You have written your own book on how to succeed in digital business and you are chairman of two internet companies yourself. What can we learn from a book as old as Being Digital, your first choice?
Nicholas Negroponte wrote this book all the way back in 1995, right at the outset of the Internet revolution. What is so fascinating about it is that he explains in layman’s terms why it is that digital information will result in a communications revolution. It was an amazingly prescient book. I think for anybody wanting to understand the power of digital information this book is a must read.
How did he say the Internet would become so important?
He said the world would never be the same again. He wrote this from the perspective of being the founder of the MIT Media Lab, already well-known for its pioneering work, funded by all sorts of companies. It had literally hundreds of researchers and staff, so Nicholas Negroponte was very well-placed indeed to make observations about how the digital world would change communications.
For example, in Being Digital, he says there will come a time when people will stop reading books in paper form, they will be reading books on a screen. That is quite remarkable – this was 1995. Now it has actually happened. In the US, the Kindle outsells hardbacks, so for book readers it has made a huge, huge difference. If, like me, you travel a lot and it’s difficult to pack lots of books and there are weight restrictions, of course you want to have an electronic book reader. It enables you to take far more books than you were previously able to do. He also made the observation that there would be touch screen interfaces, which we have now become terribly used to. He is one of the leading tech visionaries and I think this is the book that set out almost an agenda for the digital revolution.
What is dot.bomb?
This is, I think, the quintessential insider look at what happened in the internet meltdown of the first part of this century. The internet business got an extremely bad reputation which it is only now shaking off, as something that combined management incompetence with grotesque corporate excess and total failure for shareholders. For me, this book, which describes an American internet company called Value America, says it all. There is a British equivalent about the decline and fall of boo.com, but with this one the failure was on a much bigger scale. It’s a very amusingly written book and it tells how this company wanted to change the face of American retailing, to go head to head with Amazon but do it better. They made every conceivable mistake that a dot.com could make.
What were they?
They had a site that completely failed to deliver, didn’t work very well; they had no proper delivery and order system; they grew much too quickly, built a huge office complex in Virginia at a very early stage; and the CEO, who has the delightful name of Craig Winn, got too big for his boots. He was so taken with his huge success that he thought he would take a run at the presidency, because his own self-belief was such that he thought he could take this business talent and use it to good effect in the White House. So, to me, this is an insider look at everything that was wrong with the initial internet era.
It sounds hilarious.
It is! It’s an extremely funny book, but there is a lot in there of value to entrepreneurs today of what really not to do.
Don’t run for president.
Don’t even think about it! Running a dot.com company is a seven-day-a-week job and there is no time for anything else. That’s mistake number one.
What can we learn from the John Battelle book?
John Battelle is a very well-known technology writer in the States, and Google is really the company that single-handedly has enabled the Internet to shake off the bad image it developed through companies like Value America. Google has gone in 10 years to being the world’s largest media company. What the book does is explain not only how Google managed to do that, but also explain very clearly why the Google search algorithm outclassed the other search engines of the time. A lot of people think Google was the first search engine but it wasn’t – it was number 12 or 13, so by all rights it shouldn’t have become as successful as it did.
So, what are they doing right?
They invented a system of search based around the way in which academic papers are rated. What Larry Page and Sergey Brin did was to create something called a “page rank”, which is named after Larry Page. Page rank is the key to understanding why Google search is so much better than the others. It developed a sophisticated algorithm to show why some websites are more relevant than others. It also took links and looked at how important those links were to any particular website. The parallel that I draw is if you’re looking at books on skiing, you would take seriously a review from somebody who had won a gold medal in downhill skiing, because you would rate that review. If that review was written by the chief executive of Google you might not take it as seriously. If a skier wrote a book on technology you would probably think he should stick to the skiing. So they use the algorithm to see what the relevance of the links are. So, if it’s a travel business linking to another travel business, that is more important than some private blog linking to a travel business. That is why when you look at the Google results one is so often impressed that the results are amazingly fast and amazingly relevant to what you want. It manages to create, out of the disorder of the internet universe, relevant results. People have forgotten that when you searched before Google the results were pretty terrible. It sometimes couldn’t work out what you were looking for. Google does.
And don’t they have a different corporate culture?
They do. They have a corporate culture heavily centred around innovation. There was a time where they asked their employees to devote 20% of their time just to blue sky thinking. That was a very radical thing to do.
Is that no longer the case?
I don’t know. It was true a couple of years ago. Now it has become such a huge international corporation that I suspect some of those things may have changed in that very rapid rise.
Let’s go on to the Bill Tancer book.
Tancer is head of research for a company called Hitwise, one of the companies that provides research on websites. What it does is it covers all of people’s clicks, and then aggregates them to show which the most popular sites are in any particular category on any particular day or week or month.
Why does it matter what people are doing online? Aren’t they mostly looking at porn?
Clearly some people are looking at porn, and Bill Tancer does mention this in the book, but there are an awful lot of things that people do that have become very fundamental to the way they live their lives. Hitwise can pick up all these things, so it can see if people are booking flights, betting, spending time on kids sites. There is now a whole plethora of possibilities for internet users, and Hitwise tells you almost in real time what billions of users are doing.
What are we doing?
It’s quite interesting. There is a lot in the book about the surprising ways in which people behave. It’s very current, so if you have a subscription you can see what people in the UK were doing yesterday. The example that I love is that he can analyse the demographic data and say that the Republican states of America are more likely to visit wife-swapping sites than their Democratic counterparts, which I find very amusing. He goes on to say that Liberals can’t completely relax, because the Democratic states are more likely to visit adult entertainment and escort websites.
We’ve all seen the film by now but tell me about The Facebook Effect.
Well, I have to have a book about Facebook. I can’t think of another example where a business that is less than 10 years old is the subject of a major Hollywood movie. Kirkpatrick is a brilliant journalist and he writes extremely well. He’s got access and clearly gets on very well with Zuckerberg, and he’s evidently spent a lot of time with him and with senior executives of Facebook. I think it’s a fair book – a warts and all look at the company, including the privacy issue. He deals well with that. What I find so fascinating about Facebook is that it’s almost like the early years of Microsoft and Bill Gates, and it’s interesting how similar Zuckerberg and Gates are. They both come from very well-off families, both are computer whizzes, both were at Harvard, both dropped out to start their companies and took Harvard roommates with them. They are both completely ruthless in an American way that one associates with the founders of successful American corporations, like Ford and Rockefeller, and now we’re seeing it in the technology world.
Facebook in some ways is such a bizarre idea. It might not have sounded like a very good idea.
Yes. But it’s based on the fact that American universities all have a facebook, a year book that tells you a little bit about the person and gives you a photograph. What is exciting for young Americans is finding your suitable partner. What Zuckerberg did, and it wasn’t an original idea, was put it online. You can put a thousand universities online in a way you couldn’t do with a book because it would be too heavy to lift. Like many young students, Zuckerberg wanted to find pictures of the opposite sex.
But he was also looking for a business. It wasn’t a cottage industry he set up for fun, which took off. He was ruthlessly finding a niche.
He was. It’s described in some detail in the book, and of course the early stages of Facebook took place in a courtroom, as you know. As we all know.
May 10, 2011
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