Francine Hardaway's Blog

Doc Searls, The Cluetrain Manifesto, and the Call of the Wild Customer

Actually, today I am in Silicon Valley. I'm at The Conversation Group's celebration of the tenth anniversary of "The Cluetrain Manifesto," and Doc Searls, one of the authors, of the original manifesto is here to lead a conversation on where the manifesto stands now.

He's talking about what happens when buyer reach exceeds seller grasp, which is an unfinished question from the Manifesto. This was the Call of the Wild Customer: we are not seats or eyeballs or end users or consumers. We are human beings, and our reach exceeds your grasp -- deal with it.

But it isn't quite true yet. Ten years later, we're still in the grasp of the vendors. No new social network is big enough to accomplish what we have to do on our own. And we can't do it individually: we have to do it with the power of the group.

And it's dependent on open source, which is a product of human nature. Its wild and free environment is the Net: Nobody owns it, everybody can use it, anybody can improve it.

The metaphors Doc is using are from the construction industry.

There are now more than half a million open source code bases, all of which are building materials growing wild, outside of any corporate silo. The live web is branching off the static web. The branching occurs between space and time. That's why Google blog search differentiates between searching the web (static), and searching blogs (live).

On the live web, relationships between customers and vendors have to be two-way. Relationships can't occur unless both parties are equal. This means solutions have to come from customers rather than just vendors, and the two have to help each other.

Example: I should be able to express global preferences outside of anyone's silo. IF I am calling for tech support, THEN I don't want to want to hear a commercial message, AND I am willing to pay X to reach a human in

I should be able to inquire and relate to whole markets on the fly

And I should be able to contol my own health care data.

The technology to manage my relationship with vendors is here.

I should bring my own Terms of Service to the relationship. I shouldn't have to accept the vendor's. The social contract should let me be trusted if I have money to spend, and I shouldn't have to give up so much information.

I should be able to take my shopping cart from one site to another. This is now called Vendor Relationship Mangement. It tests the belief that markets can be truly free and open and every customer can be a platform. The first VRM project at the Berkman Center is a new business model for free media (that isn't advertising).

Obviously, ads can't pay for everything. Dumb wrong ads will fail.

So: in the beginning is the relationship button. An equal relationship between vendor and customer, with data stored on both sides. There's no limit to the amount of data that can be stored on both sides to enable transactions.

Eating One's Own Dog Food

I have just spent the better part of a day shopping, cooking, and entertaining. There are several problems associated with this use of my time.

First, today was (and still is) a work day. Second, the guests at my dinner party were three golden retrievers.

Ever since my daughter lost her dog prematurely to cancer, she has been cooking human food for her remaining dog, and adding all kinds of essential fatty acids and supplements. I don't know why I thought this was something I should undertake, but I decided to give it a try.

First I had to buy a stock pot. Everyone who knows me KNOWS I don't cook, so I haven't got a whole lot of utensils. There are very few places in Half Moon Bay to buy a stock pot, and I'm an efficiency expert, so I bought mine in the fancy market where I was buying the other (organic) ingredients. $59.99 for a stock pot.

Okay. Then I looked for the essential fatty acids, and I had to go to the health food store for those. $30 for about eight ounces of cod liver oil and flax oil. Couldn't find any wheat germ oil; the health food store was out. "A lot of people buy these oils for their dogs," the cashier said. But not for themselves; we can't afford them for ourselves.

Fortunately, I had olive oil in the house.

Then I went back to Cunha's for the organic chicken ($4.49/ lb.) The zucchini, yellow squash, carrots, green beans, organic rosemary, garlic, and celery. Forgot the quinoa and the sweet potatoes. But I already had organic multigrain bread, so I could add that later.

Had the butcher cut the chicken up in pieces, but had to cut all the veggies myself. Dumped them all into the stock pot, brought it to a boil, and dialed into NewsGang

Six hours later, dogs panting at my hips, I turned off the stockpot. Then I used a measuring cup (correct--I don't own a ladle) to put the soup into the dog bowls, and Chelsea helped me take all the bones out and chop everything finely. It's supposed to be pureed, but -- you guessed it -- I don't have a blender.

I drank a cup of the broth, and it tasted like chicken soup to me. This is a good sign. The dogs were divided. I think Chauncey would have preferred kibble.

Next, I had to store the leftovers. Right again. I have no Tupperware. Just a few random (and very small) Glad plastic containers. And two salad bowls. Everything else in the refrigerator was pushed to the side so we could fit all those bowls and containers of soup in the refrigerator. And then. BINGO! No aluminum foil or plastic wrap.

Had to use dish towels.

Finally got all the stuff put away and then had to force the stockpot into the dishwasher.

Exhausted, I fell into a chair and opened a bottle of wine (that had been displaced from the refrigerator).
I started adding up the tab. I figure it cost me about $120 to make this dinner, assuming my time is worth nothing. I could have taken the dogs to the Half Moon Bay Brewing Company, sat outside listening to music, and bought each dog a Kobe burger for less.

Google Health Causes Controversy

I have been waiting forever for Google Health. When it launched yesterday I immediately created a profile and linked it to my Walgreen's prescription file and a health information site. I've already been informed that people my age should be seen by a doctor if they are taking Armour thyroid, which I am. (It was prescribed for me by a doctor).

Today I read Fred Wilson's post about how shocked his Twitter followers were when he said he wanted to make his Google Health record public. One of the respondents even said it was "all right for him to do it, because he was a VC," but if the rest of us did it we'd be screwed.

What a sad state of affairs when people are afraid to share their medical records on the one hand, and are searching all over the Internet for information and support groups on the other hand. Myself, I'm with Fred. I want to be in the best position to get help when I need it. And that means sharing my records with anyone who can help, no matter where they are.

So if I could press a button and make my records public (which is not possible now), I would choose to do it, if only for the reason that I travel all over the world and spend half the year in Arizona and half in California. So now, the thing I'm not satisfied with is that my record is incomplete. I need to link in with the lab that does my blood work, the mammography center, the people who did my spine MRI, the people who did my colonoscopy, and my primary care doc, who has all this stuff in a paper file.

Because I have this opinion (I would have the URL of my record tattooed on my forehead) I have tried manhy different PHRs (personal health records) and found them all wanting. Revolution Health was the most vaunted of those, but there's also Microsoft's Health Vault and a couple of small ones I don't even remember.

Revolution Health, former AOL CEO Steve Case's effort, has evolved to an information site more than a PHR, although it started with high hopes for a PHR component. And HealthVault has become a back-end solution. To date, everyone has broken their picks on the complex issues of privacy, data interoperability, data portability, and simple data entry. Even Dossia, an ambitious cooperative effort sponsored by former Intel chairman Craig Barrett, has faltered in its effort to get the data of large corporate employees into their own hands.

Until we control our own health records, all the stuff about who owns the data on Facebook is trivial. I desperately hope Google is successful in its efforts, because Google knows how to manage data. If we drive them out of the market, we are in big trouble for our own health in the future.

Race in America: What Hillary Couldn't Say

What I have come to realize over the past few weeks, as Hillary Clinton continued to garner support from large segments of the American people, is that Barack Obama made his speech on race too early. He is going to have to make it again, louder, later. And again, and again.

Hillary has campaigned -- after the fiasco of Ready on Day One -- on the premise that she is the most electable candidate. She couldn't really defend that, because of what she couldn't say: I'm more electable because I am white. If she HAD said that, she would have been accused of dirty tactics. But she was correct.

That's been proven out in West Virginia, and will be proven in Kentucky, too, where she has a commanding lead. Many segments of the electorate, especially if they have not been highly educated or lived in large, diverse cities, still view blacks as unlike them, and there for a source of discomfort (to say the least).

There was a horrifying segment on The Daily Show last week after the West Virginia primary in which real voters showed their feelings openly in the exit polls.

I hang out with the liberal elites, and I had the same color blind background Barbara Walters did with a father in show business. But I live in Arizona, and I will share an anecdote with you.

This weekend the Bible Church in my neighborhood had an open house. They put up signs saying "all welcome." I was with my friend Carolyn, who is running for Constable in our precinct, and she is gathering signatures. So she and I decided we'd go to the church open house and say hello. After all, we live down the block from the church.

We were warmly welcomed and given a tour by the young associate pastor. The pastor himself is 30, and the associate is the same age. We really thought the place had a cool vibe, because it is an old church with a very mixed family congregation -- lots of kids, Mexican families who live in our diverse neighborhood, and European immigrants.

So Carolyn asked the pastor, "do you welcome gays? I'm gay." The pastor hesitated, and blurted "not to the level you would want. We have to follow the Bible." At that point, I asked, "so you wouldn't want me, either. I'm Jewish." No, he admitted. I would have to give up being Jewish, Carolyn would have to give up being gay.

So all are welcome. But not gays. And not Jews. This country is FULL of prejudice, racism, sexism, everythingism.

I felt like punching the pastor, even though he was very nice. But he believe that he knows, because it's in the Bible. I'm sure the people in West Virginia and Kentucky feel the same way.

To what do we attribute the fact that as a people, we don't look much different than the Shias and Sunnis? The failure of public education? The failure of previous political processes?

Anyway, back to Hillary. I will be curious whether the old white guy, even if he wants to fight an endless war, may not still be preferable to those in American who still see black men as unelectable.

Ugh.

Identity Theft or Data Portability

Whoa, Nellie. I have never heard Robert Scoble get angry before. But this morning, as I prepared to have my weekly laugh with The Gillmor Gang on the elliptical cross trainer, I heard the same decibel-level discourse I heard on Hardball with Chris Matthews this week. And what was it about?

It was about data. Who can get passionate about the subject of data. The answer: everybody. It is the biggest issue on the internet as we all become users of interactive websites, rich Internet applications, and smart phones. Who owns your data? In Facebook? On MySpace? In Google? And even in Microsoft Outlook? You would like to think you own it, rather than any of the companies above. That fight is still being fought.

But there's another, more complicated question. Who owns your data when you friend someone? Him? You? This is an extremely important conversation -- so much so that Robert, after getting really angry with Mike Arrington, went and took a shower and came back to the call.

It's very complex. I see this every day as I coach non-techies about social media. Their biggest issue is "if I put my information out there, how can I protect it. How can I dictate who gets to use it?"

Unfortunately, for anyone really interested in privacy, the genie got out of the bottle with the universal adoption of email in corporations. For corporate types and for most indiviuals, privacy isn't really an option. And younger people have grown up without privacy, so don't even see its importance the way older folks do.

Think about it. You give someone your email address, which we almost all do when we exchange business cards even if we don't live on a computer. When you give someone a business card, you give him/her tacit permission to contact you. So they do, and they include a few other people in the email. And now those people, too, have your information -- even if you didn't WANT them to have it.

Now let's assume that person has a Gmail account. Now that information is off your desktop and your correspondents' and on the Internet.

Now it can go "into the wild." Facebook has tried to prevent this by not allowing anyone to export their "social graph" (the information about them and their Facebook friends) outside Facebook.

But now there's a new initiative called Data Portability, which says I own all the information about my Facebook friends and should be able to take it with me to the other sites I like. After all, it's "my" social graph. However, it may be "your" email address and you may not want me carting it around the Internet. You may not feel that "any friend of Francine's is a friend of mine."

I think the person who came closest on the Gillmor Gang to saying what i think I think (no, that's not a mistake; I'm not sure yet what I think) about this issue was Steve Gillmor. He said that the data belongs to the relationship between you and me.

And that is an even MORE complicated notion. In plain English, there's not much difference between identity theft and data portability except in the ethical framework of the beholder.

Here Comes Summer!

I'm getting ready to shift my location to Half Moon Bay for the summer. I leave at the end of next week, and stay until the day after Labor Day. While I am up there, I will be blogging, as well as planning the Third Annual Arizona Entrepreneurship Conference, which will be held at the Ritz in Phoenix on November 19. You can register early for a discount here. The reason I'm telling you all this so far in advance is because the conference will certainly sell out this year.

Here's why:one of the keynote speakers is Matt Mullenweg, the youthful and brilliant founder of Wordpress, probably the most famous blogging platform today. He will be joined by Andy Ehrlich, a fantastic and different leadership speaker, Howard Lindzon (founder of Wallstrip and Knightsbridge Capital), Allen Kaplan, co-founder of Limelight Networks (and man who raises big bucks for Arizona companies), iJustine, Chris Brogan
and a star-studded cast of Arizona startups and successes. If you want to get involved or stay informed as we progress through the planning process, the Google Group for the Conferences is here. We would love to broaden the base of participants.

Update: If the link to the Google Group is incorrect, just go to Google Groups and search for Arizona Entrepreneurship Conference.

My friend Brian Shaler gave me a great idea, which is to turn the conference into a sort of technology festival for Phoenix, similar to South by Southwest (SXSW) in Austin. So after this year, we will have to change locations, probably to downtown as we attempt to integrate three or four other events (RefreshPhoenix, Podcampaz, Phoenix Social Media Club, and anyone else who wants to participate, into GeekWeekAZ, a festival people will want to attend from all over the world.

So that's the plan, Stan. And BTW, proceeds from the conference go to the Opportunity Through Entrepreneurship Foundation, which provides entrepreneurship training to disadvantaged communities.

This is part of my not-so-surreptitious plan to connect Arizona geeks with Bay Area geeks, so my two sets of friends can all meet each other (in Half Moon Bay, where @scobleizer can film it for FastCompany.tv)

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Stowe Boyd says it Best

Stealthmode operates in mysterious ways: we don't get paid for a lot of the stuff we do, we don't take (much) money and/or equity from the companies in our portfolio, and we largely appear to be cruising around enjoying ourselves without appearing to work. Even my best friends don't know what I "do."

I define myself mainly as an angel investor, and from time to time I invest real money in companies. But more often I invest time and talent. In other words, I don't have the money to invest in all the companies I see that I wish would be successful, so I invest in some and counsel some. Ed does something similar. Sometimes we are involved in the same companies, sometimes not.

We have been partners for nine years under this arrangement without being able to articulate it beyond aspiring to be in the middle of the activity in the entrepreneurial community and helping to build an interconnected ecosystem for Arizona startups. Yeah, people say when I tell them that, "but how do you make money?"

Today I saw a post by Stowe Boyd that expresses pretty clearly the model by which we (or, at least, I) operate. It's called How I Roll, and it explains how he chooses companies to be involved with, why he takes (or does not take) equity, and why he doesn't look like he works many hours.

Basically, we are in R&D mode more than half the time we are working during any given month. And that R&D, or expertise, is passed on to the companies we advise. Stowe calls his work advisory capital, as do we.

So great to see someone who knows what we do! It's about time we knew it ourselves:-)

Major Real Estate Developer Talks History

It's lunch in a Scottsdale restaurant. The attendees are mainly retired scions of industry, professionals, and business. I came because the group is having a presentation by one of the largest real estate developers in Arizona, and I've come to hear the story of a "typical" Arizona entrepreneur.

Mark Sklar, one of the three original (and still intact) partners at DMB was originally from Wisconsin and studied history. He has the midwesterners' value system and sense of engagement.

He and his wife moved to Arizona to strike out on their own in 1971. For seven years he was in the travel business before becoming partners with Bennett Dorrance and Drew Brown to form DMB, a company known for its excellence in real estate development and community engagement. As he runs down the list of boards he is on, from arts advocacy to Alzheimer's centers to camps for special needs children, he tells us the company credo: profitability, legacy, partnership and fun.

DMB was formed in 1982 out of some land syndications. Drew Brown was Mark's lawyer, and Bennett was Drew's client. They spent a long time getting to know each other, trying to understand if an enterprise among the three of them would make sense. Mark, Drew and Bennett are entrepreneurs who started off by buying and selling land, using money they raised from syndications.

In 1989, the Resolution Trust Company afforded them an opportunity to buy a bunch of stuff from defunct savings and loans. No one else would invest, because no one knew where the bottom of the market was. Sound familiar? So they bought a lot of property, including the famous blue building on Alma School Road in Mesa, Arizona. Of course they had the means to do it. It's not a strategy for everyone.

About fifteen years ago, the company took a philosophical jump into the planned community business. They view themselves as developers, planners, and zoners and marketers of planning communities: large communities (like Verrado and DC Ranch) with lots of different product, and recreational communities for people who want vacation homes (Forest Highlands).

DMB also has a significant amount of investment in California: in Orange County at Madera Ranch. They also have a property in San Francisco Bay that is currently under water; it was formerly a salt mine owned by Cargill.

DMB prefers to do joint ventures with landowners rather than buy property. They're a project-centric company that pushes authority down into the field into each project's General Manager.

They have done quite a bit of succession planning, including diversifying their capital base outside Bennett Dorrance's personal capabilities. They now have two financial partners from the Bay Area, a board of directors, and a real plan to allow the company to succeed them without a sale or liquidation.

And now...about the market. Mark's guess is that it won't turn around before Q3 of '09 or have righted itself until 2010.

We have an oversupply of single family residential, which will create a longer time to recover this time around. It was fueled by easy money, and the idea that single family residential could be an investment. Two and a half years ago, DMB was so concerned about this that they hired a team to knock on every door in Verrado and see if someone was living in the home. They found that about 25% of the homes were investor-owned.

Arizona has a worse oversupply of single family housing than California, because it has strong employment, a right to work state, and it is easier to bring a product to market here than in California, so that encourages inmigration.

167,000 homes were built in 2004-2006 in Arizona, where there is a need for 35-40k a year based on inmigration. The oversupply will be with us for a while. Here's why:

1)We have had a dislocation in the financial markets that has been unprecedented. Sklar is seeing a lot of institutional lenders do really stupid things; they are handcuffed because they don't know what their portfolios are worth, and they are walking away from sound, underwritten transactions. They just don't know when the regulators will come in.

Bill Gross's newsletter for the past two years has been talking about the shadow economy -- large scale transactions that have been securitized and sold to people who didn't understand the underlying value of the assets. The result of this continues to affect the real estate markets.

2)Huge increase in commodities costs.
3)Recession
4)Interdependence with everything that happens in the national economy.

How does he feel? Negative for the short short term. The economy is one problem for Arizona. Employee sanctions laws are another. The inability of people to sell homes elsewhere slows the state's inmigration. (2006 102,000, 2007, 67,000 people.) DMB has taken their land of the market to discourage more building for right now. They have no wish to contribute to the oversupply. They are also tightening budgets, lengthening timelines, and have laid off twenty people. But DMB is optimistic for the long term. With the business and political leadership we have now, he thinks Arizona has a rosy future.

Donated Screen Printing Equipment Goes to Work

Paul shows one of the screens used to print T-shirts
Originally uploaded by Blackerby Associates

The Tumbleweed program is so phenomenal; I'm not sure they really needed us to make their businesses successful. They are most entrepreneurial not-for-profit I've ever worked with.