanwhile, has always seemed more immune to antitrust enforcement: its users are its suppliers, so what is there to regulate?
That, though, is the answer: user data. It seems far more likely that Facebook will be directly regulated than Google; arguably this is already the case in Europe with the GDPR. What is worth noting, though, is that regulations like the GDPR entrench incumbents: protecting users from Facebook will, in all likelihood, lock in Facebook’s competitive position.
This episode is a perfect example: an unintended casualty of this weekend’s firestorm is the idea of data portability: I have argued that social networks like Facebook should make it trivial to export your network; it seems far more likely that most social networks will respond to this Cambridge Analytica scandal by locking down data even further. That may be good for privacy, but it’s not so good for competition. Everything is a trade-off.”
In the meantime, Facebook is arguing with Ars Technica about whether or not Facebook scraped call, text message data for years from Android phones. Facebook is pretty insistent that it isn’t. But, given that Facebook quietly hid webpages bragging of its ability to influence elections, it’s hard to know who to believe.
In shocking news, Facebook is now under federal investigation by the Federal Trade Commission. I’m sure they will get to the bottom of this quickly. I wonder if the NSA is going to have to delete all the Facebook data they’ve slurped up over the years after this is over.
I recently heard the line “sandpaper only works if it is rubbing against something” and loved it.
From Wikipedia: “The first recorded instance of sandpaper was in 1st-century China when crushed shells, seeds, and sand were bonded to parchment using natural gum. Shark skin (placoid scales) has also been used as an abrasive and the rough scales of the living fossil, Coelacanth are used for the same purpose by the natives of Comoros. Boiled and dried, the rough horsetail plant is used in Japan as a traditional polishing material, finer than sandpaper. Glass paper was manufactured in London in 1833 by John Oakey, whose company had developed new adhesive techniques and processes, enabling mass production. Glass frit has sharp-edged particles and cuts well whereas sand grains are smoothed down and do not work well as an abrasive. Cheap sandpaper was often passed off as glass paper; Stalker and Parker cautioned against it in A Treatise of Japaning and Varnishing published in 1688. In 1921, 3M invented a sandpaper with silicon carbide grit and a waterproof adhesive and backing, known as Wet and dry. This allowed use with water, which would serve as a lubricant to carry away particles that would otherwise clog the grit. Its first application was in automotive paint refinishing.”
Every company I’m involved in has issues. Some are minor. Some are major. Some are easy to fix. Some sneak up on you when everything feels like it’s going great. Some are existential crises. Some just feel like existential crises.
Simply put, Something new is fucked up in my world every day.
That’s just the way companies work. And, as long as the company is still around, no matter what size, or level of success, the dynamic is endless. When you think things are going great, it’s just a signal to pay attention to what is going wrong. While there are lots of issues that are exogenous to you, that you can’t control, or impact, many others are issues on the surface of your company.
Use sandpaper on your company daily. Be gentle with it, but precise.
A law with good intentions, but horrible side effects, passed yesterday. You probably haven’t heard about it because of the brouhaha over 97,513 other things. It’s called SESTA/FOSTA and the EFF has a good summary of how Lawmakers Failed to Separate Their Good Intentions from Bad Law. Craigslist responded immediately (and rationally) by taking Craigslist Personals offline.
Oh, and as a bonus, the CLOUD Act was buried in the Omnibus spending bill. EFF has an article from six weeks ago that explains why it is A Dangerous Expansion of Police Snooping on Cross-Border Data. The CLOUD Act is an aggressive undermining of existing privacy laws, but no one really cares about online privacy or your data, right?
If you want a glimpse as to the data Facebook has on you, take a look at the analysis Dylan McKay just posted. And then, it a magic trick of epic proportions, it turns out that ‘Lone DNC Hacker’ Guccifer 2.0 Slipped Up and Revealed He Was a Russian Intelligence Officer. I’m shocked – just shocked – that something like this could be true (actually, I’m not – I’ve been saying the DNC / Wikileaks stuff was Russian hackers since the beginning, even after several friends gave me tinfoil caps to keep me safe.)
I don’t expect the Trump campaign knew anything about any of this. Well, except for the news today that showed the Cambridge Analytica’s blueprint for Trump victory. And now, the news that Trump’s new security adviser John Bolton also relied on Cambridge Analytica. Scandalous, just scandalous (well – not really – how about “predictable, just predictable …”)
If you want to understand what can happen to your Facebook data, the Cow Clicker story is both fun and instructive. I remember Cow Clicker well because it was a spoof on FarmVille. And yes, the explanation in the article is very accurate from my perspective. If you want a more mainstream explanation, How Trump Consultants Exploited the Facebook Data of Millions is pretty good.
Expect more outrage and Facebook bashing on all media channels. And lots of talking heads and discussion about what needs to be done. We might even have hearings in Congress. But my guess is that not much will change, the outrage will move onto something else (hey – what happened to North Korea?), Facebook will make a few incomprehensible changes to their security settings, and the laws that get created won’t keep up with the technology.