What Would Google Do? Part 4

Google and the internet have created more models for making money through that side door. The appeal of this path is that often you need not own the a.s.sets that make you money. Google doesn't want to own the content it searches; it wants knowledge to be free online so it can organize more of it. In the late 1990s, Google executives came to me when I worked for a magazine publisher, trying to convince us that we should take all our content archives-for which we charged readers-and put them on the internet for free. Google search, in turn, would send lots of traffic to the old articles. Google also offered to put its ads on these pages, making new money on old content-more money, they a.s.sured us, than we were making from archive fees. They were probably right, but I knew it would have been impossible to convince magazine publishers-who were too accustomed to owning and exploiting their valuable a.s.sets-to see value elsewhere. At the time, publishers didn't understand that restricting access online was turning away people to whom they could show ads and sell magazines and build relations.h.i.+ps. The pay wall was less a revenue opportunity than an opportunity cost.

The New York Times learned this lesson through experience. So accustomed were Times executives to selling papers and charging readers for access to content that they couldn't bear the idea of giving it all away on the free web. They decided to charge readers online and had to find something to put behind a pay wall. It had to be something that would not hurt their advertising business (they wouldn't have wanted to put ad-rich travel content behind a wall, losing audience and ad revenue, for example) but something that readers thought was still worth paying for. In 2005, NYTimes.com fenced off columnists and archives along with other goodies and charged $49.95 per year for access. TimesSelect got 227,000 paying customers (plus print subscribers and students, who received it for free). It brought in a reported $10 million annual revenue. I never saw an accounting of the cost of marketing to acquire those subscribers or of customer service; the profit margin was not reported. In a speech then, Guardian editor Alan Rusbridger showed a picture of The Times' lavish new headquarters and said that revenue wouldn't pay the gas bill in the building.

The Times killed the service in 2007 and freed its content again for a few simple reasons: First, it increased the audience to the paper's site; within months after tearing down the wall, audience increased, by one account, 40 percent. Second, The Times could make more money on the advertising shown to its additional audience. Third, opening up improved the paper's Googlejuice by bringing in more clicks and links, which in turn yielded more traffic. Finally, the dropping of the toll booth brought The Times' columnists back into the conversation. Rusbridger had said The Times walling off its columnists was "brilliant" for the Guardian because it opened the door for it to reach The Times' former readers (the Guardian gets a third of its audience in the U.S.). In the end, The Times rediscovered the value of free.

Google understands the value of free better than anyone. When it bought Blogger, it stopped charging for the service and added advertising. When it launched Gmail with tons of storage, it made the service free and served targeted advertising. More recently Google has set out to pull a craigslist on the $7 billion mobile directory-service business. Google made directory a.s.sistance free at 1-800-GOOG411. My accursed mobile service provider still charges me $1.79 to find a number-and mind you, the only reason I'm looking for a number is so I can make a call using the company's network, which I pay to do. This is like a store charging us for directions to come spend money there.

Google surely will make money on its mobile directory service with advertising. It will learn more about our behavior and needs. I can imagine it using us to create a vast repository of our reviews and recommendations about establishments ("leave your review after the tone" or "rate the restaurant using your keypad"). Google may find yet another side door to make money. Tech publisher Tim O'Reilly speculated on his blog that Google wants to gather billions of voice samples as we ask for listings. That will make its speech recognition smarter, helping it get ready for the day when phones and computers respond to voice commands. Chris Anderson, editor of Wired magazine, projected that by 2012, Google could make $144 million in fees from users if it charged for directory a.s.sistance, but by foregoing that revenue it could instead make $2.5 billion in the voice-powered mobile search market. As with newspaper cla.s.sifieds, the entire industry may shrink but the winner will grab the biggest share of what is left. That winner is likely to be a new player, not one trying to protect old revenue streams and a.s.sets. By making its service free, Google will establish itself as the leader in providing local information and position the company for the coming mobile explosion. On Jim Cramer's CNBC show, Google chief Eric Schmidt said the company antic.i.p.ates making more money on mobile than desktops because mobile provides a better way to targets ads, and targeting is Google's real strength.

Anderson, author of The Long Tail, The Long Tail, argues in his next book that free is a business model. In a preview of argues in his next book that free is a business model. In a preview of FREE! FREE! in Wired, he provided a case study: Ryanair, a discount flier out of Dublin, has been selling tickets around Europe for as little as $20 and hopes to offer seats for free. The airline saves money-and who can complain at these prices?-by using less popular airports. Once it has you, it charges extra fees for priority boarding, luggage, food, and credit card handling (American airlines have started similar charges but at higher ticket prices and with spotty service). Ryanair also shows ads...o...b..ard-an ideal exploitation of a captive audience. It hopes to start onboard gambling, which could be a huge money-maker. in Wired, he provided a case study: Ryanair, a discount flier out of Dublin, has been selling tickets around Europe for as little as $20 and hopes to offer seats for free. The airline saves money-and who can complain at these prices?-by using less popular airports. Once it has you, it charges extra fees for priority boarding, luggage, food, and credit card handling (American airlines have started similar charges but at higher ticket prices and with spotty service). Ryanair also shows ads...o...b..ard-an ideal exploitation of a captive audience. It hopes to start onboard gambling, which could be a huge money-maker.

A favorite buzz phrase of consultants in the last few decades is "zero-based budgeting"-rethinking and rebuilding your business from scratch, without legacy structures and a.s.sumptions. Now you really can start at zero: What if your goods cost you nothing? What if you charged nothing? Where does your value exist? What is the essence of your business? What can you learn from it? How do you make money-is there a side door? Your business will likely operate at a different scale: It could be smaller but with lower costs and higher margins. Or it could be larger with lower margins, which helps it grow bigger faster with less investment and risk. But it will surely be different. Rich Barton, founder of online real-estate service Zillow, told The New York Times: "The internet is a great big race to free. Anyone who has built a business model with a price above free for something that can be free is in a tough strategic position."

So how do you get to free first?

Decide what business you're in

What business is Google really in? Of course, it's in the search business; that's why we go there. But it doesn't profit from licensing its search. It is also in the service business, providing us with everything from email to doc.u.ment management to mapping to publis.h.i.+ng tools to social networks to telephone directory a.s.sistance to video distribution. But it charges us for none of that. It is not in the stuff business, moving things or selling them (though it has not fully escaped the tyranny of matter; it buys a lot of atoms in the form of computers, and it has to spend a lot on charged atoms to power them). It is also not in the content business; apart from its collaborative, Wikipedia-like Knol, it doesn't create or control original content but instead prefers to organize others' (owning content would put Google in compet.i.tion with the businesses whose content it exploits). Ultimately, Google is in the organization and knowledge businesses. Google knows more about what we know and want to know and what we do with that than any other inst.i.tution. But its profit doesn't come from that either. Google's profit comes from advertising, which it dominates because it is so good at search and has so many of us using its services and knows so much that it can target ads efficiently. Google knows what it is.

AOL thought it was in the content business, which is why Time Warner, a content company, made the disastrous mistake of combining with AOL. In reality, AOL was in the community business (its chats and forums were pioneering and popular, long before Facebook or Mys.p.a.ce) and the service business ("you've got mail" on AOL way before you've gotten it from Gmail). AOL didn't ask the right question: What business are we really really in? in?

Poor Yahoo thought it, too, was in the content business; that is why it hired a Hollywood studio exec, Terry Semel, to be its CEO. He tried to turn it into a digital movie studio. But Yahoo could have owned search as the pioneer in web directories; it handed that to Google. It could have owned search advertising as a pioneer there, too, but it ceded leaders.h.i.+p in automated advertising as well to Google. What business is Yahoo really really in? I think it never decided. in? I think it never decided.

What business are you really really in? in?

Many companies worry that they can't make the transition to bits: a.n.a.log to digital, physical to virtual, 1.0 to 2.0. Some are nearer than they think. Kodak is a cla.s.sic case of a company said to be making the transition from atoms to bits-physical film to digital images, sales to service. If it had realized soon enough that it was in the image and memories business-if it hadn't defined itself by the atoms it pushed and processed-it should have beaten Yahoo to the punch and bought the photo and community service Flickr. When I think of pictures today, the first brand that comes to my mind is Flickr. Others think of Google's Pica.s.sa. I also think of my Nokia camera phone. Who now thinks of Kodak (or Polaroid, which stopped making instant film cameras in 2008)? No one.

Airlines are the ultimate atomic enterprises, moving our own molecules from place to place and burning lots more molecules in the process. But even airlines could be relations.h.i.+p and knowledge companies. Are cable companies pipe managers, or should they be hosts for our digital creations? Are doctors' offices sickness companies or health companies? Are insurance companies arbitrageurs of risk or guarantors of safety? Are grocery stores stuff companies or knowledge factories? Are restaurants kitchens or communities? We'll examine such upside-down views of these industries and more in the next section of this book.

You should be asking: Am I a knowledge company? A data company? A community company? A platform? A network? Where is your value and where is your revenue? Remember that they might not be in the same place; the money may come in through a side door.

It's time for your ident.i.ty crisis.

New Att.i.tude

There is an inverse relations.h.i.+p between control and trust Trust the people Listen

There is an inverse relations.h.i.+p between control and trust

Trust is more of a two-way exchange than most people-especially those in power-realize. Leaders in government, news media, corporations, and universities think they and their inst.i.tutions can own trust when, of course, trust is given to them. Trust is earned with difficulty and lost with ease. When those inst.i.tutions treat const.i.tuents like ma.s.ses of fools, children, miscreants, or prisoners-when they simply don't listen-it's unlikely they will engender warm feelings of mutual respect. Trust is an act of opening up; it's a mutual relations.h.i.+p of transparency and sharing. The more ways you find to reveal yourself and listen to others, the more you will build trust, which is your brand.

Give the people control and we will use it, my first law decrees. Don't and you will lose us. In a meeting of web 2.0 gurus at National Public Radio sometime ago, I heard David Weinberger-coauthor of The Cluetrain Manifesto The Cluetrain Manifesto, author of Everything's Miscellaneous Everything's Miscellaneous, and a Harvard fellow-extend that law. He may have thought of this law as his own, but I prefer to co-opt it as Weinberger's Corollary to Jarvis' First Law: "There is an inverse relations.h.i.+p between control and trust." There's another one of those counterintuitive lessons of the Google age: The more you control, the less you will be trusted; the more you hand over control, the more trust you will earn. That's the ant.i.thesis of how companies and inst.i.tutions operated in pre-internet history. They believed their control engendered our trust.

In the early days of the internet, some journalists dismissed new sources of information-weblogs, Wikipedia, and online discussions-arguing that because they were not produced by fellow professionals, they could not be trusted. But the tragic truth is that the public does not trust journalists. A 2008 Harris survey found that 54 percent of Americans do not trust news media, and a Sacred Heart University poll said that only 19.6 percent believe all or most news media. In the U.K., a 2008 YouGov poll found what looks like a high number who trust BBC journalists a great deal or a fair amount-61 percent-but that was down 20 points since 2003.

Trust is-no surprise-an issue with political leaders. In 2007 the World Economic Forum released a Gallup Voice of the People survey reporting that globally, 43 percent of citizens said political leaders are dishonest; 37 percent said they have too much power; 27 percent said they are not competent. Fifty-two percent of U.S. citizens said their politicians are dishonest. Business came off only marginally better: 34 percent believed business leaders are dishonest; 34 percent said they have too much power.

To co-opt Sally Field: We don't like you. We really don't like you.

When asked how to restore trust, a plurality of world citizens polled by Gallup-32 percent-argued for transparency and 13 percent pushed for dialogue with consumers. There is Weinberger's Corollary in action: Open up, hand over control, and you will begin to regain the trust you have lost.

Trust the people

Before the public can learn to trust the powerful, the powerful must learn to trust the public.

I learned my lesson about trusting the people when I was a TV critic at People magazine in the mid-1980s. That was the critical moment in the history of popular culture when the remote control pa.s.sed 50 percent penetration on American couches. The remote, the cable box, and the VCR reached critical ma.s.s, and together they put us in control of our consumption of media. No longer were we imprisoned on Gilligan's Island Gilligan's Island by the bad taste of network programmers in Burbank. by the bad taste of network programmers in Burbank.

At the end of a season back then, I was about to go on a CBS morning show to talk about the season's ratings when the segment producer, Bonnie Arnold, came to me on the set and summarized what she thought I would say: "You're defending the taste of the American people, right?" I recoiled in horror. I'd never do that, I said. How could I say that the ma.s.ses have taste? I'm a critic, a media sn.o.b. This is television television we're talking about. Vast wasteland, remember? Arnold argued with me: "You're saying that good shows rose to the top of the ratings and bad shows fell. So you're arguing that the audience has good taste." we're talking about. Vast wasteland, remember? Arnold argued with me: "You're saying that good shows rose to the top of the ratings and bad shows fell. So you're arguing that the audience has good taste."

Ding. She was right. I was was defending the taste of the American people. That moment evolved my worldview (as the internet would again 20 years later). I realized just then that once the people were given choice and control, they would tend to pick the good stuff. The more choice they had, the better the stuff they picked. The better stuff they picked, the more Hollywood was forced to make good shows for them. Here was a virtuous cultural circle and another law: Abundance breeds quality. defending the taste of the American people. That moment evolved my worldview (as the internet would again 20 years later). I realized just then that once the people were given choice and control, they would tend to pick the good stuff. The more choice they had, the better the stuff they picked. The better stuff they picked, the more Hollywood was forced to make good shows for them. Here was a virtuous cultural circle and another law: Abundance breeds quality.

Of course, there have been exceptions-blooper shows, game shows, tabloid shows, trailer-trash talk shows. We have feared that each of these trends would take over television and society. But in each case, we as a nation overdosed on our guilty pleasures and they faded away. Quality wins. I've long argued that the golden age of television was not the 1950s, with our misplaced nostalgia for its cheesy video Vaudeville. Uncle Miltie, I say, was a hack. The Sopranos The Sopranos is higher art than is higher art than Playhouse 90 Playhouse 90. Seinfeld Seinfeld, Cheers Cheers, and The Office The Office are funnier than are funnier than The Honeymooners The Honeymooners. Sacrilege, perhaps, but true. The golden age of TV is now-or probably tomorrow, as TV is reinvented and opened up on the internet.

On that day in the 1980s, I learned to trust the people. Bonnie Arnold's challenge turned me into a populist. I realized that if you didn't trust the people, then you couldn't believe in democracy (why let us pick our leaders...even if we sometimes do bollix it up?), free markets (shouldn't somebody be in charge?), journalism and education (why inform the people if they're a bunch of idiots?), even reform religion (surely the ma.s.ses shouldn't talk directly with G.o.d).

My new, populist worldview was only strengthened by my experience with the internet, which gives us control over not just our consumption of media but now its creation. The internet enables unlimited creation and, because abundance breeds quality, we now have more good stuff. I know, you're going to rub my nose in a YouTube video-one featuring a flaming fart or a twirling cat-and you'll argue that the internet opens the door to the creation of c.r.a.p. That, it does. But it also offers new opportunities for talent and new stages for voices that could not emerge in the old systems of control. There have always been bad books on bookstore shelves next to the gems. See: Danielle Steel. There will always be flaming cat videos next to art online. But there is the opportunity to make more art now. The challenge is finding and supporting it. That is where Google comes in. Google can't and shouldn't do it all; we still need curators, editors, teachers-and ad salespeople-to find and nurture the best. But Google provides the infrastructure for a culture of choice.

Google's algorithms and its business model work because Google trusts us. That was the ding ding moment that led Sergey Brin and Larry Page to found their company: the realization that by tracking what we click on and link to, we would lead them to the good stuff and they, in turn, could lead others to it. "Good," of course, is too relative and loaded a term. "Relevant" is a better description for what Google's PageRank delivers. As the company explains on its site: moment that led Sergey Brin and Larry Page to found their company: the realization that by tracking what we click on and link to, we would lead them to the good stuff and they, in turn, could lead others to it. "Good," of course, is too relative and loaded a term. "Relevant" is a better description for what Google's PageRank delivers. As the company explains on its site: PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at considerably more than the sheer volume of votes, or links a page receives; for example, it also a.n.a.lyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important." Using these and other factors, Google provides its views on pages' relative importance.

Google doesn't view all links from all people equally. The more links you get to your site, the more your links to other sites are worth. Thus Google pays heed to those to whom we pay heed. Google realizes that trust is something we share with each other. Or put another way, any friend of ours is a friend of Google's.

Google found value in trust. Others are creating systems of trust as the core of their businesses. Facebook helps us build lists of those we know and trust. eBay turned internet commerce's disadvantage-fear of being robbed by merchants we do not know-into a unique opportunity by becoming the platform for trusted transactions of physical goods among strangers. Studies have shown that consumers are likely to pay higher prices to merchants they trust. Amazon, too, has created a system of trust in its reviews (though they can be infiltrated by both authors and their enemies) and in the money-where-your-mouth-is value of telling us that people who bought this also bought that. Prosper.com (which I'll discuss in the chapter, "The First Bank of Google") created a system of trust for person-to-person loans. PayPal did the same for person-to-person payments. We are witnessing the growth of the trust industry.

Social news service Digg has built a content community around trust. Users find and submit stories to the site, and then the community votes on what should go to the front page. That's editing by the mob and it works (especially if your interests gravitate toward the geeky). Instead of a staff, Digg has thousands of volunteer editors out there finding the interesting and noteworthy news on the web, and competing with each other to get it on Digg first. That makes the service lightning fast, a great source of alerts and updates. Diggers develop a reputation-anointed by fellow Diggers-by finding the most interesting stories fastest.

Journalists I know are suspicious of Digg and of the mob usurping their prerogatives and jobs. One day I sat at a lunch with a news executive and my son, Jake. The executive's a nice guy but not terribly interesting to a teen. So Jake had his nose buried in his iPhone as the executive belittled Digg, which he decreed to be over already. "Why would anyone trust this thing?" he asked. I turned to Jake and asked him what he was doing. "Oh, Digg," he said. As we quizzed him, Jake told the executive that he never goes directly to a brand like this man's newspaper or even to blogs he likes. He rarely types in one of those addresses and wonders what they have to tell him today. Mind you, he reads a lot of news-far more than I did at his age. But he goes to that news only via the links from Digg, friends' blogs, and Twitter. He travels all around an internet that is edited by his peers because he trusts them and knows they share his interests. The web of trust is built at eye-level, peer-to-peer.

Before I go on, let me acknowledge that, of course, things can go wrong. In 2005, the Los Angeles Times decided to be cyber-hip by inventing the "wikitorial," an editorial from the paper that the public was invited to rewrite. In no time, the quality of discourse around the first wikitorial descended to the level of that on a prison yard during a riot because the Times had made a fundamental error: A wiki is a tool used for collaboration, but there was no collaborating to be done on the topic of the Times' wikitorial-the Iraq war. I saw things going to h.e.l.l and blogged that the Times would have been wiser to have created two wikis-one pro and one con-structured like an Oxford debate. The challenge to the opposing crowds would have been: Give us your best shots and let readers judge. It so happened that Jimmy Wales, founder of Wikipedia, saw my post and agreed. He headed to the Times to propose "forking" the wikitorial into two, but by then it was too late. The Times put a stake through the heart of the wikitorial. Since then, when newspaper people talk about interactivity, somebody will point to the danger of the wikitorial. Never mind that the form was misused; wikis now have cooties.

Interactivity has its limitations. Some people are simply wrong. Others are a.s.ses. Some need their meds. But don't let them ruin the party. Too often, I hear traditionalists in every industry suggest we throw out the internet baby with the bathwater: When they see one nasty comment, one hoax, one rumor, one lie, they try to use that to discredit the entirety of a service or of the internet as a whole. That's just as silly as wanting to ban phones, cars, or kitchen knives because something bad could be done with them. Of course, people misuse the internet. They misuse everything else, why should the internet be different? Where there is a challenge, though, find the opportunity. LiveWorld, for example, has made a business out of monitoring and maintaining communities.

Too many companies have been built not on trusting people but on making rules and prohibitions, telling customers what they cannot do, and penalizing them for doing wrong. Google has built its empire on trusting us. Trust Google on this.

Listen

At Google, we are G.o.d and our data is the Bible. It's through the data generated by our activity that Google listens to what we want, prefer, and need. Google vice president Marissa Mayer has said that Google is constantly trying to antic.i.p.ate and interpret our desires so it can predict what we are going to do-our intent. It does that by watching our every move. When her team wonders whether a page should be this color or that, they don't make the decision themselves, nor do they hold a focus group. They put both colors on the web in an A/B test that measures which yields better usage. "We'll be able to scientifically and mathematically prove which one users seem to be responding to better," Mayer told students at Stanford, demonstrating an engineer's faith in numbers.

If a Google employee is meeting with Larry and Sergey to talk about users' needs, Mayer advised, she'd better come with more than her own conclusions. She'd better come with the data. "Their immediate question is, 'How many people did you test?'" This reliance on data as the proxy for the will of the people is so ingrained in Google's culture that it even supersedes organizational politics. "We rely so much on the data and we do so much measurement that you don't have to worry that your idea will get picked because you're the favorite," Mayer said. "Data is apolitical."

Google has faith in data because it has faith in us. When you take to heart the moral of James Surowiecki's 2004 book, The Wisdom of Crowds The Wisdom of Crowds, you must realize that your crowd-your users, customers, voters, students, audience, neighbors-is wise. The next questions should be: How do you capture and act on that wisdom? How do you listen? How do you enable them to share their wisdom with each other and with you? How do you help them make you smarter (and why should they bother)? Do you have the systems in place to hear? Do you have the culture in place to act on what you hear?

The first answer is to listen before you speak. Many times, companies have told me they're going to blog to start conversations. Hold on, I tell them. Read before you write. Use search tools to find the conversations already going on about you and then join them. Look at every bit of data you have about how your const.i.tuents behave to learn more about their desires-and figure out what new data you can collect. Find ways to ask your public directly or through testing. If you're lucky, like Google, you will have the means to test the actions of thousands or millions of users in a day. About.com has 700 sites with useful information on very nichey topics and millions of users searching for answers in millions of articles. When I worked with them, I sat in metrics meetings while executives stared at no end of usage statistics projected on the screen, tracking the behavior of any and every link on all pages. They rigorously tested different versions of pages whenever they wanted to make a change.

Not every business and inst.i.tution has the blessing of Google's and About.com's data. Sometimes, of course, it's better to listen to people one-on-one, as Starbucks and Dell are doing with their give-us-your-ideas platforms and as countless companies do when they read blogs and forums. These methods beat focus groups and surveys, which pick people at random who may have nothing to say. It's better to listen to the people who have a reason to talk with you. Procter & Gamble chairman and CEO A.G. Lafley said in Strategy + Business magazine that he wanted customers to be "valued not just for their money, but as a rich source of information and direction."

Sometimes, listening itself becomes your product. Flickr listens well. The photo service founded by Caterina Fake and Stewart b.u.t.terfield and now owned by Yahoo created an incredible infrastructure to take in more than a million photos a day and enable users to organize them around captions and tags-one-word descriptions-which also enable fellow users to find them (and each other). This is all made possible, as we discussed earlier, because of Flickr's decision to make photos public by default.

Flickr brings out not just the wisdom of the crowd but also the aesthetic of the crowd and displays that for all of us to see. Go to flickr.com/explore/interesting/7days/and press the reload b.u.t.ton a few times or click the link there that enables you to view these images as a slideshow. I predict you won't be able to stop. It's mesmerizing. These are the photos Flickr has determined are interesting. How did they do that? By ranking popularity? No, that would likely lead to lots of pictures of thin young people who look good wearing very little on beaches-or, worse, to pictures of cute cats. Does Flickr do this with an army of editors? That would be the reflex of old media. But that would not scale, as they say in Silicon Valley; it would take a nation of editors to sift through the 3,000 pictures that come into Flickr every minute minute.

How does Flickr find interesting photos? Well, of course, they don't. We do. As b.u.t.terfield and Fake explained it to me, Flickr determines "interestingness" in a few ways. The first and most obvious component: Flickr measures the interactions-commenting, emailing, tagging, linking-that occur around a photo. Second, they map all these actions to see which users turn out to be hubs of activity. These people are presumed to be influencers and their actions are given extra weight because the Flickr community must trust them-a logic not unlike that used by Google's PageRank. Third, Flickr performs a reverse social a.n.a.lysis: If Bob and Sally are emailing and commenting on each others' photos all the time, the system presumes they are relatives or friends; they have a social relations.h.i.+p built on familiarity. But if out of nowhere, Bob interacts with Jim's picture, the system then presumes that their relations.h.i.+p is based on the photo, not on life. The interestingness algorithm devalues Bob and Sally's social relations.h.i.+p and gives greater value to Bob and Jim's interaction around a photo. It's counterintuitive but sensible when you think about it.

Flickr ends up with a never-ending stream of interesting photos. Granted, being interesting is not as hard a test to pa.s.s as, say, relevance on Amazon or accuracy on Google. Still, look at Flickr's gallery. I'll bet you'll agree that almost all the choices are, indeed, interesting. Flickr is algorithmically aggregating the aesthetic of the crowd. Out of that comes a better service for every user, more opportunities to build traffic and revenue, a rich relations.h.i.+p of trust among those users and Flickr, and even new products. All from just listening.

New Ethic

Make mistakes well Life is a beta Be honest Be transparent Collaborate Don't be evil

Make mistakes well We are ashamed to make mistakes-as well we should be, yes? It's our job to get things right, right? So when we make mistakes, our instinct is to shrink into a ball and wish them away. Correcting errors, though necessary, is embarra.s.sing.

But the truth about truth is itself counterintuitive: Corrections do not diminish credibility. Corrections enhance credibility. Standing up and admitting your errors makes you more believable; it gives your audience faith that you will right your future wrongs. When companies apologize for bad performance-as JetBlue did after keeping pa.s.sengers on tarmacs for hours-that tells us that they know their performance wasn't up to their standard, and we have a better idea of the standard we should expect.

Being willing to be wrong is a key to innovation. Procter & Gamble's A.G. Lafley said in Strategy + Business that he improved the company's commercial success rate for new product launches from 1520 percent to 5060 percent, but he didn't want to push the rate higher because "we'll be tempted to err on the side of caution, playing it safe by focusing on innovations with little game-changing potential." Mistakes can be valuable; perfection is costly. The worst mistake is to act as if you don't make mistakes. That puts you on a pedestal, and when you fall off you better watch out: That first step's a doozie.

Consider Dan Rather. Minutes after he reported questions about George W. Bush's military service on CBS' 60 Minutes 60 Minutes in 2004, bloggers suspected that doc.u.ments he had used as the basis of his story were faked. At the blog LittleGreenFootb.a.l.l.s, Charles Johnson proved it. He took a memo supplied to Rather that reputedly had been typed using a 1970s-era IBM Selectric and then precisely re-created it using Microsoft Word on a next-century computer. He even made a neat animation that placed his doc.u.ment over the alleged original to show just how exact the match was. After his conclusions appeared on his blog, word flashed around the web. For 11 days, Rather ignored the ensuing storm, saying nothing. When he did respond, he dismissed his critics as political operatives. The smarter reply-the journalistically and intellectually honest approach-would have been to say, "Thanks guys. Let's share what we know and get to the truth together." in 2004, bloggers suspected that doc.u.ments he had used as the basis of his story were faked. At the blog LittleGreenFootb.a.l.l.s, Charles Johnson proved it. He took a memo supplied to Rather that reputedly had been typed using a 1970s-era IBM Selectric and then precisely re-created it using Microsoft Word on a next-century computer. He even made a neat animation that placed his doc.u.ment over the alleged original to show just how exact the match was. After his conclusions appeared on his blog, word flashed around the web. For 11 days, Rather ignored the ensuing storm, saying nothing. When he did respond, he dismissed his critics as political operatives. The smarter reply-the journalistically and intellectually honest approach-would have been to say, "Thanks guys. Let's share what we know and get to the truth together."

Rather came from an era of control when journalists were taught, ironically, to hide things from the public-sources, research, decision-making, and opinions. "Judge us by our product, not our process," a former network news president told me in a discussion about journalistic transparency at the Aspen Inst.i.tute. But today, on the internet, the process has become the product. By revealing their work as it progresses, journalists can be transparent about how they operate and can open up the story for input from the public. Bloggers purposely post incomplete knowledge so they can get help to make it complete. Gawker Media publisher Nick Denton explains that such "half-baked posts" tell readers: "This is what we know. This is what we don't know. What do you know?" Corrections welcomed here.

I hear people fret that there are falsehoods and lies on the internet. There certainly are. And there are people who believe or want to believe those lies and errors. But there are also people such as Rather's bete-noire bloggers who are willing and able to ferret out facts. "We can fact-check your a.s.s," blogger Ken Layne said in 2001. A lot of attention is given to the mistakes or sabotage we see on Wikipedia, but what's more impressive is watching the process of correcting and improving entries there, undertaken by people who get nothing out of it but the satisfaction of making things right. Snopes.com exists just to debunk urban legends. Wikileaks.org exists to give whistleblowers a place to share doc.u.mentation of evildoings-and when a federal judge tried to shut it down in 2007, its community responded by replicating the site all over the web. Truth will out.

Contrast the Rather affair with the case of Reuters after one of its photographers was accused of doctoring a photo of Beirut during Israeli bombardment of the city in 2006. Some of the same bloggers, including Johnson, demonstrated that the photographer had used Photoshop to extend and darken a cloud of black smoke by copying and replicating parts of the picture. The wire service immediately pulled the photos and investigated the photographer's other work. Reuters fired him and changed its procedures to catch future tampering. Most important, Reuters thanked the bloggers, acknowledging that they, too, cared about the facts. That That is how to make a mistake. is how to make a mistake.

Life is a beta

Almost every new service Google issues is a beta-a test, an experiment, a work in progress, a half-baked product. It is a Silicon Valley punch line that Google products stay in beta forever-Google News was supposedly unfinished and in testing for more than three years-whereas Microsoft releases products and releases them again and releases them a third time before finally getting them (almost) right.

"Beta" is Google's way of never having to say they're sorry. It is also Google's way of saying, "There are sure to be mistakes here and so please help us find and fix them and improve the product. Tell us what you want it to be. Thanks." Most established companies would consider releasing unfinished products to market criminal: You can't produce a product that's not perfect-and not even done-or it will hurt the brand, right? Not if you make mistakes well. "Innovation, not instant perfect perfection," was Google vice president Marissa Mayer's advice to Stanford students. "The key is iteration. When you launch something, can you learn enough about the mistakes that you make and learn enough from your users that you ultimately iterate really quickly?" The internet makes iteration and development-on-the-fly possible.

Mayer put Google's worldview into cultural context: "I call this my Macs and Madonna theory. When you look at Apple and Madonna, they were cool in 1983, they're still cool today in 2006, 23 years later." How do they manage that? "They don't do it by being perfect every time. There's lots of missteps along the way. Apple had the Newton, Madonna has the s.e.x book." When you make a mistake, Mayer advises, "you just iterate your way out of it or you reinvent yourself."

Mayer recounted a debate among engineers before the launch of Google News. Days before the start of the beta, they had enough time to implement one more feature-sort by date or by location-but couldn't decide. So they did neither. The day the service was released, they got 305 emails and 300 of them asked for sort by date. The users answered the engineers' question for them. "Just get the product out there and then have the users tell us where it is more important to spend our time." Google is not perfect. "We make mistakes every time, every day," Mayer confessed. "But if you launch things and iterate really quickly, people forget about those mistakes and have a lot of respect for how quickly you build the product up and make it better."

Google is unafraid of making mistakes that can cost money-courage one rarely sees in business. Advertising executive Sheryl Sandberg (who later was hired away from Google to be COO of Facebook) made an error she won't describe in detail that cost the company millions of dollars. "Bad decision, moved too quickly, no controls in place, wasted some money," she confessed to Fortune magazine. She apologized to boss Larry Page, who responded: "I'm so glad you made this mistake, because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don't have any of these mistakes, we're just not taking enough risk." Google CEO Eric Schmidt told The Economist that he urges employees: "Please fail very quickly-so that you can try again."

Facebook tends to blunder into new products, making mistakes as it goes. When Facebook introduced the news feed that compiles tidbits from friends' pages and activities, some users were freaked by what they perceived as a loss of privacy (even though anything going into news feeds was already public). Protest groups were formed inside the service, using Facebook to organize a fight against Facebook. Founder Mark Zuckerberg apologized for not warning users and explaining the feature well enough-communication was his real problem-and Facebook added new privacy controls. There was no exodus. Today, I don't think any user would disagree that the news feed is a brilliant insight; it is the heart of the service.

Though he makes mistakes, Zuckerberg makes them well by listening to customers and responding quickly. After a kerfuffle about a new Facebook advertising feature subsided, blogging venture capitalist Rick Segal begged us all to give Zuckerberg some slack. "He is going to make lots of mistakes, and he will continue to learn and grow.... We need to use care in beating up Zuckerberg and Facebook in general because we want these folks to push the limits of finding new ideas and trying to make sense out of all the data flowing everywhere. Try it and get some reactions, adjust, find the happy center, rinse and repeat.... If they do really bad things, people vote with the mouse clicks." It's not the mistake that matters but what you do about it.

Be honest

Fake news anchor Jon Stewart is one of the most trusted newsmen in America because he calls bulls.h.i.+t. Howard Stern is the king of all media in the U.S. because he's honest. The tagline of Stern's personal news service on satellite radio: "No more bulls.h.i.+t." Shouldn't that be every news organization's tagline? Every company's?

I've been a fan of Stern's since I reviewed his show for TV Guide in 1996 and discovered, counterintuitively, that he is best taken not in small doses but in large doses. If all you heard of him were the odd belch, you'd be forgiven for dismissing him. But Stern is greater than the sum of his farts. Listen for a few days and you will hear the rare man-rare especially on broadcast-who is not afraid to say what he thinks and what we think but don't dare say. In the plasticized, packaged world of roboreporters on TV and shtickmeisters on radio, it's a relief to hear somebody who's candid, honest, and blunt. He is open and transparent about his life. He is unafraid to ask the tough question; I only wish that the PR-laden morning shows were as direct as Stern or as skeptical as Stewart.

Stewart, anchor of Comedy Central's The Daily Show The Daily Show, came in fourth among the most admired newsmen in America, tied in that slot with network anchormen Brian Williams, Tom Brokaw, Dan Rather, and Anderson Cooper in a 2007 survey conducted by the Pew Research Center for the People & the Press. Stewart's spin-off, Stephen Colbert's Colbert Report Colbert Report, mocks spin, shooting buckshot into the pomposity of news shows, talk shows, pundits, and PR.

Stern, Stewart, Colbert, and bloggers everywhere say what they think. In them, we hear the language of the internet age: honest, direct, blunt, to the point, no bulls.h.i.+t, few apologies. Their tone may shock old, controlled sensibilities. But complaining about it, tsk-tsking it, trying to clean it up, or trying to ignore it won't work. The post-media generation raised on honesty and directness expects truth and bluntness from others. With Google, it is harder to hide behind spin, to control information, or to hope that people will forget what you said yesterday or the mistakes you make today. The truth is a click away.

Inst.i.tutions are learning to acknowledge their mistakes and apologize. When he took office following predecessor Eliot Spitzer's s.e.x scandal, New York Governor David Paterson preemptively admitted having an affair, among other peccadilloes. Apple had a near-disaster in the launch of its Mobile.me service and Steve Jobs admitted it publicly. This is honest talk, which comes in a human voice. Even in the machine age-the Google age-that voice will emerge and succeed over a filtered, packaged, inst.i.tutional tone. The Cluetrain Manifesto The Cluetrain Manifesto (which you can read for free at Cluetrain.org) teaches this lesson in its 95 theses, which begin: (which you can read for free at Cluetrain.org) teaches this lesson in its 95 theses, which begin:

1. Markets are conversations.