Opinion

The main story of this year’s SXSW was the changing dynamic of power and cultural relevancy. It used to be that big companies or record labels were revered, but this year all bowed down to the online pundits. Niche bloggers, such as Perez Hilton, Scoble, Stereogum, and the like, whom appeal to a fragmented section of society now determine the fate of what’s next and have taken control of SXSW.

While these bloggers are relevant in their perceived world, even LA mega blogger Perez Hilton was not even known by the locals of Austin coordinating his very own party.

Most of these bloggers never did anything before their blog… a few mid level jobs perhaps but no major accomplishments. This is a pattern that seems to follow every major blogger. While no past accounts for major accomplishments, suddenly they stand up and make their voice heard saying controversial statements most of their peers are scared to say.

During the SXSW Interactive conference, I was discussing the rise of blog fame over a few beers with a fellow tech entrepreneur. He accounted their fame to one thing… “Everyone these days is looking for a leader.” While the next guy checks his blackberry to see what someone else is saying, these guy start writing about what they feel. They stand up and make their voice heard.

Today’s information ingestion versus expression was first brought to my attention by SXSW panelist Henry Jenkins, Co-Dir of CMS at MIT. Henry talked about how he always tells his children to monitor the amount of information they take in versus the amount they put out. This concept flipped my mind but instantly made perfect sense. We’re a culture of information overload and if we don’t turn around and put out information then we can quickly lose our ability to process information.

Bloggers such as Perez, Scoble, Lefsetz, Pitchfork, etc. have the ability to quickly process information. Sharing these thoughts has made them wealth, influence, and notoriety. Whether people agree with those opinions is one thing. Whether other people will equally stand up to make their own voices heard is another. Either way SXSW has shown that corporate/major label power has been supplanted by the new media.

SXSW

The Smashing Pumpkins just revealed that they will be abandoning the album format in favor of a less formal 3-4 song EP approach. “Anyone under the age of 24 just buys songs,” Corgan explained. “It’s just in our best interest to release blocks of songs.”

This format makes sense as singles have far replaced albums in digital sales. Why should an artist invest so much energy in a 10-15 song album on which they will be judged for the next 1-2 years? As album production costs have reduced substantially, artists could now start releasing new EPs every three to six months constantly feeding fans bite-sized doses of new material. An artist could even take bigger chances with new musicals directions since fans know they will have new material coming out a few months later.

Sales wise this could make even more sense. Fans could be more willing to pay $1-$2 for an EP versus $9 for an album. A subscription model could also work where fans can sign up for an entire year’s worth of releases as part of an overall fan club. Brands could come on to sponsor the EP with the songs in the brand’s commercials and the mp3’s only available at a special brand micro-site.

Concept albums are great if you are a band that can create a cohesive 45 minutes of music, but with an increasingly distracted audience would your fans ever be able to fully sit still to listen to it?

Across the street from the 2008 TED conference is BIL - a competing conference with some very interesting values. In a thought piece by Grant McCracken asks whether the super-exlusive TED has become part of the problem that its trying to solve and that BIL could be the antidote:

BIL stands for Beauty. Ingenious. Learning. It is described as an open self organizing, emergent,and anarchic science and technology conference. Nobody is in charge. If you want to come, just show up. If you have an idea to spread, start talking. If someone is saying something interesting, stop and listen.

… the implication is that TED is part of the problem it means to solve. TED is top down, centralized, hierarchical, elite driven, celebrity centered, and, at $6000 a ticket, really expensive.

What do you think? Possibly one of the big issues PSFK has with TED  is relevancy. There are some wonderful minds at TED but in past events there have been so few emerging talents that really excite us day in, day out. Of course, we can’t wait to see if 2008 offers…

BIL
TED
Grant McCracken 

This is an article that describes my recent experience with setting up new projects and relates to Likemind and The Purple List. It’s about a theory that I have come to, having been through the process of developing both properties (the former in partnership with Noah Brier).

My theory is about an emerging business model - the 50/50 Corporation.

The Background - Learning With Likeminds

To start: our classic view of a company could be described as a 100% Profit venture.

When we set up Likemind in 2006, our drive was 100% social. We just wanted to create a morning meeting of likeminded folks over coffee once a month in New York. There was no business idea behind it. The concept was so simple and attractive that others wanted to pick it up and run with the idea too. It spread and now we have Likemind coffee mornings in almost 50 cities around the world.

Likemind is all about being social - even if some of that socializing is driven for business purposes. To support the event, Anomaly gave us enough money in 2007 to pay for everyone’s coffee each month. Revenue that could be described as ‘ambient’.

At the end of last year, Noah and I explored turning Likemind into a business. We even visited a couple of VCs in Seattle and New York. We knew, however, that whatever decision we made would have to be agreed on by the whole global Likemind community - the hosts and attendees - so we proposed some ideas about monetizing Likemind.

The major response from the Likeminders made us realize that we couldn’t insert any major revenue generating system without damaging the reason Likemind was popular: Likemind is a 100% Social venture. The concept started 100% Social and that’s what attendees had bought into. That’s why they came. They hadn’t joined something that was going to make money through their participation.

Noah and I are very protective of Likemind and when we understood this we immediately stepped back and let it continue on its merry social way (actually, we haven’t had any sponsorship funds this year and still more people are coming to the mornings to socialize).

Testing The Theory With The Purple List

Likemind allowed me to to realize that while people are attracted to social projects, if you didn’t let people know from the very start that you intended to make money out of the activity, then it could not become a business.

So when I set up The Purple List - a trusted network of trends and innovation professionals - I decided to try to create an organization that was a 50/50 Corporation. I wanted it to be social for my business advantage and I wanted everyone to know that this was about making money.

On one hand, every member sees The Purple List as a private social network, on the other hand, they also see The Purple List as a way to make money. Hopefully prospective clients will also see the advantage of our approach - we’re being social enough to give away our friends details but if they want some help to find the right expert, we’ll charge that client.

Because we started The Purple List as a 50/50 Corporation, it works on different levels. For example, if we sent an email to the Likemind hosts and said that if they gave us $100 we’d put them at the top of the homepage, there would be uproar. If I sent the trends and innovation experts on TPL that offer, they’d see it as a natural opportunity that they can contend for (I assume if my theory is correct).

The Theory In A Nutshell

So, I suppose the theory is this:

To leverage the opportunities that digital connectivity has fueled a company should be a 50/50 Corporation. 50% about being social, 50% about making profit. By doing so, that organization should attract more profit than a company that follows a 100% Profit strategy.

Being 50% social doesn’t have to be all about having a social network. Having a corporate social responsibility policy that your customers love should work too.

Using The Theory

Using this theory I can look at the challenges I face with PSFK as a business. On review, I’d say that PSFK is an 80/20 Corporation. Our problem is that we set up PSFK as a 100% Social venture - we were (and still are mainly) a collaborative trends site. And that’s why we mainly work here.

It’s taken 4 years to start making money from PSFK and I believe that it’s taken that length of time because we have always been seen as a social venture. It still is vital that we are social: If we didn’t give away free information everyday and create good-value events, no one would care about visiting us. Meanwhile though, my 4 years of plugging away has turned my 100% Social venture into a 80% Social / 20% Profit corporation.

Maybe it’s today I realize that I might never really make much money out of the website and I will never drive that many readers to be our consultancy clients… I won’t admit the number of times I have heard, “Oh, I’ve read your site for ages but I didn’t know you offered consultancy.”

What would have happened if I started the site and from day one had said everything we’re doing here is to make you hire us?

Too late now. But that’s not too big a problem because as I understand that PSFK is a 80/20 Corporation, I just have to adjust how I make money. As PSFK is at its core social, the theory would lead me to believe that I have to make money through social products: from events where people can meet, network and socialize (and maybe from offering reports so cheap the community will think we’re doing them a favor and I hope we will be (more to come next week)).

Who Is A 50/50 Corporation?

So, let’s take that theory and aim it at a few well known ventures.

My Space - 100% Social - It started out as a place for everyone to meet and show off. Beyond ambient profit making activity like advertising, MySpace shouldn’t be able to make money from non-social activity. MySpace’s size of course helps realize a lot of money from advertising.

Google - 80% Profit - The first day you came to Google.com you knew it wasn’t just there for fun. Still, the most profitable revenue generation is ambient - from advertising that’s contextually designed to be more ‘helpful’.

YouTube - 100% Social - It was created by the people for the people. And now Google is trying to change that. And if we follow the theory, it would suggest that as soon as the ‘for profit’ and ‘for the people’ balance gets uncomfortable for the users, it’s going to break the product.

Apple - 100% Profit - You know you’re going to put your hand in your pocket when you go to Apple. But it’s one of the very few ‘old-style’ companies really doing something that people want. And, can it remain that way for ever?

American Apparel - a 50/50 Corporation - Probably. AA hasn’t grown into a global retailer just through sexy ads and bright t-shirts. It’s socially aware approach towards its staffing, partners and raw materials sources has a vast impact on the popularity of the brand.

I could go on and on. What type of company do you work in?

What To Do Now?

Remember that it’s not a big problem if you’re 100% Social - it’s just that you have to realize that you’re not going to make as much money per user/customer/member as a 100% Profit venture and adjust. The question that I pose is: will being a 100% Profit venture be a big problem? Is a 100% Profit venture the sort of company customers want as the consumer-company power balance changes?

Maybe the optimum is to set up a company that is equal in its aims to be social and profitable - a 50/50 Corporation.

Footnote

OK. It’s a theory that I put out there for discussion and debate. I could be totally wrong and feel free to say that - but do consider in your criticism that I’ve come up with this idea due to my first hand experience.

And sure, I can see that you can argue that I could have optimized PSFK to make sales better, that it’s not because of the social nature of my brand.

And no, I didn’t have this theory when I launched the Purple List. Creating a 50/50 Corporation is something I realized I did after the event.

On his regular podcast, Johnnie Moore invited myself and Sean Howard to discuss issues we had raised in the trends and market research business. I go over the points I raised in the opinion piece The Problem With The Trends (Business) and brainstorm with Sean and Johnnie about how to get clients and users of trends data engaged.

Johnnie Moore’s Podcast : Expert insight or human engagement?

As some of you know, PSFK began as a website project where Simon King and I wrote about the interesting ideas we were noticing around the world. It was something we did for the love of it. And one day a company phoned us up (Anheuser Busch) and asked us for our advice. That really started PSFK LLC - the trends and innovation company that fuels this site. As we have developed our offering for PSFK consultancy over the last few years, the more we have learned about the market we work in and the reaction that buyers have to trend services.

The key learning has been this: there’s something wrong in the trends business. It’s broken. It’s broken by lack of imagination, lack of collaboration and secrecy. Below we’ve listed some major areas that need fixing, not for our competitive sake, but for an industry to evolve and become useful enough to inspire its clients to make things better.

Arrogance and Control
Trends services have an unhealthy reliance on control, restriction of information and perception. Trends companies put up gates that guard this mystical information that somehow only they could gather. This presentation from Henley Center’s d_Code is an example of how the trends industry attempts to scare companies into thinking how little they know. There’s no explanation of why d_code knows better, just that they somehow know a lot more than you do (and they’ve got the graphic designer to prove it). AgencySpy gave this great reaction to the presentation in 2007:

“No ideas. No dissection of new cultural movements to help you on your way. No outlay of creatives, organizations, thinkers that are shaking up the underground to shape the future. Nada. Every one of their clients should feel like they just got punk’d.”

Death Of Creativity
Another problem with the sector is that having spent a lot of money subscribing to a specific trends service, companies are hesitant not to use it. WGSN has got itself in the monopolistic position where the fashion industry has accepted that if you don’t subscribe to their service, you’re not in the game. As we’ve argued before, if everyone’s looking at the same information for inspiration, you’re going to get the same product.

Lack Of Critical Judgement
The lack of transparency and walled-garden offering means that trends services’ opinion and recommendations can’t be discussed, criticized or judged. As their views aren’t open, there’s no way to check or challenge their validity. What really is in the Cassandra Report? Why are the Intelligence Group such experts on youth? (Especially if they use the image at the top of this article on their webpage?? ;)

We’re in a digital world where conversations are free - but trends services aren’t willing to be honest about where they got their judgments from. Too many companies and their ad agencies are cut and pasting their unchecked judgments into their powerpoint documents to make significant strategic decisions.

You’ve Made Your Bed, Now Rely On It
Compounding these problems is the cost that budgets get used up buying data from single sources. For a handful of log-in passwords, a company pays $20,000 for WGSN and $35,000 for Iconoculture. The thing is, that if your boss has paid that much for you to use the service, then it’s likely that you’re going to be forced to use it whether you like it or not. We hear stories that designers at H&M are forced to spend 5 hours a week on WGSN (Is that why H&M is rather off the boil these days?).

And let’s remember, when you spend that much money you feel that you have to start using their findings as gospel. Or someone else at work will.

Deciding What The Trend Is, Then Taking You To Its Grave
Another problem with the trends industry is that it doesn’t half like to tell you what the trends are, then spends a lot of time reminding you how right they were with new examples. You know how it is: you buy the 2008 report and then you get monthly updates on the same trends that were identified at the start of the year. The problem is that by working like that you’re immediately providing focus on data that might not really be reflecting change. Faith Popcorn, and her BrainReserve have been trading on selected ‘trends’ for ages now and Iconoculture are somehow following 45 trends. That means they’re destined to either report on the weird (Iconoculture’s Evolutionaries - “People finding new paths to fulfillment through an uncanny native intelligence combined with an intuitive understanding of paradigm-shifting perspectives, skills, and insights”) to the preaching (BrainReserve’s dated Cocooning - “The need to protect oneself from the harsh, unpredictable realities of the outside world.”) or the bland (Wellville - “A holistic (mind, body, spirit) approach to living that seeks total wellbeing through balance within self, community, and world.”).

Following set trends means that companies like Brainreserve and Iconoculture have trouble identifying the new.

The Blogosphere’s Love Of Novelty
Now to counter all these walled garden trends services and avoid these costs is to scan the blogs each day. And there’s a hell of a lot of information out there for you to gather (or get your ad agency’s intern to gather) - and a lot can be learned from the right analysis and pattern recognition. The problem with the blogosphere is that it’s too distracted by novelty. And novelty can kill innovation. Consider how far the idea behind the rolling-bench dispersed last week: from Coolhunting to Josh Spear and beyond. It’s a bench with a seat that can be rolled round so that your backside can always be dry. It’s not innovation. It’s not a manifestation of a trend. It’s a gimmick. It’s novelty and picked up because it’s different, not because it’s a good idea or could even work en masse in real life (And even if you’re a little more discerning, you’re still in trouble because trends newsletters are famous for spreading novelty not real ideas).

The Trends Industry Love Of Novelty
Ok, ok - it’s not only the blogs. It’s the industry too. The love of novelty can probably be summed up by this image about ‘Atmosfear’ on the BrainReserve’s site.

The Ad Agencies Make Their Play
And then you get the services from the ad agencies. And sure, they’re all fun and funky and well designed and all but at the end of the day, ad agencies really are in the game to make ads - not help your business innovate. And there are deeper problems we know of - the staff your agency used to do trend research tend to be the young, hip things who might know what’s hot in Hoxton, but they’ve only just turned up as interns. Of all the trend data out there, Ad Agency reports should be the most distrusted (unless you’re looking to make a shiny TV ad campaign).

Using Consumer Research To Identify Trends
There are also a lot of Market Research companies that shouldn’t be in the trends and innovation business. There’s a misunderstanding in the market that consumer research will help you innovate. Consumer research helps you optimize, not innovate. Consumers can help you understand how to improve now, but they can’t help you with the tomorrow.

Lack Of Organizational Change
While one could argue that the fact that existing trends services significantly reduces creativity, differentiation and innovation - these issues combined aren’t as problematic as the this one: companies don’t know how to use trend data to create organizational change.

The frustration for professionals that buy these services is that they are either understaffed or ill-equipped to use the data to make change. It doesn’t really matter how good or bad trend data is. Companies accept that they need to be future forward but many just don’t know how to work in a way that allows this. There’s a major issue here that stops companies from making things better and trend services are not rising to the challenge to assist them.

In Summary, the trends business is a walled business that uses smoke and mirrors to protect it. It preaches from on high what the trends are without much transparency about what their recommendations were based on. In an era of Google inspired freedom of information, these businesses surely can’t continue to hide data that is already in the public domain. There’s an opportunity to really be open in the trends business, to bring in new players that want to work together, force the old players to change their ways; and work collaboratively with clients. More importantly, we need to find a way together to create and share a tool for organizational change that is strategic in process, transparent in delivery yet flexible enough to be inspired by trends data every single day.

Maybe, we’ll run a series this year about Novelty. Novelty threatens real change. All too often it is distracting - the crazy and the wacky far to often obscure the real direction of cultural change, and all too often the blogs and wedia picks up and spreads dud ideas as good ideas rapidly (before dropping them for the next whoa-look-at-this moment). Erm, anyway - the reason I’m on this rant is because the very good What’s Next blog points us to a great reaction from a blogger in New Delhi about the cheapo car:

Purple prose hailing the new peoples car, breathless editorials brazenly brushing aside environment and traffic concerns, mushy interviews with the man himself, over-the-top opinion polls have all greeted the “world’s cheapest car”.

But, has anybody driven the bloody car?

Welcome to the age of hype as journalism. Welcome to the age of who cares as long as we can get into their media plan journalism. Welcome to the age of the details don’t matter, the spectacle is the story journalism.

…Sure, the Nano it looks cute, the colours are snazzy, and yes, it’s a proud moment for a desi company that has put out some of the most dangerous vehicles on our roads, like the Sumo and their godawful mini-trucks, to have stuck to a “promise” and delivered a car with a sticker price of Rs 100,000.

But, brother, how does it move? Isn’t that what a car is all about?

The launch that showcased a thousand slips 

Here is the first photo from our Big Picture Series where we share images of inspiration from the wall of our office.

(Click image to enlarge or visit our Big Picture flickr set)

1) Online, Everyone has an Opinion
2) Bike Polo
3) Birth of a New Museum
4) Fuerzabruta, where Burning Man meets Cirque du Soleil
5) Koreans, we miss your crazy ambition. Come back soon!
6) Pick a Beat and Start Shocking
7) An Open Source Festival
8) Beautiful Vision of a Disastrous Future
9) Guitar Hero - lastnight’sgame
10) Cards that you plant and grow
11) Colorful Consumption
12) PSFK’s New Contributor

The literary fiction site FiveChapters.com is celebrating its one-year anniversary this week by serializing a short story by Jay McInerney. But not just any post-“The Good Life”-in-between-wine-columns story. What makes this one newsworthy—and worth reading—is its origin. Stolen from the author’s apartment by a fan 20 years ago, “If Wishes Were Porsches” just came back into McInerney’s possession last year. The story was actually written back in 1986, shortly after his pioneer novel “Bright Lights, Big City” ignited the trend in “Yuppie Fiction.” Here’s the first paragraph:

…Your penis gets bigger, of course. Or your breasts. And generally you change your name. You start with a name like Norma Jean or Archie Leach. It’s not required, of course. But here in America, it’s good to remember that we like people to start from scratch. We like inventors. So get with the program. Catch the buzz. Life and liberty you got, now get happy. Don’t be a wimp, don’t be a geek. Get hip. Get laid. Get rich. Think big.

Dave Daley, editor of Five Chapters, calls the story “a time capsule, but an incredibly prescient one, as how much has really changed? Its characters aspire to the agented professions, watch early incarnations of reality TV, fight with landlords of apartments they pay way too much for, and understand that the way they read the Sunday Times says much about who they are.”

The themes of conspicuous consumption, social climbing and and twenty-something angst are as prevalent in 2007 as 1986. No wonder the cash-hungry, coke-fueled fiction of the 80’s (e.g. McInerney, Ellis, Wolfe) has a cult following today. Really, young urbanites are the same, except we have new fancy gadgets to drool over and skinnier celebs to worship. Speaking of, “Sunday Styles” has another socialite story–this time about Topper Mortimer (husband to Tinsley). Did Yuppie Culture ever die? Or is this the redux? Either way, we can’t wait for the next installment…

FiveChapters.com