Reflections of Readings (and others)
In the past few weeks, the Entrepreneurship in New Media class has tackled three main areas: law and regulation, fundraising and business models, and leadership. We have been presented with various readings, media and guest speakers that touch on these three topics in some way.
For law and technology, Lawrence Lessig in the initial sections of the book, Code and Other Laws of Cyberspace, Version 2.0, recounts an early belief of the Internet (or the “historical” term used: cyberspace) as a potential libertarian utopia. He also describes and suggests what regimes or authorities could exist to regulate what would be the modern Internet. But Lessig does caution that if left unattended, cyberspace/Internet could be used as a method of control network due to partnerships between commercial interests and the government. He proposed the question of how to reconcile the commercial and government actors. Lessig maps the evolution of the Internet’s architecture as “generations” or versions. The first generation was initially built by researchers and hackers, and the next by commerce or corporations. Lessig speculates that the third generation would be government. He also saw the the potential of partnerships between these groups, especially that of corporations and government to regulate the Internet.
On a more personal level, some lessons on business models and fundraising came from a class guest speaker, Mat Morgan, that presented on his experiences that included his failed business venture, ShoutAbout. His presentation and the following class discussions have questioned the viability of his company and highlighted some issues of fundraising problems. ShoutAbout was a web-based advertising network focused on content discovery. It was a similar service to Outbrain, but its function was more targeted to matching advertising to news stories. ShoutAbout appeared to suffer from a combination of bad luck and poor timing. A major contributor to their misfortune was their reliance on a single client, which changed its leadership, resulting in dropping ShoutAbout as a vendor. To make matters worse, it was suggested that the company should have sought funding earlier than it had, which may have positioned them better financially.
And finally, a Peter Drucker piece offers his recipe for leadership with this his essay, Managing Oneself. His approach focuses on knowing oneself, but in several ways. In knowing oneself, one can identify their strengths and weaknesses, ultimately they can use these strengths for successful action or enterprises, and acknowledge weakness to avoid potential failures or problems. Drucker’s second aspect of knowing is to identify performance. An example is whether one learns or takes in information by reading or listening. Another is knowing one’s values, what values and morals one lives by, and how working in or leading a company is an extension of one’s values. Lastly, Drucker focuses on knowing one’s community, or where one belongs.
Now the important question, what does this all mean? Internet regulation and governance are important issues that affect the basic infrastructure of the global economy. The transitions of the Internet generations, as described by Lessig, appear to be somewhat correct, however these groups do not appear to replace one another, but appear to work with some coordination. Although the final generation was a prediction, it maybe be coming to pass in recent years with international discussions and negotiations of Internet governance as reported by Vanity Fair’s 2012 article World War 3.0. Yet, the current stage does not address other regulatory issues affecting businesses. As some examples, what are the limits that companies freely use its customer data for monetization? Or can a new online streaming video company avoid having its data traffic reduced without having to pay Comcast not to throttle their traffic? The complicated issue of Internet data traffic nondiscrimination, or net neutrality, as coined by Tim Wu, demonstrates the problem of how Internet traffic can be regulated. Regulation intersects with security, and poses the question of what impacts businesses and the public, especially with possible abuse. Such is the case of AT&T providing the National Security Agency (NSA) access to AT&T customer communication data.
Aside from regulation’s role in business, business models and fundraising methods play critical roles and challenges for any entrepreneur. In the case of Mat Morgan’s company and his setbacks, his experience was the most genuine and inspiring of the guests thus far. There are many lessons from his experiences on what one should and should not do. As a model, ShoutAbout had both for profit and nonprofit utility, which appeared to be attractive for multiple markets. Despite its business model, its apparent lack of customer diversification was a contributing factor to its demise. Furthermore, ShoutAbout had money trouble. As we have learned, the importance of fundraising is fundamental. The class was given a mantra, “you must always think about money”. Interestingly, Morgan’s focus was not money, but more in promoting the social good and non-profit organizations.
Drucker’s Managing Oneself is common sense, however, it is common sense in hindsight. It can be imagined that truly knowing oneself provides insight for the who-what-how-why questions. This is important in any stage of one’s career. A concerning area in Drucker’s Managing Oneself is his discussions for the second career, and the preparation of the professional or working life for such event. It is framed in the context of an executive leaving the corporate space for a non-profit or social entrepreneurship venture. It is very admirable for people to give back, but this appears to miss several points if taken at face value. Not everyone is a high-powered executive, nor are career paths so clear and present. In addition, individuals may not follow a linear career path, nor one that goes from corporate to nonprofit, or nonprofit to corporate. According to the New Republic, Millennials appear not to be pursuing traditional career paths. Furthermore, the Wall Street Journal suggests that working adults can have up to seven to ten career changes. Drucker originally wrote his piece in 1999, so it is understandable if times have changed.
The class was given cases of Fantasy sports industry and other legal and regulatory examples. This may be a case of an industry that gambling regulation did not foresee. Moreover, its lack of regulation oversight may have contributed to the corruption and fraud since many fantasy sports companies were not seen as gambling. As a probable response Lessig may suggest that fantasy sports business may follow his models regarding the Internet, albeit loosely. It progresses from unregulated freedom, to corporate partnerships, then to government regulation. However, the final steps may involve their closure. Although gambling does have a business model as seen by casinos and lotteries, industries such as Fantasy Sports appear not to fit neatly into business models, especially in the context of Alex Osterwalder’s business model canvas as presented in A New Approach to Designing Business Models. Although Fantasy sports betting may have been profitable, it seems subject to fraud and corruption due large and fast profits. This may not been failure as in Mat Morgan’s case, but failure in the fact that regulations were needed due to corruption.
Yet with regulation, there is a question regarding the degree of regulation needed. Deregulation brought significant changes to many industries, such as in telecommunication and broadcasting. The rise of Clear Channel broadcasting company is largely due to deregulation. Regulation can also prevent companies from existing based on their business models. Aereo, a tech startup, attempted to build a business on rebroadcasting over-the-air television via the Internet, which was later declared illegal.
On a similar although different, Mat Morgan’s experiences may be rooted in his business model. This may be an argument by Osterwalder. Mat appeared to make important relationships with ShoutAbout’s co-founders, but Osterwalder may fault errors in not establishing other client partnerships and creating sufficient financial resources.
Considering all materials and speakers in the past few weeks, an ideal successful enterprise requires all the combined elements discussed. It must work in a stable and predictable regulatory regime, have a clear business model, be as well funded as possible, and lastly, have good leadership. However, is this possible? One could say yes, but it all depends. Many of the readings on models and fundraising gave templates and lists in order to develop and fund a business. Each of these areas are being disrupted by new and different business models, new ways to fundraise and find investors, and legal challenges are being made with some laws in position for potential change.
Recently, I had an opportunity to meet a few alumni from the University of Southern California (USC) with successful businesses that they had built up over the years. One important bit of advice they mentioned in terms of entrepreneurship was to be focused. Focus on goals, the business, the product. And these can include how the regulatory landscape appears, do new or existing business models apply, how to fundraise, and learn to be the best possible leader. But to be truly focused, one needs to know the who-what-why-how questions, and hopefully their answers.
