I hope you can join us on Sep. 22 evening for a presentation on "Where are the Deals?  Private Equity and Venture Capital Funds' Best Practices in Deal Origination ".  We'll be discussing preliminary findings from a white paper we're writing on this topic.  I'd like to thank our hosts, the Columbia Business School Alumni Club of New York .

Here's the ad:

The quality of the deals you source is one of the greatest drivers of your success as an investor. What are you doing to improve your deal flow?

David Teten will discuss:

• How are you positioning yourself to become your target's preferred investor?

• What does research on deal-origination indicate are the primary sources of deal flow for institutional investors?

• What are you doing to identify companies that might be interested in being approached?

• What are the earmarks of a potential investment opportunity?

• How are you systematically identifying industries/situations in which you may be able to create new companies, rather than find existing companies?

• How can you use Web 2.0 tools to identify appropriate investments?

• How do you increase your inflow of useful referrals?

• What is the best way to make warm cold calls?

David Teten is a Managing Director of Evalueserve, the world's largest knowledge process outsourcing company.  Founded in 2000, the company has over 2,400 employees.  Among its 1,100 clients are 6 of the top 10 investment banks and 10 of the top 15 strategy consulting firms.  David joined Evalueserve when the firm acquired his company, the Circle of Experts.  He leads Evalueserve's services in helping institutional investors originate investments.  David was formerly CEO of Teten Executive Recruiting, which he sold to Accolo, #42 on the 2007 Inc. 500 list.  Previously, he was CEO of GoldNames, an investment bank serving the internet domain name asset class.  He worked with Bear Stearns' Investment Banking division as a member of their technology/defense M&A team, and was a strategy consultant with Mars & Co.  David is lead author of The Virtual Handshake: Opening Doors and Closing Deals Online, the first book on how businesses can use online networks and other "Web 2.0" technologies to originate deals, raise capital, win new clients, recruit star employees, and market their firm.  He holds a Harvard MBA and a Yale BA, both with honors.   David is a member of the Advisory Board for Accolo, Grouply, and the Word of Mouth Marketing Association.   He is a frequent keynote speaker to finance and technology conferences

DATE
Monday, September 22nd

AGENDA
6:00 - 6:30 PM Registration
6:30 - 8:00 PM Program & Reception

PLACE
Cresa Partners

100 Park Avenue, [between 40th and 41st Street] 24th floor

PRICE
CBSAC/NY Members $25
Non-members $35
Pre-registration recommended. $10 surcharge added to day-of-event registrations
To become a member click here

REGISTRATION
To purchase tickets click here: Click here to buy tickets!!!
Space is limited and will fill up quickly.

NOTES
Reception includes bottled water, soft drinks and hot & cold hors d’oeuvres

EVENT ORGANIZERS
We are grateful to Gene Kenny and Frank Graziano (CBS '82) of the Private Equity Committee for organizing this event

Events | Leadership and Management | Private Equity Investing | Social Software

Following are my notes on last night's MIT Enterprise Forum event: "Lead Generation 2.0: How Entrepreneurs are Fueling the Next Wave of Innovation in Internet Marketing"

 

 

Moderator: Brian Hirsch, Managing Director, Greenhill SAVP

Brian Hirsch is a Managing Director of Greenhill SAVP and a Co-Chairman of the Fund`s Investment Committee.  Prior to joining SAVP in 2004, Mr. Hirsch was a Principal at Sterling Venture Partners and led the firm`s investments in technology-related companies. Mr. Hirsch is currently a board member of BDMetrics, BestContractors, FTRANS, iKobo, Pontiflex and Serious.  Brian previously sat on the board of YellowJacket (acquired by the Intercontinental Exchange, NYSE:ICE) and KnowledgeStorm (acquired by TechTarget, NASDAQ:TTGT).   Prior to joining Sterling Venture Partners, Mr. Hirsch was a vice president at ABN AMRO Private Equity (AAPE”), the U.S. venture capital group of ABN AMRO N.V., one of the world`s largest banks. Before joining AAPE, Mr. Hirsch worked as a senior consultant at KPMG in the Information, Communications & Entertainment (ICE) practice, where his clients included General Electric, CBS/Westinghouse and the Tribune Company.

 

 

Hirsch: We're very excited about lead-gen.  2007 Sales : $1.3b.  Twice growth rate of search or email marketing.  $2b in 2008

Have backed 4 lead gen companies in the last space

 

Drew Patterson, VP of Marketing, Kayak.com

Drew Patterson is responsible for product marketing and lead generation through Kayak`s travel suppliers and distribution partners. Kayak is the world's largest travel search engine and was co-founded by founders of Orbitz, Expedia, and Travelocity. Kayak.com's investors include General Catalyst Partners, Sequoia Capital, America Online and London-based Accel Partners.

Prior to joining Kayak, Drew held a number of positions at Starwood Hotels. As Director Pricing for Starwood, Drew was responsible for Starwood`s Pricing group, which develops and executes Starwood`s pricing and revenue management strategies. This includes management of the Starwood rate structure, analysis to identify effective pricing strategies, observations on company revenue performance and trends, and training for the field revenue management organization.

As Director, Distribution Strategy, Drew was responsible for the development and implementation of Starwood`s distribution strategy, including leading Starwood`s Best Rate Guarantee in 2002 and developing TravelWeb, the hospitality industry`s response to the independent lodging discount websites. Drew joined Starwood in 1999 as Manager of Business Development, responsible for developing partnerships and new business opportunities. Drew graduated from Harvard and received his MBA from Columbia University`s Graduate School of Business. He resides in New York City.

 

Patterson: We're both a vendor and a buyer of leads. 

 

 

Suaad H. Sait, Chief Executive Officer, ReachForce.com

Suaad Sait is CEO of ReachForce. ReachForce, based in Austin, Texas, provides data and software solutions that enable B2B companies to laser target marketing and sales initiatives at the right person in the right company, every time.  As an entrepreneur and high tech industry executive, Suaad has played leadership roles at start-up companies as well as large publicly traded firms. Mr. Sait is the driving force positioning the company as a leader in the emerging marketing and sales force automation segments of the CRM OnDemand market.

Prior to ReachForce, Suaad was the vice president and general manager of Products & Markets at Pervasive Software (PVSW) with world-wide P&L responsibility of the entire product line. Suaad served as the Chief Marketing Officer and COO of Liaison Technology (acquired by Forest Express) repositioning the company into a software platform for supplier catalog content management. Before Liaison, Suaad served as vice president of product marketing at Motive Communications (MOTV). He was on the founding team for Ventix Systems and served as the vice president and general manager of the enterprise business and vice president of marketing. Suaad has also held leadership positions at DAZEL Corporation (acquired by Hewlett Packard), InConcert Software (acquired by TIBCO), CAP Ventures and Xerox Corporation. Suaad earned his Master of Science in Business Administration (MBA) from the University of Rochester and a Bachelor of Science in electrical and computer engineering at the State University of New York at Buffalo.

Suaad has served as a Mentor for the New Venture Creation program at the McCombs School of Business - The University of Texas at Austin since the Fall of 2005. He also currently serves as an Executive Advisory Board Member of the Austin Chapter of the American Marketing Association. In, addition Suaad serves as a board member of the Austin Technology Entrepreneurs' eXchange ("Texchange").

 

Sait: Our founding team was tired of 'spray and pray' marketing.  We developed analytics around your sales funnel.  We'll custom-build leads databases for you. 

 

 

Brad Powers, CEO Active Response Group 

We're getting 100,000 registrations/day.  Strictly paid on performance. 

 

Zephrin Lasker, Chief Executive Officer, Pontiflex.com

Zephrin Lasker is CEO of Pontiflex. Pontiflex, based in Brooklyn, NY, is the first open data transfer network connecting publishers, advertisers and agencies. The company allows advertisers and publishers to reach the entire lead generation market, find partners, make deals and transfer lead data through a single online platform.

Zephrin has been involved with online marketing since its inception more than a decade ago. Zephrin is also a serial entrepreneur, having successfully launched two start-ups prior to Pontiflex. Pontiflex is backed by New Atlantic Ventures and Greenhill SAVP.

In the course of his career, Zephrin has played a key role in shaping campaign successes for a variety of clients such as Sprint, Cendant, Earthlink, and eFax, helping them acquire over 8 million new customers.  Prior to co-founding Pontiflex, Zephrin founded The North Road Group, an interactive agency. He has also worked as Vice President of Business Development at i33 Communications, where he managed sales and technical teams to help deliver new customers, launch state-of-the-art websites and deploy cutting edge marketing initiatives.

Prior to i33, Zephrin worked at Commerce One Global Services managing Sprint's new web initiatives. He has also co-founded the e-commerce company Beautility, where he served as Chief Operating Officer.

Zephrin has a background in corporate finance. He has worked for Dresdner Kleinwort Benson in the areas of corporate finance and mergers and acquisitions. Zephrin began his career as an Equity Analyst at Creditanstalt in Prague. He is an avid fly fisherman and is currently learning how to spray cast. He has a BA degree from Reed College.

 

Lasker: Central place to buy leads. 

 

Discussion

 

Hirsch: Define lead generation

Powers: Permission-based expression of interest.

Zephrin: Any media that can be sold on a cost-per-lead basis

Sait: Identifying the right buyer is important. 

 

Hirsch: Distinguish b2b and b2c. 

Sait: In B2B, Target person is often hidden within the organization.  In B2C, it's much clearer who the buyer is. 

 

Hirsch: Distinguish marketing leads vs. sales leads

Lasker: We're focused on ' marketing leads', which we think of as generic rather than specific.  A marketing lead is brand-specific.  A marketing lead usually has fewer fields (just name, zip), whereas a sales lead will often have more data (FICO score, etc.)

 

Hirsch: How should a marketer think about allocating his budget?

Powers: First think about your maximum permissible cost per sale/cost per lead. 

Lasker: lead-gen is half the puzzle; email marketing is the other half.  Have a good CRM program, good KPIs set up.  Follow your open rate. 

Lasker: How do you define success?  Leads are the lifeblood of business.  A lot of people look at conversion. 

Sait: Do as much experimentation as possible.  It's cheap.

Powers: We came up with some guidelines for data transfer for the IAB. 

Lasker: We started as the Paypal of lead-gen---an easy way to transfer leads between advertisers and publishers.

 

Hirsch: What legal issues should you be monitoring?

Powers: we have many consumer-facing sites, and are very diligent about making sure we're compliant.  We're dealing with PII (personally identifiable information) so you have to encrypt everything.  In the EU, anyone providing you leads must be Safe Harbor certified.  I.e., you're recognized as having secure data and procedures.  Also, must be compliant with DNC (Do Not Call) list.  Lead-gen can create an implied business relationship with end consumer, so you don’t have to check against the Do Not Call list. 

 

Hirsch: Where will lead-gen grow?  Which verticals?

Patterson: search engines don't like lead-gen arbitrage sites (i.e., direct navigation).  We prefer sites (like Kayak) which add value to the funnel. 

Powers: one month our #1 offer was prepaid funerals.  I almost fired my VP of Sales for signing them, and it paid for a chunk of my kid's college education.  A big area of growth is building on-demand hyperqualified lists. 

 

Hirsch: Where does Google sit in the lead-gen universe?

Powers: There's a finite amount of search ads available at a productive cost.  It can get expensive very quickly. 

Sait: For clients way out in the long tail, with very niche sites, Google is very good.  

 

Question: How do you assign a value for a lead?

Answer: Depends on what you're seeking

 

Question: Compare quality of leads from Microsoft, Yahoo, Google?  And how does ROI compare on display vs. PPA?

Answer: Google has better conversion but higher  prices.  So on a net basis, the ROI is comparable to the competition.

 

We have not figured out how to measure the value of display ads. 

Powers: tail end of social network inventory is almost unmonetizable. 

Lasker: we just rolled out a lead-gen box in a banner, so you get both the branding and the lead-gen benefit.

 

Company Presentation

 

Vitals.com

Vitals was created to give consumers the tools -- for the first time -- to make intelligent, informed decisions about which doctor to choose. The Vitals.com web site offers consumers a variety of ways to help in their choice of the right doctor. And it allows physicians to keep track of what others are saying, gives them the opportunity to let consumers know about their work, and lets them make sure their profile is complete and accurate. Vitals' business plan will be presented by Mitchel Rothschild, Founder and CEO.

 

30m people per month search doctors by name or by location/specialty.

 

3 big issues: location, specialty, and insurance network

Then other criteria are on the softer side: gender, languages, bedside manner, ethnicity

 

Background data:

30% increase in 'excellent' rating when people rate people of the same ethnic affinity.

What people want in a doctor: takes time; honest & direct; eye contact

 

First, we built a database of the 720K doctors in the US

We then mapped the healthweb.  Found 20,000 sources of data about doctors: hospital websites, board certs, licenses, publications.  We extracted all that and applied it to our database. 

 

Three parts of wheel clients use in judging a doctor:

1. Quality: education, special expertise (22% of drs. are not board-certified.)

Current profile:

2. Add in consumer ratings from various sites (TripAdvisor as model)

3. Peer reviews: Partnered with Castle Connolly. Over 200K peer evaluations

 

Went live in January.  We have millions of home pages which match up with the search that you're making.  We've spent $8K so far on lead gen.  1M visitors currently.  Great search engine optimization.

 

Sources of Revenue

 

1. We're a media property
2. Data leasing.  We'll reskin our site for various health plans and employers.  Most health plans built their directory back in 1998, and haven't updated since.  We get 15-20 commercial users per day, usually hospitals, medical centers, etc. 
3. Three basic human emotions: Greed, fear and ego.  Because doctors have lots of ego, we'll help doctors fill out the wall of fame in their offices.  Doctors will also pay a lot for this.  
4. Lead-gen: personalized search. Appointment-setting thru hospitals.  Elective care procedures.  Expected cost of visit.  Patient advocate for reimbursement with health insurer.  Choice of hospital for procedure.  Purchase of needed equipment/services.  Second opinion.

 

Online consults mainly used by younger patients with younger doctors, e.g., a pregnant teenager. 

 

We don't typically have a lot of repeat visitors, given the nature of our site. 

 

Today, we focus on advertising / data leasing.  Lead gen is the long term future for us.  We're currently pricing our advertising on a CPM basis.  Some are PPA. 

 

1m visitors per day, about 85% unique

5 page views/visitor

 

Q: How did you get consumers to review the doctors initially?

A: We bought them initially, and now about 3-4 % of visitors will do a review.  That's 50,000 per day.  We do a little SEM to get reviews.

 

John Peters, Tripology

Tripology is a new website aimed at connecting consumers with travel agents that specialize in the type of trip they wish to take. Tripology.com aims to take the hassle out of finding a great travel agent. There are a lot of expert travel professionals out there with a great deal of useful knowledge and terrific prices, but consumers don't have a good way of finding them. And they don't have a good way of finding consumers. Tripology`s business plan will be presented by its President and CEO, John T. Peters.

 

$3.25m raised

8,000 registered travel specialists

45,000 leads since june 07

 

Agent buys 16 leads ($5 each). 

Conversion rate: 6.5%

Avg. # leads before booking : 16

Avg. gross booking: $5,000

Agent commission (10%): $500

 

We tell them to spend $100 on us to do a real test. 

 

Currently flat pricing ($5/lead), but this will change to variable pricing

This is a $581m market opportunity across US, UK Canada, Australia, other Anglophone countries

 

eMarketer just came out with first market research on this sector.

 

Competitors include:

Zicasso, Respond.com, 4TravelAgents, VacationCompare

 

We sell a lead up to 3 times. 

We're building tools on backend for agent.

 

We say, this is not just a lead, this is a customer for life. 

 

We don’t need to do much database fixing, because agents have very strong incentive to be honest about their expertise.

 

Agents will often list a very long list of specialties.  But they'll pay more for leads they're convinced they can win. 

 

Events | Social Software

 

I enjoyed listening to a panel this morning sponsored by Broadgate Consultants on "Raising Fund “x”: Trends in Private Equity Fundraising and Fund Evaluation."  My rough notes follow:

 

Panelists were:

• Dr. Oliver Gottschalg, Assistant Professor of Strategy and Business Policy, HEC School of Management; Co-director, HEC-INSEAD Buyout Research Group
• C. Scott Hamner, Director, Credit Suisse Customized Fund Investment Group
• Jesse E. Reyes, Managing Director, Bear Stearns Private Funds Group; Founder, Reyes Analytics

 

Reyes: Buyout market bifurcated between very large firms and very small.  Everyone now wants to go mid-market (defined as under $1b to under $6b). 

Distributions have been coming back to LPs very slowly, so they have less capital to invest.

 

Hamner We represent pensions and other large investors.  We act as an investor/fiduciary on behalf of those clients, and are an intermediary here. 

 

Quality and volume of funds is much greater now than it was in the past. 

We're seeing a convergence of our investor criteria. 

We have a much larger universe of funds in which we can invest. 

Bar for new manager relationships is higher than managers we've known in the past.

 

Gottschalg: "Top quartile paradox". 

A lot of LPs unhappy with past performance of their investments.

 

Q: Subjective or objective criteria more important?

 

Reyes:  "People eat multiples not IRR."

 

Gottschalg: Multiples and IRRs are both misleading.  A better measure is to move to a better standard on which performance can be objectively reported. 

 

Q: What is your advice to new managers?

 

Reyes: I see a lot of shotgun marketing in the LP business.  You should only be focusing on funds that are a fit for what you invest in/your stage. 

 

The attribution of your track record is important, i.e., who in your fund did what. 

 

The devil you know is better than the devil you don't.

 

Differentiation/knowing your customer is paramount.

 

Q: What is the effect of the growth of the secondaries investing market?

 

Gottschalg: This industry will move to more objective reliable performance measures, a ratings-type model. 

 

A more liquid secondary market opens up a whole new toolbox for how you invest in this sector, and changes how you think about investing in this area.

 

Gottschalg: What are obstacles in the way of this industry realizing the division that you outlined? 

 

Inefficiencies in the market help top PE firms get great returns.

 

Reyes: Is being top quartile in Fund 1 correlated with being top quartile in Fund 2? 

 

Q: How does GPs marking to market impact how you do business?

 

Reyes: 95% correlation between VC returns and Nasdaq; 60% correlation between buyout returns and S&P 500

 

Question from fund that brags about its capital efficiency, and asked for details on metrics that the panel recommends for evaluating fund performance.

 

Reyes: Capital efficiency is not a gating item, it's a differentiator.

 

Teten: What metrics are fairest for judging private equity vs. hedge funds and other investments?

 

Reyes: Some relevant research on this topic by Austin Long, of U. Texas, and Jeremy Collard.

People tend to use just multiples, not IRRs.  "It's hard to compare an IRR with an index."

 

3 elements to consider in designing a performance measure:

- overall multiple

- duration

- risk level you are taking

 

(Teten: I'd also add you should measure how much capital you use immediately vs. later.)

 

Hamner: Two main comparables:

-         a public index (S&P 500, Russell 2000)

-         Cambridge Associates US Venture Capital Index/Thomson Venture Economics index

 

Q: How do you measure performance when PEs take a long time to put capital to work?

 

Reyes: "Just in time" financing is the solution for this, that is a tool to boost IRR to the highest possible level. 

 

 

Events | Private Equity Investing

I’ll be visiting the San Francisco Bay Area May 5-8, and hope that you can attend some of my investor seminars to the Wharton and Columbia Business School Alumni Clubs:

Topic: “Squeezing Blood from a Stone: The Professional Investor’s Guide to Eliciting Information”

Host: Wharton Club of Northern California
Learn how professional investors elicit maximum information in minimum time from industry sources. How do you ask just the right questions to get a CFO to open up and tell you about his company? This training is based on best practices in the intelligence, psychiatric, law enforcement, and journalist communities.
When: Wednesday, May 7th, 6pm cocktails, 7pm program
Location: Perkins Coie, 101 Jefferson Drive, Menlo Park, CA 94025
RSVP and more details: http://www.whartonclub.com/article.html?aid=901

Topic: “Where are the Deals? Venture Capitalists, Hedge Funds, and Private Equity Firms’ Best Practices in Deal Creation and Deal Origination”

Host: Columbia Business School Alumni Club of Northern California
What are you doing to identify companies in which you can successfully invest? Learn about recent research on where institutional investors source their investments; how to identify companies with the earmarks of an attractive opportunity; and how to increase your inflow of worthwhile referrals from both intermediaries and investable companies.
When: Thursday, May 8th, 6pm cocktails, 7pm program
Where: Pagemill Partners Auditorium, 2475 Hanover Street, Palo Alto, CA 94304
RSVP and more details: http://www.acteva.com/booking.cfm?bevaid=158041

Also, I will be attending the Association for Corporate Growth Grow! Awards on Tuesday, May 6, at the Computer History Museum in Mountain View ( https://chapters.acg.org/sv/uploads/events/922FC1DF84A74255B0B429DC3FC81104.pdf ), which may interest many of you.

Events | Private Equity Investing | Public Markets Investing

I enjoyed presenting a few weeks ago to the Harvard Business School Club of London on "Best Practices in Deal-Sourcing by Private Equity, Venture Capital, and Hedge Funds", generously hosted by McKinsey.  You can download my slides here.  I look forward to learning more about this area at next week's Capital Roundtable Masterclass on "The Art of Building the Right Deal Flow", in New York.  I would welcome your feedback.

Career Acceleration | Events | Private Equity Investing | Social Software

My colleague Jesse Mandell took detailed notes on the recent SIIA panel on Brown Bag Lunch: Content is Dead, Community is King? The Promises and Risks of Social Networking in the Information Industry".  You can view the web broadcast at no charge here.

 

Panelists:
Leslie Forde, VP of Strategic Alliances, Communispace
Leslie is a member of Communispace’s Management Team and is responsible for developing strategic partnerships with customer-focused organizations including marketing consultancies, advertising and public relations firms. She helps Communispace’s partner companies to effectively leverage customers by bringing them into the marketing conversation. Partners such as Ogilvy & Mather, Edelman and Digitas are using communities to deliver more value to their clients: to differentiate their brands, drive greater advocacy, foster loyalty, and overall, to improve marketing effectiveness. Leslie is a frequent speaker on hot topics such as: creating online customer communities, customer engagement, Web 2.0, social networking, and word of mouth. She sits on the Word of Mouth Marketing Association’s leadership committee.  Leslie is no stranger to creating effective partner alliances. Prior to Communispace, she was the Corporate Sales Director for Cook’s Illustrated and managed channel sales and marketing efforts across all products including: retail book distribution, sponsorship for the public television show ‘America’s Test Kitchen’, and alternate circulation programs for multiple publications.  Prior to Cook’s, Leslie was a Vice President at Northern Light Technology where she managed sales, marketing, and business development efforts in the US and abroad. She moved to London to launch the company’s International Division, where she lived for over two years and grew enterprise clients and alliances by over 300% within the first six months. Previously, she held marketing and brand management positions with Xerox, Bausch & Lomb, and Allstate Insurance.

Kim Kobza, President and CEO, Neighborhood America
Kim Patrick Kobza is a co-founder of Neighborhood America and has led the company through its growth and development since 1999. Mr. Kobza developed many of the original concepts on which the company is founded, helps drive its ongoing vision, and is responsible for revenue growth.
Mr. Kobza's diverse career is characterized by involvement in leadership practices and community building. His background includes education and practice in economics, business, and law. Kim Kobza is a visionary and frequently speaks on the importance of leadership and community building in both business and public disciplines.
Mr. Kobza participates in ongoing education and leadership opportunities with many national leadership organizations and is a graduate and frequent participant in the Harvard Executive Leadership series on Cross Boundary Collaboration. He holds a J.D. from Wayne State University; B.S. degrees from Central Michigan University in the areas of Economics, Mathematics and Earth Sciences.

Scott Parry, General Manager, Reuters AdvicePoint
Scott Parry has over 15 years of experience in the financial industry. His experience includes building and marketing financial information products and leading the development of innovative online brokerage services. Currently Scott is the General Manager of AdvicePoint, Reuters' Web 2.0 online community that connects investors, financial advisers, and investment product companies.
Previous to Reuters, Scott was the VP of Institutional Sales at Invesmart Advisors. Scott helped found Ameritrade Institutional Services and managed Ameritrade Retirement Services and Ameritrade Corporate Services. Scott was responsible for the creation of numerous online brokerage/information services.
Previous to Ameritrade, Scott was the VP Sales & Strategy for Nelson Information, a division of Thomson Financial where he drove the rapid growth of Nelson Information from a print directory publisher to an online information provider.
Scott has a BS from Charter Oak State College with a concentration in organizational management and is working toward a MS in internet technology at Pace University. He holds Series 7, 24, 63, & 65 brokerage licenses.

David Teten, Founder and Managing Director, Nitron Circle of Experts
David Teten is Founder and Managing Director of Nitron Circle of Experts, an Evalueserve company. Nitron is a research firm which provides institutional investors, corporations, and law firms with industry insights from a network of frontline industry experts. David was formerly CEO of Nitron, which he sold to Evalueserve. He was formerly CEO of Teten Recruiting, which he sold to Accolo, the 2006 fastest-growing private company in the San Francisco Bay Area. He was also formerly CEO of GoldNames, an investment bank focusing on serving the internet domain name asset class. David worked with Bear Stearns' technology/defense Investment Banking group, and was a strategy consultant with Mars & Co. He is an Advisory Board member of Accolo, Grouply, and the Word of Mouth Marketing Association. David is the lead author of The Virtual Handshake: Opening Doors and Closing Deals Online, the first book about how to sell, market, and close deals more effectively with online networks and other Web 2.0 technologies. He runs TheVirtualHandshake.com resource site and blog and co-writes a monthly column for FastCompany.com about Web 2.0 technology. David is a frequent keynote speaker to finance and technology conferences. David holds a Harvard MBA and a Yale BA and lives in New York with his family and two notebooks.

Moderator:
Karen Christensen, CEO, Berkshire Publishing Group
Karen Christensen is publisher, entrepreneur, and author specializing in global issues who began her career in London and founded Berkshire Publishing Group in 1998. She is editor/publisher of Berkshire's GuanxiOnline (http://www.guanxionline.com/), which helps professional people navigate today's China, and is a member of the National Committee on U.S.-China Relations (http://www.ncuscr.org/). Karen is co-editor of Global Perspectives on the United States and launched the community website http://www.loveushateus.com/ in 2006. Karen is an occasional journalist as well as the author of a number of popular books, including The Armchair Environmentalist, that have been translated into French, German, Japanese, Korean, Thai, and traditional and simplified Chinese. She blogs about publishing and social media at http://www.berkshirepublishing.com/blog and about China at http://www.guanxiblogs.com/karenchristensen.

 

 

NOTES ON PANEL

 

KC: Halloween is a good time to hold a panel. It is one of the few times where we gather with many different people we don’t really know to celebrate together. It is an interesting holiday because it is based entirely on trust---we send our kids to request candy from total strangers.  A recent study found that 25% of Americans don’t have a person to turn to when they're in trouble. This is where online communities come in; they can fill the gaps for people and provide a sense of community where otherwise they would have none.

 

KC continues with background on the program:

 

Today we are going to ask tough questions asked about community building. Community is important to many people, including environmentalists, who are into buying locally sharing resources, etc.  I looked at this community and decided that I didn’t want to live near them because they weren’t much fun (laughter). In short, communities are not all rosy; they have both positive and negative aspects. The exciting part of developing big community projects is the ability to build knowledge and business relationships. Today’s program came about because I wanted to learn about new social networking tool to build business and related communities. There are 57 definitions for community, and the ability to collaborate and make a community with different people is important for companies to develop.

 

KC then discussed the different cultural concepts of community and used the Chinese term that means community, guanxi.   In each culture there are different concepts of community, and to be included in a community even for work, there are varying ways to do it.

 

KC then introduced the speakers and reviewed their experience. She also asked the speakers how they defined the term “community” and what communities they are members of.

 

DT: A community is two or more people with any relationship stronger than they would have with a stranger. For example, Americans meeting in another country are part of a community of expatriate Americans. They would not necessarily be friendly back home but because they share the same nationality they will associate when abroad. I am a member of many communities: my family, two synagogues, company (Evalueserve), our clients, school classmates (business school, college, high school).

 

LF: A community is any group of people who share a common interest and develop relationships with a sense of reciprocity. Now with the web, location and place falls away. I belong to many communities and at the moment I am very into Facebook.

 

KK: One of the main purposes in life is to use collective intelligence as a community to make better decisions. For example, communities have been formed around the future of the Statue of Liberty, and national causes such as what to do with healthcare. Community is fundamentally about having a common purpose. I am a part of communities where I will act, friends, family, church and leadership groups. However, most people aren't part of too many communities.

 

SP: To get a better understanding of how communities function, I looked at the interactions of financial advisors and what kind of online communities would appeal to them and if they would use them. They don’t like to interact with each other online and prefer to meet face to face. So we made our community more of a transactional place where investors could talk to advisors and fund companies, etc. I also looked at open and closed communities and the implications of each. Reuters has different initiatives going on to create communities among people using their products (e.g., Reuters Space) where they can share ideas for optimization, etc., so that Reuters could better meet the needs of not only their clients but of financial advisors as well. I personally belong to several communities including family and church. People look for communities when they need information and then become part of that community. For example, when we found out my middle daughter had special needs I became part of that community.

 

KC: Why does community matter today?

 

DT: I divide community into two categories. (DT then spoke about user generated content and how Nitron acts as a community and connects people).

 

DT: There is clearly a movement for people to generate content and synthesize it into something other people can use. Also people use user generated content for feedback, e.g., the NYtimes website. They integrated community content on to the site even though it doesn’t fit the editorial norm.

 

LF: What has been happening with consumers is that people aren’t allowing brands and publishers to have such access into their conversations as they used to have. Highly authoritative content has lost a foothold. People go to friends instead of going to the traditional places for information. New content providers now have the same cachet as traditional content providers. Secondly, consumer generated content is its own animal. We need to learn how to harness consumer sentiment to understand it and how to make, and break businesses as well as what content is important in people’s lives.

 

KC: So LF, you create communities instead of waiting for them to form naturally? What does it take to build a community?

 

LF: Invitation only communities are different from ones that people create on their own. This is interesting for publishers. Publishers have many different kinds of communities that they create for their different customers. These go across age of customer base. It is surprising that when you get people into a virtual room how much they want to be part of the future and a brand's direction.

 

KK: The role of content is changing---- just look at http://ratemyspace.hgtv.com/ (Editor: the internet equivalent is ratemyspace.com, a completely different site.)  People can make suggestions etc., about other people’s spaces. Users took trusted content and used it to create a conversation. This enabled a conversation amongst users, which generated hundreds of thousands of users and millions of hits per month. The peers are the audience and are not experts, this makes it relevant to individual people; the learning is within the audience.

 

SP: I have been in the information business for a while. I have found out that there are risks associated with the rise of user generated content. Wikipedia for example has a lot of information that is now free.  Brittanica used to be worth $500m—now much less.  What happens when user generated content becomes more valuable than proprietary content? We have to stay ahead of that curve.

 

KC: Let’s talk about the implications for deciding to build a community. Can communities really be created? Are online and offline communities different?

 

DT. Yes, they can be created and need to be created using a seed. (DT then gave the example of the stone soup story and how everyone contributed to the soup but that it started with only a stone.) My company, Nitron Circle of Experts, hosts dinners which bring together both clients and Nitron’s experts. The dinner is an artificial community and the seed is the expert.

 

LF: These are great questions, since 1999, I have felt strongly that there needs to be a high level social glue for people to participate and contribute. Social glue can be many different things. I spoke with a motor oil company and asked how are we going to get people to talk about oil? The fact of the matter is that you can’t, you have to get people into community about something else like NASCAR to get them to talk about motor oil. Not every brand needs to create a community; this might not be most effective way to reach the customer. Thinking about purpose and social media strategy is the right place to start, that will lead you to what kind of communities to go to.

 

KC: Feel free to ask question (to audience)

 

KK: Really big things are happening in the world right now and it is important to build communities right now out of a want to create as opposed to something mechanical that it might have been in the past. It is behavioral not a mechanical challenge that we face. It is important in the product development process to listen to consumers. Nine out of ten products fail, what if we can bring this to 8/10 because you listen to partners and consumers.

 

KC: Those are groups we need to use.

 

KK: There is a need to recognize the value of these communities in our business. Also not simply open or closed communities but there are hybrids that need to be considered as well. They are open and give feedback to closed community (the company) to create value.

 

Audience: Do you have an example of a community that has done this?

 

KC: We may be aspirational, this might not be working as well as we would like.

 

SP: We don’t want to rely solely on online communities.  We also do conferences with financial advisors, so that they get the face to face feel they can interact best in. We need both bricks and clicks to make online communities work

 

LF: It is public knowledge that Charles Schwab is a client, and they started a new initiative to attract members of Generation X. Schwab wants to build products and relationships for this community. Schwab though up a high interest checking account that would come with free Schwab advisor account so that they could start the relationship early with these people for when they have money.

 

DT: It seems odd that they had to make an effort to figure out that high interest accounts would attract new business (laughs from audience).

 

LF: It is hard to get the practicalities into the business.

 

KC: Where should a company start listening to map opportunities?

 

SP: Just start talking to people.

 

KC: Who did it and for how long for you to get your community up?

 

SP: We hired experts and talked to our constituents.

 

KC: Do we know where our most important communities are? Where should we trust our gut?

 

SP: If you trust your gut, and add research you will get success.

 

KK: Start with your own employees and then turn to partners.

 

LF: I think it depends on what the high level goals are. If you are interested in driving loyalty then talk to customers first. How they view your value proposition versus how you do is something you need to get a handle on. Then you have to figure out how this impacts loyalty. If you are interested in new customer acquisition then you should talk to the growth market and find out what they need.

 

DT: I would talk to corporate entities and personal network of your employees. People within companies should enlarge their personal network thus enlarging corporate network.

 

KC: What is the optimal size of a community?

 

SP: I have no idea, we work with over a million financial advisors, how many do you really need? Probably thousands?

 

KC: Will they (the financial advisors) pay for a community?

 

SP: For the online community that we built there is a basic version and an advanced version. If they want, there is a basic version online but a better one you have to pay for.

 

KC: Can communities be too small?

 

SP: Yes, one that doesn't generate enough revenue to sustain it and get ad dollars is too small.

 

LF: Through trial and error we tried lots of things. We found that 300-400 people is the sweet spot. So that when new members log in to the community there is new content but at the same time there is familiarity. Members tell me when they are going on vacation for example, so there is a real sense of community with smaller networks. We all kind of know the members and they know others, there is intimacy b/c they see a relationship.

 

KK: Size is directly related to business purpose of the community. Communities based around mass market products will have lots of people. Communities based around a governance issue that affects lots of people will have lots of members. Every community has a life cycle. Some are a week some are much longer or until the business purpose has been achieved. The needs of a community change as well.

 

KC: How do we keep communities relevant and sustainable? There is initial buzz and then what happens?

 

KK: Social networks and communities are very different. Communities need to be credible and relevant over a long period of time. Community has to create value for users. There is also a need to create institutional memory for the community, the online Flight 93 community for example. A decision was made to include lots of people from designers and architects to the families of victims to create a new idea for the monument. Every PowerPoint and piece of documentation connected to a decision is stored. New people coming on can see how and why decisions were made. This underscores the need to create memories that are the working pieces of a community.

 

DT: I disagree with the rest of the panel, community size can be infinite---using my earlier definition of community.  Facebook for example, I can send anyone a note and they will read it because they can see my profile and see my credibility. EHarmony is a community of people interested in romantic partnering.

 

DT then discusses online dating and manageability issues with mailing lists, and mentions Grouply as an initiative in this space.  He then asserts that with the right amount of tech you can get around the issue of size.

 

KC: Should have an “island” in Second Life?  Should existing technologies be used (Facebook, etc.) or should they be individual for each company?

 

Many comments from panelists some yes some no. it is based on the individual need of the company.

 

KK: It takes knowledge and technology to get it right. This is a unique creature. Technology enables communities but doesn’t build them. One needs to make sure that the technology works at all times. This is the largest segment of the technology industry today. This model is used in CRM world. They use data from customers to make their software better.

 

Audience Question: Facebook had to fire some staff when they were found to be picking up social contacts from the database. Guidelines from management need to be established. Humanity has always had communities. What is really new about this? What are the real dollar opportunities? Where is the payoff?

 

DT: (Responds to a previous question about safety questions online. )  There were bad people in the world well before the internet. The telephone had the same problem; people overreact to new technology.  When we hyperventilate about alleged inappropriate behavior on MySpace, we're publicizing by anecdote instead of by data, and then we're establishing policy by anecdote instead of by data.  According to the study Love Online, the rate of negative events among couples who meet is the same or higher for people who met face to face then people who met online.

 

LF: The downside or risk of community is that you have people who can say anything, and there is a need to create boundaries. In my past life with public communities I learned that communities can be hijacked, but in communities online this can be monitored.

 

KC: There are trust issues where personal or financial data can be taken advantage of.

 

SP: There are ratings systems which are great. Like eBay, can talk about people's credibility. That aspect of community is wonderful.

 

KK: We have an expectation of interaction. This is a function of an economic equation as opposed to a behavioral equation. The opportunity cost for participation is almost zero now. What changed here is that the technology is disrupting the cost of participation. It is now easier to get involved and for companies to deliver and make sense of it.

 

Audience Question: What about civil society? To what extent does technology which brings lots of participation imply for the governing structures of our country?

 

KK: At one point I was President of neighborhood association and it surprised me to see lots of community members with lots of wisdom---who did not participate. However, at community meetings you always heard from the same loud people. The promise of technology is that it will create a more structured environment for participation. If technology is used to include people to draw on collective intelligence then it can be excellent and used for public hearings. There are rules for public comments.

 

KC: What is the one thing the audience should do to use community in their business?

 

LF: Take a look at your 2008 business plan and look at it to see if the planning for next year has any planning to do with community. Make sure that you are planning for how this technology will affect this business

 

DT: The community should look at the communities that already exist. Orkut, for example exists in India.  It is heavily used by our employees, whether or not management approves of it.

 

KK: One should feel a sense of courage to change the conversation and create clear value propositions for communities within your organization and raise expectations.

 

Audience Question from a publisher: There are many communities to be discovered online. One area not connected how is to connect people with publishers. How can this be done?

 

DT: Look where people have affiliated themselves with the publication and leverage that.

 

KC: Final comments from the panel?

 

LF: Communities can provide a lot of business value. Insight about new response to products that can make 100 millions of dollars, just look at the 100 calorie pack at Kraft, that came from customer insight. These communities can build relationships with segment of population that could never have been reached before. There is real importance around organic word of mouth that created positive brand value.

 

DT: Nothing sufficiently pithy. (laughter)

 

KK: (pitched his company’s newsletter).

 

SP: We are hedging our bets and using lots of models to start an online community.

 

DT: Just one last comment, it is short sighted to think of this in monetary terms. The NYTimes missed opportunities by charging people for viewing the Times’ archived content. While they made money, the Times lost relevance. Charging for content can be more expensive than it appears.   

Events | NextNY | Social Software

I’m happy to be participating at a Software and Information Industry Association lunch /webcast on October 31 in midtown New York, on "The Promises and Risks of Social Networking in the Information Industry".

The event is on “how your enterprise can profit from social networking: in promotion and marketing, in the development of new products and content creation, and even by making communities one of the services your business offers as an ancillary to content products.”

The other panelists are:

Leslie Forde, VP of Strategic Alliances, Communispace;

Kim Kobza, President and CEO, Neighborhood America;

Scott Parry, General Manager, Reuters Advicepoint

Karen Christensen, CEO, Berkshire Publishing Group will moderate.

Some of the questions that will be addressed include:

• How can we make our communities persistent and sustainable?

• What increases the value of a community to its participants?

• What social media are appropriate for my business?

• Does it really make sense to use existing free social networking communities like Facebook and Second Life?

• Can we develop our own unique social networking systems with open source technologies?

The event costs $50 for non-SIIA members. Alternatively, the event will be available via webcast. Register here.

Events | NextNY | Social Software

I’m looking forward to speaking at the monthly New York Software Industry Association meeting on September 10 in New York. The topic is ‘Secrets of Silicon Alley's Serial Entrepreneurs’. Carter Burden, Laurel Touby and I will be sharing our thoughts. (Personally, I think the key secret is fail fast and often.)

Career Acceleration | Events | Leadership and Management | Personal Productivity

I enjoyed tonight's talk by Peter Thiel at NYC Junto, on "How New Technologies Thwart Government and Promote Freedom". Junto is a libertarian-focused discussion group organized by Victor Niederhoffer. I've been following Peter's writing for a while, since we overlap directly in our interests in investing and in online networks. Peter is President of Clarium Capital Management, an investor in both LinkedIn and Facebook, and was co-founder and former CEO of Paypal.

Peter started with two questions:

1) Let's assume libertarian view is correct. Why aren't more people libertarian?

2) What do we do about it? How do we make the world more libertarian?

Answers to question 1

- maybe libertarianism is not in peoples' interest

- lack of education

- [Cf. Bryan Caplan's book, The Myth of The Rational Voter]

Answers to question 2

When Peter was an undergrad, he might say:

- Education

- Go door to door

- Convince people to vote for candidates

But as he got older, he saw this is very hard to do.

(highlight of the evening: Victor Niederhoffer's toddler son wanders around Peter's legs at this point)

An IQ test for libertarians: ask them how optimistic they are. The more pessimistic they are, the smarter they are.

One solution: move control of money from the government to individuals. But you cant do this via plebiscite. If there was a form of money that government couldn’t measure or track, you'd have a powerful alternative. This insight was genesis of Paypal in late 1990s.

In mid 90s, several companies were creating alternative currencies: Cybercash, Digicash, etc. All of the initial attempts were going out of business. Money has a network-like aspect. How do you create a new currency when no one else is using it?

All these efforts had run aground against this rock. So Paypal started by leveraging against existing systems: credit cards, checks. Send money to anyone with an email address. Started with 24 employees at Paypal. Preloaded accounts with $10. Started to spread. We grew at 5-7% compounded daily.

Einstein, "Compound interest is so miraculous it could only be created by G-d".

Initial theory was very idealistic. In reality we ran up against many obstacles, the first of which were customers. Massive amounts of emails/customer service inquiries.

Spring/summer 2000: discovered bad people are out there. Whole wave of fraud, including Russian mobsters, tried to exploit Paypal. Someone threatened Peter's mother unless PayPal unfroze his account. Then that person ended up shot dead.

Found dystopian website in Former Soviet Union: "Carders World". A carder is someone who steals financial information on people. This was a marketplace for personal financial information. They had a manifesto saying that they were going to take down the capitalist system. Paypal information was there.

2001 period: next obstacle was government. Initial Paypal strategy was to ignore government regulations—'we are not a bank'; ' none of these laws apply to us'. If we rolled this out quickly enough, the government couldn't stop us. "If you have a world where everyone is a criminal, you have to change the law."

Visa/Mastercard tried to come up with rules to prohibit Paypal from using their service. Government was even slower. Radical technological change must be fast.

In 2001/02, when company went public, things really hit the wall. The person investigating their S-1 thought that his job was to stop companies from going public. "He was demoted in government, which is a really extraordinary thing to happen."

Businessweek article said that state of Louisiana hadn't quite signed off on this. SEC investigator told Paypal management that state of Louisiana was going to shut this down. So in middle of roadshow, Peter had to track down government regulators in Louisana and convince them that Louisana did not want to get reputation as a particularly backward place. "So within 2 days, we managed to get that stopped. At the time we had 100,000 Louisana users."

"We are now in 100 countries. 3^rd largest payment brand after Visa/Mastercard in the world. "

How successful were we? Paypal currency is still denominated in national currencies. If you only have one form of currency, you're beholden to the issuer of that currency. Our initial vision inspired in part by Argentinean economic turmoil. If you can force competition between governments, you'll have stabler currencies.

Early 1980s: high inflation rates all over the world. Since then, it's gone down almost everywhere. Forms and symbols can persist well after the substance is gone, e.g., Queen's face is still on UK currency. Technology has been a very powerful force for decentralizing things.

1960s Time magazine cover: picture of 1 big computer that could run the world. Cf. Hal 2001. Computers as a force for centralization is a classic image. In the 90s, power shifted to individuals.

Famous early example: Soros distributing fax machines throughout Eastern bloc.

If everyone becomes a currency dealer thru Paypal, it changes the world.

So much has changed. For example in 1971: it was illegal to own gold and other currencies in the US. 1971 Treasury Secretary said, "It's our money---we can print as much as we want and it's the rest of the world's problem". You can't imagine Hank Paulson saying something similar today.

Power is shifting ineluctably away. Will technology continue to be a force for decentralization?

Why did 1960s vision of centralized computer not happen?

Peoples' ability to process information is flat, but the amount of information has gone up dramatically. So the only solution is decentralization. This is also why Moscow can't set the price of potatoes in Vladivostock.

You may be able to approximate information processing to a problem solveable in polynomial time---and then you have AI, and the 1960s vision of a centralized computer processing everything.

By 2050, we could have thousands of different countries. We have 10-20 years to push as hard and far as we can in direction of more liberty.

Q: How do you prevent Paypal from being used as electronic hawalla---form of terrorist financing?

A: We have protections in place---abide by Patriot Act.

2002: first year number of printed checks in US went down.

Q: question about Second Life and inflation

Q: question about goldmoney.com

A: The problem with gold is that when you really need it, it's not there. In 1933 the government confiscated all the gold bullion in the US.

Q; How do you promote libertarianism?

A: When I was young I tried to reduce the demand side (demand for regulation), but then I saw it was much too hard. So now I focus on the supply side. If I expand the supply side (e.g., more options for currencies), I reduce the amount of government in the system.

I want to promote change without being obliged to go through an election or plebiscite.

Governments are losing power to inflate because of technology. The risks are now tilted to deflation, not inflation. A deflationary environment is hard to invest in, because you can't just lever up and pay things off in cheaper dollars. Private equity and real estate are bad ideas in a deflationary environment. Donald Trump's argument is that you should be short dollars by going long real estate, is disastrous.

Q: How does Facebook promote libertarianism?

A: Facebook will be the dominant next media company . Since the old media companies are non-libertarian, this in itself is good.

Hedge funds are a way to bet against stupidity of governments.

Q: Could you comment on US visa policies and their impact on competitiveness.

He commented that once a tipping point happens, it's impossible to go back. Once the camel's back is broken, it can't be healed. Right now the marginal tax rate in NY is ~50%. In London it's 0%. So it's compelling for a hedge fund to set up shop in London, not NY.

There's a definite shifting of centers of quality overseas. It's happening faster in finance than in technology, but it is happening. (Audience member mentioned that Microsoft is setting up research centers in Canada and elsewhere specifically because they cant bring the researchers they hire into the US.)

Events | Leadership and Management | Public Markets Investing | Securities Research | Social Software

I hope that some of you can join me at the conference below---I'll be on the panel discussing user-generated content. Web 2.0 NY  - June 14, 2007

Combined with Local Ad World & Madison Ave. 2.0

Collaborative & Social Tools applied to Business & Media Web 2.0 Business Models with far-reaching influence Disruptive new technology and business applications How AdSense is fueling the Land Grab on Madison Ave. Why NY Digital matters as post-Industrial economy puts Advertising ahead of manufacturing How to raise Capital and grow your Web 2.0 enterprise Must attend for: Media, Advertisers, Agencies, Entrepreneurs, Digital Marketers, Tech Co's, Investors and Educators. Esther Dyson to Keynote Web 2.0 NY Summit Industry pioneer, visionary and backer of Flickr and Meetup speaks at Web 2.0 NY Summit. Shawn Gold, SVP MySpace                                         Other Speakers and companies like Michael Dubin (Yahoo), Jack Myers (Myers Report), Shelly Palmer (TV Disrupted), Kara Nortman (Interactive Corp.), Shaival Shah (Oddcast), Seth Haberman (Visible World), Doug Perlson (TargetSpot), Jenny Mullen (OgilvyOne), Andrew Weinreich (MeetMoi), Connie Connors (HitTail), Wayne Reuvers (LiveTechnology), Andrew Bloom (Spot Runner), Chris O'Brien (MotionBox), Allan Grafman (AllMedia Ventures), David Teten (Circle of Experts) Gregory Galant (RadioTail), Steve Rosenbaum (Magnify), Bob Rustad (Collarity, Dylan Charles (Crimson), Dusty Wright (Culture Catch), David Marder (Eurekster), David Rose (NY Angels)........... Come to the Web 2.0 NY Summit to learn how this is changing content, marketing and customer interaction. Learn how to develop your company, sell your products, acquire new customers and raise capital at our afternoon pitching event.   Evening Cocktail Party sponsored by Live Technology Registration: http://web2ny.com/

Events | Private Equity Investing | Public Markets Investing | Social Software

I hope that some of you will join us for the program below.

CONSULTING OPPORTUNITIES WITH HEDGE FUNDS, PRIVATE EQUITY FUNDS, MUTUAL FUNDS AND OTHERS

Webinar with David Teten, Co-Managing Director, Nitron Circle of Experts

Friday, June 08, 2007, 1:00 - 2:00 PM EST

Sponsored by Execunet, the executive network for the $100K+ executive.

David is Co-Managing Director of the Nitron Circle of Experts ( CircleofExperts.com ), an independent research firm that pays senior industry executives to consult with professional investors, law firms, and a range of corporate clients. Our clients learn from experts like you through one-on-one consultations, customized surveys, and interactive events. Nitron is a subsidiary of Evalueserve, an offshore research & analytics firm.

Joining the Circle of Experts never costs you a dime. Your benefits:

• Interact and learn from the leading institutional investors.
• Work on strategic, thought-provoking projects.
• Monetary compensation. We pay a competitive hourly rate, varying depending on your experience.
• Convenience. Most consultations are over the phone, at times you choose.
• Privacy. Your consultations are entirely confidential. Only discuss topics of your choosing.
• Earn additional compensation to introduce qualified colleagues.

Among our Circle of Experts are alumni of:

Premier companies:

AIG, Cisco, Dow, DuPont, GE, IBM, McKinsey, MetLife, Microsoft, Pfizer, Shell, Sony, Toyota

Leading universities:

California Institute of Technology, Columbia, Cornell, Dartmouth, Duke, Harvard, MIT

Scientific institutions:

National Institutes of Health, National Science Foundation, Harvard Medical School

Update:

Execunet has posted a recording of the presentation, available free at

http://www.execunet.com/execunet_ondemand/FTBREATETE_tetan_coffeebreak/ondemand.html

REGISTRATION

(Requires membership in Execunet )

https://members.execunet.com/e_membership_alertlogin.cfm?
redirfile=e_network_online_register.cfm&
fmtid=7a56&CFID=9087973&
CFTOKEN=4193b43320a9da58-C37A4E8C-EA68-1A78-C8A40DD1F900B762

Career Acceleration | Events | Leadership and Management

I thought that some of our readers might be interested and qualified to attend one of our upcoming private hedge fund dinners. =======================================================

Seeking Ecommerce/Consumer Tech Experts for Chicago and San Francisco Hedge Fund Dinners January 2007 =======================================================

Nitron Advisors is organizing a series of dinners for e-commerce and consumer technology experts to talk with major hedge fund investors interested in this sector.

These invitation-only events will be taking place in Chicago on January 16 and San Francisco on January 17.

We will compensate you for flight expenses, and pay you an honorarium for joining us.

We're looking for senior industry executives and other experts with the following backgrounds:

Consumer Technology

+ Personal computers (Dell, HP, Lenovo, Apple, etc.)

+ Flash memory (SanDisk, Kingston, Corsair, etc.)

+ MP3 Players (Apple, Creative, Archos, etc.)

+ GPS Systems (Garmin, TomTom, etc.)

+ Mobile telephones (Nokia, Motorola, Palm, Blackberry, etc.)

+ Distributors (Ingram Micro, Arrow Electronics, Synnex Corp, Tech Data Corporation)

 Ecommerce areas of interest:

+ Online specialty retail (eBay, Amazon, Blue Nile, Overstock, Audible)

+ Online auctions (power sellers on eBay, other auction sites)

+ Search engine space (Google, Yahoo, MSN)

+ Consumer generated media/free video hosting services (YouTube, MSN Video, Yahoo Video, Google Video)

+ Online advertising/marketing (ValueClick, 24/7 Real Media, aQuantive)

+ Lead generation players (Autobytel Inc, Move Inc, Bankrate, IAC InterActiveCorp, HouseValues, etc.) +Online media (PRIMEDIA, New York Times/About.com, etc.)

Qualifications: As an expert, you have at least four years senior experience in the eCommerce space or consumer tech space. You have a "big picture" perspective on different firms in the space. If you are not already a member of our Circle of Experts, please visit http://www.circleofexperts.com/apply-form.html?i=11and apply to be a member of the Nitron Advisors Circle of Experts. Please contact Mr. Jesse Mandell, 1-212-682-6455, JMandell(AT)nitronadvisors.com, with any questions. Please note that we must review your bio and talk with you before we can accept you for the dinner.

Events | General

I look forward to speaking at AQ Research's conference next week on "The Future of Research", Dec. 5, Grand Hyatt, New York.

Full schedule here.

 AGENDA THE FUTURE OF RESEARCH MORNING SESSIONS


08.00 Welcome and Introduction: Graham Field, Managing Director, AQ Research 08.15 Keynote address: Dan Chornous, Chief Investment Officer, RBC Asset Management

08.45 Major Trends in Research A review of the main factors influencing the development of research in North America: - The aftermath of the global settlement - The future of independent research - The impact of unbundling - The rise of hedge funds Speakers to include: Stefano Natella, Global Head of Research, Credit Suisse. Chair: Michael Mayhew, co-CEO, Integrity Research Associates; Eric Frank, Global Managing Director, Investment Management Division, Thomson Financial

09.40 Research Performance Measurement Performance measurement will be a key ingredient in assessing and pricing research.

 But who performs well – and which metrics make most sense? - Quantitative and qualitative tools - All round performance measurement – integrating the elements - Implementing organizational change Speakers to include: Robin Hodgkins, President, Cogent Consulting;William Russell-Smith, Commercial Director,AQ Research; John Wiseman, Manager, AlphaMetrics North America.

Chair: Michael Mayhew, co-CEO, Integrity Research Associates

10.25 REFRESHMENT BREAK

10.45 Research pricing Fidelity has already struck hard dollar deals with research providers. How much further will the research pricing trend go? - Is hard dollar the way of the future? - How does the buyside evaluate and price research? - Should the sellside go down the menu pricing route? Speakers to Include: Lisa Shallett, Chairman and CEO, Sanford C Bernstein; Paul Spillane, CEO, Soleil Securities.

Chair: Albert Alonzo,AQ Research

11.45 Expert Networks Expert networks have become a powerful addition to the research proposition.

 But how can they be built and where are they most effective? Speakers to include: Stanton Green, CEO Vista Research David Teten, CEO, Nitron Advisors, LLC

12.30 LUNCH Michael Mayhew Integrity Research Associates Stefano Natella Credit Suisse John Wiseman FactSet Lisa Shallett Sanford C Bernstein Dan Chornous RBC Asset Management William Russell-Smith AQ Research Robin Hodgkins Cogent Consulting

AFTERNOON SESSIONS

13.30 The Global Research Picture How does the research outlook for North America compare with – and relate to – what has been happening in Europe (and Asia).

 - Does a global offering still make sense? - What will the impact of MiFID and unbundling be? - Is outsourcing part of a global solution? Chair: Sanford (Sandy) Bragg, co-CEO, Integrity Research Associates Speakers to include: John Lowrey, Head of European Electronic Client Services, Lehman Brothers; Charles Gepp, Global Head, Research Initiatives, Reuters

14.30 Equity and Fixed Income Research Convergence The buyside can see the advantages, but how far can it go in reality? - Does regulation encourage or discourage convergence? - Is cooperation the realistic alternative? Chair: Sanford (Sandy) Bragg, co-CEO, Integrity Research Associates Speakers to include: Margaret Cannella, Head of Americas Corporate Research, JPMorgan; Jim Linnehan, Managing Director, Investment Banking and Research,Thomson Financial

15.15 REFRESHMENT BREAK


15.30 Research Product Management The creation and delivery of an effective product has to lie at the center of any research business. - How can the research product be differentiated? - What role can RIXML play in improving distribution and utilization of research? Speakers to include: David Richeson, Global IT Program Manager, Deutsche Bank; Skye Hauptman, CEO, BlueMatrix

16.30 Making Research Pay How can research be changed from being a cost center into being a profit center? - What role can research play in the equities business? - What organizational structures will deliver the best research product? - Does research on small and mid cap stocks make economic sense? Speakers to include: David Weild IV, CEO,The National Research Exchange; Shubh Saumya and Jai Sinha, Partners, Booz Allen; Scott Lessing, Chief Operating Officer, Citigroup Investment Research

17.30 COCKTAIL PARTY – Sponsored by BlueMatrix

Events | General

My colleague Scott Lichtman took some detailed notes on the TieCONEast panel last week on "Trends in Investment Research and Due Diligence".

 Podcast is here.

CONFIRMED SPEAKERS

Graham Field, Managing Director, AQ Research (Moderator) Graham is the Managing Director of AQ Research, which provides quantitative global analysis of the accuracy of sell-side research. Graham established AQ Research in 1998, having worked as a financial journalist since 1987.

He was editor of Asiamoney and of the International Tax Review, as well as presenting business programmes on BBC radio and television.

Graham’s books include Economic Growth and Political Change in Asia (1995), Japan’s Financial System: Restoration and Reform (1998) and Euroland: The Future of Europe’s Capital Markets (2000). He is a graduate of Cambridge and London Universities in the UK

Susan Oh, Director & Senior Analyst, Merrill Lynch Susan's responsibilities include manager research and the analysis of hedge funds.

 She is also the portfolio manager of the Merrill Lynch Event Driven Fund. Her focus is on invested managers as well as identifying new funds.

 Prior to joining MLIM, Susan was a Senior Analyst at Tremont Capital Management.

At Tremont, she conducted due diligence on hedge funds and strategies to make strategic recommendations to the Investment Committee.

Her other experience includes Citco Group Ltd. and Smith Barney, Inc. Susan was a hedge fund analyst for Citco and an Institutional Sales Assistant at Smith Barney in the hedge fund group.

Dave Furneaux, Founder & Managing General Partner, Kodiak Venture Partners Prior to Kodiak, in 1996, he co-founded Furneaux & Company, LLC, a seed stage high technology venture investment company.

He was the founding investor and active Chairman of the Board of Extreme Packet Devices (acquired by PMC-Sierra) and Philsar (acquired by Conexant).

He also was a founding investor, Vice President of Business Development, and member of the board of Skystone Systems (acquired by Cisco Systems), a founding investor in Solidum Systems (acquired by IDT) and an early investor in Telica Systems (acquired by Lucent).

 At Kodiak, he was an active early investor in AuroraNetics (acquired by Cisco Systems), Watchfire and Raza Microelectronics.

Gregory Locraft, Vice President, MFS Investment Management Gregory Locraft is the Vice President of MFS Investment Management and a Portfolio Manager of the $2billion MFS Capital Opportunities Fund and related portfolios. Mr. Locraft joined MFS in 1998 as a research analyst.

 He became a member of the Large Cap Growth Portfolio Management team in October 2003 and was named Portfolio Manager of MFS Capital Opportunities Fund in December 2005.

Previously, he was a Senior Consultant for Kaiser Associates, Inc. Prior to that, he was a Financial Consultant for Smith, Barney, Inc. He received a Bachelor of Arts degree in Political Science and History from Williams College and an M.B.A. from Harvard University.

David Teten, CEO, Nitron Advisors Bio...

Scott Lichtman's notes: Furneaux: $700M under management. 8 partners. investing throughout the northeast, and also some emerging markets. 50% of investments are with people we invested in before.

As a Private Equity firm, we are constantly communicating to our managers to find depth in companies.

The average time from startup to IPO is 8 years, from IPO to acquisition is 6 years.

To pick the right companies, combine analyst inteligence (awareness and insight) with due diligence. Locraft: Good researchers are leaving sell-side and traditional buy-side & going where there’s a piece of the action.

Teten: Gave overview of Nitron Advisors' business model. Quoted prominent industry CEO, who said, "If you’ve been in research > 5 years, you’re not a good stock picker." Locraft has 45 analysts.

Average hold on a stock in the market is 11 months. 40% of trading volume is from proprietary desks.

They compensate staff to think long-term, which they define as 3 years.

They usually only invest in companies with >$500M in assets. MFS is a $170B firm with $2B in Greg's fund.

"The level of scrutiny we've undergone at MFS has made us take a whiteboard approach to the P&L." MFS is concerned about raw trading costs.

Susan Oh: Our area invests in all major strategies: long-short equity, relative value driven, CTAs, global macro.

She focuses on event-driven.

 Due diligence starts with an on-site visit. We look at management, firm, infrastructure, risk management, operations. red flag: concentrated investor base.

Such investors may have preferential rights...which could hurt smaller investors.

 Field: What is the quality of sellside analysis information? Do you compare internal analysts with sell-side? Locraft: Yes – analyst compensation is based on stock picking results vs. sell-side recommendations.

 We use AQ's competitor, Starmine. Field: What if your analysts aren’t that good? Locraft says there are certainly cases where some analysts are better than others, and therefore some of our analysts by definition aren’t top of field.

MFS will pay accordingly for specific sell-side analysis in these cases.

 But we recognize the disadvantage of information being disseminated to all parties at the same time via FD. David Teten: How do you measure ROI of research? Oh: One hedge trader I knowwill only buy research when it’s contrarian to the general street consensus.

 Locraft: ROI on a good analyst's picks is enormous – so massive it’s not worth measuring.

Dave Furneaux: the early stage challenge for PE/VC investors these days is that there is more money than opportunities.

This means for any evident investing opportunity the returns are lower due to increased competition for investment dollars.

So the key is to find an investment idea others don’t know about or appreciate.

Events | General | Private Equity Investing | Public Markets Investing | Securities Research

Senior Media Entrepreneurs/ Executives Manhattan Lunch

Tuesday, June 27, 2006

If you are investigating new businesses to grow; have sold your business and are looking for your next move; or perhaps have just exited a senior level executive position; please join us at our lunch for Media Entrepreneurs and Senior Executives Seeking New Business Growth. Participants typically had C-level responsibility for at least a $50M budget in the media industry (broadly defined).

Due to the overwhelming interest in our topic and limited space, we can only accommodate individuals whom the event is addressing directly. We welcome referrals.

Location:
1345 Avenue of the Americas, 49th Floor

(Between 54th and 55th Streets)

Date: Tuesday, June 27, 2006, Noon sharp until 2pm

Cost: complimentary

Your Hosts:
+ David Teten, CEO, Nitron Advisors

+ John Adelman, CIMA and Paul Lewis, CFM, Wittenstein Adelman Group

+ Allan Grafman, President, All Media Ventures; Operating Partner, Mercury Capital (formerly President, Archie Comics Entertainment; CFO, Hallmark Entertainment; Tribune; Cap Cities/ABC)

+ Claire Delong, Accolo

Please RSVP with your one-page text biography to Avi Mally, AMally(at)Nitronadvisors.com , 1-212-682-5874 . Pre-registration is required; we will distribute your one-page biography to all the attendees. Please make sure to include your contact information on your biography, and ideally, your photo. Also, please indicate any dietary preferences (vegetarian, kosher, halal, etc.)

(Our thanks to Jeff Meshel of Mercury Capital for inspiring this event.)

Career Acceleration | Events | General | Personal Productivity

Seeking E-Commerce / Internet Experts for Boston Hedge Fund Dinner, June 22, 2006

We are organizing a hedge fund dinner for E-Commerce / Internet Experts in Boston on June 22, 6:30pm.

This is a chance for you to talk with and learn from some of the major hedge fund investors in this sector.

 We're looking for people with the following backgrounds, preferably with strong international background:

 + Search-engine-optimization expert (e.g., Reprise Media, competitors)

+ Large eBay power-seller, or someone knowledgeable about the eBay drop-off franchise business (e.g., Auctiondrop, iSoldit, QuickDrop, etc.)

+ Voice-over-IP executive/expert (e.g., Skype, Vonage, etc.)

+ Online travel industry – possibly with experience at a meta-search travel site (e.g., SideStep, Farechase, Kayak, Mobissimo, etc.)

 + Executive or expert familiar with the job search or jobs classified business (e.g., Monster.com, Craigslist.org, HotJobs.com, Careerbuilder.com, Dice.com, Indeed.com)

+ Paid search (or general online) marketing from the perspective of an ecommerce business

+ People familiar with the competitive environments of the following companies: Audible.com, Amazon, Ebay, Monster, Netflix, Blockbuster Online, Overstock, Red Envelope, Bluenile, CNet, Google, Infospace, iVillage, Microsoft online, Yahoo, Orbitz, Ctrip, Expedia, Travelzoo, Skype, etc…

Qualifications: As an expert, you have at least four years senior experience in the Internet/e-commerce space. You have a “big picture" perspective on different firms in the space.

If you are not already a member of our Circle of Experts, please visit http://www.circleofexperts.com/apply-form.html?i=11 and apply to be a member of the Nitron Advisors Circle of Experts.

Otherwise, please contact Mr. Avi Mally, [1] (212) 682-5874, amally(@)nitronadvisors.com, with any further questions. Please note that we must review your biography and talk with you before we can accept you for the dinner.

Events | General | Private Equity Investing | Public Markets Investing | Securities Research

I hope that some of our readers will join me at TiECON East, June 15-17, in Boston, MA. With over 1,200 expected attendees, TiECON East plans to become the largest Global Innovation conference on the East Coast.

 The sponsoring organization is TiE, whose members receive roughly 5% of the venture capital investment in the United States.

Speakers include: -

 Howard Anderson, Founder Battery Ventures and The Yankee Group - Nikesh Arora, VP & GM Europe, Google - Clayton M. Christensen, Professor, Harvard Business School, Author, The Innovator's Dilemma - Rajat Gupta, Senior Partner Worldwide, McKinsey & Co. - Ray Kurzweil, Author & Pioneer in Artificial Intelligence - Venkat Ramaswamy, Ross School of Business at University of Michigan - Paul Sagan, CEO, Akamai - Mohanbir Sawhney, Professor, Kellogg School of Management - Howard H. Stevenson, Professor, Harvard Business School - Hatim Tyabji, Executive Chairman, Bytemobile Inc.

 I'll be participating in two panels, one on innovation in social software and online networks, and one on innovation in investment research.

The keynote speaker is Kofi Annan, Secretary-General of the United Nations (although I somehow doubt he will be talking about innovation, given that's not the UN's strength.) With prices starting at $269 for TiE Members and $100 for student members, the conference isn't expensive. For more information or to register, contact the TiE-Boston office at (781) 272-3875 or visit www.tieconeast.com .

Career Acceleration | Events | General | Leadership and Management | Personal Productivity | Private Equity Investing | Public Markets Investing | Securities Research | Social Software

I am happy to report that we are relaunching the Nitron Advisors Circle of Experts Brain Food blog from a new home on the Web, http://www.CircleOfExperts.com/blog . Please tell your friends! From that link, you can subscribe with your favorite blog reader (Bloglines, Newsgator, etc.) or get every posting via email.

If you would like to change your subscription, unsubscribe, or make other changes, just visit http://lists.circleofexperts.com/mailman/listinfo/brain-food .

We will continue to write on Brain Food about career acceleration, business acceleration, consulting opportunities for industry experts, investment research, and online networks. We always welcome suggestions from people with good content.
We have several sister blogs and mailing lists we recommend:
http://www.nitronadvisors.com/mailing-list.html – two mailing lists for businesspeople interested in independent consulting assignments and new full-time jobs

http://www.circleofexperts.com/nyc : worthwhile business conferences, panels, and other events in the New York area

http://www.TheVirtualHandshake.com : how to sign new clients, raise capital, or even find your dream job with blogs, social network sites, and other online networks. You can also download there a complimentary copy of my new book, The Virtual Handshake: Opening Doors and Closing Deals Online.
To make sure that this email gets through to you, please add brain-food-blog-do-not-reply@circleofexperts.com to your address book or trusted sender list.Thanks for reading, and if you like this blog, please tell your friends!

General | Social Software | Events | Personal Productivity | Leadership and Management | Career Acceleration | Private Equity Investing | Public Markets Investing | Securities Research

Back in October, I blogged my contribution to Oxford & York’s New Media & Entertainment Summit. Christopher Clark just sent me the official executive summary of the program.

If you're interested in the impact of blogging on the media industry, and vice-versa, this is well worth reading. Executive Summary here.

 Here are the panels that are summarized:

 Evolving Revenue Models in Media and Entertainment John Nendick, Ernst & Young LLP Chris Ahearn, Reuters Media Robin Johnson, The Financial Times Thomas V. Ryan, EMI Music, North America Thomas Gewecke, Sony BMG Music Entertainment

Technology and Social Change Anthony Hopwood, Saïd Business School, Oxford University Sandy Pentland, MIT, The Media Laboratory Howard Bass, Ernst & Young LLP

New Media Meets Old Media Josh Manchester, AdventuresOfChester.com Jay Rosen, PressThink Evan Williams, Odeo Roger L. Simon, Pajamas Media Jeremy D. Zawodny, Yahoo! Inc.

The Big 3: Media Piracy, Fraud, and Music Licensing Bob Kohn, RoyaltyShare David Teten, Nitron Advisors

Instinct and Promoting Entrepreneurship! J.P. Donlon, Directorship Thomas L. Harrison, Diversified Agency Services Paul Maidment, Forbes.com

Events | Social Software

I'm speaking today at Oxford & York's New Media & Entertainment Summit. The organizer, Chris Clark, generously sent me some of the questions which he thought would come up, and I have added them below. I want to thank some of my colleagues for their quick and insightful comments, which are reflected below: Scott Lichtman, Ken Yarmosh, Scott Allen, www.PaidContent.org .

The panel is 2:15 EST today, so if you have any feedback, please add it to the Comments section, below. Thanks!

I. How big is the piracy problem on the Internet? How much does it cost distributors and content creators in terms of revenue?

Recording industry AA says they lose about $4.2 billion annually per year (globally).

Source: www.riaa.com/issues/piracy/default.asp

MPAA states they lose ~ $3 billion

Source: http://news.bbc.co.uk/1/hi/entertainment/film/4737233.stm

From a moral point of view, there's a difference between committing a crime yourself, and leading others to a crime. For example, piracy for personal use is less of a crime than piracy for profit, in which you (a) lead others to crime and (b) exponentially reduce the vendor's sales by much more than if only you personally stole.

Yarmosh: "Of course, these figures measure total piracy, but the Internet plays a large part in it. It is extremely difficult to gauge how much of the pie the Internet takes up because of the anonymity. Also, be weary that those numbers come from the producer side of the equation."

Allen: "Big enough to be a real problem, but not nearly as big as some (i.e., RIAA) would have you believe. The missing factor when they provide these numbers about the billions of dollars in lost revenue is that it’s only lost revenue if someone would have actually paid for it. And someone may download 100 songs a month from P2P file-sharing, but they would never spend $100-$200 a month on buying music at $1-$2 a track. I might read the New York Times editorials if I had free access to them, but that doesn’t mean I perceive enough incremental value from them compared to everything that’s freely available that I want to pay for it."

II. Are there ways to stop, or at least slow, criminal behavior on the Web that is both effective and proper? How should content providers handle enforcement?

+ Think of alternative revenue streams. Cf. Grateful Dead earning much of their revenues from concerts, not recordings.

+ Provide a legal alternative: e.g., 99c high quality downloads from iTunes - no need to search all over creation and verified 'virus free'.

+ Charge lower rates for content and bet on volume rising.

+ Focus on the people who are pirating for profit vs. personal use. It will have a bigger pay-off and create less consumer ill-will.

+ Education (cf. stop-smoking ads)

+ Plant fake tracks, or even virus-laden tracks, in the P2P networks.

Scott Lichtman: "A large portion of copyright infringement is in developing countries. One could debate whether inappropriate but low-cost/free access to western content will make these markets and revenue-streams grow faster over time than otherwise (just as email, Skype or portions of the web were no-charge services). But I think as these countries democratize and become information providers in their own right they will come into line."

III. How do we reduce Web crime, while at the same time protecting free speech and preserving the "commons"?

See above.

+ Educate people about fair use.

+ We need to convince people that the "digital world" is the same as the "real world" - prosecution and enforcement of regulations is a good start.

Lichtman: "The Commons is quite robust right now. Its an amazing thing that open source, and the human traits that drive it like intellectual curiosity and greater good sharing, are so robust. The process the western world has, including mandates for free speech and a political legal system to work out the details work as well as anything."

IV. Users don't really believe they should have to pay for content. Where does this attitude come from?

"Information Wants to be Free ..." is usually attributed to Stewart Brand , who confirmed he originated this on Tue, 29 Jun 1999 07:00:58 -0700 in an email to TBTF (thanks Eric Scheid, Keith Dawson and Kragen Sitaker). Stewart wrote:

"In fall 1984, at the first Hackers' Conference, I said in one discussion session: "On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other." That was printed in a report/transcript from the conference in the May 1985 *Whole Earth Review*, p. 49. (Source: http://www.anu.edu.au/people/Roger.Clarke/II/IWtbF.html )

Why?

+ Economics 101 – People are more likely to be moral if it's not too expensive. the perceived incremental value has to be worth the cost. When comparable, if slightly inferior, content is freely available, most people will take the slightly inferior free stuff. Consumers have considered a lot of content prices to be too high. Cf. Gary Becker and economics of crime.

+ Consumer expectations. Lichtman: "much of the web model has been free, or free trial, or limited edition, whatever... Whether web browsers, or free short clips of baseball games on MLB.com or 1-user salesforce.com free licenses, we have created our own expectations for free content. This has changed since 2001 somewhat, as more services are pay to play, but it will continue to be a basic part of how services create buzz online."

+ Lack of enforcement.

+ Little opportunity for empathy. The victim of your theft is invisible, so the personal hurt is hard to relate to.

+ Peer pressure. Everyone else is doing it.

+ Fundamental immorality of human beings. Ken Yarmosh: "Recounting “The Ring of Gyges” from Plato’s Republic, the argument goes that if two men, one just and the other not, were given rings of power that allow invisibility, both would perform equally as unjust. The reasoning eventually follows from a simple thought - take away the fear of punishment and no one can resist acting immorally. Both eventually would steal and use the ring to their advantage because, as Plato writes, “men believe in their hearts that injustice is far more profitable…than justice.”"

V. There seems to be a race between technologies--- technologies of the criminals vs. the technologies of the providers. Any predictions on who will win?

They will leap-frog forever. I think it’s a basic truism that if you create a system that is unhackable, it will be too cumbersome and/or expensive for general consumers to use. Compare Gary Becker's argument that society chooses an optimum level of mugging, and other crimes. Scott Allen: "Consider the analog world. Grocery stores, for example, lose millions and millions of dollars a year to shoplifters. There are all kinds of measures they could take to curb shoplifting more, but they don’t. Why? Because the cost of prevention would be greater than the cost of loss. There’s an equilibrium point of “acceptable loss" that they’ve found after years and years of studying it very closely. …Content providers would do well to observe and learn from this. You can’t stop everything. What you want to do is find the optimum balance that maximizes the difference between the cost of prevention and your real loss (not some imaginary number of what the content would have sold for if people had paid for it, but what people would really be willing to pay, plus real lost advertising dollars from diverted traffic)."

Social Software | Events | Public Markets Investing

I had the chance to participate in the IRTS Foundation's panel last night on: "Marketing and Media Opportunities in Social Networking and Online Communities".

 Other panelists:

Manon Bone, Director, Sales, Friendster Scott Heiferman, Co-Founder and CEO, MEETUP Cem Sertoglu, Co-Founder and Former CEO, SelectMinds Laurel Touby, Founder, CEO, & Cyberhostess, Mediabistro.com Moderator Jack Myers, Editor, Publisher, Jack Myers Report and MediaVillage.com

My notes:

 Bone: friendster revenue is ad driven, not membership driven. heiferman: Meetup has few ads. We get money from our users: $19 per month per group. For that $, you're buying an easy way to find others.

Touby: mediabistro is a community for media professionals. Tv, books. No one is a direct competitor to them. Now have blogs, e.g. Tvnewser.com . only word of mouth marketing. 350,000 users today. Sertoglu. Corp. Alumni like their former coworkers, even if they dislike their firm.

Teten: gave overview of social software industry structure. Myers. How get ad agencies excited about social networking?

Heiferman. we don't want them! myers. myspace secret sparkle deodorant deal. When teen girls checked out the musicians who had signed up as brand promoters , they were invited to sign up to enter contest for new ipod. 30,000 did it. myers.

What's the problem if a needle company Advertises to a meetup of knitters? heiferman. 100000 people go to a meetup every month....there's huge market potential. cem. 80 companies run formal organized communities for their alums, many of them served by SelectMinds, which is an ASP.

 (DT: that's a tiny percentage of the total market.) Teten. The future is bottom up , 'open source' marketing, not top down.

What if marketing materials were published with a Creative Commons license, encouraging, rather than prohibiting, derivative works? Social software facilitates the participation of the market; people communicate/market to one another, instead of receiving a top down message. E.g., george masters' ipod ad.

Events | Leadership and Management | Social Software