The rest of the readings and videos reminded me of the immense value that the Internet brings.  It is here to stay and if we don't figure out ways to utilize it, many areas of the economy will be overrun by it.  The dichotomy of risk is striking to me.  If you are a start-up, there is nothing to lose, try what you would like, information flows like water, if it works great!  If you are an incumbent and you do something wrong?  WOW!!!  The response can be destructive.  Those with the least to risk have the highest potential gain and those with the most to risk, well hopefully they can maintain market share after the Internet runs over it's market.  The star search clip was a great example of mistakes made and the pain caused by those missteps.  It seems backward to be honest.  But that's why its so disruptive.

On top of it, as talked about in "Building Your Business Without Building Code", you can start one of these businesses with a power point presentation.  How does an old line company compete? 

In reading some of the other articles we heard stories about blogs going viral, little people who evolve faster than regular humans and the values that creates till they take over, etc... But through it all I kept thinking about all the positive and negative impacts.  Many impacts are unknown to be honest and we have to keep adopting. 

For someone like me lists are one of the best ways I think about things.  The Internet is here to stay, community is important to humans, we will continue to drive connectivity and if we don't engage we will be left behind.   So, my lists on the Internet:

Positives: 

1. Breaks down the barriers to starting a new company
2. Reduces existing friction in communication
3. Can create great wealth rapidly (This is counter in my view to the idea that the Internet flattens the world economically.  I believe it just shifts wealth)

Risk:

1. Potential to be ants following each other around till we die
2. Can destroy your business if you don't understand it
3. Limits independent views and forces individuals toward the consensus. 

If we understand these things (and many more as we learn about the impact) we can utilize the power of the Internet in each of our enterprises. 

Crowdsourcing... or will be just crowd surfing in one generation?

So, I read and watched the required video and readings and the first 3 readings under optional and the social marketing playbook.  I have emailed my team to talk about our approach to the team project, and watched most of the videos under the General information, video links tabs.  There were some great videos there.  More on that later. 

The crowdsourcing reading was very interesting.  I really enjoyed reading about threadless.com.  I love the fact that they didn't start out to create a business, but just did something they thought would be cool.  They didn't like the T-shirts they could get, so they decided to figure out a way to get cooler ones.  The thing that was even more interesting was that they really understood how to create a business though once it was going.  By understanding human nature they created demand, developed a process to pay designers, and developed a relatively low risk business model from the beginning.  In many ways, this is what the Internet is about.  Allowing someone with nothing to lose (cause they have nothing but an idea) develop something that has the potential to create real value.  The iStockphoto.com company was almost even more exciting.  When you think about threadless.com, they were just selling T-shirts, iStockphoto.com was taking on a giant.  However, this business model created so much disruption, it forced the incumbent Getty to buy it.  This is the disruption that is so compelling and valuable.  I was also struck with the authors discussion on community.  This is in short supply these days as we become more mobile.  We keep in touch, with family, we communicate on the Internet, but community...  That seems to be missing.  That desire for connection is something innate in humans.  We need it.  If you can great a model that generates that it can be very powerful. 

P&G's model was probably the most interesting to me as I work in and analyze old line companies.  I follow the technology industry but most companies I follow are not internet based but sell products into the technology supply chain.  There are some Internet names, but not many that fit our requirements.  So to see the use of the Internet and Crowdsourcing to develop product was intriguing.  It got me thinking about other ways my companies and others could develop ways to improve their uses of crowdsourcing.  I wrote my previous blog this week on an idea that I think is somewhat scary.  In addition, I liked Surowieki's comments and Keen's comments as well regarding the risk associated with social media, networks, and to some degree crowdsourcing.  I loved Surowieki's view of the only way social networks can be more correct than an expert is when each individual is independent and by operating in a network, it compromises your independence. 

I am thinking more and more about ways to use the Internet to drive our business, but it concerns me longer term what will happen to independent thought over time if we don't manage exposure to networks for our children. 

So, I got all my reading and listening done...  Now I need to go back and review to write my blog!  Maybe I should take notes on what I read.  I never used to have to, but with the likely hundreds if not a thousand or my pages on read weekly from research reports and school, I think I may have to start taking notes.

One thing I keep coming back to is the social aspect.  The ability for anyone to come out and say or do just about anything they want on the Internet.  I was thinking about it in relation to investing yesterday.  As an active investor, I believe that through my research, I can actually beat the market over time.  We won't do it every year but we can do it over time.  Our clients believe that too and they stick with us when we have 6 months or a year below trend.  Historically we have come roaring back in the next year or two and move back to top performing fund.

The question though that I am asking here is, could a crowd approach to investing be better?  Seeking alpha is a way for investors on my levels to post research.  I love the idea!  Could I use it anonymously to develop some street cred as an activist (I do this quietly already with companies)?  More thoughts to come on that.  The problem I have is some of the research is just atrocious.  Here is a perfect example!

 http://seekingalpha.com/article/75121-add-some-power-to-your-portfolio-with-volterra-semiconductor

This "analyst" likes VLTR.  He has 48 different articles, almost 60 followers.  He is recommending buying VLTR.  That isn't the problem, I know the CEO, CFO, CTO, CMO, and many others at VLTR, but by just doing a little research, like reading and listening to their calls, I can tell you that some of his comments particularly the ones on notebook recovering or stabilizing (it's likely going to zero based on changes INTC has made to their chips) are wrong.  This is not to tell you to go long or short on VLTR but to point out that individuals doing research who don't know what they are doing (comments are basically positive on VLTR) shouldn't be doing it.  Would you invest using these analyst or retail sentiment indicators like trending stocks on message boards etc...?  Honestly, I would probably invest opposite those metrics.  I don't have an answer yet, but I don't see these models adding much value to the individual investor.  If the model over the long run only gives value to the owner, I believe it will fail.  I don't see this working in the investing world.  Maybe I could use it to launch an activist hedge fund though...  Hhhhmmmm, something to think about.

Goals for this week...

Below are the readings required and suggested for this week from Angel.  I plan to read and watch the required readings and at least 4 of the 6 suggested readings etc... 

I also plan to go back clear up some of my comments from last week.  I didn't really give clear comments on a couple of the topics. 

Required reading
	•	"Introduction: The Dawn of the Human Network" in Crowdsourcing, pp. 1-19. (Download content.) How to Build Your Start-up Without Building Code
Required viewing
	•	Podcast: Information Liquidity with slides and audio;

Suggested readings, podcasts, Camtasia presentations. These continue to help you see how the use of the internet has changed over what has been a very short time. Pick a few and write about them in your Learning Journal.
	•	Chapter 1: "Why the Groundswell and Why Now?" in Groundswell, pp.3-15. (Download content.) The Internet Before Search Engines : from the 1990’s point of view.
	•	Chapter 6: "Web Video: The New, New Thing," in Digital Engagement, pp. 112-13. (Download content.)
	•	Video: Alma Whitten on 'Lessons from Googles Approach to Internet Security, Privacy and Encryption'
	•	The social marketing playbook
	•	"Star Search" (from NPR's "On the Media" program of October 9, 2009; 7 minutes; discusses consumer ratings of products on the web)
		Crowdsourcing Evolution from YouTube 5 minutes by "the blogtv".

Security is interesting and has many issues regarding the business models, but more important for me is how and why these businesses are funded and what the sustainability of some of the startups are.  When you consider valuations of the companies, the longevity of the business model should have significant impact on the valuations.  However, right now, the most important part of the businesses are short term revenue growth relative to expectations.  I want to try and understand the expectations up front and then think about how the models evolve. 

Reflections on my first group of readings...

I was able to read and listen to a number of the articles and presentations/interviews.   Below is the list of media I reviewed

"Does the Internet Make You Dumber? (by Nicholas Carr, the Wall Street Journal, June 6, 2010 "Does the Internet Make You Smarter? (by Clay Shirkey, the Wall Street Journal, June 6, 2010 Book excerpt: "Mastering the Hype Cycle Books 2.0 (from NPR "On the Media", July 2, 2010 Article: "Do You Trust This Face?" by Alex French, GQ December, 2008 Video: "The Web and TV, a sibling rivalry," presentation by Peter Hirshberg, Silicon Valley executive  I think the thing that struck me most was the comment made by Peter Hirshberg when he compared technology companies to religion or politics.  In summary, he said that tech entrepreneurs tell us what they are going to do and then in many ways convince us that we need their product and then go build it.  As a buy side analyst that invests in technology companies for a living, I can totally relate to this comment.  I have sat with many a CEO and wondered what in the world they were thinking giving their pitch.  I must admit, I even once told a CEO "either you are lying to me or you are an idiot, either way I don't plan to invest in your company".  I got up and walked out after fifteen minutes.  I don't say that to tell you how great of a one liner I had in ripping a CEO (I was right by the way!), but to give another example of an executive in this case selling his vision to me when it wasn't fully vetted.  That being said, I have seen and made a lot of money in companies that enable the Internet and social media.  Companies like Digitas, aQuantive, and Macromedia I owned when they were bought by larger tech and media companies (I thought the CEO at Adobe was going to lose his lunch when I asked him when they would buy Macromedia.  Three months later the press release came out).  I have made a lot of money investing in RedHat, Arm, and Macrovision and many many more.  That being said, I remember sitting with Marc Andreesen over desert and thinking he was crazy as he was espousing the virtues of Twitter.  I couldn't figure out the business model!  Oh well, you can't be right on them all. That being said, I have had similar thoughts that Mr. Carr presented in his article.  I work with the youth at our church in my free time (no I don't have any, but my wife and I still enjoy working with them), I have seen the inability to focus, thoughts that sputter, the need for instant gratification.  I do believe there are great efficiency being created, buy I worry about deep thought.  Will it happen, can it happen?  Can we focus long enough to develop a full thought?  Do we need to anymore?  We "joke" about this at the investment firm I work at.  We have morphed into such an egalitarian society, we don't believe in the excellence that one human being can create.  Exceptional-ism is viewed negatively now.  Some of the commentary around social media talks about the benefit of the collective individual.  Each person adding their part to the collective work.  We have always seen and benefited from collective work of individuals.  I firmly believe that.  But are we losing the desire to have an exceptional individual drive change?  Some would say we are making it easier.  My concern though is that if you look at the things that generate the most traffic, they aren't exceptional works.  They are things like Gangnam Style. So, I see the huge benefits in connectivity.  But my biggest concern is are we getting dumber as we move further and further into a post paper culture.  Can we think?  Really think?  Will the collective really build better "things" than an exceptional thinker.  If I look at Apple, it doesn't happen without Steve Jobs.  If you consider Facebook (probably the greatest example of social media), it doesn't happen without Zuckerberg. So, I will end with a few questions, not an answer, do we still need exceptional human beings who are deep thinkers, does social media allow those individuals to still develop, and are the benefits of social media worth the risk?  Don't be confused, my nine year old uses Instagram, and she is already complaining her friends have moved on... but I still have my reservations.

Reservations, and not to a hotel...

Well, I have created my first Blog.  This is honestly a little uncomfortable for me.  I have my Facebook page for my personal stuff, my LinkedIn account for my corporate connects, I have played around with Twitter (really questioned the business model there initially, but starting to get it). However, I am concerned a little bit about the interaction of the Internet and my work life.  I try and separate it.  I am a securities analyst, so by nature I am not trusting and highly secretive of my actual thoughts.  Not sure I like this...