Yotta Point

The Future of News and Media

Venture capitalist and entrepreneur Marc Andreessen has a series of interesting tweets discussing his perspective on the future of the news business. It starts with this premise:

Starting point: I am more optimistic/bullish about future of news industry over next 20 years than almost anyone I know. Will grow 10x-100x.

He explains in several tweets how he sees the new business changing in the future. In a nutshell he believes the following (this is my translation or summation of his tweets):

• News should be run like a business; profitability is key to producing quality content
• The news industry is experiencing tumultuous change because incumbents are losing, in his view, "monopoly" or "oligoploly" status in the "control of distribution" and thus pricing
• The advent and global popularity of the internet has led to multiple forms of media - TV, cable, newspapers, etc. - seeing their futures converge on the internet (where there is a proliferation of relatively free content). As a result, they are losing market & pricing power when it comes to distribution.
• There has been a large expansion in the customer base for news - and this growth in (sales) "volume" will (partly) counter the loss of revenues from widespread competition. Therefore, he says: "Big opportunity for news industry in next 5-10 yrs is to increase market size 100x, drop prices 10x. Become larger & much more important."
• Those that offer most breadth or depth in coverage will be the most likely winners in this new paradigm - those in the middle more likely to lose. Based on this, the business models he believes that will survive are the following: Advertising, subscriptions, premium content, conferences and events, cross-media, crowdfunding, bitcoin for micropayments, philanthropy.
• He adds: "the more noise, confusion, and crap -- corresponding increase in need for trusted guides, respected experts, quality brands"

News and media are one of my favorite topics and it is hard to do justice to this topic in a single & quick post, but I'll try. Since I have a fair amount of direct experience in this area and have enjoyed many discussions over the years with many friends interested in this area - like Peter Daou - I'll say the following in response to Andreessen's thoughtful observations.

Making Public Private Partnerships Successful

One of the key themes from the Clinton Global Initiative (see my discussions on the Q&A with President Bill Clinton at the most recent CGI 2011 - Part 1, Part 2, Part 2A, Part 2B, Part 3) was the notion of leveraging public-private partnerships to drive solutions to large scale problems. For instance, in my discussion of shared value v. shareholder value in Part 3, I made some related observations [note that all of the bold text in this post is used for my own emphasis]:

A few other related observations from the above CGI panel discussions:

• Unilever CEO Paul Polman, in the discussion on redefining business as usual to drive sustainability, remarked that in today's social media environment, the people in Egypt were able to bring down their government in "17 days" and as consumers could bring Unilever down in "nanoseconds" if, as a company, they are not sensitive to their impacts on society
• Dow Chemical CEO Andrew Liveris, who has been vocal about the need for a manufacturing renaissance in the U.S., made several noteworthy comments:
  • The need for "inclusive democracy" through a "golden triangle" of public (government), private (business), and non-profit (NGO) partnership
  • A world view has finally arrived where we need to value the planet
  • It is challenging to run long cycle investments with a focus on public good when - you are measured on a quarter-by-quarter basis, some investors don't fully understand the notion of long-term value, and there is ten times more money going around the world (from an investment standpoint) than you can deal with
  • "Poor people are poor, not stupid", i.e., it takes a certain level of creativity to survive when one is poor

Liveris has previously stated that while he is a supporter of free markets, we should recognize that free markets don't naturally allow for strategic decisions at a country level and that public policy and government need to step in to address that - "I would not let free markets rule without also addressing what I want manufacturing to be 20 or 30 years from now". That is very much aligned with what I wrote about a year ago:

What I believe is sorely missing in the US today is any kind of broad strategic thinking or position on the type of manufacturing leadership that we believe the U.S. should continue to have in order to preserve our leadership and security over the next 50 years - and - a vision on how we should concomitantly engage with governments and private enterprises to make that strategy a reality. In the absence of a strategic long-term view and any substantive broad-based dialog with the U.S. business community (not in the vein of political talking points, but in the spirit of driving American leadership through enlightened policy and deep engagement), dreams of re-building US manufacturing leadership will remain out of reach.

The key motivation for public-private partnerships (PPPs or P3s) is that, often times, neither the public sector nor the private sector is able to completely shoulder the costs and responsibilities for solving serious large-scale problems - so, a PPP might therefore be a more effective solution path in those circumstances. Note that I use the term PPP to refer not just to the public and private sectors, but also non-governmental organizations (usually non-profits or NGOs) that are funded through public or private means.

PPPs are generally much more complicated to plan and execute than purely public sector or purely private sector projects. In the aftermath of the Great Recession, there has been increased skepticism in some circles about the effectiveness of PPPs in achieving their goals given that reckless private sector risk-taking on a large scale got socialized into public sector budgets. For example, Toby Sanger and Corina Crawley of the Canadian Centre for Policy Alternatives wrote:

Q&A with President Bill Clinton at the 2011 Clinton Global Initiative - Part 3: Shared Value and Shareholder Value

[Part 1 includes links to President Clinton's comments on a number of topics; Part 2 was focused on his comments on Greece, the Euro and the financial crisis in Europe; Part 2A and Part 2B were focused on food security - the role of commodity market speculation & corn-ethanol conversion on food prices and sustainable agriculture]

The focus of this post is President Clinton's observations on the role of shared value vs. shareholder value when it comes to corporations, their impact on society and job creation.

Summary

The key takeaways from this post are the following:

a) President Clinton strongly endorsed the need for U.S. businesses to focus on shared value as opposed to merely shareholder value, in order to be successful in the long-term and create more jobs in the US. According to Michael Porter and Mark Kramer, the "principle of shared value...involves creating economic value in a way that also creates value for society by addressing its needs and challenges." [Section 1]

b) Shared value does not refer to "corporate social responsibility" but a very different way to shape and run a business which recognizes that societal and environmental impact should not be viewed as externalities for firms but rather as key factors that shape business strategy and practices. As Porter and Kramer have illustrated with examples, if this is done correctly, perceived "harms and constraints [do] not necessarily raise costs for firms, because they can innovate through using new technologies, operating methods, and management approaches—and as a result, increase their productivity and expand their markets." [Section 2]

c) There are many examples of firms that are achieving great success by focusing first on key stakeholders other than shareholders, e.g., Apple, which has become one of the most successful companies in the world with a focus first on customers, rather than shareholders. [Section 2]

d) There is growing recognition, as was particularly evident from some of the CGI panel discussions [Section 3], that:

• Corporations should focus on creating shared value and be given the legal flexibility to operate as such - e.g., via the creation of a new corporate legal entity called a benefit corporation
• A pure focus on profit is not necessarily likely to lead to long-term success or profitability - e.g., the massive collapse of financial companies worldwide recently, given financial companies perhaps more than any other class of companies, are ostensibly focused solely on financial profitability
• Free market principles by themselves do not allow for optimal outcomes at the level of individual countries; country-level strategies require the cooperation of public, private and non-profit entities.

In the following sections, I'll explore the above points in greater detail.

1. President Clinton's Observations

Q&A with President Bill Clinton at the 2011 Clinton Global Initiative

UPDATE: Part 2 is here discussing the financial crisis in Europe...more coming in the next week.

Like last year, I had the opportunity to participate in a Q&A session with former President Bill Clinton, along with a handful of journalists and bloggers, on the sidelines of the 2011 Clinton Global Initiative Annual Meeting in New York. A variety of topics were discussed during this meeting and Tom Watson at Cause Wired has some overall commentary. Some of the other attendees of the Q&A have published articles based on the discussion and I'll mention some excerpts here.

1) Amanda Terkel at The Huffington Post: Bill Clinton weighs in on Troy Davis execution

2) Josh Rogin at The Cable, one of the foreign policy blogs at Foreign Policy Magazine, initially posted this - Bill Clinton: Netanyahu Killed the Peace Process; Rogin then wrote about the initial response of Israeli PM Benjamin Netanyahu here and another response here. I don't have time to get into parsing the he-said she said, but I'll make one quick comment. One of President Netanyahu's comments was the following:

You know, I regretfully and respectfully disagree with former President Clinton. He should know, more than anyone else, that in the peace conference he presided in at Camp David in 2000 with [Yasir] Arafat and former Prime Minister [Ehud] Barak, it was the Palestinian side who walked away from his own parameters...

In fact, during the Q&A, President Clinton did blame Yasser Arafat for the failure of the 2000 peace conference.

3) Brian Merchant at Treehugger: Creating 1 Million Energy Efficiency Jobs is a No Brainer - Bill Clinton

4) Penelope Chester at UN Dispatch: President Clinton: "We've Got a Shot in Haiti"

5) Eli Clifton at Think Progress: Clinton: ‘There Is Not A Single Solitary Example’ Of A Country That Has Succeeded With A Tea Party Philosophy

[Clinton] responded to a question from ThinkProgress about Texas Gov., and GOP presidential frontrunner, Rick Perry’s position that Social Security is unconstitutional, and about the Tea Party’s anti-social spending sentiment more generally. Clinton blamed the “continuing dominance of non-fact based political debate,” saying:

You can stand up and say anything and nobody rings a bell if the facts are wrong. There’s no bell ringing. It’s crazy, we’re living in a time when it’s more important than ever to know things. And not just to know facts but to put them in a coherent. sensible pattern. And we live in a time, if you just want to talk about the economy, where the model that works for economic growth and prosperity is cooperation. But the model that works in politics is conflict.

Clinton went on to challenge the emerging GOP consensus that government size and spending require dramatic cuts, observing that the most prosperous parts of the U.S. “look nothing like the anti-government ideal of the Tea Party crowd”:

You know, there’s not a single solitary example on the planet, not one, of a country that is succesful [sic] because the economy has triumphed over the government and choked it off and driven the tax rates to zero, driven the regulations to nonexistent and abolished all government programs, except for defense, so people in my income group never have to pay a nickel to see a cow jump over the moon. There is no example of a succesful [sic] country that looks like that.

6) Brad Johnson at Think Progress: Bill Clinton On Claims That Solyndra Means All Green Energy Is Bad: ‘Don’t Insult My Intelligence’

Asked by ThinkProgress Green about how to fight the corrupting influence of climate deniers, Clinton said that people need to defend the facts about the green economy as vigorously as the opponents of the clean economy promote lies:

They can take nothing like Solyndra and say that proves all green energy is bad. Why? Because those of us on the other side don’t say: Whatever the truth is, here’s the mega truth. We can’t burn up the planet. We’ve got to find an economically sustainable way to save it. Green energy jobs have grown at twice the rate of overall economy jobs in the last decade, they pay 20 to 30 percent more, they’re directly responsible for a $60 billion trade surplus.
Do whatever you want about Solyndra, but do not insult my intelligence by trying to say that the big oil [companies] are right and the green tech people are wrong.

Clinton was citing the analysis by the Brookings Institution of the clean energy economy, which found that employment in the clean-tech sector, which includes companies like Solyndra, grew at 8.3 percent from 2003 to 2010, twice as fast the overall economy.

[...]

Later in the roundtable, Clinton offered some thoughtful analysis of why the government is “picking winners and losers,” as some have described the loan guarantee program that supported Solyndra. He explained that the understanding that corporations have a responsibility to all stakeholders has been lost to the idea that they only answer to shareholders. The role of government in setting market fundamentals has been attacked relentlessly. So government policies that define the market — like clean energy standards, cap and trade, or carbon taxes — can’t get passed, even though those are the most efficient at supporting economic innovation.

People need to understand that the government should play a role in making markets, Clinton said, and “part of the market making should be designed be create a mentality of shared value rather than just shareholder value.”

Note: The last bit on shared value was in response to a question I asked and I'll write about that in a separate post.

7) Morra Aarons Mele at BlogHer: What President Clinton, Maternal Health and Blogging Have in Common

Emerging Africa

Just came across this interesting piece at the Center for Global Development: "Emerging Africa: How 17 Countries Are Leading the Way". Radelet's view is summarized below:

Since 1995, seventeen African countries have defied expectations and launched a remarkable, if little-noticed, turnaround. These countries are putting behind them the conflict, stagnation, and dictatorships of the past and replacing them with steady economic growth, deepening democracy, improved governance, and decreased poverty. Five fundamental changes are at work: (1) more democratic and accountable governments; (2) more sensible economic policies; (3) the end of the debt crisis and changing relationships with donors; (4) the spread of new technologies; and (5) the emergence of a new generation of policymakers, activists, and business leaders.

Not entirely clear to me to what extent this is true of all the countries surveyed, but worth a look.

CGI: Notes on Panels on Women and Girls, Market Based Solutions, Environment, Haiti

In my two previous posts, I discussed comments on the American job market by former President Clinton at the Clinton Global Initiative. In this post, I'd like to briefly comment on some of the panel discussions on other topics.

Women and Girls

President Clinton's remark that it is amazing that we even need panels discussing the protection and empowerment of women and girls in the year 2010 set the stage for CGI's focus on this topic. The panel discussion on Empowering Girls and Women (see Michelle Kraus' piece at the Huffington Post and Ken Houghton's notes at Angry Bear) was one of the better ones in my view. A superb video worth watching and sharing - The Girl Effect - was aired during this session. Joan Walsh at Salon.com wrote more about this and about Secretary of State Hillary Clinton's announcement on a new initiative:

I'm attending the first day of the Clinton Global Initiative, where Secretary of State Hillary Clinton just announced the launch of the Global Alliance for Clean Cookstoves, a public-private partnership. Before you shake your head at the former president's powerful wife being confined to the kitchen, the toxins released by open fires and inefficient stoves create one of the five most serious health risks to people in developing countries, putting them at risk for pneumonia and lung cancer.

The participants on the main panel were Queen Rania Al Abdullah from Jordan, President Ellen Johnson Sirleaf of Liberia and Muhtar Kent, CEO of the Coca Cola Company, with Katie Couric of CBS moderating. I was particularly impressed by Queen Rania Al Abdullah (her outspokenness and willingness to take strong positions), although President Sirleaf was engaging as well.

The breakout session on Securing the Heath and Safety of Girls and Women, moderated by The Daily Beast's Tina Brown, was interesting as well (see Ken Houghton's notes at Angry Bear). The panelists were Gary Cohen, EVP of BD, Geeta Rao Gupta, Senior Fellow at the Gates Foundation, Richard Holbrooke, Special Representative for Afghanistan and Pakistan (US State Department), and actress Ashley Judd, Board Member of Population Services International (PSI). Holbrooke was vocal about what he felt were some shortcomings in traditional approaches to deal with women's rights and security in countries where women face suppression or sexual violence. He said that we also have to address the men in order to fix the problem of violence against women, that he rarely sees programs where men are the target of appropriate outreach - he gave an example of police training (not sure if he was referring to Pakistan) where he said there was nothing in the training really about how women need to be shown respect. He mentioned that both he and Secretary of State Hillary Clinton see eye to eye on this topic. Gupta countered this by stating that there are programs that target men and boys - not just women - and with a broader community-level focus these programs aim to show how the men and the community can benefit (especially in terms of growing their income or wealth) if women are allowed more freedom to pursue their goals and are respected. Holbrooke also spent some time discussing the recent devastating floods in Pakistan and what he thought it would take to help Pakistan recover from this unprecedented calamity. He cautioned that any aid given to Pakistan should not be linked to any commitments on social re-engineering because it would be counter-productive - he said, aid should be provided to save lives and livelihoods, not just for security alone. Judd spoke passionately about her travels and experiences in Africa.

(NOTE: I was unable to attend the session on Profiting From The Poor? A Discussion on Microfinance IPOs - where Muhammad Yunus (Nobel-Prize winning Founder of Grameen Bank) and Vikram Akula (Founder of SKS Microfinance) evidently had an energetic debate. Megha Bahree of Forbes has a brief write-up on the debate in her blog and Rina Chandran has more at Reuters).

Why Yotta Point?

As Wikipedia states:

Yotta is the largest unit prefix in the International System of Units (SI) denoting a factor of 10²⁴ or 1000000000000000000000000. It has the unit symbol Y.

The prefix name is derived from the Greek ὀκτώ (októ), meaning eight, because it is equal to 10008. It was added to the SI in 1991. [1]

I started this blog because of my interest in challenges of immense scale and designing and implementing solutions to such challenges. For example:

• How do Governments devise solid policies to address a problem impacting tens to hundreds of millions to billions of people?
• How do non-governmental organizations (NGOs) and non-profits take solutions that might work within small populations and scale them to address much larger populations?
• How do businesses that are growing (either organically or inorganically) scale everything they do successfully to meet the demands of growth?

...and so on.

I consider these challenges ones of scaling. As the world grows, the challenges of scaling get more pronounced. Solving real-life problems of scaling excites me. Hence, the use of the term Yotta Point to denote a place where issues tied to scale will be discussed.

Welcome!