Goodbye DKNY: In my interview with David Kirkpatrick (or DKNY as some of his Fortune colleagues call him), leading up to Brainstorm:TECH, we touched on the leave he’s going on for his upcoming book The Facebook Effect. Last Friday Kirkpatrick published his final Fast Forward column, ending its 6 and a half year run. In talking with David, he will be back at Fortune in a year or so (He’s aiming for September of next year with his book). However, he’ll be more of a “free agent” as he says, or editor-at-large. He’ll also have his byline on a new column - which is yet to be decided.
If it’s goodbye to David, then who are we saying hello to at Fortune? Who should we look to - to take the baton and lead the Fortune brand in its technology and business coverage?
Hello Michael V. Copeland: Although he doesn’t have the influence or clout of DKNY in the mainstream media - Michael V. Copeland, a senior editor-at-large at Fortune, is the best bet to really anchor the feature technology coverage. He penned the cover story on Tesla in the most recent Fortune (technology special for Brainstorm:TECH) and has taken over Josh Quittner’s former role by penning tech columns for each issue of the magazine.
Hello Adam Lashinsky: As far as stepping into David’s shoes as the next big Fortune “Brand,” one should look no further then Adam Lashinsky. Lashinsky proved that he’s seasoned speaker and moderator at Brainstorm:TECH.
He hosted one of the most talked about panels of the event in moderating the blogger showdown between Kara Swisher, Robert Scoble and Om Malik. While moderating, Lashinsky managed to steal the show at times (not an easy chore with this group), and even got the last laugh when responding to Scoble’s assertion that the reader participation in fact-checking his blog makes sure that his stories are told accurately:
“In the old school, we like to get it right the first time,” quipped Lashinsky.
Even Om Malik noticed that Lashinksy had a true stage presence:
“Fortune senior writer Adam Lashinsky, who is missing his calling as a television anchor by being just a scribe, was a witty host, also trying to press our buttons.”
Lashinsky already makes regular appearances on Fox News and the Fox Business Network and one would expect more of the same in the future - along with more work on video segments for CNNMoney.com. In addition, Lashinsky’s focus on the finance behind technology - especially on the West Coast, make him a natural to cover the big financial stories (Ala the WSJ) on Google, Yahoo!, Microsoft and Apple without DKNY around.
Goodbye to the Joe Nocera and Steve Jobs on-the-record Debate: After I wrote about it last week, Joe took time out of his vacation to clear it up on his blog. Hope to hear more from him now that he is “officially” back from vacation.
Goodbye and Hello to Claire Cain Miller: Claire Miller became the second high-profile exit from the Bulingame office of Forbes over the last month, when word broke last week that she has officially joined the New York Times San Francisco bureau as a VC reporter. Earlier this month Erika Brown, who also covered San Francisco based VC’s and tech companies out of the Burlingame office, left Forbes to join VC firm Matrix Patrners as Director of Marketing and Business Development. Forbes takes a lot of heat from the VC’s and start-ups that I talk to regularly - for not devoting enough coverage to technology companies on the rise, as well as a lack of feature stories on trends happening in the tech space. These two latest exits are not going to help them increase coverage there. On the bright side, Miller has a pretty good introduction into the VC social circle with Brown.
I had made it back to Boston on Saturday, after my trip out to Fortune Brainstorm: TECH, and was enjoying my iced-coffee (America runs on Dunkins’) with the New York Times when I had one of those near death choking experiences. It happened when I flipped to page two and was enjoying Joe Nocera’s Talking Business column on “Apple’s Culture of Secrecy.” It was an interesting read already (Nocera kicked it off with Job’s famous quote from the Stanford commencement a few years back ”No one wants to die and yet death is a destination we all share. No one has ever escaped it.” - talk about getting sucked in) and then I got to the actual phone call as noted by Nocera, in the final two paragraphs (Talk about burying a lead):
On Thursday afternoon, several hours after I’d gotten my final “Steve’s health is a private matter” — and much to my amazement — Mr. Jobs called me. “This is Steve Jobs,” he began. “You think I’m an arrogant [expletive] who thinks he’s above the law, and I think you’re a slime bucket who gets most of his facts wrong.”
One of those moments where liquid somehow makes it back through your nose (apologize for the visual). I did manage to resuscitate myself.
You see, I’ve been having a back and forth email exchange with Joe for a couple weeks on random topics: His Loeb Award Win, AMD & Intel and doing a Q&A with me for our blog (which he agreed to do) - so I owed him a few questions. Of course I didn’t realize he was going to publish a column on Saturday that would kick-off a week-long buzz while he escaped for vacation until August 4th.
Now I have a million questions to ask him and he’s probably in the Berkshires.
There has been tons of commentary in the blogs on this already. The Real Dan Lyons (who never came up with a Fake Steve Jobs’ line as good as this actual Steve Jobs’ line) gave his in-depth analysis. Claiming that Nocera got played by Jobs and his PR team by taking an “ambush call” and allowing Mr. Jobs to talk off-the-record. You see, after Jobs re-introduced himself to Nocera, as only he could, he went on to agree to talk to Nocera about his health - as long as it was off-the-record. Here is how Nocera’s article concluded after Jobs’ opening line:
“After that rather arresting opening, he went on to say that he would give me some details about his recent health problems, but only if I would agree to keep them off the record. I tried to argue him out of it, but he said he wouldn’t talk if I insisted on an on-the-record conversation. So I agreed.
Because the conversation was off the record, I cannot disclose what Mr. Jobs told me. After he hung up the phone, it occurred to me that I had just been handed, by Mr. Jobs himself, the very information he was refusing to share with the shareholders who have entrusted him with their money.You would think he’d want them to know before me. But apparently not.”
Since the June Worldwide Developers Conference where Jobs appeared to be gaunt (pictured above), people have been buzzing about his health. Last Wednesday John Markoff reported in the New York Times that Jobs had surgery this year to address a problem that was contributing to his weight loss. The Wall Street Journal reported earlier last week that “fund managers have talked of asking doctors to closely analyze pictures of Mr. Jobs to monitor changes in his physical appearance, and have been talking about once again hiring investigators to find out Mr. Jobs’ prognosis.”
There are no hard and fast rules about how and when companies need to disclose information about the health of their chief executives. But it seems that the vaunted Apple PR machine has let this get completly out of control. If Mr. Jobs did in-fact call Nocera with his PR team on the line (as folks such as Lyons believe) in a last ditch effort to spin the story in a positive direction - it certainly backfired. Yes, he (or they) somehow got Nocera to state the following, based on and off-the-record conversation:
Suffice it to say that I didn’t hear anything that contradicted the reporting that John Markoff and I did this week. While his health problems amounted to a good deal more than “a common bug,” they weren’t life-threatening and he doesn’t have a recurrence of cancer.
This asserted (like Markoff’s piece did as well) that Jobs has been sick but not that sick (and doesn’t have recurring cancer).
However, they also gave him the ammunition to illustrate Jobs and his organization as the arrogant folks who think they are above the law (as Jobs duly noted himself), while also allowing him to portray that they gave him the very information that they have been unwilling to give investors.
Yes, Nocera, Jobs and Apple have a history. During Nocera’s run as an Editor at Fortune they crossed paths several times (not always friendly). Nocera has also published stories on Apple’s backdating scandal and problems with the iPhone over the last year in the Times. But why push him even further in his potential negative view of the company? Why cross-off another reporter that you could work with, when there aren’t that many left out there? For an organization that has one of the best marketing forces I’ve ever seen the secretive nature of their PR practice is completely baffling.
In addition, either come clean in an on-the-record-conversation or stick with what you’ve been saying all along by going with the it’s a “private matter.” Don’t flip-flop half way and if you’re going to, certainly don’t start the conversation with something that you know is going to make you look foolish in print. If you think he’s going to get the facts wrong then why contact him in the first place?
As Lyons sums up best about the situation on his blog:
“The unfortunate thing about this arrogance is that no matter how hot a company may be, eventually every company stumbles. Someday Apple will need friends among the hackery. I’m not sure it will have any.”
Hopefully I can add more of Joe’s thoughts on the situation when he’s back next week. Would love to hear what questions you’d like me to ask him.
Nicholas Negroponte took the stage with David Kirkpatrick at Fortune Brainstorm: TECH to address the crowd on where the One Laptop per Child project currently stands earlier this morning. Some excerpts below:
DK: Happy to have you on stage, along with your XO.
You have transformed a new way to get technology into the hands of kids across the world. However, you’ve often talked about goals that haven’t been achieved. How do you describe the state of OLPC?
NN: You need a certain amount of hype. Some of it was that. We had to change our targets as we began to see which countries really were going to put a full effort behind one laptop for every child in their country. Peru is going to do a million this year. If I was running a company that would be pretty good to go from $0-$200 million (if they were paying for each computer) in one market - in one year.
DK: Do you sometimes wish that you had made it a business and not a non-profit philanthropy effort?
NN:Never. What the non-profit does is create the mission for us. We don’t look at the developing world as a market, we look at it as a mission. When I go to each head of state they know that I am talking with them about a mission to transform education in their countries and not giving them a sales’ speech. It also allows us to attract the top talent that want to be part of a true mission, without even thinking about earning a salary.
DK: So the XO that you have with you does something different then the XO’s in the developing world right now?
NN:Yes, this is a dual-boot XO that runs both Windows and Linux (Negroponte boots in Windows for the crowd).
NN: We will kick-off a global “Give One, Get One” program within the next few months.
Disclosure: One Laptop per Child is a client of the Racepoint Group.
Had the opportunity to share a quick chat and drink with Richard Edelman, CEO & President of PR-giant Edelman and Keith Reinhard, former CEO of advertising giant DDB yesterday evening at Brainstorm: TECH.
The two industry giants were worth a good laugh as they playfully chuckled about stealing each other’s clients at the conference.
Richard was chatting me up on the reason to be global and why PR is a scalable industry. He still feels like there is a true advantage in being a massive global agency over a mid-size shop.
Keith on the other hand couldn’t stop talking about DDB’s latest project with McDonald’s in reviving the “Big Mac” jingle, with its new digital campaign. Richard and Keith both had to actually let me know what the jingle was in the first place as it orignated in 1974, 9 years before I was born.
To celebrate the Big Mac’s 40th Anniversary, DDB helped with a campaign that calls for U.S. consumers to write their own songs using the exact words of the jingle, and submit them to a contest on MySpace.com.
Not only is the campaign succeeding by engaging in brand dialogue with consumers, but it also garnered coverage in the New York Times - Results that both men can appreciate.
BTW: Richard told me he was going to have a blog post up this morning at 6 a.m. (As he is one of the featured live bloggers at Brainstorm: TECH). Where is it Richard? I have five up already.
I took in the “How Net Content will be Monetized Round Table (Wedding Table) at Fortune Brainstorm: TECH this morning. Hosted by Fortune’sAdam Lashinsky the round table included Greg Waldorf, CEO of eHarmony; Neil Ashe, President of CBS Interactive; Robert Glaser, CEO of RealNetworks and Mike Volpi, CEO of Joost.
Here are some of the excerpts from the round table:
Adam Lashinsky: Good morning, we are going to be talking about “Net Monetization.” This is not the format that we planned on doing for a breakfast round table (straight table facing the audience). We had so many people sign-up we decided we’d do something like a head table at a wedding with you being the guests. However, we’re not going to talk to you we are going to talk with you.
Robert Glaser, President & CEO of RealNetworks:
600 million in revue last year. 2/3 of monetization comes through consumer purchases. 1/3 is from net carriers.
Our goal is to create a balance in revenue streams.
You look at what Google does with only one revenue stream and may think we are taking the wrong route, but you have to diversify.
Behavioral targeting is an major opportunity, but there doesn’t appear to be an Overture type idea out there that goes beyond search.
Greg Waldorf, CEO of eHarmony:
eHarmony was founded 8 years ago to be a series match making site. It was a crazy idea at the time because the industry was dominated by the photo-clicking approach.
We recently released Harris Interactive numbers, which found that 236 people marry each day (on average) through eHarmony.
This has allowed the business to become very successful and over 200 million in revenues last year.
Lashinsky - ”My best friend met his wife through eHarmony. He’s a serious guy, so I guess he needed a serious relationship site.”
96 - 97 percent of our revenue comes from subscriptions.
Match.com and ourselves are really the biggest players in the space.
We want to keep a “happy” churn rate - given our goal to match couples in serious long-term relationships (which leads to them leaving site). Usually takes a couple of months for that to happen.
You can’t just create great content first and then say we’ll figure out how to monetize it later. I think people have this belief that good content will easily translate into ad revenue and that is just not the case when you are looking at scale.
Mike Volpi, CEO of Joost:
Joost was created in October of last year and has slightly under 1 million unique visitors.
We have a revenue share model that goes back to content owners.
We’ve really been the first online video destination to use the 30-second in-spot ad that is seen on TV.
Music has been really hard to monetize on our site because its hard to understand interests in music to target relevant ads at users.
President of CBS Interactive:
Earlier this year I was the CEO of CNET Networks and now I am the President of CBS Interactive after the close of our sale to the CBS Corporation.
We reach the 8th largest Internet network in the world.
80 percent of business is ad supported through sponsorships or advertisements.
About 20 percent of our business is in major countries in Europe.
We’ve found that you can’t out grow your category. The growth of advertising revenue has grown across the Internet but there is a cap in how it can grow within certain markets on the Internet.
We’ve made mistakes along the way. We never could monetize Webshots. We could sell certain sponsorships but not for each individual page view.
Disclosure: eHarmony is a client of the Racepoint Group
“Broadcasting is really too important to be left to the broadcasters”. So said Tony Benn, Member of Parliament, to constituents in 1968. That same year, the Free Communications Group (FCG) was founded to demand “democratic control of all media”.
Lets skip the next forty years’ analysis of broadcasting motives and actions that so preoccupied these politicians, broadcasters and journalists. In 2008, convergence has emerged as a force of nature, irrevocably changing “broadcasting” globally, and the FCG might just be smiling if it still existed.
I put “broadcasting” in quote marks because I decided, as chair, to start last Thursday’s Convergence Conversation, titled “Is broadcasting dead or merely taking a break?“, by seeking to define broadcasting. Not as trivial a task as it sounds, rather a critical task if the 65 conversationists who attended the event hosted by BT Media at BT Tower were going to reach a conclusion.
The meaning of broadcast
The Oxford English Dictionary defines the verb “broadcast” as “transmit by radio or television”, and “tell to many people”. And for American English speakers Merriam-Webster offers “to make widely known” and “to transmit or make public by means of radio or television”.
So the same word applies to both the technology employed and the end result; the “radio or television” transmission, and the one-to-many communication achieved. I guess this attribution of dual meaning is to be expected given that “radio or television” technology was the only way to communicate one-to-many for almost the entire twentieth century. This technology consisted RF transmission from the 1920s and cable from the 1940s.
The broadcast industry supply chain
This isn’t an academic paper, so we can simplify the (commercial) broadcast industry supply chain as one that aggregates audiences with content that informs, entertains and educates so that they can also be hit with adverts. The advertising revenue should cover all costs with a bit left over; the profit. So the chain goes something like:
1. Produce or commission great content
2. Estimate how many people will watch it
3. Sell ads to go alongside the content
4. Transmit the content and ads
5. Grow the audience and repeat
The disruption of the broadcast industry
Convergence has wrought huge change on the broadcasting industry.
Traditional broadcasting technologies are no longer the sole means of achieving one-to-many communication, and they struggle with any form of many-to-many communication. Mobile and Internet protocol based technologies are the new contenders.
The broadcasters’ revenues pivot almost entirely on marketing directors’ willingness to pay to advertise on TV and radio. Yet new technology allows viewers to skip broadcast ads and has created competing new opportunities (eg, the Web and mobile) for marketers to reach out to their target audience. In other words, new channels are purported to offer comparatively more effective and more measurable marketing outreach, so there is fierce competition for the marketing budget that has underpinned the broadcasting industry to date.
Will broadcasters survive?
As for all dynamic systems, the answer to this question hinges on the relative rate of change of the core characteristics and parameters in the mix. To reduce it to the simplest form:
If the rate at which advertising spend is diverted away from traditional commercial broadcasting exceeds the rate at which traditional broadcasters can adapt and capture some of the new kinds of marketing spend, they’re dead (or require some serious bridging capital).
The adaptation required can be considered to fall into two camps. Firstly, there’s the “OMG! We better get monetising the new channels quickly!”; and secondly, there’s the “What can we do the new channels can’t do, and how can we leverage this differentiation?”
The first of these, getting into the new channels quickly, is exemplified by traditional broadcasters’ uptake of new technology and media. The award winning bbc.co.uk and iPlayer. Time Warner’s award winning cnn.com. BSkyB’s Sky+ box.
And Jon Mobbs, BT Media Head of Strategy, clearly articulated at our event when traditional broadcasting wins hands down. No other technology is as efficient at reaching hundreds of thousands of people as traditional broadcasting. No other technology is as adept at covering live events. And none of the new technologies can yet warrant the same quality of service.
Fragmentation
It appears very unlikely now that any broadcaster from the twentieth century can thrive unevolved. Moreover, no one organisation can own the entire supply chain. They may offer services throughout the supply chain, but the chain fragments, shifts platform, shifts place and gets mashed-up.
The user (aka the recipient of news and information, the listener, the viewer, the inter-actor) has been empowered to set the schedule. It’s what they want, when they want it and how they want it. Video on demand. Personal video recorders (PVR). Newsfeeds (RSS). Alerts. Lifestreaming. Podcasts. Web radio. Mobile TV.
To all intents and purposes, we’re just a short hop away from everyone having their own customised channel, a channel tailored uniquely from your own subscriptions, your friends’ subscriptions and recommendations, and automated “if you like that, you’ll like this” discovery.
Given that broadcasters’ revenues lay in the hands of marketing directors, it’s worth understanding what myChannel means to them:
Considerably more fragmentation of the target audience of communications campaigns
Less precise timing of delivery
Increased opportunity to provide niche information
Less certainty of how each recipient is receiving the information
Greater opportunity for innovation in inviting and securing interaction
The need for new mechanisms for gauging campaign success.
The broadcaster as brand
Attempting now to leap swiftly from analysis to synthesis, it appears there may be an ever increasing emphasis on broadcasters’ abilities to transmute into lifestyle brands.
They need to pick their fight (the parts of the supply chain they wish to excel at) and their audience (who’s going to buy into their brand). Both the supply chain and the audience are too diverse and too complex for a broadcaster to try to be all things to all people, and too noisy not to aspire to reaping the benefits of lifestyle branding.
What tech?
And, if this isn’t sitting on the fence, the right broadcasting technology will simply be defined as the right one at the right time.
Live Earth concert = traditional broadcasting tech. Live Earth’s ongoing SOS campaign = Web and mobile.
First airing of Lost = traditional broadcasting tech. Subsequent episode sales and associated community engagement = traditional, Web and mobile.
Democratisation
According to the Free Communications Group, “newspaper, television and radio should be under the control of all people who produce them.”
Whilst this point of view was asserted in the 1960s to eradicate Government politicking of the BBC, the assertion repeated in 2008 takes on new meaning and fresh energy. The viewer has always been able to vote with the off button, or by switching channels. Now they can engage in programming, vote for winners of talent shows, develop and vote for plot ideas, and even create and publish their own content.
In conclusion, broadcasters must be adaptable and nimble. They must develop compelling content and services, create enticing opportunties for engagement, and adopt the right channels at the right time. No small task, but as the next Desperate Housewives or X-Factor won’t be user-generated content (a small matter of budget), there’s plenty of opportunity for today’s broadcasters to thrive tomorrow.
Tomorrow marks the kick-off of Fortune Brainstorm: TECH (AKA: David Kirkpatrick’s conference) in Half Moon Bay, California. Many in the industry believe that it will be the best technology conference of the year and with a speaker list that includes Mark Zuckerberg, Eric Schmidt, Nicholas Negroponte and even Neil Young (yes the musician) – who can argue.
Fortune has turned the conference circuit into big business and gives the conference major editorial billing thanks to Kirkpatrick’s influence over the magazine. Fortune’s special Tech issue, on newsstands now, takes a deep look at those that will be on hand at the conference. RaceTalk got a chance to sit down with Kirkpatrick late last week to preview the conference, chat broadly on the technology industry and discuss his upcoming book on Facebook.
RaceTalk: So is this the calm before the storm (Brainstorm: TECH)?
DK: It’s pretty calm. The problem we have now, so far (knock on wood, that it’s not people dropping out as speakers), are people who forgot to register and are now begging to come as attendees.
We have a PR person who says “Our CEO (of a fairly major tech company) wants to have an in-house PR handler come with him.” I’m thinking this guy (CEO), isn’t even a speaker and I look and he’s not even registered as an attendee.
It’s great though, they all want to come. They sign-up, then they back out and then they want to come again.
RaceTalk: Well it’s good that I got on the list early. I’m excited to take it all in next week. I’m really looking forward to your conversation with Nicholas Negroponte of One Laptop per Child and the “How Net Content will be Monetized” round table that eHarmony’s CEO Greg Waldorf will be on with Neil Ashe of CBS Interactive and Robert Glaser of RealNetworks.
DK: That’s great. Glad you’re going to be making it out.
RaceTalk: So, for your last “column” you asked everyone that was coming to Brainstorm: TECH to discuss their thoughts on the most exciting innovation in the technology space, what their biggest hope or fear for the future is / how tech relates to it and what should the top priority be for the next U.S. President. I was hoping you’d take a stab at answering your own questions for me?
DK: Did you see their answers?
RaceTalk: Yes, they had some great answers.
DK: I continue to think that social networking and social media at large is the biggest innovation over the last twelve months. The addition of automation to human communication has really occurred over the last five years but it has really been significantly augmented over the last 12 months.
Let me bring a little twist to that as well. Since so many of the Brainstorm: TECH attendees did say that the iPhone was the biggest innovation over the last twelve months, it also ties in. I think what you are seeing with the applications on the iPhone is a huge innovation. I’m sure more of those will be social applications that will incorporate location into the communication which they facilitate between people. Basically the iPhone 3G has three basic qualities: it’s 3G, it has GPS and it has applications – that are very easy to download. It’s the first time you’ve ever had a really easy way to get sophisticated applications on a mobile device, period. That is a huge leap forward from the first version of the iPhone, which only had a very constrained group of applications – or they were put on there illegally.
RaceTalk: I heard they sold 1 million last weekend, did you get one?
DK: I bet that is true, I got one.
Social networking, which will then be combined with the ability to put applications on mobile devices - In the new simple way that the iPhone 3G demonstrates – that is big. Social networking is different because the software makes connections for you (with other people) when it’s working in its highest level of sophistication – as it does on Facebook.
RaceTalk: What is your biggest hope for the world and how does technology fit into it?
DK: My biggest hope for the world is that the poor of the world, who are increasing their aspirations for a better standard of living, will find technology tools that will help them make a rapid transition from illiteracy, economic health and information deprivation. Technology will make a big difference there. Mobile technology and wireless technology are making a huge difference there already and are very promising.
RaceTalk: What should be the top priority for the next U.S. President? – That was another one of your questions.
DK: It was interesting - if you read my column – how many of those priorities sounded like they should be the top priority. It only makes you realize how many priorities have been abandoned or mishandled by our current administration.
I would say the single biggest priority is thinking through the integration of the U.S. with the rest of the world and conveying that understanding to the American people. I think the American people (In general), are really misinformed about the depth of their own economic integration with the rest of the planet – which is already real. However, most Americans deny or disregard it.
RaceTalk: Let’s get to your book. Can you tell us a little bit about it? It’s called the Facebook Effect from what I’ve read and aiming for September of 09’?
DK: That is a bit optimistic. I’m hoping to get it out in the fall of 09’. The book industry, its wheels turn slowly. Simon & Schuster is publishing it. Got the signed contract in hand – just got that yesterday – so that’s very exciting. It is going to look at the history of Facebook but the real intention is to explain what I started to describe earlier. I want to illustrate how there is a new kind of communication arising, as a result of what is popularly described as “Web 2.0” or “social media,” and that it is profoundly transformative.
It takes us beyond the era of email to something new. It is the new killer application for the Internet. The killer application up to now has been email and the Web. Social media uses the Web to create a much more sophisticated set of connections between people that allows a whole new set of things to happen in society between people; which I don’t think is yet fully appreciated. I think Facebook is the product or business that is most fully realizing that.
RaceTalk: I saw your one piece on Jeremy Burton and Serena software and how they are using Facebook for a collaborative R&D culture. Are there other ways you’ve seen so far in your research where companies are using Facebook to affect the bottom line? Different types of social networking?
DK: Social networking as a concept still goes against the grain of the impulses of most modern managers. For all the verbiage to the contrary, they are still oriented to the top-down hierarchal structure. Only the smartest companies are willing to experiment with the true empowerment that social media represents. I think you will start to see that companies are performing better when they empower employees with these new tools. Whether it’s Facebook or something else that makes it happen – I don’t know.
The single best example that I’ve seen on how Facebook creates fundamentally new opportunities for society was the demonstration in Columbia last year, where 4.8 million people went into the streets to protest FARC - in the largest demonstration in the history of the country. It happened one month to the day the first message was put on Facebook by a simple 30-something programmer who had the idea. He got it all started on Facebook by himself and it mushroomed into 4.8 million people in the streets one month later – and that’s largely due to the viral power of Facebook.
RaceTalk: Wow that’s interesting. So you also said that you’re going to take a look at the history of Facbook. So are Mark Zuckerberg and Sheryl Sandberg giving you carte blanche access to the company?
DK: I have total access and they are very much behind it and excited about it. It’s not their idea, it was my idea, but they are enthusiastically helping and participating.
RaceTalk: I was talking with Steve Levy a couple days ago and he’s pursuing a book on Google – will you be comparing notes on the access you’re getting?
DK: I’m sure I’ll get much better access.
RaceTalk: I’ve seen some of your latest columns on Microsoft and moving on after Gates’ retirement. It was interesting that you were taking the stance that Microsoft is still better positioned in the marketplace as a technology company then Google.
DK: I think Microsoft is a more successful well-rounded technology business then Google is. Google is a stock market phenomenon on one brilliantly managed business. But that business is not impervious to competition. Just like in all things, diversification is the best way to avoid risk. Google does not have a diversified risk portfolio. Microsoft does. Given the respective valuations, Microsoft is a far better risk for an investor (in my opinion) then Google. I think that Google is brilliantly managed company, managing a marketplace for advertising using search. They’ve done an extremely good job maintaining that.
However, I don’t think they have proven themselves to be a durable, continually innovative technology company - at least not yet. Microsoft has been challenged on the innovation front but they have succeeded in creating a wide variety of new successful businesses.
RaceTalk: I know we had talked about this awhile back, and your thought was “There is no way Microsoft is not going to get Yahoo!.” Do you still feel that way?
DK: I wouldn’t say there is no way. I would say they desperately want it and predicted they would get it. I wouldn’t’ say there is no way. Microsoft has mishandled the process so badly and it has been such a comedy of errors for Microsoft, Yahoo! and now Carl Ichan. I wouldn’t say anything is easy to foresee. They’re doing such a bad job managing this negotiation. Microsoft badly wants Yahoo!’s search and they need it.
RaceTalk: Out of all the people that are going out to Brainstorm: TECH, who are you most looking forward to running into or interviewing.
DK: I’m not interviewing him, because I generously passed him along to my bosses’ boss, but Neil Young is who I’m most excited about. John Huey, Editor-in-Chief at TIME, is interviewing him and he closes out the conference. You knew that right though?
RaceTalk: I think I knew that.
DK: Out of the ones I’m interviewing I’m excited for all of them: Jeff Bezos, Eric Schmidt and Nicholas Negroponte.
RaceTalk: Cool. So in general you are excited about Brainstorm: TECH and it sounds like you are planning to make this an annual thing?
DK: I think it is the best technology conference of the year and I think that will be proven true.
RaceTalk: Sounds like it’s well on its way. So you’re taking a leave when you get back for your book?
DK: Yes, I’m taking a leave August 1st.
RaceTalk: Well thanks for your time David, good luck next week and hopefully I run into you there.
DK: Thanks Kyle.
Disclaimer: One Laptop per Child and eHarmony are clients of the Racepoint Group.
Four Months After he Announced His Departure from Newsweek - On Facebook - Steven Levy is WIRED for Sound
By Kyle Austin
Back in March, we broke news by confirming the rumors that Steven Levy was leaving Newsweek for Wired. Well, he actually broke the news by posting it on Facebook - we just happen to be his “friend.”
Four months later, after penning his final column for Newsweek last month, Levy is now working from his desk in Wired’s New York offices. We managed to steal his attention (for a few minutes at least) while he caught some air.
Racetalk: Steve you officially announced your move to Wired on March 21st – through Facebook no less – after more then 12 years at Newsweek. It was reported at the time that Wired wooed you with a huge book deal to go along with your move. What was the biggest decision behind your move?
SL: The book deal and the Wired job were independent. I had been thinking of doing a book about Google for a while and finally figured out how to do it. Around that time Newsweek offered buyouts to people who had been there a certain amount of years, and I qualified. I had been talking to Wired previously about making the move, and the timing seemed ideal. I had a great run at Newsweek, and now I’m looking forward to more long-form journalism.
RaceTalk: So you answered my next question. Google is the book project - Why?
SL: Google is a fascinating company and I hope I can explain why.
RaceTalk: Fort the most part – PR folks like myself didn’t waste our time bothering you at Newsweek unless we were going to connect you with Bill Gates or Steve Jobs – what will you be looking for from PR pros at your new job at Wired and what main beat will you be pursuing?
SL: If you didn’t contact me for that reason, you made a mistake (You contacted me on OLPC and I responded). I am lucky to have long-standing relationships with some significant figures in the industry but am always looking for up and comers — and just good stories in general. Basically my “beat” hasn’t changed — Wired is devoted to the range of subjects I covered at Newsweek — but I will have a chance to get deep into stories. I’m also doing a front of book column that’s more consumer oriented, so I welcome early news of breakthrough gadgets and stuff (I do mean early–I’ve got a longer lead time to deal with).
RaceTalk: You’ve contributed to Wired for more then a decade as a side job to your regular gig at Newsweek. Sounds like you’ll keep a similar role there?
SL: My job is a writer and my hope is simply to do great stories.
RaceTalk: I was always impressed by your ability to elevate technology stories for mainstream audiences and understood which technology stories had the potential for serious social impact. Do you think you will have to move away from covering those types of stories now that you are at a pub that is more targeted on tech specific issues?
SL: Well, take the “Future of Reading” story I did for Newsweek about the Kindle. Can’t imagine Wired wouldn’t want to do something similar.
RaceTalk: Where will you be based for your new gig? I know you have been spending more time in Silicon Valley but will you be making your residence there or will you still be working at large from your home office?
SL: I will be working out of Wired’s New York City office.
RaceTalk: What do you see as the biggest trend currently happening in consumer tech? Is it the touch-screen phenomenon that Apple has spawned or perhaps something larger like the transition towards greener cconsumer tech products?
SL: Everything, from multi-touch to social networking, stems from the increasing power and ubiquity of computation, storage and broadband. It just gets juicier.
RaceTalk: Finally, is just me or is it somewhat ironic that Newsweek has pegged Fake Steve Jobs (UPDATE: At press time Fake Steve Jobs is now Dan Lyons) to take your old beat after you literally trashed the MacBook Air in one of your final columns for the magazine? Should we look for journalistic revenge from Fake Steve?
Happy belated 4th of July! Do you realize that it now takes 2 cents to make a penny? Well almost. 60 Minute’s ran Morley Safer’s segment on the economics of making pennies for the second time this Holiday Weekend (It first ran in February). In which, Morley reports that due to the price of copper tripling in price -it now costs the U.S. Mint $134 Million to make $80 Million in pennies.
Stephen D Levitt, the author of Freakonomics, is ready to put the penny to rest for good, noting in the segment that “it’s just not useful anymore because of inflation.” Still others argue that if we got rid of the penny, retail outlets will inflate prices to the nearest nickel.
The Washington Post owes Politco 2,000,000 Pennies: If you’ve been following the road to the White House online, it’s likely that you’ve spent some time on Politico. Former Washington Post (WaPo) reporters John Harris and Jim Vandehei started the online political destination two years ago after WaPo turned down their idea. Politico has been a landmark success and in May it reached nearly two million unique visitors (See chart below courtesy of Compete.com). So it’s no surprise that the WaPohas reconsidered the idea of a political only online destination. However, according to Gawker, when they went to purchase their preferred domain name “PostPolitics.com” they found it was already purchased (If you type it in now you are redirected to Washington Post’s Post Politics page). By who you ask? Those former employees that broached the idea with them two years ago. In addition, to being a head scratcher for the WaPo Editor-to-be (Perhaps former WSJ Editor Marcus Brauchli), it cost the paper $20,000. As someone once said, “Revenge is a dish best served cold.”
Fox News vs. The New York Times:
Right before the Holiday break media gossip sites began chattering about the latest illustration of Fox News’ professionalism. On July 2nd Fox News’ Fox & Friends, co-hosts Steve Doocy and Brian Kilmeade went after New York Times reporter Jacques Steinberg and his editor Steven Reddicliffe for a June 28th Times‘ piece on cable ratings, that the hosts labeled a “hit piece” on Fox. Their segment could have been accepted as a gentle media rebuttal if Fox News didn’t take it a step too far (seems they have a knack for this) by including digitally altered of photos of Steinberg and Reddicliffe in the segment. The alterations to Steinberg’s photos took the most notice - with his ears being pulled out, forehead being lowered and his nose enlarged & widened (I’ve imbedded the video of the segment courtesy of MediaMatters.org).
I’ve written about Fox News sensationalist approach several times. The most recent time, I presented trends in production and on-air interviews that I believe could alienate them from potential guests. However, David Carr of the New York Times brought to light another issue with their news organization today. His piece spotlighted the Steinberg and Reddicliffe incident as part of a broader story on the organizations media relations’ tactics.
Carr Likens the tactics of Fox News to the public relations’ apparatus of a political campaign, which is run from the top down (i.e. Roger Ailes, Chief Executive of Fox News). He points to several examples -outside of the latest incident- where Brian Lewis, the head of Fox News public relations, and other PR executives there have threatened they would “go after” reporters, blacklist them and publicly smear them in blogs if non-favorable stories were published. While Mr. Lewis denied the existence of a “blacklist” in Carr’s article and stated that it makes their lives difficult when on-air talent goes after reporters; he did acknowledge that they are very aggressive in what is often a passive PR industry.
With their current practices eliciting fear in reporters (like those illustrated below in the excerpt from Carr’s piece) I’m scratching my head wondering how many “friendly” reporters they have left? That Fortune cover story from Tim Arango seems like it ran light-year’s ago.
David Carr in today’s New York Times:
“Like most working journalists, whenever I type seven letters — Fox News — a series of alarms begins to whoop in my head: Danger. Warning. Much mayhem ahead. Once the public relations apparatus at Fox News is engaged, there will be the calls to my editors, keening (and sometimes threatening) e-mail messages, and my requests for interviews will quickly turn into depositions about my intent or who else I am talking to. And if all that stuff doesn’t slow me down and I actually end up writing something, there might be a large hangover: Phone calls full of rebuke for a dependent clause in the third to the last paragraph, a ritual spanking in the blogs with anonymous quotes that sound very familiar, and — if I really hit the jackpot — the specter of my ungainly headshot appearing on one of Fox News’s shows along with some stern copy about what an idiot I am.”
I’ll give you a penny (or two) for your thoughts on Carr’s assertion and the fate of the penny.
However, none of these stories portrayed the potential hand that CNBC had in the fall of Bear quite like Bryan Burrough’s piece for August’s Vanity Fairentitled “Bringing Down Bear Sterns,” which is now on newsstands.
Perhaps Burrough, the author of the heralded book Barbarians at the Gate: The Fall of RJR Nabisco, needed a new angle. Or perhaps, he’s actually intrigued by the behind closed door dealings between news outlets and PR executives. Either way, his story is the first to spotlight Bear’s P.R. man, Russell Sherman and CNBC reporters in the final days of the Bear Stearns’ collapse. The result is a fascinating read and if you’re a media junky like me; you can’t put it down. Anyone with experience in working with the different producers at CNBC can understand the situation that Bear’s was faced with and the cautionary tale that Burrough’s tells highlights the high stakes of crisis management communications.
Here’s Burrough’s introduction of Sherman in the piece:
Bear’s P.R. man, Russell Sherman, heard the rumors, too. As the stock continued to slide, Sherman began calling reporters, trying in vain to pin down their source. As he did, Molinaro (Bear’s CFO) checked to see what could be fueling the rumor. Bear itself had no liquidity problem—he knew that. That morning the firm sat atop $18 billion in cash reserves. Molinaro checked with his finance desk, the repo desk, his treasurer. Had anyone heard of anything like a margin call (in which a lender was demanding a huge chunk of cash back)? A trade gone bad? Was anything out of the ordinary? “Across the board, it was ‘No, no, no, no—no problems,”’ a Bear executive says.
The Huffington Post excerpts from the Vanity Fair piece and highlights the rest of the CNBC / Bear Stearns’ story here:
How Repeating Rumors Makes Them Fact
At Bear Stearns, no one was laughing. Publicly speculating on a firm’s liquidity is akin to shouting “Fire!!!” in a crowded theater; in catastrophic cases it can trigger panic selling. It risks, in other words, becoming a self-fulfilling prophecy.
For the next hour the Bear Stearns rumor became a topic of conversation between CNBC correspondents and various market traders and analysts. At 1:50, Matthew Cheslock remarked, “The sentiment [on Bear] is pretty negative. The general consensus is ‘Where there’s smoke, there’s fire.”
A few minutes later, Griffeth, perhaps sensing the network might have gone a bit too far, asked Dennis Kneale, “What about the jittery nature of this market right now? Are we starting to believe some rumors that may or may not be true?” Kneale agreed. “Someone,” he observed, “is always making money on the other side of that bad news or that rumor.” Yet CNBC’s coverage remained anything but skeptical of the rumor. At two the network’s new “money honey,” Erin Burnett, headlined the hour by announcing “credit issues at Bear,” never mind that there was no such thing. She turned to correspondent David Faber, who observed, “Of course, no firm’s ever going to say that they are having trouble with liquidity, and, in fact, you’ve either got liquidity or you don’t. So if you don’t have it, you’re done. Those are the kinds of concerns in this market, concerns of confidence You can have crises of confidence, causing meltdowns.”
Managing CNBC Egos
Sam Molinaro felt it was time for another public assurance. CNBC’s Charlie Gasparino had been peppering him with phone calls seeking comment. Molinaro talked to Russell Sherman, who felt Gasparino could be played. “He’ll say something negative if you shut him out. But if you talk to him, he’ll go positive,” one Bear executive told me. Around three, Molinaro spoke to Gasparino, telling him, “I’ve spent all day trying to track down the source of the rumors, but they are false. There is no liquidity crisis. No margin calls. It’s all nonsense.” Gasparino’s on-air comments were mild, but for the first time he raised the specter of a nightmare scenario: “They are really worried about this inside [Bear], that these rumors are taking a very nasty turn, and they might cause a run on the bank.” Still, by day’s end, there was no rush among Bear’s lenders to withdraw cash from the firm. At that point, this executive says, “the notion of a liquidity crisis seemed silly.”
That night Schwartz, Molinaro, and others discussed what to do. The talks centered on whether Schwartz should go public in an interview with CNBC. “We debated putting Alan on the air a long time,” says one board member. “Yes, it might draw attention to the rumors. But it would definitely answer the questions. Our view was: we had to get him out.”
Schwartz, though, wanted some assurances first. From experience, he knew he faced a risk in picking the wrong CNBC correspondent for the interview. All the network’s talent–Gasparino, Maria Bartiromo, Faber, Larry Kudlow–had requested the interview, and whoever didn’t get it, Schwartz feared, might retaliate on the air. “Each of these correspondents has his own producer, and they all seem to hate each other,” one Bear executive told me. “If you choose Faber, you know Bartiromo will bash you the next day.” Schwartz directed Russell Sherman to identify the CNBC executive who supervised the correspondents, explain the situation, and ask that the correspondents who didn’t get the interview refrain from attacks. Sherman, however, couldn’t identify a single CNBC executive who seemed to have control over the correspondents. “Everyone on Wall Street knows the joke,” says another Bear executive involved in the discussions. “At CNBC, there is simply no adult supervision.”
The Deadly Interview
Faber’s first question was a bombshell. He told Schwartz he had direct knowledge of a trader–a single trader–whose credit department had held up a trade with Bear Stearns, citing concerns about its health. At Bear, many executives gasped. It was a killer statement: Faber was saying, in essence, that Bear’s status as a trader, the basis of its business, was in question. Schwartz answered as best he could, saying everything was fine; only later did Faber say on-air the trade in question had finally gone through. But the damage had been done.
“You knew right at that moment that Bear Stearns was dead, right at the moment he asked that question,” a Wall Street trader of 40 years told me. “Once you raise that idea, that the firm can’t follow through on a trade, it’s over. Faber killed him. He just killed him.”
