Content Matters

Stephen Colbert, Gates Foundation Team to Support Donors Choose

I spent my morning in the auditorium at Manhattan Bridges High School in Hell's Kitchen.

It was there that Stephen Colbert, along with representatives of the Bill & Melinda Gates Foundation came together to announce a $4.1 million grant to Donors Choose.

The "Double Your Impact" program will provide half the dollars to fund an expected 17,000 projects, which will touch 300,000 students. Qualifying projects will focus on college readiness.

Stephen Colbert, who was recently named to the board of Donors Choose, served as moderator of the event, with a panel consisting of Donors Choose Founder and CEO Charles Best, Gates Foundation director of education Vicki Phillips and Elizabeth Smith, a teacher at Manhattan Bridges, who twice has had projects funded through Donors Choose.

Donors Choose is an amazing organization. Founder Charles Best, a former Bronx social studies teacher  came up with the concept in conjunction with his students. To-date, the program has funded more than 80,000 projects, impacting more than 2 million students in all 50 states.

Donors Choose blends the concept of micro-donations with transparency, control and accountability. It's an amazing model and it's a model for individual philanthropy. To explore the projects currently seeking funding, visit Donors Choose.

I caught up with founder Charles Best for a few minutes at the end of the event.

 

Where Might the Best and Brightest Go to Work?

The New York Times today has an article entitled Crisis Reshaping Wall Street as Big Banks Lose Top Talent, which spotlights the decisions some on Wall Street are making to leave the big investment banks..

This is a discussion I've been having with friends (both online and off) for much of the past year.

For those in the New York technology industry, the financial markets have been both boon and bane. They create a strong market to sell into, but they also make it much harder (and more expensive) for startups to recruit technology talent. In Silicon Valley, the decisions are between startups or the former startups who've grown up a bit. In Silicon Alley, we've had to compete with Goldman, Morgan Stanley and others who offer salaries and benefits with which startups are unable to compete.

Of course, it's not just IT and MBA students who go to Wall Street. For more than 20 years, the top graduates of law schools and various undergrad and graduate school programs have been recruited by the top investment banks.

So, if there is a shift, is that a bad thing? Personally, I think it will be healthy for the Street and certainly for other industries.

If I were starting my career today, finance would not be near the top of my list. There are so many fields undergoing transformational change where young people can make a huge impact, such as health care, energy or technology. For those who love finance, there are great opportunities with smaller firms where entrepreneurial skills can be applied. And, of course, there are public sector roles where the smart young leaders can help reshape our society.

What would be the negative impact of a brain drain on Wall Street? I think the Street can survive without the invention of new financial instruments for a few years. Meanwhile, getting the best and brightest to focus on solving the challenges of energy, healthcare, infrastructure and information technology will have a big positive impact on society.

The Federal Government Behaving as a Private Investor Might

I've been amused by all the outrage over the government's recent actions related to the AIG bonuses and now its apparent role in the resignation of Rick Wagoner at GM. Tonight on the news networks there are various people being interviewed, expressing indignity over the possibility that the White House had made Wagoner's resignation a criteria for another bailout.

GM has a current market cap of slightly north of $2 billion. Taxpayers recently put $13 billion into GM and are on the verge of providing another $12 billion in loans to the troubled automaker.

Last week there was similar feigned outrage by many that the government would try to restructure or otherwise limit the bonuses that had been awarded by AIG. "If the government fails to meet contractual obligations, it will lose the confidence of everyone" was the party line for many big-business conservatives and many on Wall Street. This after putting more than $150 billion into a company which could today be bought outright for less than $3 billion.

If it weren't so difficult politically, the right thing for the government to do might have been to purchase GM and AIG outright; combined it would cost about $5 billion (less, if it had been done a while ago). But true nationalization is not politically tenable, at least for now.

But let's pretend for a moment that, rather than the White House, it was a private equity firm doing the acquisitions. Let's call them WH Partners LLC. Would there be any cries from either side about the aggressive actions WH Partners was taking?

Hmmm. Let's start with GM. Once WH Partners wrote the check and closed the deal, would anyone suggest they had no right to install their own CEO? Did anyone make that argument when Cerberus put Nardelli in charge of Chrysler? While some questioned whether he was the right guy, I don't recall anyone saying Cerberus had no right to make the change.

Now, let's take a look at AIG and whether the government might have had the right to change the terms of the retention bonuses. Well, in the private sector, that happens all the time. Many of the firms who complained that this would be unfair are the same firms which have done advisory work that allows, for example, Company A to do an asset acquisition of Company B which would avoid it having to pay out retiree benefits (the Halliburton acquisition of Dresser Industries is one such case that I recall). Now, I'm not suggesting that WH Partners should, in this case, strike the bonus deals outright, but I might encourage them to restructure the deal to reflect the current situation. Perhaps instead of a lump-sum bonus, the bonus might be paid over a multi-year period and be tied to specific performance goals.

Look, no one wants the federal government to be making hiring decisions nor to set compensation plans for the private sector. But when failed companies seem unwilling to make changes themselves and turn to the government for bailouts, they should expect a bit of oversight to come with the check. And I for one am happy to see this administration place at least some controls on the companies we're bailing out.

What do you think?

DonorsChoose Always Brings a Smile

I've written previously about DonorsChoose and how it really transforms the whole process of supporting charitable causes.

This weekend, I received thanks you notes and photos from two recent projects:
Mrs. French's first grade class from the Syracuse area are using a Flip digital video camera to share information about themselves with a first grade class in a nearby school, then will use the cameras to record book reviews and interviews. Sounds like a great program.

Meanwhile, on the west coast, Ms. Tothova teaches a special ed class where 90% of the students have autism. She'll be using a digital camera to take photos of daily learning items and activities around the class and school. The pictures will then be used on communication devices which her preschool students use to "talk".

Any day where we can make a positive impact on those around us is a pretty good day. The two projects above were funded through Twitter-based requests which were retweeted around our networks. No individual gave more than $25-30 and some gave as little as $5, but together we made an impact. Micro-sharing is starting to really take off and, combined with the transparency of the Donors Choose program is an amazing thing.

Thanks, Donors Choose, for making my weekend with the teacher feedback.

AIG Resignation Letter - One Point DeSantis Missed

In reading the Jake DeSantis resignation letter in this morning's Times, it's hard not to feel some sympathy for DeSantis and others in a similar position. Clearly, in this market, there are many people who had little direct responsibility for the credit crisis, but who are not feeling the brunt of the pain.

Yet one part of the letter rubbed me the wrong way. In his letter to AIG CEO Ed Liddy, DeSantis writes:

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.

What DeSantis doesn't say here is that some portion of the value that had been boosting his life savings were the artificial profits from the credit default swaps in prior years. He's now complaining about the losses in his deferred comp plan when the CDS were losing money, but doesn't acknowledge that much of the gains in prior years were based on smoke and mirrors.

This reminds me of a post I read recently on Felix Salmon's Market Movers blog, where he shares the story of Dr. Martin Beitler, who complains that due to tight credit, he lost a nonrefundable deposit on a million dollar Chelsea condo because he couldn't get a no-income-check $1.5 million mortgage. Dr. Beitler is suing for his deposit back, and states that "he had bought and sold property before and had always qualified for no-income-check mortgages."

As Felix notes, Dr. Beitler does not offer to return the funds he earned when he had flipped apartments in the past using those no-income-check mortgages. No, like Jake DeSantis, Dr. Beitler wants someone to bail him out when things go badly, but feels a sense of full entitlement when things go well.

To some extent, all of us were complicit in the use of cheap credit and the rising economy that it funded. But some share more culpability than others. And while DeSantis and Beitler might not be the worst offenders, neither makes for a very sympathetic character, particularly when they fail to recognize that their earlier gains were built on the same smoke and mirrors that are now causing their pain.   

Pssst, the recording light is on

In this age of citizen journalism, I'm amazed at the number of public figures who still don't get the fact that what they're saying and doing are being recorded.

While numerous cases of people embarrassing themselves on social nets (such as the Ketchum PR exec calling on Fedex tweeting nasty comments about Memphis), I guess I'm still most amazed at the political leaders who, despite being media savvy, show a total lack of understanding of the Internet and the political blogosphere.

The latest instance came last week with Louisiana Governor Bobby Jindal's response to President Obama's address to the Congress. In explaining why he did not view government as the best solution for our current challenges, he relayed a story of how he and Sheriff Harry Lee during Hurricane Katrina stood up to federal bureaucrats who supposedly prevented volunteers from rescuing stranded storm victims.

Within a day or so, it came out that Governor Jindal was not present during the incident. He inserted himself into an event where he could not possibly have participated. Later, Jindal's staff admitted that the Governor was not there at the time and was relaying a story which he had heard after the fact, but in which he had no direct role.

I don't mean to call out Jindal here. He's clearly not the only one who's done this (remember Hillary "dodging bullets" in Tuzla?) but his story is so easily proven false that it makes no sense. Governor Jindal has, at age 37, already accomplished more than most of us will accomplish in a lifetime, so there's no need to pad his experience.

In a seemingly unrelated story last week, the blogosphere (twittersphere?) was abuzz with (mock) outrage over the changes to the Facebook terms and conditions, allowing Facebook to continue to use your content even after you leave the service. Imagine that - information that you post to a public web site might remain there even if you decide you'd like to erase it.

Is anyone really surprised at that? A current Google search for my name brings up more than 13,000 pages. That information is out there and there's no way to remove it. It's not just the information you put up - when friends tag you in photos or mention you on their pages, your information is out there.

So, whether you're a politician, a professional athlete or just an ordinary worker bee or a student applying to college, your words and actions are being captured. And if there's one thing that the citizen journalists have proven (especially when it comes to political matters), it's that they will dig through the archives to find those incriminating videos.

Mark Walsh: Lessons from Politics #SIIA

Mark Walsh delivered the lunch keynote at SIIA. Walsh has a fascinating background. He currently serves as CEO of GeniusRocket, but previously served as CEO of Genie, VerticalNet and Air America Radio. He was CTO of the Democratic National Committee during the Kerry campaign and lives in the DC area, giving him a somewhat unique view of politics and technology.

Mark's presentation was entitled "Lessons on Politics" and he particularly focused on the concept of MicroScripts, ultra-short marketing messages. MicroScripts dominated the recent election cycle - just think about how your perception of the following terms have changed in the past few months: lipstick, (bridge to) nowhere, maverick, and of course, change.

Walsh suggested that MicroScripts will impact product marketing as well and that we need to focus on shorter and shorter ways to express core product features. As he said, "it's not an elevator pitch anymore; it's a bumper sticker".

But it's not all bad news. Walsh sees the current time and the new administration as potential antidotes to the MicroScripting trend. Describing Obama as "human ritalin", he described how we are forced to slow down and think by his deliberate speaking style.

For those who wish to follow IIS online, the best way is to follow the stream of tweets using the #siia hashtag.

Five Questions for Ed Keating

Ed Keating is Vice President of the Content Division for the Software & Information Industry Association (SIIA). Keating has over 15 years of experience in the information industry as both an internal manager and a consultant. He has led marketing, product management and sales organizations at both startup and established information companies. His work to enhance product processes and organizational effectiveness has helped numerous companies enter unfamiliar markets and launch new products.
From his vantage point at SIIA, Ed has a unique view into the operations of hundreds of content companies. Ed is also author of the ContentEd blog.

Content Matters: 2009 will certainly have its share of challenges. What do you see for the Content industry in 2009?

Ed Keating: In looking at the four vectors of social change (Economic, Technology, Sociocultural,  Political/ Regulatory) I think the biggest challenges will be on the economic and socio-cultural front.  With so many jobs being lost in some key information industry markets like finance and pharma, there will be economic impacts.  This will ripple through companies in a myriad of ways.  As an extension, there are sociocultural impacts as the information industry workforce contends with the economic uncertainty that accompanies the drumbeat of layoffs.

While I don’t see much in the way of technological challenges, there may be some threats to the industry if the government tries to become a prominent publisher and competes with industry companies.

CM: What shoes have yet to drop? Which less obvious sectors might be facing troubles in 2009?

EK: The ease of creating businesses and products, coupled with the simplicity of building social networks could create new entrants into the professional publishing space.  What would happen if a group of scientists decided to come up with their own naming conventions for chemicals or if a financial team tried to usurp the CUSIP system?  Neither is an easy feat but the building blocks are becoming easier to stack up.

CM: Other than the economy, what macro issues do you think will have an impact next year?

EK: The biggest change will be the shifting of nexus from Wall Street to Washington DC.  With an estimated $3-4 trillion to be spent, DC is seen by some as the new Wall Street. On the plus side, new regulations have historically been great for professional publishers. It has always been a reason to “fire up the printing presses” as professionals have always relied on regulatory publishers to explain the new world in Washington.

There is also the challenge of our industry having some conflicts with the new administration.  With a “wired White House”, there may be challenges to publishers if the government tries to become a premium publisher.  As the old adage advises, never pick a fight with someone who buys ink by the barrel.  If you do, be sure to be an SIIA member!

CM: In 2007, Facebook was all the rage, while in 2008 it was clearly Twitter. Yet neither has shown the ability to make money yet.  Do you see social media making a breakthrough impact for business in 2009? Or, is that window closing?

EK: These products were certainly the rage of the cognoscenti but in 2007 Facebook was still largely populated by students with student-level purchasing power and Twitter is still only used by a narrow band of early adopters.

I don’t think 2009 will be the year of a big breakthrough, but I believe we’ll continue to see incremental breakthroughs. For example, now that Twitter is internationally recognized for breaking the USAIR Hudson River crash, more companies may try and build unique alerting/warning products.  Maybe some will even charge for these services!

CM: While there’s a lot of gloom and doom about, there are always bright spots. What are you optimistic about in 2009 (professionally or personally)?

EK: Having worked through a number of recessions in the last 20+ years, these down times can help businesses focus on what is important and let go of marginal people, products and services.  It may also build in some perspective in the workforce so that we are all a bit more skeptical when the next bubble begins to emerge.

CM Note: Ed - the annual Information Industry Summit is to be held next week. I couldn't let you go without a quick plug.

EK: During the past seven years, the SIIA Information Industry Summit has earned its reputation as the digital information industry’s flagship conference. This annual Summit of industry leaders is one of very few forums providing strategic guidance to senior business leaders representing publishers, content technology companies, bankers, analysts, bloggers and press.

Corporate and business development executives interested in sourcing new technology or vetting deals, and venture capitalists and other bankers, should attend the 3rd annual pre-conference event, SIIA Previews, taking place January 26. CEOs of young innovative publishers, aggregators, and content technology companies will provide 5-minute presentations followed by Q&A.

Registration for the SIIA Information Industry Summit includes registration to attend SIIA Previews, or you may also choose to attend just SIIA Previews.

For more details, please visit: www.siia.net/iis/2009/

Thanks, Ed, for your insights. And to those attending IIS next week, I look forward to seeing you there!

Well Wishes raises $25k for Charity:Water via social media

Last December, I posted about microdonations and the project that Laura Fitton (@pistachio) had kicked off with a goal of raising $25k for Charity:Water by her birthday.
Well, her birthday was yesterday, and while it took a few minutes past midnight, Laura's extended social network helped her achieve the goal.

The bulk of the funds (more than $15k) were raised and contributed on Twitter via Tipjoy. Tipjoy and its founders contributed a matching $5k, while another $5k or so was raised directly on the Charity:Water site. That will be enough to provide fresh water to five villages, saving countless lives.

Laura did an amazing job, tapping into her network and the extended network of retweeters to get the needed contributions. While some contributions were as little as $0.25, others were much more substantial. I have to recognize @linlee888 who pledged $1 per follower, then blew that away with a $1,300 donation.

Laura put an amazing effort into this, topping it off with a one-hour live broadcast via UStream TV last night starting at 11pm. Putting yourself on a webcast with accompanying live chat is a pretty brave thing to do (and believe me, there are some weirdos chatting out there) but it all helped her achieve her Christmas wish.

The full details will be posted shortly to the Pistachio site. In the meantime, please join me in congratulating Laura and her network.

Five Questions for Paul Kedrosky

Kicking off the "Five questions for..." series on Content Matters is Dr. Paul Kedrosky.

Paul is an investor, writer, and entrepreneur. He is a senior fellow at the Kauffman Foundation, a strategist with Ten Asset Management and the author of the Infectious Greed blog. A frequent analyst on CNBC, Paul was formerly a technology analyst at HSBC James Capel.

Content Matters: What shoes have yet to drop? Which less obvious companies or sectors might be facing troubles in 2009?

Paul Kedrosky: Sovereign defaults. Ecuador doesn't count, as it was largely a recreational default. Now, however, we're onto the biggies, with countries like Ireland, Greece, Turkey, Italy, Ukraine, and even the U.K., to some extent under immense pressure. While they won't all default, many will require bailouts, and there is a high likelihood that the U.K. ends up adopting the Euro.

CM: We've privatized large parts of the economy with little discussion or oversight. What do you think has been the most underreported aspects of the events of the past year?

PK: How bank lending was never the right measure to judge the success of these programs. We were trying to prevent the system from seizing up, not trying to turn the go-go easy-money clock back to 2:25pm on June 25, 2005. Confusing people on this point has been life much tougher for Treasury, the Fed, etc.

Second worst-reported story is the idea of the "new normal". What does a post-leverage world look like? How much are stocks worth? How fast does GDP grow? How big are corporate profits? What percentage of GDP is profits? These things will all chance, and yet we act as if we will just return to trend at some point.

CM: Historically, as the economy comes out of recession, it creates transformation and change. Which industries/segments might see an earlier recovery than the economy as a whole?

PK: Banking, strangely enough. Judging from the Depression, banking saw the most wrenching dislocations, but became productive sooner than many thought. Not necessarily the same names, but the sector did come back in unexpected ways. Following that, I expect energy, agriculture, and some selected commodities to ride the reflation wave that is breaking on pretty much every shore in the world.

CM: With the end of the trading culture that dominated the past 20+ years, what do you think Wall Street will look like when the dust settles?

PK: It blow it up into a million shiny pieces -- or at least three. We will see proprietary trading shops, which are really just hedge funds.
We will see pure agency traders, which are really just providers of liquidity for specialized trades. And we will see deposit-taking consumer-centric banks with business accounts. The days of banking hypermarts are over, as are the days of being a hedge fund with a loss-leader brokerage operation (read: Goldman Sachs).

CM: Finally, some predictions. Where do you think the Dow Jones Industrial Average will close on 12/31/2009? What might the unemployment rate be? What will the price be for a barrel of oil?

PK:
    DJIA: 6700
    Oil: $30
    Unemployment: 10%

CM: Thanks, Paul, for your time and your insights (and your somewhat frightening predictions).