by Dana Blankenhorn
Volume IV, No. XLV
For the Week of November 13, 2000

This Week's Clue: The Internet and Jefferson's Ideal

This Week's Clue: The Internet and Jefferson's Ideal

SSP (Shameless Self Promotion)

How to Survive a Recession

Winning the e-Shopper

Why B2B Sites Fail

Clued-in, Clueless

The first great debate in American politics was joined by Alexander Hamilton and Thomas Jefferson

Hamilton saw that America's future would be as a mercantilist and manufacturing state. He wanted a strong central government to grant necessary stability to its great enterprises and a central bank with the power to control money supply. Jefferson saw America as a nation of shopkeepers and yeoman farmers. He wanted no power organizing men against their natural inclinations.

History shows that Jefferson won the myth but Hamilton won the war. America became a grander, gaudier version of what Hamilton envisioned. But in every election, and with every change in technology, the battle is joined again. Usually, when given a choice, the people stand with Jefferson. 

So it is in our own time, on the Internet. Hamiltonians insist that the Internet must be organized around big enterprises, that wiser heads must control what is read and written on it, and that only a few strong companies will survive the shake-out. Jeffersonians insist that men (and women) are free agents, that millions of small visions are more powerful than a few great ones. 

As you may have guessed, I'm a Jeffersonian. But that belief, like libertarianism itself, has its limits. It takes talent and a Clue to find your way as a free agent within this medium. You have to believe in what you're doing, and how you are doing it. You have to accept setbacks and refuse to settle for less than your vision. You have to stand up to power and (sometimes) show some courage. This is what Tom Peters was referring to as the company of Me Inc. Not everyone can or wants to do this. There must be room for Hamiltonian security even in this Jeffersonian paradise. 

I began the Internet revolution as an employee, a rather loudmouthed and opinionated one. Failing at employment I sought any writing work I could find. Then I learned how to fire bosses, and began choosing those who catered to my need for editorial freedom. Despite the failure of some outlets, despite the "Internet recession," I find I'm still moving forward.

You can, too. But you must be sure of your ground. You must be willing to work in ever-shifting teams. You must be willing to walk away, even in the face of money, when your vision is challenged. You have to wear a lot of hats. Finally, remember that you only learn when you change your mind. 

Anyone who acts as an entrepreneur of Me Inc. has a good chance to succeed, despite the present environment, because the Internet gives any niche, no matter how small, the chance to be organized. The ability to concentrate on one piece of intellectual ground, to focus with passion on one market or one idea at a time, gives the Jeffersonian long-term advantages over any Hamiltonian counter-attack. The "dot-com" billionaires have learned that already. The corporate suits will in due time. We will be their teachers. 

SSP (Shameless Self-Promotion)

We're now a syndicate! I've begun self-syndicating the columns and items of A-Clue.Com to Web sites and print publications. The base rate for a Web site is just $100/week - which includes the weekly Clue column, the separate news features, and our most popular feature, Clued-in and Clueless. Your site will be able to publish this content each Monday, the formal date of publication. Drop me a line  for more information.

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 My Clues come from daily writing for ClickZ. I also write monthly for Crain's B2B, and Boardwatch . I've just started writing regularly for WorkZ  and my monthly column will launch next year in Publish Magazine. I have written for Internet Content as well and create a twice-monthly column for OneChannel.Net . Yes, I'm very busy, but you can still buy my book.

Remember that it's journalism that keeps the Clues coming...

Takes on the News

How to Survive a Recession

The rest of the country is about to learn what anyone who attended the recent Internet World and ISPCon have already learned. There is a recession coming, and fast.

All recessions have causes, and this one is no different. It's energy, stupid. Oil and natural gas prices aren't going down, they're going up. It will take years to bring new supplies online, and the markets have been hopelessly complacent, refusing to invest more in exploration stocks on the fear prices will collapse.

There's nothing the Fed can do about this. Higher energy prices fuel inflation, forcing interest rates up even while growth becomes negative. There's little the Congress or Executive can do, either. (Who you gonna kill, George?) The budget surplus can quickly turn to deficit because each person left unemployed supplies a double-whammy to the books, reducing tax income while increasing unemployment insurance outflow. Crime also rises, demanding new investment in police and jails at a time when government can least afford it.

The biggest danger in a recession, however, is psychological. The rich are envied, the poor are feared, middle class people get squeezed, and a palpable funk can settle on the affected city. In some cases (see Michigan in the 1970s, and Houston in the 1980s) the result is desperation - homes are abandoned and families crowd the highways looking for work. Extremist religions take advantage, offering simple answers (it's your fault, it's their fault) to complex problems. Demagoguery becomes a real danger.

All this damage will be magnified by the sense of entitlement many feel today. The last recession was short, and occurred in 1991. The last energy crisis ended over 20 years ago. This is beyond the memory of most young people. For many, the next few years will be the most shattering experience of their lives.

The question is, however, how do you survive it? Some Clues from past experience provide the answers:

Every boom overshoots, and so does every bust. There will be great bargains in all kinds of assets as fuel cell and solar cell technology start to take the edge off the disaster. (Government didn't cause this one, and government can't cure it, either.) There will be huge opportunities in niches left wide-open by bad fortune. (If Webvan disappears, that's one right there.) Reformist impulses that just lost to complacency will next have to battle revolution. But that's not your problem - that's politics.

When the going gets tough, the tough will survive.

Winning the e-Shopper

This week I'll start my Christmas shopping, and in keeping with the beat I'll do it online. What will it take to win my business?

MSNBC offered an interesting profile of e-shoppers recently , based on a survey done at UCLA, and the results were instructive. We're not so much worried about big government or big business so much as we are big brother. As much as possible we want it both ways. We want to know everything possible about your offering (and be confident it's a good deal) but we don't want merchants to know too much about us.

What's needed is an honest broker between offers and information, someone who won't trade more than either side is willing to give. If I give this broker my data, they had better just use it to find me a deal, and not give me away to the merchant. What merchants most want, on the other hand, is sales - most don't know what to do with the data they're drowning in anyway. They want to know that if they put out their best offer, it will reach their target market.

The needs of neither side are being met right now, which is why this Christmas season is bound to disappoint. But there's no reason they can't be and soon (I hope) they will be.

Why B2B Sites Fail

Big b2b exchanges are failing to meet expectations, reports Bloomberg and anyone with a Clue can see why.

Top-down approaches to organizing markets don't work. Deals can only be done at arms-length, between equals, in a transparent market.

Besides, there's another key point most b2b sites are missing. The Internet isn't just the Web, and transactions aren't the whole marketplace. In the business world, information, contacts and trust all go into building transactions. Unless these are built first, a relationship will fail. This requires the use of e-mail, a willingness to "exchange precious bodily fluids" in terms of information, and (yes) face-to-face contact.

The best b2b sites, therefore, will not just be exchanges, they will also be virtual coffeehouses. One great model emerged in the 17th century, a coffeehouse near the London wharves where shippers could learn from one another and, with trust and transparency, make deals to cut their risks. The name of the coffeehouse was Lloyd's. Give both sides of each transaction insurance and assurance if you want them to do their deals at your table.

Clued-in, Clueless

Clued-in are Microsoft and Radio Shack, for getting into the Internet broadband business through StarBand, a satellite service that doesn't require a telephone or cable hook-up

Clueless are Michael Dornemann and Strauss Zelnick, who resigned as chairman and CEO of BMG Entertainment, respectively, rather than back chairman Thomas Middlehoff's play with Napster . The play may fail, but for big music companies the wages of doing nothing is death.

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