NEW YORK--The line on Wednesday night snaked outside the New York Stock Exchange building as a swarm of marketing, advertising, and other media types waited to get into the party that AOL was throwing on the trading floor to mark its spin-off from Time Warner. Onlookers weren't really sure what the big deal was.
An evening commuter walked past, craning his neck up at the massive AOL-logo banner--yes, the one with the fuzzy blue monster on it--and asking a few of the people in line, "Why's AOL having a party?"
"Spinning off from Time Warner."
"Oh, finally," the commuter replied, and sauntered off into the night.
Approximately 10 minutes later, security stalled a pack of party guests between the coat check and the entrance to the trading floor so that they wouldn't get in the way of AOL CEO Tim Armstrong's photo op on the red carpet with publishing industry dame Anna Wintour. There were waitresses carrying massive bourbon-infused cocktails called "The Ticker," sushi chefs chopping up spicy salmon rolls, and a photographer snapping pictures of guests posing with the iconic NYSE gavel. Oh, and there was a DJ booth where rap legend Sean "Diddy" Combs was calling the shots.
The next morning, long after that had all been cleared out, trading of the new AOL stock commenced: it fell in the first hour, hovered around $23 for most of the day, and climbing a few notches to close at $23.52. It looked less like the refreshed, shiny AOL that had turned the NYSE trading floor into a celebration of its vision of 21st-century publishing, and more like the AOL that, in preparation for the spin-off, cut 2,500 employees and began to explore selling off peripheral businesses like ICQ and MapQuest.
"I haven't looked at it because we've been so busy," Armstrong, in a morning call with reporters and analysts, said of the company's stock price. "The stock may go up and down, but I can tell you internally that the company continues to progress and get stronger."
Not very long ago, AOL was a punchline: edgy publishing outlet Thrillist, known for its in-the-know men's newsletter and wacky stunts that often involve party planes, threw a party in the summer of 2008 with a "vintage AOL" theme that interspersed the once-ubiquitous dial-up tone with mid-'90s pop songs (Thrillist CEO Ben Lerer, it should be said, happens to be the son of former AOL exec Ken Lerer). AOL was the ultimate brand for the old Internet, the one that would forever be associated with the "You've Got Mail" recording and the e-mail addresses that have long since fallen out of favor.
Its attempted revamp does elicit a few "over the hill" snickers, but in New York's media community--the people flooding the Stock Exchange on Wednesday night--it's treated with a good deal of respect. Armstrong was very well-regarded in his prior gig as a sales executive at Google. At the lavish AOL spin-off party, there were fewer snarky remarks than expected about wasted money, premature celebration, the disastrous results of AOL's original Time Warner merger in 2000, or how many laid-off employees the event had cost.
Because these are the people who, as much as New York media likes to thrive on an aura of cynicism, really do want the new AOL to succeed. The industry's been more or less smashed to bits, with magazines closing up shop and newspapers going through yet another fit of layoff rounds. Regardless of early concerns about its stock price, the new AOL is a bright spot.
Using its 2005 purchase of blog network Weblogs Inc. as a cornerstone and ambitiously rolling out new properties to add to the arsenal, AOL increasingly shifted focus away from its access business and more toward publishing. The company uprooted its corporate headquarters from Dulles, Va., to New York, picking a downtown office space in much closer proximity to the trendy digital agencies and blog networks of SoHo and Cooper Square than to the media industry stalwarts--including then-parent company Time Warner--in midtown.
Shortly before the spin-off, AOL announced a project that Armstrong had been hinting at for some time: Seed.com, a sort of clearinghouse for assigning freelance journalists and photographers to areas that its "engine" has deemed to be high-interest or in need of coverage. The company hired veteran journalist Saul Hansell to helm the project.
"Basically, our system allows us to take lots of data to figure out how to make better content for the Internet," Armstrong said in Thursday's conference call.
Seed.com has garnered some criticism: that it's really no different from existing business models of companies like Demand Media; that it will invariably prioritize tabloid-like, sensationalist stories with huge readership potential rather than less titillating but important journalistic endeavors; or that regardless of how innovative it is, it won't save AOL's advertising revenues.
Armstrong, of course, has a "go forth" attitude toward it all. "We focused the strategy of the company very clearly and succinctly around content, advertising, and communication," he said in Thursday's call. "And as we think about the future and stay focused on what we're going to be executing, we're in a good place because of where the Internet is headed. The '90s were about access, (and) AOL played a major role in access...This decade has really been about platforms: Google, Facebook, Twitter, etc., and we believe that the next decade will really be about content.
Not everybody agrees. But the invite list for AOL's celebration sure hopes Armstrong has the right idea.
NEW YORK--Former Six Apart executive and well-read blogger Anil Dash has a new gig: he announced at the Web 2.0 Expo here on Wednesday that he will be the director of Expert Labs, a new nonprofit that will take the dot-com incubator model and apply it to new digital tools for the federal government.
"Despite what our ego tends to think in the tech industry, the issue is not that we need to have more tweeting from the White House," Dash said onstage. "(We can) help them learn the lessons that we've seen over the past half decade of Web 2.0's ascendence."
Expert Labs, which is a division of the American Association for the Advancement of Science that's funded by the MacArthur Foundation, will match digital voids and holes in government and policy with the developers who can fill them, with grant money paying for the work. The organization also hopes to host developer competitions, a similar move to some municipal projects like New York's "Big Apps."
It's not a government agency, but the Expert Labs Web site explains that "we've been privileged enough to connect with agencies and departments across the federal government, from the White House on down." Cutting through bureaucracy, needless to say, will still be a challenge. Dash is unfazed.
"If we tap into the expertise of each community, there's enormous potential," he said. "So we're going to ask policymakers for their expertise in defining the questions that we need answered." Then, Expert Labs plans to hook those projects up with technologists who can build the requisite systems, and then to members of the science and academic communities to help solve the issues at hand.
"No matter how smart the policymakers are in our government...there's always going to be more experts outside the Beltway," Dash said. "The tactics thus far have been a closed-door meeting with a half dozen people for an hour."
He asserted, "The Web has changed the way that works."
NEW YORK--You had two options if you wanted to hang out with Digg founder Kevin Rose at the Web 2.0 Expo conference this week: head over to the lobby bar of the trendy Standard Hotel on Monday night, where Digg was picking up the tab for several dozen of the city's blogger elite; or pack into Manhattan Center Studios on Tuesday night along with about a thousand other young, predominantly male New Yorkers for a live taping of Rose and co-host Alex Albrecht's "Diggnation" video show.
Geek heroes: Jay Adelson (left) and Kevin Rose in a screenshot from one of their regular 'Digg Dialogg' videocasts with Digg users.
Those are, after all, the two Diggs. There's Digg the company, the name that first put "social news" into the mouths of New York media both old and new, the BusinessWeek cover story that established the shaggy-haired Rose as digital media's poster boy, the start-up that was once talked about as a huge acquisition target for the likes of Current Media, News Corp., and even Google amid CEO Jay Adelson's coy insistence that it wasn't for sale. But then there's Digg the brand: haven for the wackiest of the Web, with a front page dominated by anything Apple, oddball science, insidery tech and politics news, and the latest YouTube sensations. It's a dual identity that seems to be tough for the industry, or the five-year-old company itself, to reconcile.
At the Web 2.0 Expo, both Diggs--and the tension between them--was on full display in a dual keynote by Adelson and Rose on Tuesday afternoon. And the executives were both vocal about the fact that Digg has got to change.
"We're about 40 million users today, (with) about 20,000 submissions a day going into the Digg system," Adelson said onstage. "It's certainly achieved huge things for us. It's what we've set out to do, but we have a ways to go."
Rose added, "We've pretty much stayed the same over the last couple years."
There's a revamped Digg coming, a complete overhaul using the Cassandra database management system, which was developed and then released as open source by Facebook. In the new version will be "instant Digging" that doesn't require registration or a login, better filtration of topics to fit any number of niche interests, and a "smarter" way to gauge story popularity so that both the number of "diggs" and the number of times a link was submitted in the first place are taken into account.
Adelson told CNET later on Tuesday, just outside the auditorium where hundreds of rowdy young Diggers were awaiting Rose and Albrecht to walk onstage for the live Diggnation taping (a co-production of Revision3, the video outlet that Rose and Adelson also co-founded), that this will arrive in the first half of next year. "I can't say with certainty when, because there are so many infrastructure components that have to come first," he said.
This talk of change and versatility is exactly the message that the San Francisco-based Adelson and Rose want to convey while they're visiting New York, the center of the global publishing industry. This is Digg the media company on parade, the Digg that picked up the tab for the cocktail-swilling media insiders at the Standard on Monday night; and this is the Digg that's taken a bit of a beating recently. True, its traffic isn't plummeting, and by most measures continues to grow at a decent pace, but as a news-sharing destination it's been eclipsed by both Facebook and Twitter.
Digg's once-gossiped-about valuation may have taken a hit simply because the market for social news has grown so saturated, and as a result the company is no longer a novelty. Take third-party Twitter app TweetMeme, for example, which takes the links shared all over Twitter in "retweets," and compiles them into something that looks an awful lot like Digg. Or the likes of Yahoo Buzz, which haven't proven to be as popular or ubiquitous as Digg but which proved that it's not particularly difficult to build your own social news service.
"It makes me very proud," Jay Adelson said of the Digg influence evident in TweetMeme buttons and, now, Facebook sharing buttons. He added, "I think that the sophisticated publisher understands the difference between sharing within a social network, sharing on Twitter, and sharing on Digg."
Influential, sure. But when it comes to making a lasting footprint in the media world, Digg hasn't yet been able to get past the common wisdom that the footprint in question will be from a beer-soaked Converse All-Star. And that's the Digg that was showcased on Tuesday night as Rose and Albrecht, both in trendy fitted plaid shirts, received a rock-star welcome for Diggnation.
More than a thousand people had showed up at the Manhattan Center Studios venue, a smaller crowd than the show's last taping in New York, but a company rep pointed out that the previous taping had been in the summer, and this one was on a school night. Someone in the audience excitedly waved a sign that said "WINDOWS 7 FTW!" (That's "for the win," in case you stepped in late.) Another sign read "I SKIPPED CLASS FOR THIS!" and still another, which Rose and Albrecht seemed especially proud of, was a green sign that read "GO HIPPIE!" with a massive, hand-drawn marijuana leaf.
Adelson says that the company's merry band of fanboys--yes, most of them are male--doesn't get in the way, strategy- or image-wise.
"Our core Digg enthusiasts frankly provide a tremendous amount of our feature ideas and feedback, and are the ones that we can count on to be there even when we screw up," Adelson told CNET on Tuesday night. "I don't think they hold us back. I think that's the power of the product."
Kevin Rose's essential Diggnation props: Mac laptop, open bottle of beer
(Credit: Revision3)There have been some good signs. Adelson says that Digg's experimental advertising system, in which unpopular ads are penalized with higher costs ("We charge the advertisers more money when their ads start sucking," Rose explained in the Web 2.0 Expo keynote) have been a runaway success. The company also absorbed a Rose side project, Twitter directory WeFollow, which could have interesting implications.
Their mission is still precarious. The hordes of Digg loyalists propelled the company to fame, but they're known to be volatile: if they hate something, they'll make it obvious. In 2007, when Digg pulled down a number of news links in response to a cease-and-desist complaint (the links directed to instructions for cracking a digital rights management code in the now-defunct HD DVD format), avid users flooded its system with even more links to the code. Digg admitted defeat, and restored the censored links. Earlier this year, when a new URL-shortening feature called the DiggBar garnered a negative reaction, the company made some significant modifications. If they don't like the yet-to-be-unveiled Digg revamp, it could get really ugly.
But perhaps the most difficult part of Digg's dual-identity wrangling is the fact that the company's executives and figureheads really do seem to have an affinity for its mischievous roots. Take Tuesday night, when a few excited audience members at the Diggnation taping started waving around the pink tickets they'd received from local cops for downing booze while waiting in line outside to see the show.
"Open container in line? That is awesome!" Rose exclaimed, reaching for one of the tickets and displaying it in front of the crowd.
Co-host Alex Albrecht chimed in. "You should get that framed!"
NEW YORK--Web pioneer and conference honcho Tim O'Reilly warned the audience at the Web 2.0 Expo here on Tuesday afternoon that he thinks "we're headed into another ugly time." Namely, everybody is just being really nasty to each other. And it makes his hippie soul hurt.
For example, Rupert "Dr. Evil" Murdoch keeps threatening to pull News Corp.'s pay wall-guarded content from Google, perhaps offering an exclusive deal to another search engine for one hundred billion dollars (give or take a few bucks).
Those ubiquitous URL-shortening toolbars are throwing Web addresses behind a cloak of invisibility, O'Reilly said, and they "don't let you navigate freely like the Web used to work." With Google's Chrome hurling itself into the mix, the browser and operating-system wars are starting to look less "Mean Girls" and more "Aliens vs. Predator."
But O'Reilly's attitude isn't "bring it on, and get me a large popcorn with extra butter, while you're at it." Rather, he hinted that at least in some cases, he's willing to embrace Google as a big, cuddly, benevolent dictator in the midst of it all. It's "a monopoly that's a service of value to users," he said, adding that generally, when Google makes a product with the primary goal of one-upping the competition--Knol vs. Wikipedia, Checkout vs. PayPal--it's not a success.
That's probably because, at least right now, among all the giant robots stomping about the series of tubes, Google is the one that most resembles O'Reilly's vision of the "open Web." In a blog post prior to his speech, he predicted that Microsoft could take over this role. Or not. Either way, he insisted that "it's time for developers to take a stand."
Setting off this kind of electric shock in the Web's punditocracy is a great way to drum up attention and newsworthiness that doesn't have anything to do with philosophizing about the recession, extolling the possibilities of the real-time streaming Web, or predicting which dot-com figurehead is going to be the most plastered at South by Southwest this year. Thank goodness! That stuff was getting so boring!
And O'Reilly's rallying cry has already gathered reactions. Barbarian Group executive Rick Webb, for one, posted a colorful retaliatory blog post, in which he said that "setting aside the 'boo hoo, the Internet is becoming a bunch of walled gardens' arguments, when rational people have conversations about how to make the Web actually usable and not 95 percent piracy, spam, and fraud, almost every discussion starts with the proposition that there is no other realistic option but to chuck the whole thing and start over."
Of course, the Web should be in a state of "war." When have things been any different? It's a hub of innovation, competition, and constant change, and I think we all knew that already. The barrier to entry is low enough so that if there's a glaring problem with something, users will flock to whoever can create a better alternative. In fact, O'Reilly brought that up on Tuesday, when he talked about expensive in-car GPS navigation systems.
"The turn-by-turn directions from TeleAtlas cost $99 [on the iPhone], but Google is giving it away for free. This is a natural kind of extension for Google. I don't think Google is being evil here by being disruptive," O'Reilly said. "That's a massive user win, even though it is incredibly damaging to some existing companies and some existing business models. When Google offers free speech recognition, [that would be] an amazing win."
Is that legitimate innovation? Yes. But let's hope the "win" doesn't stop there. If Google manages to throw a sucker punch to Apple, Microsoft, or whoever else by offering something once-pricey for free, I should hope that the rest of the industry makes sure that it doesn't grow too complacent.
So let's get this straight: monopolies are bad, unless they're "nice" ones on behalf of companies that extol the virtues of Razor scooters, wheatgrass smoothies, and lava lamps. Competition is great, as long as everybody's nice to each other.
Doesn't quite make sense to me. But, hey, it's his show.
A preview of how Blip.tv content will be displayed on the Roku Digital Video Player
(Credit: Roku)NEW YORK--Online video start-up Blip.tv on Tuesday unveiled an wide range of infrastructure and partnership announcements that, according to chief operating officer Dina Kaplan, explains why "for the past year we have been very quiet."
Part of Tuesday's announcement, made in conjunction with a breakfast event at Blip.tv's downtown offices here, was a new set of syndication partnerships with hosting platforms YouTube and Vimeo, local TV station NBC Local Media New York (which acquired video production company LX.TV last year), and set-top box manufacturer Roku. It's also expanded existing partnerships with TiVo, Sony, and Verizon Fios. Blip.tv, geared toward video producers and creators who want a hosting, distribution, and marketing platform for episodic programs rather than standalone videos, has existing partnerships in place with iTunes, AOL Video, MSN Video, and a number of others.
"Before today we used to say that Blip reaches half of the video Internet," CEO Mike Hudack said at the press conference. "Today I'm really happy to announce that we probably reach about 80 percent of the video Internet."
Blip.tv, which Hudack says was designed "to make independent Web shows sustainable," runs its own hosting platform but also distributes to partner sites--basically, letting members upload to many platforms at once--and runs an optional advertising program that it splits 50-50 with show creators.
Additionally, Blip.tv unveiled on Tuesday an upgraded "dashboard" for members to manage the shows they've uploaded: new features include batch-editing of episodes, statistics and analytics from new partner TubeMogul, enhanced advertising capabilities from FreeWheel Media, and cross-platform comment and friend request management.
With the dashboard, members can use a series of check boxes to choose the platforms to which they want to upload their videos, track views and revenue earned on a series of graphs, and opt to integrate advertising.
"We started Blip about four years ago with five friends, and the idea was really simple," Hudack said. "There were all these people making Web shows and we figured they needed help with hosting and distribution and all this stuff." At launch, the start-up was effectively a YouTube competitor that was only differentiated by its appeal to the independent video blogger community, but Blip.tv has since been crafting itself into more of a distribution platform rather than yet another place to upload and watch videos.
Now, only four percent of Blip.tv users' 72 million monthly total views are on the Blip.tv platform.
The differentiation is enough so that Blip now considers the Google-owned YouTube to be a partner, not a (significantly larger) competitor. "One of the things that we really believe in is an open Web, and we believe in data, and we believe in supporting content partners and independent show creators," YouTube content partner manager George Strompolous said at the event on Tuesday.
But the announcement also had an old-media angle: thanks to the partnership with the NBC affiliate, some Blip.tv creators' shows will air on New York Nonstop, an NBC-owned station in New York that specializes in short-form digital content like the shows it acquired with LX.TV, and possibly even on the main WNBC channel.
Blip.tv raised its most recent round of funding last October in a round led by Bain Capital Ventures, and soon after moved to a new office space in the downtown SoHo neighborhood that has become a social fixture for the local tech community in part because of its built-in beer taps.
The company has not yet provided a roadmap regarding revenues and profitability.
This post was updated at 7:22 a.m. PT.
NEW YORK--The state senate in Albany was in a bit of a shambles Monday. So instead of speaking in-person at the Personal Democracy Forum as planned, NY Mayor Michael Bloomberg used Skype to make his keynote address.
"Through the miracles of modern communication, we're essentially together," Bloomberg commented to the audience at the Frederick P. Rose auditorium here in midtown Manhattan. He then spoke about how New York is using the assets of the digital age to make more information available to the city's residents--something that Bloomberg can pitch well, considering he made a fortune as the founder of the business news and information company that bears his name.
Mayor Michael Bloomberg
(Credit: NYC.gov)Bloomberg's new initiatives include Skype and Twitter accounts for NYC 311, the city's information hotline that Bloomberg launched several years ago; a partnership with Google to get more detailed information about exactly what people are searching for on municipal government sites (and what they can and can't find); and "Big Apps," a new contest for developers to crunch and remix city data into Web or mobile applications for the masses.
The economy, however, may get in the way. Any ambitious new city projects are taken with a grain of salt these days, and with good reason.
I, for one, was scrambling to get to Bloomberg's talk on time because cutbacks and delays on the B-D-F-V subway line had added literally an extra half-hour to my commute from downtown to the conference venue at Columbus Circle. Griping about the city budget is pretty commonplace around here these days, and Bloomberg himself is no exception.
"If any of you from around the world wants to move here," Bloomberg quipped over the Skype connection when conference organizer Andrew Rasiej commented that a thousand people were on hand, "we would love to have you. We need taxpayers."
The official information available on the Web to New York residents includes public school progress data and citywide performance reporting. Beyond that, Bloomberg's administration has chosen to support new and more efficient ways of doing business: it has given the thumbs-up to collaborative workspaces and launched a venture fund for tech and finance start-ups, among other things. These are all part of a way to combat the fact that the Wall Street meltdown has left scores of the city's professionals out of work.
With "Big Apps," Bloomberg is encouraging developers to participate in a contest that "will challenge all of you, and the whole tech world, really, to come up with new applications using city data."
"We'll be releasing a huge volume of data from a number of agencies," Bloomberg said before the Skype connection briefly cut off. Rasiej re-dialed in, and Bloomberg continued that he hopes the fruits of Big Apps contests will "create the connectedness that will benefit the city economically, civically, and socially."
If developers aren't willing to act solely out of a desire to help the city, Bloomberg said that Big Apps will indeed have cash prizes, as well as an even bigger incentive.
"I'll up the ante by taking the grand-prize winners out to dinner," he said.
Good to hear that's still in the budget.
NEW YORK--Amazon CEO Jeff Bezos was coy about exactly why he isn't thrilled with Google's attempt to forge its way into the digital publishing business.
"We have strong opinions about that issue which I'm not going to share," Bezos said to interviewer Steven Levy at the Wired Business Conference. "But, clearly, that settlement in our opinion needs to be revisited and it is being revisited."
In a court battle rife with twists, turns, and delays, Google has been attempting to push forward its Book Search initiative, which could potentially give the Mountain View, Calif., tech giant exclusive access to digital editions of some out-of-print books. That could, as Levy pointed out, get in the way of Amazon's goal of offering every book ever printed in every language on the Kindle and its new, bigger Kindle DX sibling. And it sounds like that's where Amazon has some beef.
"There are many forces of work looking at that and saying it doesn't seem right that you should do something, kind of get a prize for violating a large series of copyrights," Bezos said.
Bezos was speaking at the conference, which had the subtitle "Disruptive by Design," to talk about Amazon's legacy of shaking up the retail industry and now potentially the publishing industry with its Kindle e-reader device. Most of his talk was focused on the sort of business advice that one might expect a tech company to provide to a room full of big-business and old-media types ("be stubborn on the big things and very flexible on the details," "you have to be willing to be misunderstood for long periods of time"), but he did get a few minutes to talk about how he thinks the Kindle is changing things.
In New York, a longtime global hub of the beleaguered publishing, media, and advertising industries, what he had to say was particularly weighted. The Kindle, after all, is doing extremely well: Bezos said that out of the entire offering of 300,000 books available for both the Kindle and physical retail on Amazon, that the Kindle's sales are 35 percent of physical books' after only 18 months on the market.
"Internally, we are startled and astonished by that statistic," Bezos said.
But he wouldn't promise that the device will singlehandedly save the newspaper industry.
"I never want to convey that I think we have a sinecure with any particular product offering, but if we execute well and other companies that do these kinds of electronic readers, that is going to be part of what happens with newspapers," Bezos said. "And I do think there are going to be multiple companies competing with reading devices and I think there's room for multiple winners."
Like much of the speakers at the Wired Business Conference, Bezos talked extensively about how things have changed over the past few years, and how it demands a deep rethinking of business practices in all industries. In this case, he was talking about the media business.
"Unfortunately, there's a collision of several major issues happening to the magazine, newspaper, and publishing industries all at once, including most recently the recession which has taken a bad situation and made it much worse," he said. "But the biggest structural problem in my opinion is there's just so much supply of advertising space. That's a fundamental problem that's not going to go away."
But at the same time--in keeping with the conference's theme--there's an extraordinary amount of opportunity, Bezos insisted.
"Some of the most important barriers to entry in that industry have been dissolved, and they've been dissolved permanently."
NEW YORK--"I'm anti-tax, but I'm pro-carbon tax," Tesla Motors founder Elon Musk said onstage at the Wired Business Conference here Monday--a remark that prompted interviewer and Wired editor-in-chief Chris Anderson to quip that he was a "true Silicon Valley libertarian."
Tesla Motors Chairman and CEO Elon Musk
(Credit: Tesla Motors)Gasoline "should probably be $10" per gallon, said onetime PayPal co-founder Musk, who is also attempting to make sending satellites into space cheaper with a start-up called SpaceX. "I'm not paying for the true cost of gasoline at the pump...since nobody's explicitly paying for the CO2 capacity of the oceans and atmospheres, it's getting consumed. We will pay for it down the road, but we are sort of ignoring it for now."
Musk's company has put out the Tesla Roadster, a pricey sports car that runs exclusively on electric power. On the way is the Model S, a more affordable sedan. Separate from the technology, Tesla has gained a reputation for financial difficulties and corporate bickering. Earlier this month, former CEO Martin Eberhard sued Musk and the company for libel and breach of contract.
Musk's rash attitude and devotion to cutting-edge innovation has constructed him as a figure less than willing to compromise. He didn't sound too satisfied, for example, with the level of innovation in the Toyota Prius, the car that is practically synonymous with environmental consciousness in the auto industry.
"A Prius is not a true hybrid, really," he said. (A plug-in Prius is on the way.) "The current Prius is like, 2 percent electric. It's a gasoline car with slightly better mileage."
That said, Tesla shines quite a bit brighter due to the utter disarray of the U.S. auto industry, with major automakers falling into bankruptcy and Detroit in a continuing downward spiral. This, according to Musk, was the inevitable result of a completely broken system.
"Great companies are built on great products," he said, and when those products take a turn for the worse, so does the company. Automakers, Musk theorized, focused too much on the money rather than innovation. "The path to the CEO's office should not be through the CFO's office, and it should not be through the marketing department. It needs to be through engineering and design."
Musk said that unions weren't inherently the problem but the way that they were structured was. "It's not out of the question to have unions. But if they do have a union, they've got to understand that they're on the same side of the company," Musk said. "I really am kind of against having a two-class system where you've got the workers and the management sort of like the nobles and peasants." In other words, Musk thinks Detroit could use a dose of Silicon Valley corporate culture.
Surprisingly, Musk implied that Detroit will survive. "I think it'll probably be a healthier place. This has been somewhat cathartic. Maybe, I think, maybe I'm being overly optimistic, but I think this will be a cathartic experience," Musk said. "I think GM and Ford, maybe not Chrysler, but GM and Ford will come out of this healthier...and more competitive."
He wants Tesla to be part of that, obviously.
"I'd like to take up some of the manufacturing plants," he said. "When the mess gets sorted out I'd like to have a conversation with whoever's in charge."
NEW YORK--As he kicked off the Wired Business Conference on Monday, Wired magazine's editor in chief, Chris Anderson, started talking about Jell-O.
Anderson was explaining the thesis of his forthcoming book, "Free," about the realities of making a profit and building a business in an environment rife with digital goods that can be replicated at almost no cost. The Jell-O angle came from an anecdote that detailed how, in the late 1800s, the manufacturers of the then-bizarre dessert got the word out about it by distributing free Jell-O recipe books around the United States.
"Giving away one thing free could help them enter the market, create brand recognition, and create demand for something that was paid," Anderson said.
The Jell-O reference probably resulted in quite a bit of head-scratching, as this was not the Wired crowd of wacky futurism, sci-fi fandom, and gadget hacking. With a slant of "Disruptive By Design," the Wired Business Conference's target audience was corporate New York, a city full of suits who have been operating in lockstep for decades and yet have seen all hell break loose in the past year.
"(These are) seemingly unprecedented times because the time is right for disruption," Howard Mittman, Wired's publisher, said in the morning's first talk, as he introduced Anderson onstage at the Morgan Library & Museum, a historic space with deep ties to business innovation in New York.
The conference was also, in effect, a marketing pitch for Wired itself, which has seen the media industry's crisis take a massive bite out of its advertising pages. By bringing the likes of Amazon.com CEO Jeff Bezos and Tesla Motors founder Elon Musk to a day of panels and talks, the Conde Nast-owned brand was attempting to give the hard sell about its own portfolio of ideas and open it up to a crowd that's historically been more likely to pick up Fortune or Forbes at a newsstand.
As he discussed disruptive business models, Anderson revealed that his take on "free" is that businesses have to accept that some things just do not, and should not, have a price tag attached anymore because the Internet has driven their costs to zero. Companies should focus on where they can charge money.
"In the 21st century, with virtual stuff...you've got swords and other digital goods in games and online spaces, and you're looking at a different economic model," Anderson said. In many video games, you can play for free, but the game experience can be enhanced with paid services. The Disney-owned kiddie virtual world Club Penguin, for example, makes most of its money with paid virtual enhancements: many a parent in the audience was familiar with their kids' desire to buy a better "igloo" for their virtual penguins. Playing for free is an incentive not unlike the Jell-O recipe book.
In a less silly context, there'sadvertising company OpenX, whose CEO Tim Cadogan was on a panel that followed Anderson's talk. OpenX gives away its open-source ad platform software but charges for consulting and other services.
One of the biggest innovators in the "free" model, Anderson said, is actually Microsoft--derided for years by geeks as the quintessential plodding software company. He explained that Microsoft didn't do much to derail piracy of its products in China because it saw the proliferation of the Microsoft brand as a way to get a foothold in a developing market that would eventually be able to pay for its products. (Not everyone would agree with this assessment, to say the least.)
"What you see in piracy is essentially the marketplace imposing "free" upon you," he said. "With a little bit of looking the other way, (Microsoft) let pirates be their best marketers...so that someday, that would come back as revenues as the country developed. They accepted piracy as a term of gray marketing."
Virtual goods are a huge business indeed, especially when it comes to online gaming, but the audience at the Wired Business Conference might not have the same take on it. The music industry is still in turmoil over the decade-plus of proliferation of free music on the Web that caused sales to plummet. Newspapers and magazines, meanwhile, are suffering due to declining revenues, and everyone's still afraid of Google (even if Google has now shown some vulnerabilities). An entire economic model based on the success of World of Warcraft's magic spears and Radiohead's onetime name-your-own-price experiment are radical, to say the least.
Or maybe the audience will prove more receptive to "free" and its manifesto. We have learned in the past year, after all, that Wall Street was dealing for decades with a whole lot of stuff that was about as tangible as a Club Penguin igloo.
The hottest hotspots in New York...for nerds.
(Credit: Sam Lessin)Just how powerful can the data behind a location-based application be? Extremely.
Earlier this month, the second annual Internet Week New York took place, and Dropio founder and certifiable data nerd Sam Lessin crunched a bunch of numbers based on what his contacts on urban navigation and friend-finding service Foursquare were doing. Lessin was working with a group of fewer than 100 contacts, almost all of whom are involved in the tech and new-media industries (this is the scene that birthed Foursquare and its predecessor Dodgeball, after all), and yet it's a fascinating peek at just how much this kind of data can reveal. He's posted it on his personal file "drop" on Dropio.
Lessin trawled through the data to find what time people checked into coffee shops in the morning (and whether they were doing this earlier or later on a given day), how much people "lost steam" over the course of a party- and conference-filled week, and how much the most popular gatherings actually matched up to the Internet Week New York official schedule. As it turns out, the hottest parties were impromptu, unofficial gatherings at the Standard Hotel and, um, Sing Sing Karaoke.
Obviously, this isn't perfect. Foursquare updates are voluntary, which means that data can't say a thing about what people are doing when they aren't telling the app about it. The presence of an app like Foursquare, too, can also skew social activity: word about the massive impromptu party at the Standard Hotel bar, for example, spread when the Foursquare check-ins started snowballing.
But when you have enough people participating--which, as of yet, Foursquare does not--the critical mass starts to correct some of those issues. It's a fascinating sneak peek at what sort of value this data could have down the road.
What we can also look forward to: pretty infographics, Orwellian privacy concerns. Eek.
