(photo: Evil Erin)

Matt Yglesias analyzes the failure of the progressive block strategy, and chalks it up to progressives not picking issues that centrists care about.

He doesn't note his own role in that failure, vilifying the leader of the progressive block Raul Grijalva as the world's greatest monster unless he backs down. (Our own whip effort started to back Grijalva's efforts, which were already underway in the House when we started in June of 2009.)

I've said many times that it's impossible to expect progressive members of Congress to hold together if they don't have the backing of their natural fiscal constituencies the liberal interest groups and the unions. Without that support, they're left to raise money from PACS and other corporate sources to sufficiently fund their campaigns. That's why they take turns championing progressive bills that ultimately fail so they can pretend they do something, and then vote for bad bills that ultimately pass so someone else can be the failed hero. When Tammy Baldwin votes for one PhRMA-friendly bill after another, progressives can say hey, but she's so good on LGBT issues! Which never actually pass either, but the kabuki keeps activists sufficiently docile and donating to large organizations who fundraise off amping up outrage.

But it's also worthy to note that it's hard for them to withstand the assault of liberal pundits who sneeringly derided their efforts as naive, futile and purist. They should be proudly taking credit for their role in delegitimizing progressive opposition to the bill in liberal intellectual circles, much the same role that the same people played during the Iraq war. After all, it's TNR's stock in trade.

I'll leave it to others to analyze how corporate cash was laundered through foundations to underwrite the efforts of various opinion leaders in the health care debate, but it definitely deserves more scrutiny. . .

Monday, June 1, 2009

Kaiser Family Foundation Launches New Non-Profit Health Policy News Service

Menlo Park, CA In the midst of a major federal health reform debate and the ongoing financial turmoil in the media industry, the Kaiser Family Foundation officially launched Kaiser Health News (KHN) today to provide a new source of in-depth reporting on major health issues. KHN is staffed by experienced health policy journalists and editors, and will feature contributions from a wide array of leading health policy commentators and independent journalists.

[]

At the heart of KHN will be in-depth, explanatory stories about complex health policy issues and major developments in Washington, D.C., and around the country in the health care marketplace and health care delivery system. The news service will cover policy stories like health care reform, developments in major public health coverage programs like Medicare and Medicaid, and complicated ongoing policy challenges like the financing of long-term care, and it will examine the nation's health care system from a consumer perspective. KHN will also provide a synthesis of health policy news coverage through a daily health policy report, original programming from Kaiser's broadcast studio, and regular columns from contributing writers and experts. Jonathan Cohn, senior editor of The New Republic, and Howard Gleckman, senior research associate at the Urban Institute and former senior correspondent at Business Week, will be writing bi-weekly columns. Among others who will contribute occasional columns are: Michael Cannon of the Cato Institute, Jim Capretta of the Ethics and Public Policy Center, Judy Feder of the Center for American Progress, and Mark Pauly of the Wharton School at the University of Pennsylvania.

The development of Jonathan Gruber's much-vaunted model, which formed the justification for econo-wonks and politicians alike to support the Senate bill's voodoo claims about the excise tax, was originally paid for by the Kaiser Family Foundation in 1999 according to Gruber. It was given a facelift this year courtesy of the Small Business Majority, whose money comes from foundations including the Blue Cross Blue Shield Foundation. (h/t spanishinquisition)

And recall that Kaiser Permanente was the original sponsor of the Washington Post pay-to-play salons.

You have to wonder if any of that Kaiser cash underwrote other efforts at the Post after the parties fell through.

HCAN's efforts were funded by Atlantic Philanthropies, the Robert Wood Johnson Foundation and George Soros foundations, among others.

So, come on, pundits. Don't let the lameness of progressives in Congress get all the credit for shooting down the public option, rolling back choice, and teeing up constitutional amendments to overturn the health care bill around the country.

Stand proud.

Tags: Blogosphere, Jonathan Gruber, Kaiser Family Foundation, Matt Yglesias, Media, new media, Raul Grijalva, Robert Wood Johnson, The New Republic, TNR, veal pen

Shared by Kristopher
app, ipad application, ipad app, apple app, kindle app

Apple Stacks The Deck Against Amazon's Kindle App

Jay Yarow | Feb. 26, 2010, 11:00 AM | 5,634 | 34

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Tags: Gadgets, Amazon, Kindle, Apple, iPad, eBooks, Big Tech, Media

AAPL Feb 26 2010, 05:20 PM EST

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When Apple's iPad goes on sale in a few weeks, its iBookstore will have a distinct user-experience advantage over e-book competitors like Amazon's Kindle App.

That is, the iBookstore will let you seamlessly buy books from within the iBooks reader app, with the iTunes account it's already aware of.

Meanwhile, rivals like the Kindle app and Barnes & Noble e-reader will require you to boot up their apps, then click a button to boot up the iPad's Web browser, shop for e-books in a Web store, sign in and pay with a non-iTunes account, relaunch the e-reader app, and sync up your new e-book. Not as elegant.

It's not a huge difference, but it's the kind of small simplicity advantage that has helped Apple's iTunes music store maintain a lead over its rivals, including Amazon.

People who use the Kindle app on their iPhones today will know that this isn't a new thing: Since the Kindle iPhone app launched last March, users have had to leave the app to buy e-books.

Amazon didn't built the app this way from the beginning. We have learned that when Amazon first submitted its Kindle application for the iPhone to Apple, Amazon included its own payment system within the app, so customers could just pay for e-books and download them right in the app.

When Apple spotted the payment system, it told Amazon to get rid of it, according to a source familiar with Amazon's operations.

Why? It's a rule Apple smartly instituted at the App Store's beginning, forbidding third-party e-commerce of digital goods within apps.

That is, it's okay to use an iPhone app to buy physical goods -- as you can in Amazon's main iPhone app, or the Fandango app, etc. And developers are welcome to use Apple's in-app purchasing system -- and give a 30% cut of revenue to Apple -- to sell digital goods within apps.

But Amazon, Barnes & Noble, and other vendors are prohibited from using their own e-commerce systems within apps for virtual goods. Thus the trip to the Safari browser to buy books.

It's obviously a rule Apple itself is allowed to break -- it's Apple's iPhone, and it can do whatever it wants, as we've seen recently with Apple's recent raids on thousands of sexy apps. But it does put competitors like Amazon on uneven footing.

Obviously, Amazon is never going to want to give Apple a 30% cut of e-book sales, so it's not going to implement Apple's in-app purchasing system. So it's indefinitely stuck sending its customers into the browser to make purchases. (Meanwhile, on the new BlackBerry Kindle app, you can buy e-books directly within the app.)

Assuming the iBooks app and the iBookstore have similar selection, pricing, and e-reader features, this one simple step could give Apple a substantial advantage over Amazon.

See Also: 10 Burning Questions About Apple's iPad

Shared by Kristopher
android apps, android, nexus one

The Android Market may still lag behind the iPhone App Store in terms of variety and quality, but there is something to be said for the Android operating system's extremely tight integration with existing Google products, and the wide choice of devices and carriers.

There's no question that the iPhone has many wonderful apps, but Android's smart syncing with existing tools, interesting Android-only experiments coming every day from Google employees, and its open marketplace model have yielded some tools that may give the average iPhone user pause.

If you're looking for a change, or you're in the smartphone market and still weighing the pros and cons, consider these Android-only apps and how they might fit into your work, play, and mobile lifestyle.

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1. OpenHome

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There's no denying that the iPhone OS is a gorgeous piece software. But when it comes to the home screen, you get what you get, and you don't get upset, to quote a nursery school mantra.

Android is completely open-source, which means that apps can change the functionality and appearance of the OS, if you permit them to. This isn't always good for safety, but it's great for customization.

OpenHome is one of the leading customization apps available on the Market. It functions as a replacement for the default home screen, into which you can load customs skins, icon packs, and fonts many of which are freely available in the Market and created by other users.

In addition to the look and feel of your OS, OpenHome also allows for other custom tweaks including soft keyboard improvements and widget modifications.

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2. Google Voice

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Imagine a world where you never have to listen to another voicemail again. That's almost what you get when you set up Google Voice and utilize the Android app. Google Voice lets you keep your existing mobile number, but will forward your missed calls to a generated Google number that you can check on the web, in your e-mail, or via the app.

The service automatically generates voicemail transcription that is usually accurate enough to get the gist of what the caller is saying. Instead of getting a voicemail on your phone, you'll receive and e-mail (or text message) with the transcription.

The app then lets you scroll through your messages visually, like an e-mail inbox, and stream the audio messages from the web as needed, all without wasting precious mobile minutes.

There are certainly other great voicemail alternatives for the iPhone (and Voice is available as a web-based service), but Google Voice's deep integration with Gmail (you can also enable audio playback within web e-mail messages) makes it a great compliment to your hand-held arsenal of communications tools.

Google Voice is still an invite-only service at the moment. You can request an invite from Google here, or hit up your friends on social networks for one.

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3. NESoid

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Classic gamers rejoice! NESoid is a Nintendo ROM emulator for Android that actually works. The app itself is software that interprets ROM files the format of choice for hacked console games. Assuming you're loading a worthwhile ROM file from your SD card, the gameplay is really smooth.

The lite version of NESoid is free, but prevents you from loading a saved-state of a game. The full version will cost you $3.49 and unlocks this feature.

Most ROMS are not exactly kosher in terms of copyright, so we'll leave it at your discretion whether you want to actually track down the games. This is likely why console emulators have not made it through the stringent App Store approval process, but are now appearing in Android's more liberal Market.

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4. Google Finance

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If you've got an eye on your stock portfolio 24/7, Google Finance can be a useful tool for getting customized, real-time quotes.

The Android app syncs directly to your Google Finance portfolios and streams live data right into your hands by way of quote updates, charts, and financial news.

Android is currently the only mobile platform with an official Google Finance app.

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5. Google Listen

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Google Listen is a unique offering from Google Labs that functions like a search engine and subscription tool for podcasts across the web. If you're on the train and realize you've forgotten to download the latest episode of NPR's This American Life, simply fire up Google Listen, search for it, and stream it immediately, from the source.

Google Listen effectively eliminates the need to download podcasts or connect your handset to your computer. And with subscription options built in, once you find a show you like, you'll never miss an episode while you're on the go.

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6. Gmail and Google Calendar

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Last but not least, the utility of the fully integrated Gmail and Calendar apps that come built-in to the Android OS cannot be overstated. One of the core reasons why any Gmail or Google Apps user should go Android is that the handset will complete your suite of cloud computing productivity tools.

Because of the intrinsic link between your Android phone and your Google account, the mobile functionality of Google apps like Gmail and Calendar are seamless. Draft an e-mail on your phone and it is instantly viewable in your drafts folder on the web. Update an appointment on the web Calendar, and it's reflected on your phone seconds later.

Android users also enjoy the built-in functionality of shared calendars, Gmail labels, threaded conversations, and Send As accounts if it is configured in your settings.

If you live and work out of your Gmail inbox, an Android handset is the perfect extension.

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More Android resources from Mashable:

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- 7 Mind-Blowing Free Android Apps
- Free Multiplayer Android Games [3 of the Best]
- 3 News Apps for Android Compared
- The Best Free Twitter Apps for Android
- 30 Android Apps to Watch
- 8 Android Apps Worth Paying For (And Some That Aren't)

I don't want to be seen as some kind of apologist for China, given its horrendous human rights record. I think the President meeting with the Dalai Lama despite Chinese warnings sends the right message and is eminently responsible.

But that doesn't mean we can't learn something from how China is reacting to the recession with quick and massive stimulus that is succeeding in creating jobs and growth.

The world's largest human migration the annual crush of Chinese traveling home to celebrate the Lunar New Year, which is this Sunday is going a little faster this time thanks to a new high-speed rail line.

The Chinese bullet train, which has the world's fastest average speed, connects Guangzhou, the southern coastal manufacturing center, to Wuhan, deep in the interior. In a little more than three hours, it travels 664 miles, comparable to the distance from Boston to southern Virginia. That is less time than Amtrak's fastest train, the Acela, takes to go from Boston just to New York.

Even more impressive, the Guangzhou to Wuhan train is just one of 42 high-speed lines recently opened or set to open by 2012 in China. By comparison, the United States hopes to build its first high-speed rail line by 2014, an 84-mile route linking Tampa and Orlando, Fla.

China spent $88 billion dollars on high-speed rail investment in 2009 alone, a substantial increase from previous years. It rivals the construction of the interstate highway system in America in the 1950s for its audaciousness and use of public monies to spur jobs and growth. And it's working:

As China upgrades and expands its rail system, it creates the economies of large-scale production for another big export industry. The sheer volume of equipment that they will require, and the technology that will have to be developed, will simply catapult them into a leadership position, said Stephen Gardner, Amtrak's vice president for policy and development [...]

Officials drafted a plan to move much of the nation's passenger traffic onto high-speed routes by 2020, freeing existing tracks for more freight. Then the global financial crisis hit in late 2008. Faced with mass layoffs at export factories, China ordered that the new rail system be completed by 2012 instead of 2020, throwing more than $100 billion in stimulus at the projects.

Administrators mobilized armies of laborers 110,000 just for the 820-mile route from Beijing to Shanghai, which will cut travel time there to five hours, from 12, when it opens next year.

You can do this far more quickly in a command economy, of course. But it's the priority order that is striking. China needed economic stimulus, and rapidly accelerated public investment. The US (which actually has added more in stimulus than most countries in Europe) took a balanced approach based more on tax cuts. Aside from the question of what approach works better in terms of economic activity, look at the end result practically all of China will be served by high-speed rail within a matter of years.

It's not perfect. Some Chinese have complained about the fare costs. And again, a single decision-maker rather than a phalanx of competing interests makes decision-making that much easier. But there's something that can be learned here. If you want to create jobs, rather than the Rube Goldberg approach of tax breaks and nudges toward private investment, just go ahead and create the jobs. In the long run you'll have higher growth and a better quality of life for the nation.

By Senior Editor Kris Smith (@croncast)

Fifteen years ago I listened to James Burke at a symposium deliver a speech titled, Axe Makers of the 21st Century. It was the precursor to his writing of The Axemaker's Gift. A book that dealt with the problem that Burke was working through in his head before the internet exploded.

Axe Makers was a syllogistic study of mankind's ability to restructure society based on how the internet age would create a diaspora of talented workers. These workers in turn would be able to lead a nomadic lifestyle based on their connectivity to the internet as information workers. At this time, part of his hypothesis was that these workers would then raise the standard of living for local inhabitants.

Some components of Burke's look into the future have come true. A connected information worker can now perform their duties from anywhere they choose as long as their employer has signed off on it. Another was his correct assumption that the ubiquity of near real-time information would change global culture.

His book, The Axmaker's Gift, was an attempt to reconcile this new culture shift with cultures of the past. Burke was concerned that technology was and would strip away our humanity. That our future needed to have a moderated technological lust passion interest. In the book he advocates for the simplicity of life and a continued movement toward small communities but not through technology.

What really got me going down this path today thinking about James Burke was my experience at another small conference here in New York. As an information worker in one of America's largest cities, I find myself more connected to a community of like people than ever before.

For the last three years I was one of the diaspora working from remotely from home for businesses that at their closest proximity to me were 900 miles away. An opportunity that Burke described in detail. But in this space I was isolated. I had a few friends that could identify with my work life and worked in similar ways. However, most of the people that I was in contact with on a daily basis I couldn't connect with. We existed in two separate realities.

What Burke didn't account for was this loss of community due to the lack of commonality in the experience that nomadic workers have with the locals they take up residence with. In New York I am able to continually find common experiences with other people, workers that have similar experiences to mine.

The proximity of information workers even in this large city is due to the multitude of businesses that need our services. Many of them in media and others in financial or advertising benefit from the central location of talent. What makes this talent even more valuable is its ability to connect to one another and flow through these businesses to keep culture and ideas fresh.

The ability to capitalize on common experience, talent and proximity is what has made certain locations on our planet the centers for varying industries. Information workers, like Burke described, should be considered skilled tradespeople that for the better should be concentrated into spaces so that they can produce their best work.

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/4

Proximity: The Power of Space is a post from: TechStartups.com

By Senior Editor Kris Smith (@croncast)

Last week we had a search come in for what happens in a startup merger? A brilliant question that is most likely being asked at the worst time the merger.

This question might have been asked by an employee of the startup, but let's for this instance suppose that it came from the lucky founder of a startup that found an exit well before the business has matured. This merger allows them financial compensation and just how much is at stake.

What appears to be missing from this founders startup experience and vocabulary is a very important term and process due diligence.

One of the best, if not the best, resources for helping this startup founder would be the Technology Due Diligence (TechDD) written by Mike Dunn (@glemak). Mike's current role is CTO of Hearst Interactive Media. He's a tech veteran with stripes pre and post bubble that guides Hearst's technology investments like Brightcove, BuzzFeed and UGO.

Dunn's document is a view behind the curtain of venture capital. It gives a startup a view that a potential investor or a more experienced merging company has of the process that is about to unfold and seeks to make it as smooth as possible.

Dunn describes his open source TechDD as:

The goal of this due diligence process is to allow us to fully understand the technology practice of your company, including how you are staffed, your tactical and strategic utilization of technology and the processes that allow them all to work together to produce what you do for your company. We would like to be able to understand this for both your current state and your roadmap. So where relevant to your business, please be prepared to discuss and provide written answers for the following scoping questions

And scoping they are.

The documentation is broken down into three sections:

1. Technical Staffing
2. Infrastructure and Architecture
3. Workflows and Processes

Each with a keen focus on extracting the most information that will allow outsiders to understand the inner workings of the startup. If these questions are answered truthfully by a startup before being approached by a potential investor the process of a merger wouldn't cause anxiety but provide for a source of relief that from the very beginning the building of the business was transparent.

The Technology Due Diligence documentation that Dunn has created isn't designed to trip up an entrepreneur. It is written in the spirit of the open source community to be a transparent and genuine glimpse into what is often the most fear inducing a process and unprepared startup can find itself in.

The document is a comprehensive primer for any tech startup to integrate with their business plan. It clears the way for building a business that is investment or acquisition ready at any time.

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/0

Tech Startup Due Diligence is a post from: TechStartups.com

By Senior Editor Kris Smith

Are you a VIP? Did you pay for access?

These are the questions that will drive the next web, the version beyond 2.0. A trend towards exclusivity is one that appears to be gaining momentum as business models are coming apart at the seams.

The most prominent of these business models, revenue by CPM from advertising dollars, was the first to begin unraveling over last few years. As the economy tanked many sites relying on this revenue stream couldn't afford to keep the lights on.

Those that have survived are looking to premium content to supplement their income or even stay afloat. Premium meaning exclusive pay for content. And as the great Janis Joplin sang, Exclusive's just another word for nothing left to lose.

That's close right?

Don't take my tone the wrong way. I am bullish about the next web and view exclusivity as a viable method to generate revenue that can sustain a business. Many publishers, for years, played the hunch that simply building audience would lead to revenue. Much in the form of advertising dollars and we can see where that has put them. They're ready to earn.

I recently spoke with Tim Bourquin, the founder of New Media Expo. Tim was a leader in creating a community from the diaspora of global podcasters. But as Tim found out, along with others, there was no sustainable revenue stream to produce your own content. If someone wanted to make money in the medium they would need to produce shows for other people.

This is the category that I fall into. For the last 5 years I have been podcasting a free show at the rate on average of 2 episodes a week. We've done over 500 episodes and are the proud owners of an artist page in iTunes. Over that time, all but one month, I paid $200 for the server to host the show. Simple math will put my costs of production over $10,000. And that doesn't include the time to produce the shows, gear or facility (though it was my home).

We were never able to monetize our show with an audience of over 2,500 regular listeners. We looked at advertising, sponsorships and pitching our show for television. None of them were viable as our audience was too small. It was filled with the right people, just not enough of them. The only money that I have made from podcasting came from performing contract work for advertising agencies.

Bourquin is now charging for his content and building a community from and exclusive set listeners that are paying him with their attentions as well. It does change the dynamic as a publisher to have a financial obligation to an audience. In this model, every player has a vested interest in the content having value.

Exclusive purple ropes are a coming necessity for online businesses to grow from the passions of artists, publishers and regular folks. The next web will be filled with independent publishers mixing their content with that of today's mainstream media.

The difference will be that it will be paid for. Think exclusivity through micropayments and the bundling of content like a cable television provider under the umbrella of larger publishers. Both of these models rely on the new web's ability to syndicate and track content effectively.

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/4

Post from: TechStartups.com

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Running your own small business has plenty of perks: you can set your own hours, work from home, and there's nary a TPS report in sight. But there are also a number of downsides, not the least of which is the fact that you have to take on role of your business's accountant. That means keeping tabs on business expenses, filing taxes four times a year, and plenty of other headaches. Cue Outright.com, a startup launching out of beta today that looks to be the absolute simplest online application for small business back office tracking, accounting, bookkeeping, and more.

Getting started with the site is quite easy, because Outright has recently partnered with a number of financial services: you can import invoices from Freshbooks, receipts from Shoeboxed, your PayPal transaction history, as well as your credit card transactions through a deal with Expensify, which supports 94% of US credit cards. You only have to do this once once you've linked your account, they'll keep automatically updating until you unlink them.

Once you're done with the initial setup, everything on Outright is fairly self-explanatory (which is sort of the idea). The home screen presents you with a chart pitting your costs against your income to give you an at-a-glance look at your business's health. At the top of the screen you'll see tabs for Income, Expenses, Taxes, and Reports, where you can hone in on the transactions you're looking for. Transactions are automatically sorted into different categories (for example, the site knows that your airline's tickets belong under the Travel' category), and you can also generate reports on a per-customer basis, which would be helpful for eBay sellers. Beyond that the application helps with taxes by offering reminders when a deadline is coming up and an estimated amount that you'll have to pay.

Outright isn't as robust as some other financial services out there, but if you're looking to keep things simple it's certainly worth a look. The company was formerly called GoBoostrap.com, but changed its name in conjunction with news of its $2 million funding in February.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

The US Securities and Exchange Commission is considering a ban on a stock market practice known as "flash trading," where supercomputers get access to information milliseconds before other traders and can rapidly buy and sell in ways that are argued to influence the market unfairly - thus discouraging mere mortals from participating.

Many bleeding-edge trends in the consumer web play out writ large in financial markets; as all of us look at the growing prominence of real-time information on the web, the debate over flash stock trading raises issues worth considering outside the stock markets as well.

Sponsor

If the real time web at large grows up open and democratic, then we're likely to see innovation, understanding and growth. If it's priced out of reach to all but marketing and state interests, then an experience analogous to that of small-time stock traders today could become what the web at large looks like.

It's easy for technologists to say that this is progress and rejecting the advantages technology brings would demand a return to time before the abacus. It's not so easy to explain why we have to take an all-or-nothing approach to judging technologies and their implications - why not look at them one at a time and evaluate them intelligently?

Here's how the introduction of real time information is being debated regarding financial markets, followed by some thoughts about the analogous transformation going on around the web.

This isn't just a story about robot stock traders and the SEC; it's also a story about Twitter, Facebook and the Pushbutton Web.

Robots in Financial Markets

Last month the New York Times' Charles Duhigg wrote a high-profile story about the practice of high frequency trading, including this juicy description of the practice:

Powerful algorithms -- "algos," in industry parlance -- execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.

High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits -- and then disappear before anyone even knows they were there.

Rich Miller, writing at Data Center Knowledge, a blog that tracks the powerful computers that high frequency traders (among many other industries) use, called the article one-sided and inconsiderate of the argument that "this activity provides liquidity to execute trades that would otherwise not be possible, making the market more efficient." He also said the press was widening the debate over the practice by bringing it into the mainstream.

Now U.S. Senator Charles E. Schumer (D-NY) has sent a letter to the SEC this week, calling for action to be taken against the practice of flash trading in particular, the act of selling for a fee access to trading information milliseconds before it is otherwise available. He argues that the practice "creates a two-tiered system where a privileged group of insiders receives preferential treatment, depriving others of a fair price for their transactions. If allowed to continue, these practices will undermine the confidence of ordinary investors, and drive them away from our capital markets."

Schumer focuses on the early access to information, but always in the context of the computer-driven trading that occurs based on it.

Trader John Hempton writes that critics over-estimate the financial impact of flash traded stock, needlessly complicating a situation that he describes with the following, fascinating, story:

We trade electronically at our fund. We were recently trading in a stock with a large spread. I have changed the numbers so as not to identify the stock - but the ratios are about right. The bid was about 129.50, offer was about 131.50. We did not want to cross the spread - so when we bid for the stock we bid $129.55. Within a second a computer (possibly at our own broker but it makes no difference which broker) bid $129.60 for a few hundred shares. We fiddled for a while changing our bid and watching the bot change theirs. We would have loved to think we were frustrating the computer - but alas it was just a machine - and we were people up late at night.

Actually obtaining the stock required that we paid up - and when we did so it was probably a computer that sold the stock to us.

...It is always there - even when buying defaulted debt that trades once per month. We simply ALWAYS find the bot.

What About Real-time Robots on the Web?

Could the real time web give some people such an unfair advantage over everyone else that non-early adopters of new technologies or people outside of marketing firms could be left out in the cold? Presuming we're talking about important, actionable information online and not just real-time chat and fun - it's possible. The question is: will the most important parts of the real time web be open and democratized, or proprietary and shared only with those who can pay a high price for access? That question hasn't been answered yet.

If you were among the people who purchased the new Breaking News Online (BNO) iPhone app (released an eternity ago, yesterday!) then today you probably found out about the two US journalists being freed from North Korea and the shooting in Pennsylvania at least 45 minutes before almost anyone else did. (CNN posted a link to local PA news 45 minutes after the BNO network published.) That notification system costs $1.99 to purchase and $1 per month to stay subscribed.

If you've visited Yahoo's social-bookmarking turned real-time news service Delicious since this morning, you've seen that hot news links are now found not just by vote counting, but with a new method augmented by tracking the open, rapid conversations on Twitter.

These are innovations built out of elbow grease and publicly available feeds of data. Yahoo might be, but the scrappy guys at Breaking News Online definitely aren't, using software something like IBM's new stream processing software, for which it will charge "at least" hundreds of thousands of dollars.

No, this real-time public web is very low cost and increasingly both open sourced and decentralized. It's akin to what Anil Dash calls the pushbutton web.

Pushbutton is a name for what I believe will be an upgrade for the web, where any site or application can deliver realtime messages to a web-scale audience, using free and open technologies at low cost and without relying on any single company like Twitter or Facebook. The pieces of this platform have just come together to enable a whole set of new features and applications that would have been nearly impossible for an average web developer to build in the past.

As long as it's open and low cost, real time information on the web should be as democratic and fair as computer use is. It's not perfect, but it's no longer the David and Goliath-on-steroids fight that critics of high frequency stock trading say that market has become because of real time stock data.

The Risk: Facebook

The real time web is a shimmering mass of conversation and data, but there's no guarantee that it's going to stay open, free and democratic forever. Already, in fact, there's no bigger river of the real time social web than Facebook. Facebook is simply huge, it holds huge sums of information and so far it allows aggregate access to no one. As far as we know.

If Facebook, or some other equally important site of the real time web, began offering access to its data but pricing mere mortals out of that market - then we could have a situation where individual software developers and social scientists were like grandpa reading the stock pages in the newspaper and huge marketing firms and government agencies had the kind of advantage that high frequency traders are alleged to have in financial markets.

Anil Dash puts it this way:

Pushbutton technologies are not just free and open, they're decentralized, which is a serious threat to the "lobster trap" model of social software. We can expect serious competition from the centralized networks that are currently building these sorts of systems. If a threat arises to Pushbutton's adoption, this is the most likely source. Worry? Definitely.

In addition to development concerns, there are also analysis concerns. If stock trading equals liquidity and knowledge is the new currency, then open access to aggregate data could be the equivalent of high-powered stock-trading tools for all instead of for just the already-richest few.

Some research has already been performed on the connection between communication on social networks and real-world events. The Information and Language Processing Systems Informatics Institute at the University of Amsterdam, for example, correlated mood messages on LiveJournal closely with world events. ("Mass increase in the level of worriedness around major weather phenomena, such as hurricane Katrina on August 29, 2005 - Excitedness around global media and culture events, such as the release of a new Harry Potter book on July 15, 2005 - Mass increase in the level of distress and sadness after terror attacks, as witnessed by the response to the London bombings on July 7, 2005.")

Analysis of real time mass communication could lead to a world of innovation and understanding - if that communication is an open fire hose of data and not shared only with deep pocketed commercial partners.

Everything is Complicated, Some Can Afford to Ponder It

Is high frequency, low latency, computer executed, "flash" trading unfair? It must feel that way to individual and small investors who can't afford killer number-crunching robots - but it's also pretty awesome technology and is said to provide liquidity that the markets depend on.

Could the real time consumer web be made undemocratic by being priced out of reach for edge-case developers and social scientists outside of government and the corporate world? That could happen.

As we speak, though, there's a lot of innovation going on in the real time web that's open, based on standards and available to all of us. Let's hope it stays that way

This is one post/chapter in a serialized book called Startup 101. For the introduction and table of contents, please click here.

There comes a time for every venture when the owners have to decide whether hockey-stick-like growth is feasible or not. In your initial plan, you indicated a sudden surge in revenue at a certain point in time, i.e. where the hockey stick shows up. You have now reached that point. You may have a great business, but will it hit the big time?

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You need to make an honest, clear-eyed assessment at this stage. You might spend money in the hope of achieving that growth and end up losing everything, which would be a big shame if your business was profitable and growing at normal rates (and therefore valuable). On the other hand, forgoing a chance at the big time just because you are too nervous would be equally unfortunate. How do you navigate this complex decision?

Understand Your Investor's Agenda

If you go for growth and miss your numbers and have to raise more money, your investor will get hurt a bit and you will get hurt a lot. The investor can put in more money, and they will do it on harsh terms if they have to because you have missed your numbers. You may end up with nothing at the end of the day while the investor will get their money back plus some.

If you don't know how that works, look up and understand Liquidation Preference. Your contract with the VC will have a Liquidation Preference clause. It is a perfectly reasonable term (although there are egregious variants), but it can really hurt you under certain circumstances. Basically, your view of risk and your VC's view of risk are different.

Let's look at a simple case. Let's say your VC invested $3 million for a 30% equity share and has a 5% Liquidation Preference (quite reasonable -- not one of those egregious variants) and that your business sells five years later for $3.8 million. What will you and your team get? Because you and your partners and team own 70% of the shares, you would get 70% of $3.8 million, right?

Wrong. You get zip. Nada. Nothing. Just do the compound interest calculation to see why. The fact that you own 70% of the common shares means nothing in this case. The VC gets their money back with interest, which is not a good result but not a disaster either.

If your venture does reasonably well and sells for $50 million, you and your VC will do just fine. The VC will get $3.8 million, and you will divide up $46.2 million (i.e. $50 - $3.8 million) according to the ratio of shares owned. (That works out to over $30 million for you and your 70%-owning team.)

If you hit the ball out of the park and sell for $500 million, the Liquidation Preference becomes essentially a rounding error of interest only to accountants. If your venture misses its numbers and sells for $3.8 million, you will get nothing, which is quite reasonable: the VC bought into a dream and a team, and if you do not deliver, you shouldn't get anything.

Even if the whole business goes kaput without any realizable value, your venture is still just one among many companies in the VC's portfolio. VCs don't like losing ventures, but as they say, "This will hurt you a lot more than it hurts me." This is akin to the chicken and pig contributing to the eggs-and-bacon breakfast: the chicken may be involved, but the pig is "committed."

Just understand that your interests may not be aligned and that your and their views of risk may be different.

Raise More and Go for It?

Let's say you raised $3 million, and you are now gaining traction and everyone is telling you to raise more and really go for it. The VCs are ready to write a big check. It's a no-brainer, right? Wrong. This is when you need to think hard.

Suppose you raise a second round. It's a nice big one for $10 million, and the headline valuation is triple that of your first round. You and your team are giving each other high fives. Perhaps you don't look too hard at the Liquidation Preference. This time, the terms may actually be egregious, but the thought of that $10 million and the headline valuation number cause you to overlook that.

For example, Mark Zuckerberg should be a billionaire because he owns a ton of founding stock in Facebook? Well, Facebook has raised $640 million and some of it a long time ago. There would almost certainly be Liquidation Preference. If Facebook sold for around $1 billion today, Mark Zuckerberg would probably walk away with nothing but a lot of experience and memories. But Facebook would never sell for as little as that, so not to worry, right?

Entrepreneurs are optimistic by nature. They have to be if they are going to get out of bed every morning and work against the odds as passionately as they do. VCs don't have to be optimistic: their downside is pretty well covered.

Run the numbers -- all of them, not just the rosy projections -- and see where you end up. Then make sure your interests and the VC's really are aligned.

And how do you align interests? Five ways.

1. Align Around Facts

Facts are hard to come by in a startup. There is a ton of unknowns. So separate fact from forecast: you can take facts to the bank, but you run sensitivity analysis on forecasts. If that sounds intangible, here is the simple version. Take your forecast and...

1. Double the cost,
2. Halve the revenue,
3. Double the time it takes to do everything in the forecast.

First, do you have enough capital for this scenario?

Secondly, look at what the business would be valued at in such a scenario... not what you hope it will be valued at, but rather what other companies in a similar position are being valued at.

2. Focus on Server Costs

In the Web 2.0 era, we achieved control over the costs that bedeviled the 1.0 era:

• R&D costs have shrunk through a mix of open source, new development tools and offshore resources.
• Marketing costs have shrunk, thanks social media and viral marketing.

Hearing the proud claim that "Our major costs are now only our servers" has become common. For some businesses, that is no longer a proud refrain but a business problem. If you hit that magic viral moment when user traffic takes off, you had better have some of these three things:

1. An incredibly low cost per user as a result of some really smart performance optimization,
2. A revenue model that kicks in right after traffic grows,
3. Enough capital to sustain you until #1 or 2 is figured out.

Ideally, you would have all bases covered, but two out of three is fine. Look at Google. It had #1 and 2. Twitter and Facebook have #3. I would prefer to own Google.

Even if revenue growth is lower than forecast, if the server costs are under control and user growth is booming, you will get more VC money on good terms.

So, don't skimp on that software performance design and coding early in the game. Leaving it as an afterthought was okay for a venture starting out in 2004, not for one starting out in 2009.

3. Control the Business Planning Process

This means you will need a process. If that goes against your grain (because, say, you are a creative type, a great hacker, or a sharp sales guy), then find someone on your team who can really run the numbers and unite everyone around a common planning process.

The type of process will depend on the type of business. At a high level, they all address these questions:

1. Where are we now?
2. Where do we want to get to?
3. How do we get there?

As the entrepreneur/CEO, though, you need to own this process and drive it. The worst thing you could do is let a junior member do this for you. They don't truly understand your business and certainly don't care about it as much as you do, and their interests won't be the same as yours.

The process must be dynamic and based on a financial model. This means you should be able to adjust each variable and re-plan efficiently as circumstances change. Your VC may use earlier plans to beat you up a bit, but those plans are irrelevant; all that matters is the current one (and your VC knows that).

4. Talk to Your Independent Adviser

This is when you will find it valuable to have an independent adviser on your board (see Building an Advisory Board). Being independent means that the adviser was not nominated by the VC. Having someone like that on the board (as opposed to their being merely a friendly mentor) is important because they will then know the numbers and character of the VC better. When you need critical advice in a hurry, it is vital that your adviser knows these things.

5. Do a Deal That Aligns Your Interests

This is possible. If you have a good VC, a good board, and some good advisers, having an honest dialogue to get everyone's interests aligned is quite easy. If you have a lousy VC and a toxic board, you will have a nasty fight on your hands. Don't shirk that fight.

The simplest way to align interests is for the VC to buy some stock from you and your founding team. But the right amount: not so much that they will be afraid (justifiably) that you will walk away to play golf or start another venture, but enough that your family feels secure and personal finances are not a worry. Too much stress is not productive. In other words, you and your VC should be in the same boat and view the world and your risk with the same perspective.

When your business finally gains traction and VCs want to invest more money because they see the big pot of gold at the end of the rainbow, your negotiating position will be strong. At this stage, they need you more than you need them. But don't abuse this position of strength: just use it to get what you and your team reasonably need, and then march on together to build the big dream.

Photo credit: jurvetson.