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<nettime> from the dotcom observatory
geert lovink on Wed, 26 Dec 2001 22:48:56 +0100 (CET)


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<nettime> from the dotcom observatory



A New Report from the Dotcom Obervatory.

Ola.

If 2000 was the year of the NASDAQ crash, inevitably 2001 was followed by
pittyful dotcom biographies. So far I have read three of them, Brenda
Lauel's account of her wrecked Purple Moon venture (Utopian Entrepreneur),
David Kuo's Dot.Bomb (about the e-tailer Value America) and Boo Hoo, the
story of boo.com's founder Ernst Malmsten (written in collaboration with
Portanger and Drazin). I will try to review them in one way or another. What
stroke me in all three of them was their shared desire to capture the
excitement, the drive to get there "first", the immense dogmatic belief in a
slavery-type hard work and obligatory determination. We deal here with true
believers in the Naipaul sense and the religious aspect of the dotcom
phenomena really cannot not be underestimated. Perhaps something for an Erik
Davis Techgnosis Part II, this time analyzing the New Age adoptation of Max
Weber...

The question, one and a half years after the tech wreck, where dotcom models
came from and didn't work remained unanswered in all three works, how
different the authors and their background may be. Underneath the dedicated
excitement the reader finds a deep sense of inevitability. I am hesitant to
say fatality because that would be too beautiful of an ending. The
dotcommers are still baffled. Everything seemed right. They all got
overwhelmed by a crisis without cause, with hardly anyone to blame. Lawyers
may have adviced the authors not dig too deep. That might be the case. While
waiting for Doug Henwood's final answer to all these questions, for those
who want to read something more substantial I can recommend two books, both
published in 2000, Paulina Borsook's Cyberselfish for the tech part and
Thomas Frank's One Market Under God for the business mythology part of the
dotcom saga.

A "prosperous" 2003 from the dotcom observatory, still going strong.

geert

ps. Is there anyone interested in this topic who can read Swedish and would
like to write a few words about Patrik Hedelin's Swedish book on the boo.com
story? Hedelin was responsible for the finance schemes and was one of the
three boo founders. He left a few months before boo collapsed. Another
interesting angle could be the UK/London point of view as the whole boo
story is pretty much Swedish biased but actually took place in London.
Nothing against Swedish people but the Uebermensch mentality in this book is
really too much.

---

1. Review of David Kuo, Dot.Bomb (Martha Liebrum)
2. Review of Paternot, A Very Public Offering (Katharine Mieszkowski)
3. Review of Ernst Malmsten (and others), Boo Hoo (from the amazon.co.uk
site)
4. Review of Boo Hoo by BBC News Online's Emma Clark
5. The Carpetbaggers Go Home by Cory Doctorow
6. D I T H E R A T I : SOMEBODY'S BUSINESS PLAN NEEDS A HUG
7. FAST TALK DALLAS: Smarter Moves for Tougher Times

---

1. www.houstonchronicle.com
Gold fever chilled
A player tells the sad story of a dot.com gone bust
By MARTHA LIEBRUM

DOT.BOMB:
My Days and Nights at an Internet Goliath.
By J. David Kuo.
Little, Brown, $25.95.

IN the business of books about business there is a tradition of doting on
inside stories of big companies that go wrong. In the same way we relish
accounts of tragedies that befall movie stars, we like to read about how
rich, smart guys blow it occasionally.


This particular insider's story is especially delicious if you are one of
those who did not make a million investing in some dot.com and are jealous
of those who did. This book is about the ones who spent their days and
nights working at Internet start-ups and their sleep time dreaming of yachts
and jets.

And then got laid off.

The insider in this case is J. David Kuo, who was senior vice president of
communications for Value America, a giant Internet company that had the
backing of such luminaries as Paul Allen, who co-founded Microsoft, and Fred
Smith, who founded FedEx. Kuo's previous experience was in politics and
government; he was even briefly (and not successfully, he notes) a
speechwriter for then-Gov. George W. Bush.

Kuo was among dozens of experienced and high-achieving executives recruited
to work at Value America, in frumpy offices in Charlottesville, Va., to
realize the vision of a retail genius named Craig Winn. Winn had put
together a concept of a cyberspace store that eliminated the middle guy,
taking orders from customers directly to manufacturers who sent products to
the home. He had hundreds of the best brands in the world available on his
Web site, and big plans to take it public.

His key was his plan, which was roundly applauded, and his personality,
which was that of a supersalesman and visionary.

And he won support from the likes of Smith and Allen, which is to say,
titans of the business world. He was a brilliant speaker and salesman, prone
to exaggeration. He was excellent at recruiting top people to work for him.
He had powerful money sources begging to buy into his company.

But what happened is what happens sometimes to people and to companies. He
promised more than he could deliver. He lost sight of the day-to-day. He
decided he wanted to become president. Of the U.S.A. He went over the top,
expanding the truth in announcing alliances that hadn't quite been forged.
He grew weary of sweet-talking the bankers and others who couldn't see his
vision. He got hostile, overwrought, things a titan can get away with if the
numbers come in right.

But they weren't coming in right at the end. The company was spending too
much money to get customers, not attracting enough of them, not able to
handle orders or customer complaints. It became famous for poor performance.

A company coup ensued. Winn was eventually booted by the board of directors;
a short time later the whole company closed down.

But before that happened, what a ride for the employees, who expected to
become millionaires from the stock they held and who enjoyed the perks of
working for a man who liked to spend money and fly folks around in the big
company jet.

It takes a few chapters to get involved in this book, but that's because Kuo
is reconstructing the story of Winn's rise, of which he did not have
firsthand knowledge. Once Kuo is on the job and in the office and under
Winn's wing, he brings his story alive. He is both cynical and savvy, but he
falls for it all pretty quickly and comes to love and admire Winn and Value
America. So much so that he encourages his fiancee to leave her job at
America Online to work at Value America, too.

Drunk on their dreams of the future, he and his fellow execs smooth over
their concerns about what is happening to the company. When it comes
tumbling down, Kuo is there until the end, knowing he should have known
better.

After he and his wife resign, they spend Thanksgiving in Las Vegas. He finds
himself watching Alaska on the IMAX at Caesar's Palace. He is startled into
an epiphany by the pictures of "starving, freezing fools" struggling through
a snowstorm, "fantasizing about the gold they were going to find."

"The truth," Kuo writes, "hit me over the head like a gold miner's shovel.
Despite the hype, headlines, and hysteria, this was just a gold rush we were
in. ... We might look like hip, chic, cutting edge, new-economy Internet
workers, but in fact a lot of us were kin to those poor, freezing fools in
Alaska who had staked everything on turning up a glittering chunk of gold."

Ha, just as the rest of us thought.

---

2. http://www.salon.com/tech/books/2001/08/22/paternot/print.html

Dumb, dumber and theglobe.com

A memoir by whiz kid turned dot-com refugee Stephan Paternot is as silly as
the company he founded.
By Katharine Mieszkowski

By now there's already been so much snickering at the fallen darlings of
dot-com mania that Stephan Paternot's Internet adventure story/mea culpa --
"A Very Public Offering: A Rebel's Story of Business Excess, Success and
Reckoning" -- is a rather tardy arrival at the post-meltdown party.

But if you're still game for kicking the dethroned titans of new economy
capitalism when they're down for the count, the co-founder of the "community
hosting" Web company theglobe.com provides ample fodder in his new memoir.
Sharpen your knives, and let the cathartic bloodletting begin.

Stephan Paternot was one of those dot-com 20-something wonder boys that the
other 99.99 percent of the population loved to envy during the boom. On the
first day of theglobe.com's ludicrous IPO, the Cornell grad with the
chiseled good looks was worth $97 million. On the Friday the 13th in
November 1998 that the company went public, its stock price recorded a
one-day rise higher than any other market debut in history. (VA Linux has
since stolen this dubious distinction.)

But you already know the punch line, don't you?

Theglobe.com, now having closed its doors, has suffered the sorry fate of so
many of its Net brethren, and the co-founder's claim to be an Internet whiz
kid and entrepreneurial prodigy has sunk out of sight along with the
company, as has most of his tens of millions. As Paternot recently told
SmartMoney.com: He may make more money on the book and the movie version of
his personal story about the company than from the company itself.

While he was once in the amorphous "online community" business -- meaning
everything from chat and home pages to gaming and e-commerce -- Stephan
Paternot is now in the business of being Stephan Paternot, and this book is
his first product. "After theglobe.com, I never want to be in another
position where I build an asset only to have it taken away," he writes. "I
want to be the asset."

In this case, the problem with being the asset is that the asset displays a
sophomoric lack of insight into his own experiences that pencils him in as
much younger than even the 27-year-old former dot-com co-CEO that he is. His
book is peppered with "whatevers" that try to fliply explain away key
decisions, such as whether or not the company should have gone public in the
first place, and how things might have been different if it hadn't. While
the author frequently expresses annoyance at the condescending venture
capitalists and institutional investors who treated him and co-founder Todd
Krizelman like kids and their company like a cute college project, he
frequently lapses into teeny-bopper-eze when he gives his own version of
events. A sample of his prose style: "Public speaking was really our thing."
Or, "Even though Jennifer was a model, she was down-to-earth."

But the problem with "A Very Public Offering" isn't the author's lack of
depth. In that respect, Paternot is as much the perfect poster boy for the
bust as he was for the boom. He's the dot-com business man-child, with
enough crazy-making experiences to carry a breezy tale.

The more basic problem with the book is that Paternot still thinks that the
question everyone is dying to ask him is: "How does it feel to be worth $97
million?" when the new, meaner question is now "How does it feel to lose
it?"

One question that "A Very Public Offering" never answers is how two
20-year-old college students in 1994 would have ever heard of venture
capital, much less have sought it out for their fledgling Web project.
(Maybe Paternot's patrilineal entrepreneurial heritage had a hand in this --
his great-grandfather founded Nestlé, which he never bothers to mention, and
his father founded Adia, one of the largest temp agencies in the world,
which he does bring up.) But Paternot's not telling.

He is so loath to get into the details that we never really understand why
he and Todd, instead of any of the other countless other bright, well-off
kids their ages, managed to turn their college project into a funded
company. Instead, he gets so hung up trying to cast himself as a Great Man
who seizes a historic opportunity at the right moment that he doesn't
describe what outside influences played a role, as if doing so would somehow
diminish his accomplishments. (The requisite eureka moment that leads to
what will eventually become theglobe.com involves a chance reading of an
issue of Vassar Quarterly, but I'll spare you the details.)

The most trying passages of the book are precisely those in which Paternot
tries vainly to find the seeds of his own greatness in his childhood. A case
in point: In high school he starts dating "a very hot, very popular girl --
Elayna." He points out: "(Even her name was sexy.)" Paternot sees the fact
that a self-described "computer geek" like himself could score such a hot
babe as a girlfriend as a turning point for the budding entrepreneur: "It
was the first sign that one could transcend the barriers of what one wanted
to pursue, yet not be locked in as a one-track geeky engineer."

The story improves when it eschews the painful-childhood two-bit
psychologizing, and gets into the delicious anecdotes about the reality
behind the scenes at theglobe.com. When the company was just getting going,
the two co-founders advertised in their college paper for new talent:
"Looking for seasoned management, must be at least Junior or Senior." During
the practice for the IPO road show -- during which the two co-founders would
make as many as seven presentations a day -- the presentation coach
admonishes Paternot for falling back on "the old genital clutch, in which
your hands are clasped together, hanging right in front of your balls," he
writes: "'What are you trying to tell people!' the coach would yell at me."

And when the stock began to plummet, Paternot would field frequent voice
mails from a furious investor over the course of six months, screaming voice
mails that said: "I hate you! I hate you! I hate you! I will kill you! I
will kill you! I will kill you! Invested my money in you. I will sue you!
Class action lawsuit!"

When he loses his power at theglobe.com, resigning as co-CEO, Paternot tells
us that he hid away in a New York jazz coffee bar with "the entire volume of
'Dune'" to help revive "my long-starved imagination."

Along the way, Paternot does a fair amount of casting blame for the
company's twisted fortunes. He's especially annoyed at the press that builds
you up with one hand and tears you down with the other, as well as other
sources of "negativity."

As for how it feels to lose all that money, for the most part Paternot keeps
a stiff upper lip, and he thinks that the rest of us should, too. He has no
sympathy for the individual investors, i.e. "I hate you! I kill you!" who
lost money when theglobe.com stock plummeted from that high of $97 a share
to $2 a share when the book ends. After all, Paternot confides that he lost
$1 million of his own that he'd borrowed against the value of his
theglobe.com equity and invested in the ill-fated Kozmo copy-cat UrbanFetch.

"Individual trading is rarely nothing more than gambling, which is why I
have no pity for those traders out there who lost money and blamed Todd and
me," writes Paternot. "Hey, I lost a million dollars, but I'm not blaming
UrbanFetch." It has all the makings of a new aphorism for skinned investors
everywhere: At least you didn't lose as much as Paternot!

The UrbanFetch tidbit pretty much sums up Paternot's attitude toward the
whole NASDAQ meltdown. We all lost money, so no one is stupid, or we all
are, so it's OK. "No longer were we the only idiots in town," he writes. But
he doesn't extend the same logic to the boom -- if losing your shirt when
everyone else is also going bankrupt makes you less of a bozo on the way
down, then doesn't winning big when everyone else is raking in the cash make
you less of a boy wonder?

When their company was growing, the consumer press ate up the Stephan and
Todd show. Their story was the company's best marketing strategy. But maybe
Paternot was just a more valuable product when he had a crack P.R. team,
whom he lovingly credits in the book, to shape and shill his story.

Or, maybe it's just hard to write a memoir as if you were an individual
actor on the great stage of business history, when there are clearly so many
larger forces at work -- as Paternot might write, you know, that whole
Internet bubble thing.

---

3.
http://www.amazon.co.uk/exec/obidos/ASIN/0712672397/qid=1009156225/sr=1-1/re
f=sr_sp_re/202-8971990-2299022

Incompetece backed by less expert investors, 4 December, 2001
Reviewer: A reader from Stockholm, Sweden

When Boo.com went into liquidation only six months after its launch, the
question was not why the global online fashion retailer went bust. Rather,
it was why investors had allowed the company to burn through 100m Dollars
before it did so.

In the book JP Morgan's contacts is highly emphasized. However, Boo.com was
actually turned away by venture capitalists with a record in backing
technology start-ups. Instead, it was less expert investors who took the
bait - notably a small British investment firm called Eden Capital, the
luxury-goods magnate Bernard Arnault, the Benetton family and a rag-bag of
Middle Eastern investors.

At the same time not one of the founders was a capable manager, let alone up
to the task of getting a highly complex international launch project
finished on time and on budget.

As the schedule began to slip, Ernst Malmsten lost faith, one by one, in his
partners and underlings. E.g. Ericsson was no good at systems integration,
he concluded, and later regretted. Hill and Knowlton did not know how to
sell the story to the media. JP Morgan was not bringing in investors fast
enough. The chief technology officer was not up to his job. Even Patrik
Hedelin, his fellow founder, was too much of an individual to be a good
chief financial officer.

The Boo founders continued to argue internally about the depth of the cuts
they should be making, while the core investors talked seriously about
putting in another 30m Dollars at a price that valued the existing
shareholdings at 20m Dollars.

Certainly, this is boo hoo is an interesting story about the dot.com frenzy.
But at the same time it leaves you with the impression of being a biased
story written by Ernest Malmgren. Being a credulous person is certainly not
easy...

This impression is of course made stronger after reading the co-founder
Patrik Hedelin's Swedish book on the same topic written by Gunnar Lindstedt.
That is strongly recommended for people who have a good command in Swedish.

---

Boo's journey to failure
by BBC News Online's Emma Clark
"All these people trusted me and now I have failed them. What have I done?
How could things have gone so wrong?" These are the words of a desperate man
who has realised that his time is up. They occur a few pages into a new book
by Ernst Malmsten on the collapse of the infamous sports and high-fashion
e-tailer, Boo.com. "Boo Hoo: a dot.com story from concept to catastrophe" is
Mr Malmsten's attempt to put the record straight. The collapse of the
company, which was founded by Mr Malmsten and his photogenic business
partner, Kajsa Leander, came to epitomise the excesses of the dot.com era. A
press release promoting the book grandly describes Boo.com as "the first
major casualty of the internet age" - and for many it was.

Taking the blame

Although Mr Malmsten willingly takes responsibility for the dramatic demise
of boo.com, he is also keen to counter the criticism that he and Ms Leander
have faced. In recent interviews to publicise the book, he has talked of how
he lacked the strong hand of a chairman to guide him through the corporate
quagmire. Equally, Ms Leander has commented - with no hint of irony - that
she only travelled by Concorde when it was on special offer. However, Mr
Malmsten's comments in the book that "after the pampered luxury of a Lear
jet 35, Concorde was a bit cramped" are unlikely to dispel the couple's
image as high-spending and irresponsible.

Cash burn

Over the course of two years, the company managed to burn through $130m of
investors' money, as well a substantial amount of the founders' savings. In
between bouts of guilt, Mr Malmsten's tale captures the hype and the
excitement of developing what was seen by many as a ground-breaking company
with state-of-the-art technology. Co-written with Erik Potanger, a
journalist from the Wall Street Journal, the book is clearly intended as a
testimony to the energetic team that struggled to build Boo.com into a
working enterprise. Along the way, it tells of endless rounds of raising
finance, glamorous parties, staff clashes and bitter sparring with the
press.

A personal account

The book is very much a personal account and begins with a meeting between
Mr Malmsten and Ms Leander outside a Parisian club. The two had been at the
same kindergarten in Sweden and briefly at the same high school, before
bumping into each other again in Paris as twenty-somethings. "It quickly
became obvious that we made a great team. While I possessed unflagging
enthusiasm and persistence, Kajsa had a sense of style that I sorely
lacked," Mr Malmsten wrote shortly after their reunion. This self-belief and
later a passionate commitment to Boo.com see the two battling to develop
their "brand" and win more money to keep the venture afloat.

Collapse

Despite backing from Bernard Arnault, the chairman of luxury group LVMH,
investment bank JP Morgan and enthusiastic Middle Eastern investors who saw
Boo as the next Amazon.com, the company collapsed on 18 May 2000. Ambitious
plans to make Boo a top-grade global e-tailer had already been scaled down,
but a last-minute bid to find yet more funding failed and sealed its fate.
Over-ambition is a recurring theme in the book. Even after the website
finally launched, following months of expensive delay, there is a sense of
anti-climax. "We should have felt wonderful, and we did, at first," says the
book. "But once the effects of the champagne wore off and everyone had
slowly returned to their desks, a heaviness began to settle over the
office."

Hyped forecasts

In a typical example of internet hype, Mr Malmsten recalls how initial
forecasts were not met. "There were plenty of visitors to the site, but not
the tidal wave of traffic that we had expected. "By the first afternoon when
the first statistics came in, we knew the figure of a million [that] some
people had talked about was a complete fantasy." This combination of naiveté
and hapless optimism was characteristic of many dot.com ventures. Boo's
technical equipment was sold on to another UK internet venture, while its
brand and website address were snapped up by a US fashion retailer.

Failure?

Rory Cellan-Jones, the BBC's internet and business correspondent, attributes
Boo's failure to a host of reasons.  In his recent book "Dot.bomb", he
refers to managerial incompetence and a profligate culture at the company.
But he also reports that many believed "Boo was just beginning to prove
itself and if it had been given a few more months it would have fulfilled
its promises". It is too late now to prove the validity of such hopes, and
the founders are keen to move on. For Mr Malmsten, the exercise of writing
the book was "a sort of therapy". For others reading the book, it will be a
colourful account of dot.com hubris, youthful enthusiasm and a doomed
struggle to give the Boo start-up its wings.

---


5. http://www.oreillynet.com/pub/a/network/2001/12/21/2002.html
2002: The Carpetbaggers Go Home
by Cory Doctorow
12/21/2001
The Internet is antithetical to commerce. There, I said it.

Business is built around reliability, offering a predictable quality of
service from transaction to transaction. Even the messiest, one-off
businesses are based on reliability; for example, estate auctioneers are
predictable -- indeed, they provide the only touchstone of predictability in
one-off sales, through the authorship of dependably consistent auction
catalogs.

The Internet is unpredictable. It's non-goddamned-deterministic. That's the
point, of course. The Internet is a lingua franca (or, if you believe the
poor bastards who went broke on Frame Relay networks, a
lowest-common-denominator) by which just about any computer can talk to just
about any other computer. Your computer only needs to know how to construct
its message such that it conforms -- more or less -- to the latest rev of
the holy book of Standards, slap an IP address on the ass-end of it, and
ship it out to the intended recipient, who interprets it according to that
same holy writ.

Or not.

That's the thing about messages -- the recipients can do anything they want
with them, not merely what you expect them to do. For example, Raffi emailed
me a couple of weeks ago with the wonderful idea of identifying cataclysmic,
9-11-grade crises by monitoring the lagginess of CNN's Web server, on the
very sensible grounds that when bad stuff happens, the whole world fires up
its browser and points it at cnn.com, which gags and barfs when it is
confronted with a half-billion twitchy netizens trying to get the scoop on
the latest thrax scare.

Raffi doesn't care what's on CNN's Web page -- he cares about how long it
takes CNN's httpd to respond to a generic query. Like a jazz critic who
listens to the pauses more than the notes, Raffi will toss away the message
sent by CNN's httpd and record only the interval associated with it.

God, this kind of stuff drives most MBAs berserk. eBay's devoting fantastic
heaps of engineering talent to make sure that their pages can't be scraped
by homebrew Web-spiders that attempt to aggregate eBay's auction listings
with Amazon's (and, of course, O'Reilly does the same thing with Safari). To
both organizations' credit, neither has attempted to Java-fy their UI/UE as
a means of controlling the sorts of things their users can do with their
messages.

The Internet is loose and wobbly from the bottom up. TCP/IP is all about
non-deterministic routing: Packet A and Packet A-prime may take completely
different routes (over transports as varied as twisted pair, co-ax, fiber,
sat, and RF) to reach the same destination. When the Internet is running
tickety-boo, the traffic histogram at any point is positively Brownian,
fuzzy and random and bunchy and uncoordinated as a swarm of ants
randomwalking through your kitchen.

Fuzzy Wuzzy
Fuzzy at the bottom: TCP/IP. Fuzzy in the middle: message-passing protocols.
Fuzzy on top: services.

The Internet is full of fantastically useful and frustratingly unavailable
services, from the elegant simplicty of Weblogs.com's XML-RPC interface that
accepts a URL and a link-title and shoves 'em on top of the stack of
recently updated sites, to the unaffiliated public CVS servers that pock the
Internet like so much acne. They work well enough, on average, and if they
were all to fail suddenly and at once, the Internet would kind of suck until
they came back online. But there are enough of these little tools, enough
ways of finding and manipulating information, that users can interpret
unreliability as damage and route around it, finding alternate means of
communicating and being communicated at.

This nondeterminacy is antithetical to all our traditional notions about
success in branding and business. The CEOs of the world have a lot of
trouble getting their heads around it:

The music industry wasn't always sure that Napster was their doom. When
Napster debuted, bigwigs at conferences like DDMI pooh-poohed the service.
No one who's serious about music will use Napster, it's too unreliable.
Napster's users will surely quit in disgust when they discover that the
availability of any given song is based on whether some other Napster user
who has the song has left their computer on and Napster running. If that
doesn't scare them off, then badly-ripped files with misspelled, inaccurate
metadata and files truncated en route will.

And these all were problems with Napster! Nothing's worse than downloading
three quarters of a file and have the guy you're downloading from switch off
his machine! But it didn't matter. It was good enough -- empirically so.
Napster is the fastest-adopted technology in human history.

A sane, managed approach to building a reliable Napster would involve armies
of trained employees, laboring around the clock to digitize, annotate, post,
and catalog mountains of CDs. The files would live on a server-cluster the
size of an ENIAC outbuilding with a braided rope of fiber as thick as a
baby's arm punched up through the raised floor.

It would cost a fortune. By the time the industry was ready to sell you an
MP3 for download, they'd have to bill you $22.95 for it.

The point is that Napster -- and its anarchic, unmanaged successors -- was
almost reliable enough to build a business on, just one little last-mile
away from brand-consistent perfection.

The Intractable Percentile
The first time many corporate silverbacks saw the Internet, they came to the
conclusion that the way to commercialize the thing was to carve out managed
pockets of sanity in the anarchy. Consumers have been bred to expect
consistency, cultivated for it by generations of Madison Avenue Mafiosi, and
changing the expectations of consumers back to unbranded chaos is not an
option at this late date -- it'd be like trying to breed chihuahuas back
into wolves. Instead, you change the environment to meet consumer
expectation, sit back, and open the checks.

After all, it's just a little order imposed in the chaos, right? How hard
can it be?

This is one of the classic fallacies that players of the Big Con like to
confuse their marks with. If A is possible, and B is possible, then how hard
can it be to make A and B? Eric Benson soaked up a lot of people's money
with a scam that exploited this. Benson had a prototype child-finder
bracelet that used satellite-based positioning signals to track abducted,
lost, and missing tots, then beamed their locations back to the satellite so
they could be recovered.

Benson's plan sounded reasonable. He could show you a working, miniature GPS
receiver that could pinpoint its location to the yard from anywhere on earth
with a clear shot at the sky. Everyone knows that GPS sats communicate with
GPS devices to accomplish this quotidian miracle. It's therefore reasonable
to believe that such a device can talk back to the satellite and give its
position back.

Of course, this is a lie. Satellite receivers can be small and
low-powered -- the satellites are sending their signals with enough power to
be heard by anemic little dashboard navigation systems. Uplinking to a
satellite, on the other hand, requires a device with all the
power-consumption, safety, and user-friendliness of an industrial microwave
oven without a door. Benson's child-finder bracelets couldn't work the way
he said they would -- at best, they'd allow lost children to know exactly
how lost they were.

The people that Benson rooked were making the same kinds of semi-reasonable
assumptions that the Mighty Morphin Power Brokers of the New Economy made
when they assumed, for example, that a crappy audio stream could be made
radio-grade with just a little engineering know-how and some strategic
alliances.

After all, if something's 95 percent of the way to perfection, how hard can
it be to nail that last five percent?

Engineers understand that the difference between 95 percent and 96 percent
reliability is often infinite. Some problems are tractable within a certain
tolerance, and asymptotic to infinity above that tolerance. The Internet is
full of best-effort algorithms, timeout mechanisms, asynchronous
communication, and stateless clients. This is the fault-tolerant realpolitik
of a public network composed of uncoordinated actors with conflicting
agendas.

You can't be a control-freak on a public network. KPMG learned this lesson
the hard way. The big-name Internet carpetbagger consultants have a policy
that requires anyone wishing to link to their site to secure a formal,
legally binding agreement in advance -- just as anyone using KPMG's
trademarks would have to negotiate that right first. When KPMG sent a
threatening note to Chris Raettig, an itinerant British engineer, demanding
that he produce evidence of his formal agreement granting him permission to
link to their site, Raettig countered by sending back a snippy note and
posting both to his Web site. Within days, KPMG had become a laughingstock,
their brand ("KPMG is the global network of professional advisory firms
whose aim is to turn knowledge into value for the benefit of its clients,
its people and communities.") flushed down the toilet.

---

  D I T H E R A T I
     see the digerati dither, daily

       SOMEBODY'S BUSINESS PLAN NEEDS A HUG

     "There was an emperor's new clothes thing going on. No one wanted
     to believe the whole thing could crash. But it surely did. When I
     went back in April earlier this year, I wanted to hug everyone."

         Archaeologist Christine Finn, on how Silicon Valley's boom-
         and-bust cycle left techies feeling naked and vulnerable, BBC
         News, 11 December 2001

       http://news.bbc.co.uk/hi/english/sci/tech/newsid_1697000/1697295.stm

- - -recommendation - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
- -

     Get inside how the Valley rose and fell with Gary Rivlin's latest:

       "The Godfather of Silicon Valley: Ron Conway and the Fall of the
Dot-coms"
       http://www.amazon.com/exec/obidos/ASIN/081299163X/ditherati-20

---

Fast Company's Fast Talk newsletter
December 04, 2001

----------------------------------------------------
FAST TALK DALLAS: Smarter Moves for Tougher Times
----------------------------------------------------

Dear Fast Company Friend,

In less than a year, we've gone from prosperity and
peace to recession and war. Across the economy,
companies in every industry and leaders at every level
are wrestling with the same questions: Where does it
make sense to cut? Where would it be insane to cut? And
on an aggressive note, where would it be opportune to
invest?

In early November, a roundtable of nine smart,
seasoned, strategic business leaders, thinkers, and
doers assembled in Dallas to talk about short-term
tactics to survive the downturn and shrewd long-term
strategies to win in the future. Following is their
fast-paced discussion on technology investments, R&D
spending, mergers and acquisitions, human-resource
policies, and how one manages these issues in the face
of extraordinary economic challenges.
----------------------------------------------------
Lightning Round 1: Mistakes That Losers Make
----------------------------------------------------

Panelists weigh in on the dumbest moves a company can
make in responding to an economic downturn -- from
misguided layoff strategies to short sheeting the R&D
budget.
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2139&M=225447&MS=6015

----------------------------------------------------
Lightning Round 2: The Best and the Brightest
----------------------------------------------------

Trying not to gloat, panelists suggested ways that
smart companies ( like their own ) have dealt with grim
times -- from buying up faltering competitors to
pumping up marketing.
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2140&M=225447&MS=6015

----------------------------------------------------
Essay Question 1: The Art of Making Sense
----------------------------------------------------

When the rules of business are changing rapidly and
consumer behavior fluctuates with each day's headlines,
the first problem facing a manager is how to make sense
of the environment. What can we learn from the past?
Are there key areas to watch? Panelists separate the
wisdom from the chatter and reveal what really counts
in the long run.
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2141&M=225447&MS=6015

----------------------------------------------------
Essay Question 2: What's the Smart Bet for the Future?
----------------------------------------------------

Even in an ugly economic cycle, there are opportunities
for the stout-hearted. Where do the wily players double
down their bets? What moves now are apt to pay big
dividends when the markets rebound?
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2142&M=225447&MS=6015

----------------------------------------------------
Lightning Round 3: Monday Morning Action Items
----------------------------------------------------

By the end of 90 minutes, our crafty Fast Talkers were
ready to draft an agenda: If you want to emerge a
winner when the economic mayhem subsides, what
strategies do you adopt now? It's Monday morning in
this brave new world. What items are on your action
list?
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2143&M=225447&MS=6015

Read the transcript at:
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2145&M=225447&MS=6015

Learn more from Ian Downes on thriving in economic
uncertainty:
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=2151&M=225447&MS=6015

----------------------------------------------------
PARTNERSHIP
----------------------------------------------------

Fast Company and Cap Gemini Ernst & Young are pleased
to partner on key events in the Fast Talk series. Cap
Gemini Ernst & Young is one of the largest management
and IT consulting firms in the world. The company
offers management and IT consulting services; systems
integration; and technology development, design, and
outsourcing capabilities on a global scale. Cap Gemini
Ernst & Young employs more than 60,000 people
worldwide. For more information, log on to
http://robin.fastcompany.com/cgi-bin/nph-t.pl?U=348&M=225447&MS=6015


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