Today in our international negotiation class, one of the readings we looked at was Robert Axelrod’s highly influential article, “The Evolution of Cooperation”.

In it, he describes a computer simulation he ran based on the game theory game “prisoner’s dilemma”.  Basically, the game assumes two prisoners, speaking to the police separately.  If both stay mum on the crime they both committed, they get the lightest punishment.  But if both tattle on the other, they both get a fairly bad punishment.  If one tells on the other but the other doesn’t do the same, then the traitor gets a lighter punishment and the other gets a really horrible punishment.  So it would seem to be “safest” to confess on the other party, just to be sure.

Instead of analyzing one iteration of the game, he extended it to run multiple iterations, building on past results, to generate the best outcome for both parties.

What Axelrod concluded was that the best strategy for a party in this game is to reciprocate the other’s move, after opening with a cooperation move.  That is, the first thing you should do is cooperate.  But if the other party defects, then you should reciprocate by defecting too and reciprocate every move henceforth.  But your overall strategy should be to want to cooperate and forget past defections.

Basically, as our professor put it, this strategy is “be nice, retaliatory, and forgiving”.

There are flaws in this game, as my brilliant classmates pointed out:  parties are rarely equal in international negotiations (the US vs. Panama), the first defector ultimately has a slight advantage, and sometimes payoffs for cooperating/defecting are different for each party.

But I am interested in the overall message:  reciprocity.

If I am going to try to build a comprehensive reputation system, then it cannot just be a quantitative measure of your life-long statistics.  It must also incorporate social and qualitative measures, such as what other people think about you.  In other words, your reputation as we tend to think of it now.  It is an amalgamation of all the acts that other people know (and suspect) you’ve done.

If you are going to evaluate someone else’s honesty and trustworthiness, you want to know whether they’ve ever pulled a fast one on someone else.  Even then, would you still conduct commerce with them?

Galapag.us will allow people to post bad things about other people, something that’s fairly neutered online right now (for obvious reasons).  But what mechanism needs to exist in order to counter this is the ability to reciprocate both by the person aggrieved and by the system itself.

Yes, you can post something negative about me.  But the system will see this as a negative attack that should cost you something, and both my friends and myself will have methods to attack you back.  All done in public.  So it’s a transparent system that holds people accountable to their actions.  It allows for reciprocity.

Says Axelrod:

“Once the word gets out that reciprocity works – among nations or among individuals – it becomes the thing to do. If you expect others to reciprocate your defections as well as your cooperations, you will be wise to avoid starting any trouble. Moreover, you will be wise to respond appropriately after someone else defects, showing that you will not be exploited. Thus you too would be wise to use a strategy based upon reciprocity. So would everyone else. In this manner the appreciation of the value of reciprocity becomes self-reinforcing. Once it gets going, it gets stronger and stronger.  This is the essence of the ratchet effect: Once cooperation based upon reciprocity gets established in a population, it cannot be overcome even by a cluster of individuals who try to exploit the others. The establishment of stable cooperation can take a long time if it is based upon blind forces of evolution, or it can happen rather quickly if its operation can be appreciated by intelligent players.”

It will be interesting to see how different personalities approach this functionality.  Will some people defect more often on others?  Will some really come to value being trustworthy?  Will people become hypersensitive about any sort of negative attack like on eBay’s buyer/seller ratings?  How can Galapag.us facilitate an equitable system.

These won’t be easy questions to answer, but my overall goal is to create a reputation management system that rewards cooperation and social capital while at the same time valuing negative feedback, both in the sense of finding it necessary and important, and in the sense that if you say something bad about someone, it should cost you something to take that course of action.

A last point I want to make is about the value Galapag.us holds:  its permanence.  It establishes a long-term view and accountability upon all users.

Axelrod says, “For cooperation to prove stable, the future must have a sufficiently large shadow. This means that the importance of the next encounter between the same two individuals must be great enough to make defection an unprofitable strategy.”

Clay Shirky, who’s been thinking about reputation a lot lately, talks about the “shadow of the future” as well, based on Axelrod’s reciprocity.  You get a sense that the Ayn Randish selfishness and every man for himself attitude is only a short-term game.  Some might call this social Darwinism or survival of the fittest, or Malthusian or gladiatorial (as Wikipedia says in its article on Axelrod’s “The Evolution of Cooperation”).

But the shadow of the future, the mankind and individual memory we have of the past, allows us to play out into the long-term.  And this is where altruism and “mutual aid” come in.  It might serve our purposes better to work together than to play for ourselves (i.e. the prisoner’s dilemma).  We may need to be competitive to advance, but if we destroy each other in a zero-sum game, then we will all die.  The ecosystem we are all a part of thrives when we’re all there, participating.

So Galapag.us was not born of a cutthroat mentality where every person must compete with everyone else.  Galapag.us is that ecosystem, made up of many levels and units and layers of biomass and data, and the more datamass there is, the more information we can learn from it in order to grow more individually.  It is a network of trust and accountability that creates teeming supplies of social capital so that we can conduct better business and social networking and self-awareness.

Mike Neuenschwander wrote a post on how it’s good that social science is coming into the internet security (which feeds off of reputation) discussion, which had been dominated by computer science in the past.  What he says is,

“However, I’d like to add that Axelrod’s work is only a starting point—a portal into the discipline of what I now refer to as “social trust online.” Some of my “Laws of Relation” hark back to Axelrod. But Axelrod’s work on reciprocity isn’t sufficient for developing new pathways to trust on the Internet. In fact, filling in all the other applicable research on trust is the entire purpose of my contributions to this site.”

So with that in humble mind, there’s a lot more to research in order to make Galapag.us the massive all-encompassing trust network for every human and thing on the Earth that I envision it to eventually be.

Reid Hoffman, founder of LinkedIn, has been getting a lot of press this week.  He was interviewed on Charlie Rose and also had a column published in the Washington Post. (please check them out to understand the context below)

The start-up/entrepreneur community linked the heck out of Hoffman (like at TechCrunch), so his name kept getting more and more traction.

Although Hoffman is right about making the US hospitable to immigrants (immigrants are shown to very positively impact economic growth), I do not agree with much else of what Hoffman does or says.  Why?

LinkedIn

Listening to Hoffman peddle LinkedIn on Charlie Rose was kind of sad.  Really?  A popular founder posted a question on a forum on LinkedIn and a bunch of people responded?  Wow, you can post recommendations of people on LinkedIn?  That’s amazing!  Only on LinkedIn can you use forums and post things about people!

This probably works pretty well if you’re popular and have a lot of fans willing not only to read you but also to contribute.  But how does this help individuals with little prominence get a job or promote themselves?

Can anyone not affiliated with LinkedIn honestly say it’s helped them professionally at all?  The more people join LinkedIn, the more their job listings become like Monster or other clearing houses for jobs.  i.e. they’re totally useless.  Naturally a lot of bloodsucking headhunting/recruiting companies leech onto LinkedIn and bulk post listings, diluting the value even more.  Now there’s a 6-figure salary professional networking site, TheLadders, which I’m sure looks upon LinkedIn with disdain but is also pretty much useless to most people.

Hoffman dismisses Facebook as a place mostly for photo-sharing.

Uh, what?  That’s a pretty big red flag that he either was making a small off-the-cuff comment, or he has no clue what he’s talking about when it comes to social networking.  Facebook is massive; it’s vibrant, explains who people are, and allows people to be creative.  LinkedIn is stuffy.

It’s unfortunate, too, because LinkedIn could totally become a standardized resume service so that you don’t need to hand someone a resume, they just go to LinkedIn and find you.  Then your resume never goes out of date.  You know, like how the web is supposed to work…

The Future of Social Networking

LinkedIn is an added layer of redundant social graphs on top of something really useful like Facebook.  I’d be more likely to meet people I want to work with and communicate with through Facebook than on the staid LinkedIn.

Hoffman talks about people in the future needed two social networking sites.  One professional, one personal.  I completely disagree.  I think one thing to come out of this Great Disruption and crashing down of old business models is that personal and professional lives will be combined.

It’s unsustainable to live a dual life of your professional self and your personal self.  One should reinforce the other.  People create value when they’re employed in a way that allows them to self-actualize and be creative.  They are useless as drones.  People aren’t comfortable with this yet (privacy concerns) but it’s the only way a future information/service/networking economy is going to work.

Hoffman’s world of two separated social networks is ridiculous.  Most of us play with the people we work with, or at least socialize to some degree.  Our networks overlap quite a bit even though we try to control the degree of convergence to “protect” our reputations.

Identity layer protocols in production right now like OpenID and OAuth and Facebook Connect and Yahoo! Open Strategy and OpenSocial are going to jailbreak our social graph data.  We will be able to use multiple sites simultaneously.  Likely there will be an aggregator through which we use those other sites (Facebook hopes it will be the aggregator), but each site will cater towards specific hobbies and interests (that is, specialization of Facebook into social networking, Yahoo! into social media, Twitter into micro-messaging).  Our daily internet use will look more like a meshy ecosystem of different sites and brands.  Companies will have to fiercely build their brands so that their data doesn’t get absorbed into a ghoulash you see when you open your browser.

Stimulus Plan

So then Hoffman argues passionately in his WaPo column that the stimulus plan should earmark money for giving micro-loans to small businesses.

There’s a canard that the Republicans love to use that the lifeblood of the economy is in small businesses and start-ups.  Now, as someone who wants to start my own company, you’d think that I’d be all in favor of this talk.  But it’s not really true.

Yes, there are far more small businesses than big businesses.  Duh.  You can start and close a business fairly easy in this country (see the World Bank’s Doing Business report).  Obviously the aggregation of human capital into firms is going to consolidate into larger and larger companies, which will be fewer than small businesses.

But those large firms are also usually fairly successful (to have gotten that far), require massive administrative/financing/etc. support and logistics and clustering and supply chains and their own mini ecosystems.  That is why they generate far more actual productive jobs than a small business with a handful of people could.

Small companies far more often than not fail to make money.  They churn quite a bit.  Hoffman of course would like to boast about Google and Amazon and Microsoft (he cites Microsoft in his article) as examples of how small businesses drive the economy.  But these companies are outliers that actually had different, revolutionary ways of doing business.  They don’t represent the majority of small businesses.

In short, most small businesses are trash and will never make it.  They will barely employ anyone.

So Hoffman recommends giving loans to small businesses.  Is this a government function?  To fund businesses?  No.  What Hoffman seems to be advocating is a lot of mini-bailouts for small businesses that can’t monetize or succeed in an open market.  He seems to want to subsidize failing businesses.  How are these people going to pay back their loans if their businesses fail?  Will they blot out their credit records early with a bankruptcy?  Does this funding come along with better bankruptcy/business exit regulation that’s more conducive to entrepreneurial endeavors?

Hoffman says, “The stimulus finances important development of infrastructure, renewable energy and scientific research, which is great for jobs in the short term but doesn’t guarantee the vibrant economic ecosystem required for sustainability.”

What?  How does research and infrastructure only lead to short-term jobs?  Doesn’t he have it backwards?  Research and infrastructure create long-term ecosystems and new sectors for jobs, while micro-loans create short-term jobs?  I’m confused.

To dispute this, let’s take a look at how some companies came about, through small business loans:

FedEx (from “FedEx History”):

“In 1965, Yale University undergraduate Frederick W. Smith wrote a term paper about the passenger route systems used by most airfreight shippers, which he viewed as economically inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight that could accommodate time-sensitive shipments such as medicines, computer parts and electronics.

“In August of 1971 following a stint in the military, Smith bought controlling interest in Arkansas Aviation Sales, located in Little Rock, Ark. While operating his new firm, Smith identified the tremendous difficulty in getting packages and other airfreight delivered within one to two days. This dilemma motivated him to do the necessary research for resolving the inefficient distribution system. Thus, the idea for Federal Express was born: a company that revolutionized global business practices and now defines speed and reliability.”

Burger King:

From “Food Metrics”:

“When you think of McDonald’s in San Bernardino and later Des Plaines, Wendy’s in Columbus, Burger King in Miami, and KFC in Corbin, Ky., the one element that combines all these concepts is food. Colonel Harlan Sanders sells the first KFC fran­chise in 1952. Burger King opens its first restaurant in 1954 in Miami. Ray Kroc sees the success that the McDonald brothers are having in their restaurant in California and immediately starts to sell the brothers on the idea of opening other restaurants, first to sell his Multimixers and then to run them himself. He opens his first McDonald’s in Des Plaines, Ill., in 1955. Along the way, Pizza Hut starts up in Wichita in 1958. The common thread? Food—the American equalizer.

“With the development of the interstate highway system through the 1960s and into the 1970s, we’re on the road, and we find a growing number of meals are being eaten away from home. By using franchise and license systems of development, food vendors are able to develop chains of (continued from page 35) restaurants, thus leveraging purchasing power for all of them and using those franchise and license agreements to leverage standards of operation across franchise net works. McDonald’s is a strong proponent of mandatory standards and leads the way for other chains to develop quickly. McDonald’s targets television advertising to children and drives sales by reaching out to the youngest members of the family. All this occurs at a time when mobility and suburb growth are exponentially expanding.”

I think if you read a lot of histories of successful companies, you will not really read a whole lot on how they got financed.  I mean, some have interesting stories like Charles Ferguson’s company, Vermeer, that he eventually sold to Microsoft.  But mostly these companies were about people, and about ideas.

Hoffman mentions MTV and CNN as start-ups…really?  Too bad he didn’t mention Google and Yahoo!, both started out of a very generous Stanford computer science school that put up with the massive resources they ended up using.

Similar to Malcolm Gladwell’s point in Outliers that people do not just happen to be successful, new firms are very often products of large agglomerations of human capital.  Fast food, as Eric Schlosser discusses in Fast Food Nation, came about after WW2 and the Federal Aid Highway Act of 1956 under Eisenhower, that created a market for food on the go — it is no mystery why all of our greatest fast food chains were created at about the same time in the 50’s-60’s.  FedEx was the product of university research and experience in the military through Fred Smith.  Heck, even Reid Hoffman is a Stanford-born and Berkeley-raised Stanford and Oxford grad, all pillars of human capital agglomeration, a key driver of innovation and growth as Richard Florida describes in his latest book, Who’s Your City?.

Human Capital

Hoffman belittles Obama’s investments into human capital.  Funding university research, private research, improved education systems and schools, technological and logistical infrastructure, these are all keys towards building human capital so that it can continue to innovate.  Green energy research is going to at the same time lower the cost of energy inputs into development and production and consumption, while providing new jobs and new sectors for continued economic growth.  It will also wean us away from having to work long hours to create value, as we transition to a lifestyle where we value living as much or more than working for someone else.

Hoffman’s cute but pithy quote that everyone will be an entrepreneur is quite frankly offensive.  Not everyone has an entrepreneurial spirit.  Certainly most entrepreneurs are not social entrepreneurs, people who seek not just to own a business or make lots of money, but to also (and primarily) to help a lot of people.  Entrepreneurial literature carefully discusses how entrepreneurs are NOT like other people, most of whom just want to earn a comfortable salary and raise a good family.  Far different to take responsibility for your life (as we all should do) than to work on a completely untested, unproven idea (as true social entrepreneurs do).

The money for financing new ideas will always be there.  Forcing investors and financiers to fund bad businesses is just like the Big 3 bailout on a smaller scale.

What we should be doing is investing in people, building their intellectual and creative capacity, while giving them the health and social security to take risks.  Start-ups are most constrained not by lack of funding (except for large capital expenditure ideas like nano or bio research), but by not having the time and living money necessary to dedicate to an idea without having a regular job.

We should invest in training and mentoring people to build their human capital that way, too.  We should encourage people with opportunities to do what they really enjoy to do, to find a way to apply their talents and skills towards something that might be valuable or profitable.  We should invest more into organizations like the National Science Foundation and DARPA and joint partnerships between universities and businesses and government.  We should invest in universities all the way down to K-12, but focus mainly on high school, where most American children fall behind internationally.  We should invest in common areas for knowledge (public centers, co-working, etc.) and internet infrastructure.  We should free companies from having to fund health care for their employees, by universalizing health care.  Why do Republicans support businesses having to pay for health care instead of concentrating on their core businesses and making money?  We should guarantee college for students but also have public schools compete against private schools, as Stanford’s president John Hennessy just told Charlie Rose in a recent interview.

A recent study released by the Information Technology and Innovation Foundation, entitled “The Atlantic Century:  Benchmarking EU and US Innovation and Competitiveness” (PDF file warning), ranked the US #6 overall out of 40 states/groups of states, and dead last (!) out of all 40 in improvement in innovation and competitiveness in the last decade.  The indicators?  Human capital, innovation capacity, entrepreneurship, information technology infrastructure, economic policy, and economic performance.  Vencap and small business creation, two things Hoffman values, are only small parts of the whole picture.  And even in this downturn, privately funding and ease of starting a business is still something the US does really, really well.  So why is he so focused on that stuff when there are deeper structural problems in our government funding and education systems?  Is it because he’s a financier?  Hmm.

Can we just get rid of this idea of “economic incentives” as the only way to spur growth?  Incentives mean distortions at some level, and what Hoffman wants would be tantamount to nationalizing start-ups and innovation.  The government should invest with human capital, not with money.

Money doesn’t lead to ideas…ideas lead to money…please don’t buy into this crap.  At some point, ol’-money-bags-America will run out of ideas and will have nothing worthwhile to fund.  Then it will cease to have money.  That will happen if we don’t invest in human capital.

I think Obama’s stimulus and budget proposals see the value in this and have provided a lot of money to raise human capital.  I have no idea if the amount of money proposed is enough, but the initiative is there.  I want the US to be competitive and innovative, and therefore I must sharply disagree with what Reid Hoffman had to say.  I hope you feel the same way.

Malcolm Gladwell

This is going to be a rather meandering post, covering Malcolm Gladwell’s new book “Outliers”, a little human capital theory, international development strategies, and the computer game Civilization IV.

I just finished reading “Outliers”.  I found it to be superb; its adoption of cultural legacy as one of the missing inputs for discussion of how people become successful is brilliant.

You can watch Charlie Rose talk to Gladwell about the book on the Charlie Rose site.

Gladwell argues that people are not destined for success, or born with all the talent they need, or have advantage as a pure function of just income.  It is the culture in which those people grow up in that is key.

For example, he starts off by saying that professional hockey players seem to be overwhelmingly born in the first few months of the year.  The reason?  Age cut-offs for youth leagues give these kids an advantage because they’re older and stronger than the kids born later in the year.  As a result, these kids get picked to advance, and receive more training and practice than the other kids.  The other kids are doomed from the beginning.

But even then, not necessarily.  What else could happen is that certain kids find odd circumstances.  Bill Joy, co-founder of Sun Microsystems, for example, logged computer time on local school systems that by chance had terminals, a rarity for the day.  As a result, he had the practice and skill to code at an early age, well before almost everyone else in the world, within the context of the birth of modern computing.

Gladwell also proposes that Asian cultures, based in rice-growing, have a distinct cultural advantage in persistence to attack a problem that wheat-growing Russian or American cultures do not have.  Rice requires a lot of precision, love, and nurturing to grow.  Corn and wheat are fairly easy to grow and don’t take much work (however, read this article in last month’s Wired about the top corn-grower in America).  In school tests, Asian children spend far longer trying to solve math problems than white children.  Gladwell says that this is not because Asians are just “better at math” but because they have been raised and taught not to give up so easily, to diligently solve problems.  He also states this might be rooted in the Chinese numbering system, which is more logical than the English one in the ways it is expressed.

The other crux of Gladwell’s book is that failure is not assured for those not born to privilege.

As an example, Gladwell cites a study that tracks the progress on a standardized test given both at the end of the school year and right after the summer break.  While rich and poor students seem to learn at the same rate during the school year, regardless of socio-economic status, low-income students learn absolutely nothing over the summer while high-income students continue to learn at a healthy clip.

The reason?  Rich kids’ parents keep their minds engaged and challenge them to question authority and to ask a lot of questions.  They might have books around for the kids to read, or send the kids to summer camps.  Poor kids’ parents are more accepting of the environment and defer to authority as if it were not their responsibility as much to push their children.  The children just languish during the entire summer.

Gladwell talks about the life of one guy whose IQ scores rival Robert Oppenheimer’s.  The difference was the first genius came from an environment where he never received breaks, even when he made it to university; the university would not allow him to continue studies and never encouraged his obviously brilliant mind by fostering it.  Oppenheimer on the other hand received the benefits of privilege and was always given opportunities to thrive.

I found another part of Gladwell’s book highly fascinating:  his look at Harvard students.  He concludes that after a certain point, IQ stops mattering.  Someone with an IQ of 120 is not going to be more successful or creative than someone with a 180 IQ.  All that matters is that one becomes smart enough.  Gladwell writes about affirmative-action students at Michigan who had lower entrance scores but who ended up doing just as well as the other students later in life; they were given the opportunity that comes from the degree, along with working with a different class of people, and they turned out as good as everyone else.

Human Capital

I have always been more interested in studying the biographies of people than, say, reading fiction or even reading about historical events.  Gladwell has encapsulated what I’ve found so interesting:  what breaks did these people get to get where they are today, and where would I be if I did or didn’t get similar breaks?

I know in my own life that there have been times when I’ve been given extraordinary opportunities that I didn’t feel like I deserved.  I’ve also had times where I’ve reached out for a mentor, for someone to push me further, and have been let down and disappointed by apathy.  While entrepreneur advocates would have you believe that it takes just sheer will and determination to make it, I think this is only partly true.  It certainly matters who you know, what opportunities you come across, and how lucky you get.  This “luck” is what Gladwell refers back to often, as that intangible that allows certain people to develop a competitive advantage on others through sheer circumstance.

I don’t have a lot of time to play computer games but I do remember contributing to a bulletin board on Prodigy back in the early 90’s that was dedicated to the computer game Civilization.

I was barely in my teens and was talking with programmers and people older than me about this game.  It’s stayed with me up to this day.

So when I was reading about Civilization IV, the latest installment, last semester, I found that they’ve actually created quite a clever approximation of what Gladwell is talking about.  You can call it Michael Porter’s “cluster” or a supportive community (like SanFran for start-ups) or whatever.

In CivIV, you are the ruler of a civilization and you can build cities.  These cities can dedicate their labor in different directions such as food production, mining, or knowledge work.  That knowledge work, if there is enough of it, can birth a “great scientist”, such as Albert Einstein, whose presence gives the city even more knowledge capital — he can build a great scientific work in a city that propels it to the top of the world in science.  The same can all be said about working on entertainment and culture:  Shakespeare could be born in a city and settle there, making it a global cultural powerhouse.

Culture can be an imperial weapon in CivIV as well.  A city’s cultural influence boundaries can be expanded as its culture capital increases.  A foreign civilization’s city that falls within your city’s cultural boundaries may decide it wants to switch over to your civilization.  In this way, capture is bloodless and organic to that new city.  CivIV also allows you to found religions and send out missionaries.  You can build a civilization that is fundamentally founded upon Buddhism, and foreign cities won’t switch to your side solely on that basis, but if they are proximate to your Buddhist cities, they may switch to Buddhism and therefore be more sympathetic to your interests.

A final point:  if you accumulate enough capital, you can trigger a renaissance, which increases the civilizational cultural, scientific, and economic growth per turn for a while.  Gladwell’s stories of personalities and the opportunities they received are like mini-renaissances:  if that person accumulates enough opportunities to keep pushing forward with his interest, then all the sudden he might have the chance to make a key breakthrough!

I think the gaming engine for this is simply brilliant.  Instead of simply a battle to build up military units and economic power in the original games, now the game is a battle of cultural contexts and amassing human capital.

Sometimes it feels as though our policy implementations for education, politics, and international affairs, is all based on a hare-brained view of the world, without the cultural context at all.  Despite the recently deceased Sam Huntington’s seminal work, “The Clash of Civilizations:  Remaking of World Order”, we have just begun to come to terms with a unilateral, western-biased, free-market attack on Iraq, Afghanistan, the banking system, health care sans businesses, low-cost housing, HIV/AIDS strategy in Africa, and so on.

International Development

Malcolm Gladwell uses the well-known cultural context study by Geert Hofstede, which Gaurav, Pav, and I used extensively in our research over on the Yahoo! fellowship blog.  Gladwell does not point out that the study only interviews or surveys IBM employees and not any broad-based country survey.  But still the classifications of context from “uncertainty avoidance” to “power distance index” shaped a lot of debate into how different cultures should perceive and cooperate with each other.

In the international development field, which I’ve been studying for my Master’s, it seems to me that despite some good work to add anthropological perspective to the field, aid and development practitioners still come from a highly top-down oriented perspective.  Only a few rebels like Bill Easterly ask why we spend all this money on projects that have no transparency, accountability for results, and arguable pay-offs.

People like Easterly argue that development must be organic to the culture.  Bottom-up action makes progress sustainable.  In other words, the people have to do it — there can’t be a deus ex machina, which foreign aid agencies and the World Bank/IMF have tried in the last few decades.

Even the most savvy and regionally-trained practitioners are still saddled with a budget and policy daddy that forces them to act in a certain way (the western way) on the ground.  There has been some improvement, particularly from England’s DfID and Scandinavia in terms of how to effectively help developing nations, but it’s a long way from ideal.

Amartya Sen’s book “Development as Freedom” is massively influential right now; it claims that self-actualization and freedom to pursue one’s own path is the perspective to view international development from.  Sen’s point of view is coming to be the newest, hottest point of view, and in my opinion this is a good thing.  Individual capability (Gladwell’s skill-building) or human capital is always impeded by top-down efforts because the top-down approach is directly in conflict with human rights and actualization.  I am reading similar sentiments in my comparative democratization class, its literature showing just how important organic democracy-building and human/institutional/social capital are towards sustainable democracy.

This has been quite a long post, and I apologize, but I do see something truly remarkable converging out of all these different, recent projects.  While it sounds pithy, we may be truly returning the human (and by extention, environmental and natural) element to modern civilization.

I’m currently applying to Stanford’s Summer Institute for Entrepreneurship.  Here were the short answers I gave to their questions section.  The limit was 500 words.

Why would you like to participate in the Summer Institute for Entrepreneurship?

For the last two years, I have been thinking about my web start-up idea, taking it through class assignments from crude business plan and online prototype to elevator pitches.  I must formalize my business background, meet inter-disciplinarians, and form a team.  As junior Yahoo!/Institute for the Study of Diplomacy fellow, I studied international values and their effects on social networking site design and individual privacy.  As a Georgetown international development concentrator, I took classes in small-medium enterprise and social entrepreneurship, seeking to create a social business to help the disadvantaged.

What specific goals do you hope to achieve?

I have breadth from past studies (international affairs, social media, anthropology, capital markets), but desire a business background to be a tough-nosed founder, and to find the right founding team of smart, diverse, entrepreneurial-minded people.  I will refine my pitch and will develop monetization metrics along with contingencies for my start-up’s first few years.  Specifically I am looking forward to the modules in negotiation, management communication, and non-verbal communication to shore up my people skills.

What are your entrepreneurial ambitions? If you are currently pursuing an entrepreneurial venture, please be as specific as you can.

My organization will be split into a personal data control advocacy foundation and a social business for persistent identity system for the web.  I believe  all humans (6 billion customers) as well as “the internet of things” can have verified identity online through which they build credit history, reputation, and personal brand for their various transactions and networking.

Imagine viewing my reputation online through a number score in different areas of my life (business, education, personal), and using it to judge whether you should admit me or not.  Imagine if that score contained all my public life datapoints, and you could contribute your knowledge of me to it, a Wikipedia for my reputation.  Global reputation management systems will be the next big killer app once identity-layer standards such as OpenID, OAuth, and OpenSocial become popularized, which will be within the next two years.

How will the Summer Institute for Entrepreneurship help you achieve your career goals?

I attended last year’s Academy of Achievement summit in Hawai’i and met one hundred other grad students from all fields (mainly science and health), who all had different, creative views of the world.  Multi-disciplinarian environments are key towards the viability of my company since it will bridge fields to approximate individual identity.  To operationalize my international development studies, I seek to use my start-up as a social business to improve the welfare of those who had no way to protect their reputations or to build social credit.

What leadership skills, entrepreneurial experience and perspectives will you contribute to the Summer Institute for Entrepreneurship?

I served five years US Army enlisted, eventually a sergeant, both in field operations and in headquarters, so I have on-the-ground leadership experience through training new troops and deploying to Iraq, as well as larger strategic experience working with senior officers.  I studied international development as well as telecommunications policy while at Georgetown in Washington, DC, so I can bring in knowledge of how state policies may affect start-up climate.  I researched online privacy in different cultural contexts through my Yahoo!/ISD fellowship, obtained because I was recognized by my program as web-savvy, having coded and maintained databases, using Twitter, multiple blogs, Facebook, and other social networking tools to further my online presence.

I find people highly compelling.

I love biographies.  I love looking at actual facebooks with pages and pages of photos of people with short descriptions of what they do and who they are.  Wired has super glossy, close-up photos of personalities and Esquire does “What I’ve Learned” features overlayed on one staged photo of that person.

I think it’s interesting to find new people and see what their histories are, where they came from, what decisions they made to get them to a certain point.  Some sort of mix of their own view of their development, and outsiders’ views of them.

Few things drive me more nuts than people online who hide their biographical data.  Are they ashamed or embarrassed by what they’ve done?  How can you read someone without context?  There are a lot of bloggers who don’t include a simple About page so you can know who they are and what they do.

Facebook came out of the Harvard facebooks, but it works substantially different now.  There’s no facebook-like page with lots of portraits on them.  Some of that grand appreciation of humans disappears — Facebook seems less about people and more about interfacing with a web platform or with a dissociated computer.

One other limitation I find is that photos often provide little insight into the personalities behind a profile.  Most of this is due to the fact that people get to select which photo to use.  But it would be nice if everyone could have a Wired or Esquire -like portrait that really shows them in full light. (e.g. this Halle Berry cover is hot)

And it would also be nice to see a brief 5-10 second video of that person moving or saying something, to add more context.  Something brief, something well-integrated.

A little while back, I created a Wuntsah template.  It’s intended to be a photo of yourself over regular intervals of time — in my case, once a (or wuntsah) month.  I think it’s a great thing to do over time but it needs to be codified into a successful project and then made easily portable.  Read more about where it came from and how it looks. You can even install it!

I am tinkering with an idea to take my Canon PowerShot (on loan from my mother) and take short videos of my classmates and then put them up somewhere (maybe Flickr).   I just want to experiment with it, and have something to remember them by after we graduate.  Some cool stuff might come out of it.

Maybe Galapag.us will have something like it.  I’ve already decided to try to hire a freelance artist with a stunning, unique style, to draw portraits for paying subscribers.

Over on the Yahoo!/ISD fellowship research blog, I wrote a post about James Grimmelman’s thorough and fascinating research paper on Facebook’s privacy norms.  I thought it’d strongly apply to the research here, since I’m trying to formulate a system that allows people to protect their own identities and data in an open format.

In it, Grimmelman talks about all the different aspects of how we use Facebook’s privacy controls (or rather, how we don’t use them at all) and how Facebook is absorbing an awful lot of data.  How are we to protect ourselves and our data using Facebook’s system?  How can we get people to pursue their own privacy more actively?

Go give my post and Grimmelman’s paper a read.

Negative Identity

I recently finished reading “A Crowd of One”, by John Henry Clippinger, who is a senior fellow at the Harvard Berkman Center for Internet and Society.  Dr. Clippinger studies open identity and digital institutions, and his book is about the history of identity and where this is leading us in the future.

I’m going to make this book mandatory reading for all Galapag.us employees.  It’s excellent, and basically anticipates an open online reputation system, using the new identity layer applications that are in their early stages right now.

The most interesting part of “A Crowd of One” to me was his talk of a “negative identity”.  Basically he defines a negative identity as organisms defining their individual identity by excluding outside groups.  This is somewhat different than how organisms usually perceive identity formation, through actively choosing clothing or coloring or whatever, to make themselves different than others.

The whole line of explanation is a bit longer.

Clippinger starts by talking about the Harvard evolutionary biologist Richard Lewontin, who wrote of Darwin:

“Darwin’s alienation of the outside from the inside was an absolutely essential step in the development of modern biology.  Without it, we would still be wallowing in the mire of an obscurantist holism that merges the organic and the inorganic into an unanalyzable whole.  But the conditions that are necessary for progress at one stage in history become bars to further progress at another.  The time has come when further progress to or understanding of nature requires that we reconsider the relationship between the outside and the inside, between organism and environment…. But the claim that the environment of an organism is causally independent of the organism, and that changes in the environment are autonomous and independent of the changes in the species itself, is clearly wrong.  It is bad biology, and every ecologist and evolutionary biologist knows that it is bad biology.  The metaphor of adaptation, while once an important heuristic for building evolutionary theory, is now an impediment to a real understanding of the evolutionary process and needs to be replaced by another.  Although all metaphors are dangerous, the actual process of evolution seems best captured by the process of construction.” (page 152 in Clippinger’s book, from Lewontin’s “The Triple Helix”)

Clippinger says that “every organism must have a rudimentary way of recognizing what is friend, foe, or food, and act on these differences.”  A good example is the human immune system.  It doesn’t know what actually does belong in your system, so doctors and scientists have come up with ways to trick the human body into accepting foreign organs and blood from donors, as long as they pass basic identity tests.

But when the body identifies something as “foreign”, it attacks it relentlessly.  Diabetes and multiple sclerosis are a result of autoimmune defenses destroying the body.  The great influenza attack early in the 20th century succeeded in killing the healthiest, not the weakest, of our population because the healthiest peoples’ bodies would promote such a response from their body to kill the pathogen that the body would die of exhaustion and drowning in fluids.

Clippinger goes on to say that perhaps social identity works the same way as biological identity.  Groups that are ethnically similar and/or geographically close try to find elaborate ways to distinguish themselves from each other.  Crips wear blue, Bloods wear red.  Arabs and Jews, Tutsis and Hutus, Turks and Armenians.  By all appearances (or maybe not), they should get along, but instead they fight even more violently than anyone else to find ways to look different.

Identity Tests

Clippinger talks throughout his book of two identity tests in society:  merit-based and status-based. So certain people succeed because of their birth and upbringing bestowing upon them a certain lineage, family history, and reputation.  Other people succeed because they have the best skills for the job.

Galapag.us I think is easier to explain in the latter sense:  you enter in data about where you went to school, what you ate for your meals today, more of the quantitative stuff.  This is somewhat verifiable and less tenuous; the tools for it are being built and are collectively called microstatistics or even microblogging or microsharing.

But I think the more interesting aspect of Galapag.us will be the status-based side.  What will your friends say about you in public and then anonymously?  Will people build strong and weak ties on Galapag.us to vouch for a person or to give them a recommendation?  Will people enter in and verify other peoples’ data, like a CDDB for people?

These systems can be gamed individually, through identity theft.  Clippinger talks about a guy who managed to convince a lot of people that he was worthy of managing their money.  He had all the appearances of being trust-worthy (good family, well-esteemed friends), but he did not have the requisite skills, and was later exposed.  Hackers can steal your identity, your quantitative details, and run off with a lot of goods before you can call up your credit card company and they analyze your “status” to see if you normally make those purchases.

So if you combine the two different tests for a feedback system that accepts conversations and debates between an individual, the groups he’s in, and outsiders, I think you’d get an extremely awesome identity system.  That’s my hope anyway.

So Clippinger’s idea that part of future identity systems will be allowing for people by expressing their identity by claiming who they’re not, instead of just who they are, is brilliant.  And related to that, is this person not my friend, but actually someone I hate?

Don’t Regulate Behavior, Just Protect Its Versatility

His final insight is that by identifying ourselves by who we’re not rather than specifically who we are, it leaves our identities somewhat amorphous, flexible, and free to create and adapt.  That is, if you’re only given a few rules on what to do and what not to do, then everything else is therefore permissable.

This is quite compatible with trends towards forward-thinking approaches to governmental regulation.  We want there to be basic protections of our freedoms, but not lengthy lists of what’s allowed and what’s not allowed.  We want there to be copyright, but according to Lawrence Lessig in “Remix”, we want to be able to opt in to copyright protection (i.e. every work is shareable upon creation unless copyright is specifically claimed), rather than how it is right now where everything is opt out (therefore anyone can claim a copyright after the fact, which is restrictive to creativity and innovation).

Anyway, fascinating stuff.  I think Galapag.us will be huge.  And Clippinger’s “A Crowd of One” makes me even more confident in that.

Webster’s New World selected “overshare” as its word of the year.

I guess people are getting nervous about sharing so much data online this year.  Just like they were in 1996, and 2000, and 2003…

I think the real story, however, is that 2008 was the year when everything has flipped:  now undersharing is the new problem!

In 2008, microstatistics and microblogging and lifestreaming and portable data became ubiquitous among the web community.  Sure, many of your friends are not yet on Facebook.  But of those who are, do you get annoyed that they don’t have MORE of themselves there?  Does it make you wonder why someone doesn’t have a Twitter account yet?  Why aren’t they using RSS and sharing feeds?

This point is early still, but this is how it starts.  The web ecosystem should burst with life in the next few years as smaller and smaller details are uploaded, but with more frequency, so that the web begins to visibly breathe as we use it.

I found myself annoyed while doing my Christmas shopping.  Since I don’t want to ask family and friends what things they’re interested in (since I should know, for one, and also because that would give away the surprise of a gift), I look on their Facebook accounts for hints.  But I find that most people still either don’t take entering in their personal data seriously (joke/humor/false data) or they don’t put enough.  I know for sure that this doesn’t mean they’re boring people, since I know them.

But I get pissed that they haven’t added more!  Aren’t we past this already?  Get with it!  You’re undersharing!

Zuckerberg was right about his law for the half-life of privacy data.  But people will fight and fight and fight…  “Why use e-mail?  No one ever writes to me.”  “I read books and newspapers, the web is just more stuff to have to keep up with.”

You’d think by now people would learn to stay ahead of the curve a bit and just embrace the new stuff.  Heck, it might even give them a leg up on their competition.

People don’t think that way, by and large.

You think it’s ironic that Webster’s is thinking about oversharing?  Don’t you imagine that the Wikipedia userbase complains about undersharing holding back the breadth of knowledge that Wikipedia could potentially hold?

Yeah.  Think about that one for a second.

Itemizing the World

So we can assume with the advent of IPv6, RFID chips, and smaller, leaner, smarter appliances and devices, that the internet of things is coming.  Your fridge will talk to the grocery store with your list of favorites (“please always keep the milk, eggs, and cereal stocked”).  WalMart will not just track pallets of inventory using RFID, but all their items will have chips.  When you buy something, you’ll put an RFID or GPS locator on it with your return information, like tags on your animals.

That much has been talked about for while and is the holy grail for bringing the living, breathing, sensing world of the virtual and the real together.

Applications for a Synthesized Digital-Analog Future

But what are the implications for future applications?  We will need new tools to track and visualize all these new “individuals” in a coherent way.

Will there be something interesting about finding out if one object is in proximity to another?  For instance, will a toolkit come with centralized tool tracking so your wrenches don’t get lost and separated?  If we package something up and make a shipping label for it online, can we link it with someone generous or with a shipping service that’s nearby and can take the package for you to a location?  Will we have something like Trinity phoning Tank for the location to the nearest hardline exit from The Matrix?  Certainly some of the most popular applications for the iPhone 3G involve geolocations for your position relative to locations you’d like to go to.

When you’re looking for that sweater you packed away for the summer months in boxes in the basement, will you go to your Google search box on your cell phone first instead of rummaging around for an hour?  Will you type in “grey sweater”, bringing up a search result and proximity tracker so you can zero in on where it is downstairs?

Will we be able to make our devices “public” so we can see visualizations of density and concentration of, say, the use of iPods playing Coldplay in Manhattan right now versus three months ago?  Will we be able to make our devices “read/writeable” so other people can use the web to manipulate our devices?

Overcoming Contradictions

I just finished a two-person project to research innovation processes, and one of the processes we came across was called TRIZ (Teoriya Resheniya Izobretatelskikh Zadatch, meaning “the theory of solving inventor’s problems” or “the theory of inventor’s problem solving”, according to Wikipedia), a process developed by a Soviet engineer Genrich Altschuller.

“Altshuller believed that inventive problems stem from contradictions (one of the basic TRIZ concepts) between two or more elements, such as, “If we want more acceleration, we need a larger engine; but that will increase the cost of the car,” that is, more of something desirable also brings more of something less desirable, or less of something else also desirable.

“These are called Technical Contradictions by Altshuller. He also defined so-called physical or inherent contradictions: More of one thing and less of another may be needed. For instance, a higher temperature may be needed to melt a compound more rapidly, but a lower temperature may be needed to achieve a homogeneous mixture.

“An inventive situation might involve several such contradictions. The inventor typically trades one contradictory parameter for another; no special inventiveness is needed for that. Rather, the inventor would develop some creative approach for resolving the contradiction, such as inventing an engine that produces more acceleration without increasing the cost of the engine.”

TRIZ sought to identify contradictions that served as barriers to solving a problem, and then figuring out a way to solve the contradictions themselves.

The Barrier Between the Virtual and the Real

What we will have to deal with is unprecedented in human history except within fantasy, science fiction, and imagination.  We will have to learn that the internet of things will solve the contradiction that exists between the virtual world and the real world.

We have always assumed there to be a barrier between what we imagine and what we do online, and what actually happens in the real world.

We will have to map all of our software tools developed on PCs and on the web into applications that can manipulate the real world.  It will not be easy for us to conceptualize but those who succeed will make a lot of money doing it.

In some ways it amounts to what was known in the past as magic or just sleight of hand.  We have to imagine that what we create through software will work on new hardware:  the world and objects within it.

Yahoo!, Facebook, and Amazon are working on the next revenue streams and business models. Only a small percentage of people and investors actually understand this.

Yahoo! is understood to be a site that uses its webmail, search engine, news, and gossip photos to attract eyeballs for banners and advertisements.

Facebook is understood to be a social networking site without a business model. It needs to monetize, and all it seems to do is be a time sink that lets you chat with friends and non-friends who won’t stop stalking you.

Amazon is understood to sell books and music and maybe some other things over the web. Particularly savvy people might know that Amazon is moving a lot of its products to Kindle for distribution, so that you can download a book immediately for a much cheaper price onto Amazon’s e-ink reader.

But these descriptions only scratch the surface of what these companies are doing.

The Next Wave

Let’s look at Yahoo! first. Jerry Yang just announced he would step down, which quite a lot of people wanted. Why? How does this serve the company? Yang co-founded the company with David Filo. Another guy came in and ruined the company by trying to make it a media company.

As a result, Yahoo! fell behind while Google and Amazon and other web companies took off. But Yahoo! still has some of the most popular properties online.

When Yang returned, Yahoo! cut down its operations, fired some people, and began transitioning to a more open data platform, called the Yahoo! Open Strategy. Yahoo! is a member of the OpenSocial Foundation and supports OAuth, OpenSocial, and REST for enabling the transferring of information between web sites. In a way this is part of what some have called Web 3.0, or read-write-execute. (Web 1.0 was read, Web 2.0 was read-write)

Therefore, what investors think Yahoo! is doing is something that died with the dotcom bubble. What it’s actually working on is at the forefront of the coolest stuff on the web right now. The problem? It’s not recognizable, it’s not monetizable yet, and it’s not standardized and adopted enough to allow for generativity amongst new start-ups and other sites. It also has entirely too many employees; does it really need 14,300?? But this stuff is absolutely integral to the next iteration of the internet, so Yahoo! will be right in the thick of it.

Facebook

Facebook is pervasive enough now that even people most disconnected from the internet are now creating profiles. But people think all it’s doing is being another Friendster or Orkut. Just social networking.

What’s going on under the hood? Something radical for the current internet. Facebook is working on Connect, which is similar to Y!OS but is far more closed in at this point.

It’s also working on Beacon, which enables users to show what they’ve purchased to their friends, serving as trusted buying recommendations. Essentially this is allowing each individual to be able to extend the power of his reputation and brand so he can influence advertising. Check out this presentation I did on Facebook Beacon for my class this semester.

Facebook is actively working on building a social graph that it thinks it can extend to its Applications, allowing anyone to build an app and use Facebook’s resources.

Eventually, Mark Zuckerberg, founder of Facebook, must certainly believe these will not only monetize Facebook, but become standard advertising and distribution streams in the future internet.

In fact it is evident in interviews with him (including this fine one in the latest GQ, the link of which was sent to me by Kevin Donovan…thanks!) that he knows this is the future of the internet.

Says the GQ article’s author, Alex French:

Facebook is gradually rolling out Connect, the product previewed in Zuckerberg’s July f8 keynote speech. (It currently works with CNN, MoveOn.org, and CBS, among others.) But the technology is clearly an attempt at seizing control of digital identity in the way that caused Sean Parker to see dollar signs when he first met Zuckerberg. Connect will essentially work like this: You log in once, to Facebook, and then everywhere you travel on the Web, that log-in travels with you. Such a system has potential advantages for users. Web sites will use your Facebook data to create new features—e.g., if you visit Citysearch, you’ll be able to click a tab and see which restaurants your friends have recommended. “You’ll have a seamless sign-on process and seamless access to your data everywhere you go,” says Parker. “And you’ll control who has access to your data. I don’t think Microsoft would’ve been trusted to perform that role, but Facebook has earned that trust.”

You can see why I have such a fascination with Zuckerberg and Facebook — this is what I’m looking for in Galapag.us.

Once again, like Yahoo!, Facebook is far ahead of where its users and stock-market gurus think it is.

Amazon

I think what Amazon is doing right now is the closest to being monetized. In early October, I wrote about Amazon as an investment. Since then, the stock has gone from around $80 to a closing price today just under $36. So it’s almost buyable under ideal conditions, I think.

But what Amazon is doing is not just selling books, music, and everything else. Well, it IS doing that. It’s selling everything else. Amazon is selling books at a cheaper rate that go on its Kindle reading device. It’s selling MP3s. It’s offering excellent reviews of products from its users.

But not only that, Amazon is using all of its data centers and processing speed and bandwidth to re-sell at a pay-as-you-go rate to all the individuals and small business and large businesses that want to put up their businesses online too. In other words, Amazon is enabling a business climate and operating space for entrepreneurship and innovation.

Read the slideshow I put together on cloud computing; Amazon is right in the thick of it. In fact, Amazon offers services for hosting data, crunching data, and now, content delivery networks in its recently-released CloudFront.

The cloud is the future of computing, Jeff Bezos being an early adopter of it and among the top competitors in that space. Who knows what he’ll do next? Can he cloudsource his logistics networks for business services in the same way that UPS has (UPS having moved into helping businesses with streamlining their shipping processes and pleasing their customers)?

But this is completely unnoticed. In a #daytraders channel I frequent, people were bashing AMZN. I asked them if they knew the Kindle. For one, they all said the Kindle would fail because people prefer books. That’s a myth that will die soon. Offer a device that gives you superior features to a book, with a fairly similar feel and dimension, and people will switch. Especially when they can edit and change the text as they do on a computer, and when they can interact with the content more.

Then I asked these daytraders if they knew about cloud computing and Amazon’s Web Services (AWS). Again, no. So all this stuff Amazon is doing, and supposedly very knowledgeable potential investors have no clue about it!!

Bad Marketing?

So is what’s going on here just a case of bad marketing? I’m not sure. I’m pretty sure businesses have caught on pretty quickly to the fact that you can have the cloud do all your computing for you so you don’t have to waste a lot of capital expenditures on server equipment. They’ve been a bit slower in figuring out how to leverage Facebook’s applications and fan pages for their social branding. And Yahoo!’s stuff? Forget about it. Very few people know what they’re doing.

A new infrastructure for generativity is currently being built. It will take some time for people to adjust, for there to develop a market, for coders and entrepreneurs to begin to exploit it. But it will be fabulously fun and useful to see what products come out of it all.

I’m excited, but it’s early in the game. However, I’m always looking for early-mover investment opportunities, and these web companies show that down the line, there will be a lot of them. It is particularly tempting if, instead of just being a consumer, someone such as myself is looking to be a bootstrapping entrepreneur in that space. I’m licking my chops.