irresistible prejudice

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p. 52:

It faced – or seemed to face – the whole external world for an instant, and then concentrated on you with an irresistible prejudice in your favor.

Most of this paragraph is taken with a description of Gatsby’s smile.  That smile is a wonderful piece of work, and Gatsby must have truly worked at it – you can picture him spending hours in front of the mirror perfecting the radiant character of that smile.  He started with natural material, the handsome face, a wide mouth around even white teeth.  His ambition to become a man of the world required an openness to experience beyond his small beginnings, and that open heart can fill a smile with good will.  He continually nurtured his ability to appreciate and reflect joy, if not always to generate it.  All of that could be genuine.

What could not be genuine, what does require that practice in the mirror, is the way that smile turns to just you, no longer the natural sun hanging in the sky buy a spotlight made and tailored just for you.  You have to remember, that’s how he smiles to everyone, it’s not just for you.  There’s a particular technique in this, a conscious effort required to give you that irresistible prejudice.  He has to lean into you a degree or two more, focus both of his eyes into your dominant eye, hold the gaze a fraction of a second longer than normal.  That smile is a work of art, not a work of nature.

culture wars

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From the Department of Unsolicited Advice:  Jack Flack gives Carol Bartz six pieces of advice as she tackles the Yahoo CEO job.  Blodget likes all but the first, about reducing the friggin’ moxie, since a little pseudo-profanity makes his own job more entertaining.

To add my own unsolicited advice, which Bartz surely doesn’t need:  only the second point, about the folly of stalking leakers, has a lot of merit – but Blodget already said it much better.  It’s the fifth point that inspired me to post, because it’s truly terrible advice:

5. Ignore the current company culture. Courting the employee masses will have limited upside. Many Yahoos still actually bleed purple, but the percentage of destructive malcontents in Sunnyvale, Calif., rivals that of even the cheesiest reality show. Consequently, the best way to get early traction will be to create a small inner circle of people who want to win, and build from there. As you make decisive moves that are applauded, your support base will grow quickly.

I’m not sure exactly what he means by “ignore the current company culture,” but any way you read it, it’s bad advice.  If he means that the current culture is that of destructive malcontents, then why would you ignore that?  Fixing that poisonous culture should be a top priority.  If he means that cultural change is accomplished by anointing an inner circle of true believers, that’s wrong too – instead it’s a sure formula for creating (or reinforcing, if it already exists) a toxic culture of self-interested politics.

The worst interpretation would be that Bartz should ignore whatever remains of the passion that first made the company succeed, the purple blood that so famously runs in the veins of the devout Yahoos.  That’s exactly the opposite of what the CEO should do.  A great CEO would find and nurture that spark, because it is the only hope of returning the company to any semblance of greatness.  It is eminently possible to revitalize that culture while still weeding out the malcontents and malingerers; in fact, doing the latter would go a long way to accomplishing the former.

Establishing and reinforcing a great company culture is one of the key jobs of any CEO.  The only exception would be if the CEO really was only hired to sell the company ASAP – while that may end up as the outcome, I don’t think Bartz would have come out of retirement if that were her only possible objective.

apples to apples

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Facebook turned 5 years old last week, and a couple of commentators took the opportunity to compare the company’s progress unfavorably to Google’s.

I understand the compulsion to compare every hot startup to the current media darling that literally put its name next to the definition of “Zeitgeist” – but still, I don’t believe there is any practical value in that exercise.  A meaningful comparison compares things of like kind, and comparing every company to the once-in-a-decade champion is not apples to apples.  Take a look at this list of companies, which I’d say are all the same kind of apple (of course one of them is literally an Apple):

Company Year Founded Year IPO Feb 09 Market Cap
HP 1939 1957 $87 B
Intel 1968 1971 $83 B
MSFT 1975 1986 $173 B
Apple 1976 1984 $91 B
Oracle 1977 1986 $91 B
Cisco 1984 1990 $99 B
Google 1998 2004 $119 B

These are the true giants of Silicon Valley (plus our favorite giant from up north), all companies that have spent a goodly amount of time with a market cap over $100 billion.  Comparing any private company to these monsters is a fool’s game; it’s like comparing a college basketball player to Michael Jordan.  Actually it’s worse than that – projecting athletic talent is considerably easier than projecting $100+ billion success for a company, because there are orders of magnitude more points in a company where externalities and luck play a tremendous factor.  (I always like to recall that Intel and Microsoft were initially made giants not by their own strategy, but by the strategic decision made by IBM when it chose to outsource production of its PC microprocessor and operating system.)  These true giants are Black Swans, by definition nearly impossible to predict, and useless as comparative points except when holding both points in retrospect.

If you must make comparisons, it’s more realistic to compare to the next tier, for example:

Company Year Founded Year IPO Feb 09 Market Cap
Sun 1982 1986 $4 B
Amazon 1994 1997 $44 B
Yahoo 1995 1996 $19 B
eBay 1995 1998 $18 B

I could put a dozen more on that list, but I’ll let you pick your own peer group.  Any one of those companies (yes, even that one that you think is irrelevant/dying/dead) could still take the multi-decade journey to giant-hood.  But even if they never do, they’ve accomplished something extraordinary in growing up from a tiny Silicon Valley startup (with one favorite from up north) to an independent company, a true a difference-maker in technology and the daily lives of millions upon millions of people.  Because they haven’t had such outstanding externalities and luck in their favor, they are a better basis for comparison.

still misunderstanding micropayments

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Please, Shirky, don’t hurt me.

See, in the past Clay Shirky has expressed some healthy, justifiable skepticism about Second Life, or rather, the hype around SL in 2006-07.  And on a scale of one to infinity, he knows about a googol (old skool usage) more about the future of Internet and new media than I do.  So I’m loathe to disagree with him on any topic.  But I’ve got to chime in about micropayments.

The quick recap:  Shirky says that publishers are grasping at straws if they think that micropayments will save their dying business models.  Matthew Gertner hopes that publishers might still find that magic blend of quality and scarcity that allows them to charge micropayments for content.  I think both misunderstand the demonstrably successful business models for micropayments.

Shirky’s right when he says that “users don’t like being nickel-and-dimed” for content.  But that’s not what happens in the successful models, not from the users’ point of view.  Users are making small payments, but they’re not paying nickels and dimes, they’re paying significant amounts of dollars over relatively short periods of time.  They are paying for the convenience of not making micropayments while making micropayments.  Huh?

If “micropayments” means anything anymore, on a pragmatic definition it means “payment of an amount that is typically too small to justify its own transaction costs.”  Depending on volume, merchant fees and chargeback rates, the $0.99 price of a song is probably not large enough to justify transaction costs on a transaction-by-transaction basis – but that’s not how iTunes does it.  iTunes aggregates charges and only incurs transaction costs when the aggregate charge supports the costs.  This is a seamless experience for the user, and together with the presentation of a broad catalog, a pleasant user interface, and smart search and recommendations, this service is well worth paying for.

Shirky believes that iTunes demonstrates that “the only real lesson of small payment systems generally . . . is that if you want something that doesn’t survive contact with the market, you can’t let it have contact with the market.”  Ironically, the internal contradiction of this statement is that it assumes that the value is in the content.  But the value is not in the content, as many people, including Shirky, have pointed out.

The point is even clearer in Shirky’s other example, Cyworld, a Korean social networking site where users can buy each other “virtual gifts.”  Facebook introduced the same feature in 2007, quickly giving birth to a virtual economy that some estimate at $100 million a year.  Shirky says these kinds of services are a “monopoly within the environment” that “prevent[s] competition for pricing of digital goods.”

fbvirtualgoodsWhat?! Think about it, how can there be competition for pricing on goods that are worthless?  Those little virtual gifts that sell for a buck a piece – the flowers, hearts, puppies, etc. – there ain’t no monopoly on them, it’s not a closed environment as far as those goods are concerned.  I can take them wherever I want (notwithstanding copyright claims, which aren’t the point here).  You see, there they are, 21 virtual items right next to this paragraph.  Did I just steal $21 from Facebook (or worse, from Susan G. Komen)?

Nope, I didn’t.  Because nobody gives a damn about those items here on my blog.  (Well, maybe someone will make a copyright claim that I’m not making fair use of them, as I think I am, but again that’s not the point.)  People don’t pay for those little bits of clip art, and I certainly wouldn’t be interested in paying to display them here.  People who buy virtual goods are paying to have those bits of content show up on the service of Facebook, of Cyworld, etc.  They are paying to have it show up on the profile of a friend, they are paying for the social graph, they are paying for all of the reliability, usability, network effects and ego-fulfillment of those services.  And they’re making micropayments, and the services are again aggregating the micropayments in a way that is part of a convenient and seamless user experience.  The content in Facebook is not “trapped” in some kind of monopoly – the service of Facebook is in full and open competition with every other social service out there.

So that’s all I have to say about that, but I have to end with a little disclaimorama:  Second Life may have had a “virtual economy” of over $360 million last year, but that’s not necessarily where my thinking comes from on this.  I’ve been looking at things like Cyworld since I was a VC at a Korean shop, long before I joined Linden.  Disclaimer necessary because there’s whole reams of thought about whether the content on SL has value off of SL, which I am not getting into and not taking any position on here.

breaking the seal

~ ginsu ~ 1 Comment

Why bother?

Blogging’s dead, isn’t it?  Calcanis quit, hating the haters.  Arrington was pushed out by unreasonable expectations and expectoration.  The 250 have moved on to Twitter, where they are all already plotting to move off to the next big thing that you don’t know about.

So there’s no glory to gain here.  In fact, for me there’s only downside to exposure.  I’ve got a prominent role at a company that’s still climbing out of its hype cycle.  I’ll have to avoid some of the topics that I’m most familiar with, since I’m not going to say too much about my work.  And it’s not like I have a whole lot of interesting hobbies to fill the gap, notwithstanding a minor OCD compulsion to pick sentences out of The Great Gatsby.  This is just asking for ridicule.  So again:  Why bother?

The best answer I can give has to do with how I used to pick bars in New York.  This was more than a decade ago, but it’s probably still the same today:  When a hot new nightspot opens up in NYC, you can’t get in.  They put up the velvet ropes, celebs on the A-list get ushered past the line, the bouncers don’t let anyone in, so everyone else can only read the gossip rags about just how cool the place is.

But in less than a year or so, the hot new place isn’t so new or so hot anymore.  The A-list has moved on to the next place.  Now you can get in, but you probably don’t want to.  The place is stuffed with bridge-and-tunnel dorks, assorted Eurotrash, and other doofi who are overjoyed to stand where their favorite star stood just months ago, thrilled to wait in line to fight the crowd to catch the bartender to overpay for watery drinks.

I developed this fine theory Temple Bar, at Lafayette and Houston in NYC.
I developed this fine theory at Temple Bar, at Lafayette and Houston in NYC.

Ah but then, but then . . . in another year or so, the doofi have moved on.  And the place has some good bones:  the owners invested some coin in this place, and it shows.  Good location, swank interior, broad top-shelf selection, attractive service.  They’ve fired the bouncers, mothballed the velvet ropes, and lowered their prices.  The status-seekers and tourists wouldn’t be caught dead in this place.  The locals are starting to check the place out, some are becoming regulars, and they’re a friendly, interesting group.  Now it’s a good time to go.

And that’s how I think of blogging now.  Well past its coolest days, but man it’s easy to get to, everything’s clean and works well, and you sure can’t complain about the price.

elemental and profound

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p. 51:

I had taken two finger bowls of champagne and the scene had changed before my eyes into something significant, elemental and profound.

After midnight the party is starting to crest and even the studiously detached observer falls into the flow. The champagne helps more than a little.

I also like on this page the ‘old men pushing young girls backward in eternal graceless circles.’

in a library

~ ginsu ~ 1 Comment

p. 50:

‘I’ve been drunk for about a week now, and I thought it might sober me up to sit in a library.’

If you find yourself in a similar condition, you should try this, it works surprisingly well.

violent innuendo

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p. 49:

a persistent undergraduate given to violent innuendo and obviously under the impression that sooner or later Jordan was going to yield him up her person to a greater or lesser degree.

Something about this description assures us that the violence is ultimately impotent, befitting of the stunted ambition sure to envelop the undegrad later that night.

romantic speculation

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p. 48:

It was testimony to the romantic speculation he inspired that there were whispers about him from those who had found little that it was necessary to whisper about in this world.

Now, who doesn’t daydream about being whispered about in this way? Even considering that the speculation at hand is that he killed a man.

the premature moon

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p. 47:

the girls had moved casually on and her remark was addressed to the premature moon, produced like the supper, no doubt, out of a caterer’s basket.

Just another lovely, easy turn of phrase, describing a beautiful night and Gatsby’s otherworldly wealth at the same time.