Reddit’s easy fix

Are you following the hand wringing over Reddit? If not, the problem is that a few people say terrible things there. And then Reddit tries to figure out how to stop it without infringing on the sense of ownership that users have for the content they help create. But deciding where the lines are and what crosses the lines is hard. After all, Google links to ALL SORTS of terrible things (seriously, click on that link at your peril), but since they don’t host all that terribleness, it’s all OK.

The controversial CEO Ellen Pao has left, and people are clamouring for “real leadership”.  This is not a “leadership” problem any more than global warming is a “sunshine” problem.

Rob Labatt and I have been discussing Reddit’s dilemma, mainly because we’ve lived through it.  Rob was CEO of a company called ezBoard, where I invested.  ezBoard grew to be a giant host of discussions of all kinds, circa 2000-2008.  We had the exact same problem as Reddit, and struggled over it in the exact same way (minus blaming the CEO — Rob was great).  The challenge is less about leadership and more about the nature of online communities.  They are, let me not say “unruly”, let me say “heterogenous”.

And, beyond attempts to play moral policeman, it’s also hard to get advertising dollars for a website that has folks saying things with which Safeway or Ford Motor Company would rather not have their names associated.

GOOD NEWS:  There is an easy fix.  The easy fix will temporarily reduce some of Reddit’s traffic but shine a fantastic light on the shady neighborhoods, and it’s this—

Make Reddit users use their real names.

It’s far easier for bad behavior to hide behind anonymity, that’s why mobs can be so destructive.  That’s why the Ku Klux Klan wear hoods.

Facebook, the most successful social network in the world, requires the use of real names.  I have a friend who is working to legally change her name, but until she does, Facebook won’t let her use the name by which everyone knows her.  So it can certainly be done.

Then, the people who need to hide behind anonymity will go to some other site that allows for that sort of thing, and we can campaign to root them out from there as well.  Keep Reddit to its original theme of Democracy Re-envisioned.  Well functioning democracies require ID for voter registration, so Reddit should take a hint.

And it removes much of the problem without Reddit trying to play policeman.  There will still be occasions where Reddit will have to remove content, but I guarantee those occasions will be drastically reduced.  Real names is the single biggest change to allow Reddit to move on from this series of bad PR and destructive moves.

Wind Turbines Kill Birds – and abuse statistics

Wind turbines in the US kill 440,000 birds per year according to the US Fish and Wildlife Service. That’s appalling, say opponents of wind turbines. Maybe we should sue. This apparently green energy source is clearly bad for at least one part of the environment. Why, that’s about 1,000 birds per day. Imagine 1,000 birds piled up your  doorstep. Egad!

Well, before we get too upset, this is another misuse of data.  Don’t fall for it. 440,000 birds sounds like a lot, until we realize the following:

Cats kill 500,000,000 birds per year in the US.  That’s nearly 1,400,000 per day.  That pile on the doorstep is way bigger than the house.

Only by giving the context and the grounding for the numbers can the numbers really mean anything.  And these numbers say that we should sue cats!  They’re bad for the environment.

I’ve also seen awareness advertisements that say things like “AIDS kills one child every minute.”  That’s very sad. And it’s an attempt to make tragic AIDS deaths real to us.  I applaud the effort, but it misses the context.  We need one more piece of data to really be an informed consumer here.

And that data is that “20 children die every minute from all causes“.  That’s also sad.  In fact, half of those deaths are preventable malnutrition.  That’s one child every 6 seconds.

In our attempts to make human the ridiculous sizes of statistics, we have to also provide context.  Or as consumers of statistics, we must demand context.  For example, a stack of $100 bills to the moon represents the size of the US Debt.  That’s really useful if you are one of the 24 humans that have made that trip.  For me, the moon looks pretty darn close, especially when it’s on the horizon.

Tax Breaks for Angel Investors

This is a great idea to stimulate new business creation (including businesses like microfinance that both make money and solve a social problem).  I don’t say “great idea” in response to legislative efforts very often.

It’s unlikely to pass, so if you have some political contacts, some pull, or just like writing emails and letters to senators and newspapers, now would be a great time.

Sen. Bill 256, known as “The American Opportunity Act,” will provide a 25% federal income tax credit for investing in qualified small businesses, including companies in the advanced manufacturing, aerospace, biotechnology, clean energy and transportation sectors. Qualified small businesses can receive up to $2 million per year in tax credit-eligible cash equity investment, of which no more than $1 million can come from a single investor. The funding is estimated to stimulate $2 billion per year of new capital formation.

More info here.

Blogs manipulate internet

I write because it’s interesting, and it records what I’m thinking.  I still have all my third grade English papers.  I’m that kind of guy.

The fact you read third grade quality randomness makes me both grateful and curious.  I was curious what you were reading, so I went to look at my blog statistics.

My most popular blog is about fixing the iPhone.  It shows up in Google searches, and desperate smart phone owners surf over to see it.  It is clearly more actionable than any of the random complaints I make about the federal deficit or the paucity of gluten-free foods at In-n-Out burger.  Though In-n-Out does make a nice french fry.

But what does it say about blogs?  It says that if you want a popular blog, it has to talk about popular things.  In fact, I could make this blog post my most popular post with just a few choice additions:

• “Charlie Sheen and Lady Gaga contemplate birthing Justin Bieber competitor”
• “iPad 3 specifications include free pornography app”
• “Sammy Hagar claims alien abduction”

That last one isn’t even made up, it’s actually the third hottest search today according to Google Trends.  I bet, though, that Google Trends excludes searches like “Gisele Bundchen nude” or “bestiality”.

I also didn’t make up “bestiality” as a hot search topic, sadly.  In 1999 companies had to buy ads from Yahoo! by negotiating for them rather than buying them in auctions a la Google Adwords.  Yahoo! would send our portfolio companies the list of top search words for purchase.  In the top 20 were “bestiality” and 2 apparently very common misspellings.  It would seem that having sex with animals messes with your spelling skills as well.

Pictures have also been a big draw, like this one:

That’s Brian Williams of NBC Nightly News, and if you’re like my girl, you’ve got “a bit of a crush on him.”  Honestly, I don’t get it, but if there are more people like her my blog search results just went up 4 fold.

Politics doesn’t move the needle for my blog, but just in case:  Go, Sarah Palin/Mike Huckabee/Tim Pawlenty/Donald Trump!  (Trump is seriously considering running for President, as if having that awesome hairdo wasn’t enough for one man).

The internet started as a research link between government funded research labs.  If the first file exchanged was “Monitoring structural integrity through acoustic emission” (i.e., beating on things to see what noise they make), the second file exchanged was “Hello, I am a Nigerian widow with $1m in a bank account that you can help me access…”

Ultimately, the internet and blogs are about us, and we are about “The Real Housewives of Schenectady” and “The world will end in May, 2012 (just like it has at least 200 times before)”.

We’re still gonna need nuclear energy

The nuclear nightmare scenario in Japan might give nuclear energy a bigger black eye than BP gave drilling in the Gulf of Mexico.

Nuclear energy is scarier.  Birds coated in thick black tar don’t bother us as much as the silent killer of radiation and subsequent thyroid cancer.  It’s an exotic experience, outside our normal life, and a gruesome end.  That’s the reason why more people are scared of guns than cars. (Even though cars kill twice as many Americans per year).

But whether you like it or not, we’re still going to need nuclear if we want to end global warming.  Here’s three reasons why:

1) Nuclear is safer than other energy options, surprisingly.  Despite the current crisis, nuclear accidents are isolated and less harmful.   Chernobyl killed 50 people immediately and perhaps 4,000 people over 20 years.  Japan is still in doubt but could be more.  Meanwhile, pollution kills about 3 million people per year.  Nuclear is even safer than rooftop solar, because people die while installing solar panels according to one estimate.

Deaths per Terawatt hour:

Coal – world average               161 (26% of world energy, 50% of electricity)
Coal – China                       278
Coal – USA                         15
Oil                                36  (36% of world energy)
Natural Gas                         4  (21% of world energy)
Biofuel/Biomass                    12
Peat                               12
Solar (rooftop)                     0.44 (less than 0.1% of world energy)
Wind                                0.15 (less than 1% of world energy)
Hydro                               0.10 (europe death rate, 2.2% of world energy)
Hydro - world including Banqiao)    1.4 (about 2500 TWh/yr and 171,000 Banqiao dead)
Nuclear                             0.04 (5.9% of world energy)

 

2) It fits in our space.  According to the substantially researched “Sustainable Energy Without the Hot Air”, by David MacKay, our other options take up a lot of space.  We can’t meet our current energy demands even if we convert 75% of agriculture to biofuels, fill 5% of the land with solar panels, and install wind generators where the wind blows.  Nuclear is a very dense power supply.

3)  Nuclear is three to five times cheaper than other non-carbon producing options.

Energy is a huge component of our overall cost of living.  If we raise its price, we will have to lower our living standards.  Take a room off your house, you can’t afford it.  Sell your car, you can’t afford it.  Eat less food, you can’t afford it.  If you make those sacrifices, you can afford to replace fossil fuels with solar power.  Meanwhile, nuclear is the cheapest non-carbon producing option.

3 to 5 times more money?  That doesn’t sound too bad.  Well, imagine filling your Prius with $20/gallon gas.  That’s $240 a tank, or about $12,000 a year for the average commuter (who also makes just $33,000 a year)

 

Free the WiFi

I’ve been traveling through three countries in Latin America:  Nicaragua, El Salvador, and Honduras.  I’ve been in airports and hotels of every variety, establishments I would loosely call “restaurants”, in towns large and small.

And only when I landed at Houston airport did I face the prospect of having to pay for WiFi.  That’s right, the internet was free in all those little shops and towns with dirt roads, from coffee land to cowboy country.  Wouldn’t want to end up in the hospital in those places, but it’s nice to know that if I did, I could check my email and watch videos of cat farts on YouTube.  That would make the lack of antibiotics and painkillers much more palatable.

Since the infrastructure is so completely inexpensive, why do American companies insist on charging for WiFi?  When Starbucks switched to free WiFi, how many of you spent longer, and spent more dollars, there?

Making money off of WiFi, for a retail location, airport, or airplane, is such a tiny percentage of incremental revenue, is so far from the main business model of the companies, that it is short sighted to charge for it.

WiFi is not the blade, it is the razor.  Give it away for free, so that you can sell more of the main thing — hotel rooms, grande lattes, car washes or Happy Meals.  And so I can tweet things with lots of exclamation points, like “OMG!!! Saw a kid soooo big!  He’s a cubist painting!  I can see all sides of him at the same time!  Oh well, pass me my super-sized chicken nuggets!”

Nation-building, poverty style

Has it occurred to anyone that poverty, high food prices, and unemployment have done what $1 trillion and the power of the United States military could not?  It appears that poverty has led to more regime change and nation building than war.

Depending on the outcome of the Libyan situation (and we could certainly see another military leader take over there rather than democracy), poverty is beating war 3 to 2 (Tunisia, Egypt, and Libya vs Afganistan and Iraq).  Of course, the process is incomplete in all 5 countries.

Poverty beating war.  It’s the lack of plowshares beating swords.

Fair Trade for Profit

I just realized that Fair Trade is a for profit business model.  Maybe I’m the last to know.

I’ve been touring coffee co-ops in Nicaragua.   I always thought of Fair Trade as some sort of utopian, bright-eyed, “let’s hold hands across the world” sort of charity.

Nope.  Fair trade makes money.  Here’s how.

You and I and other well off types decide that we want to feel good when we drink coffee or eat bananas.  We’re willing to pay a little extra for it, in fact.  That extra gets passed on – not to the distribution channel, but direct to the farmers.

That’s thanks to certification and auditing from folks like my friend Paul Rice at TransFair (the company behind the Fair Trade USA label, predominant in the US).

Market demand drives the whole thing.  It’s not charity, it’s good business.  It’s just taking advantage of brand preference, just as you might prefer Kraft brand macaroni and cheese instead of some store brand (I know I did when I was allowed to eat grains and dairy).

You pay more for the feeling and quality of the brand.  Fair Trade USA charges farmers for certification.  Farmers make more.  Although, when I say “farmer” I’m being too general, because right now it’s almost exclusively co-ops of farmers.

Co-ops of farmers aggregate small family farms, becoming large enough for certification, and co-ops of co-ops are large enough to become distributors and exporters.  All those co-ops make money, too, and their owners (the farmers) decide whether to get dividends with the profits, reinvest in the co-op, or provide programs like children’s scholarships to college.

Co-ops of farmers are where Fair Trade started, but it’s also the next battleground.  As fair trade demand increases from retailers like Starbucks, co-ops don’t have enough capacity, accounting for about 2% of coffee sold in the U.S.  But large industrial farms do have capacity.  That’s right, those greedy, corporate, and exploitive farming companies (so say many consumers who are paying extra for coffee).

Corporate farms could join the Fair Trade bandwagon to meet demand for Fair Trade products.  And it could help the poor.  The workers at large industrial farms like Dole or Chiquita also get terrible wages.  Those farmers and workers could gain similar advantages as co-op farmers if only Fair Trade would allow them.

But Fair Trade is resisting.  Which makes me wonder: is Fair Trade only for co-ops or also for farm workers?  Can the brand expand beyond the co-op movement?  Does corporate structure matter more than poverty?

Is Fair Trade exclusively for poor family farms or also for poor farming families?

 

It’s the businesses, stupid.

Jon’s Home is a small, start up orphanage on the far outskirts of Kampala.  When speaking with Jon Freeman (who is embarrassed that the orphanage is named after him), I was reminded that so many social problems can be solved with one thing:  jobs.

To help its orphans, Jon’s Home started providing school books.  They had to do this because the schools don’t have enough money to provide books.  Without school books, students aren’t allowed to attend.  And the reason the schools don’t have enough money?  There isn’t enough income from businesses or individuals to tax.

It’s true all over the third world.  There’s no electricity because there isn’t enough money.  There’s no healthcare because there isn’t enough money.  There are few local high schools in Nicaragua because there isn’t enough money.  The only money seems to come from things we’d prefer it didn’t, like sex trafficking.

From Kampala to Kansas, there are real similarities:

• In the US, schools don’t have enough money.  The tax base shrank when jobs were lost.

• The US budget deficit has ballooned to over $1.5 trillion per year as economic output declined (that’s $1,500,000,000,000.00 in traditional form.  The calculator I used in grade school didn’t even go up that high.)

• We develop fears of the Japanese in the 1980s or the Chinese today, not because they are a military threat but because of their economies.

In America today, we have 15 million Americans unemployed.  We’ve extended the social net to protect them.

And just like the third world, charities are not enough.  The problems are too big for good intentions alone.  Or government intervention.  Only jobs, and the taxes on them, will ultimately solve the lack of money for our social priorities in the US or in Uganda.

So, to ask a silly question:  where do jobs come from?

During a recent meeting with over 20 Congressmen, there was clear hand wringing about the lack of jobs and concern for the plight of Americans.  Our elected representatives are hard working, passionate, and intelligent people.

But during a one hour conversation on the topic, it was 35 minutes before I had to raise my hand and say:  “We’re concerned about jobs, but unless we are going to recreate the Work Progress Administration of 1930s, those jobs have to come from businesses.”

With 50% of all American jobs coming from small businesses (with 500 employees or less) I’m not speaking of the 800 large corporations in America.  They know how to work the system to their advantage.  I’m talking about small businesses – from taxi companies to technology startups.  These are hard-working people, not overpaid CEOs.  Small businesses are the long term solution to our lack of dollars for social problems.

Economies are built.  They are creations of man, not of the ether.  They have systems and rules and sometimes the mechanisms break.  Like a car.  Instead of focusing on just the passengers, let’s work on the engine.  The engine looks like this:

Successful Businesses = Good Jobs = Taxable Income = Cash for Social Priorities.  There is no other way to increase cash for social priorities.

American Airlines forgets their business model

American Airlines announced yesterday that they will pull out of the SAABRE reservations system that they founded in the 1970s.   While my predictions seldom come true, it seems, I’ll predict this is a bad decision for American.

SAABRE is the reservation system that allowed travel agents (and now online booking sites like Expedia and Travelocity) to have a one stop shop for flight searches.

In their decision to withdraw, American Airlines indicated that “air travel is not a commodity, and the current system doesn’t allow us to present our unique value”, to paraphrase.  It’s possible that American will not allow crawlers and meta-search engines like Kayak to search them either.  American Airlines will be an online island – just like Southwest Airlines.

American Airlines looks with jealousy at Southwest Airlines, which doesn’t participate in SAABRE and doesn’t pay its fees.  Southwest does most of their booking through their own website, and Southwest is also the most profitable airline in the industry.  With thin margins for air carriers, American wants to offer, direct to consumers, its “upgrades” including such luxuries as a meal, a second checked bag, and 3 inches of extra legroom in economy.

American Airlines has something very wrong here, and it’s something that many businesses screw up.  American Airlines misunderstands the business they are in.  They believe they are in a brand driven business.  Or they fervently hope they are in a brand driven business.  They are not.  Consumers are perhaps slightly more brand loyal to airlines than they are to concrete providers.  Consumers are instead largely schedule and price sensitive.

Online purchases can be drastically altered by the addition of an extra click or slow screen.  Ask any online retailer, and they can tell you the percent attrition in customers due to the placement of the “buy” button or the speed of their servers.

Southwest Airlines gets people to perform that extra set of clicks for one very simple reason:  Southwest is $50 – $200 less expensive than the competition on nearly any route you choose.  Southwest is essentially paying consumers to come to their website.  American Airlines is not.  American is charging consumers – in time and in dollars.  To believe that the average online consumer will spend extra time searching American Airlines indicates that there are still companies that don’t understand the internet.

My prediction:  in six months, American Airlines will slowly rejoin the fold.  Their revenues will have declined due to consumer’s reluctance to search them out.