(Note: This is my second and final report on my conversation with Charlene Li.)
Back in 1995, Charlene took part in a brainstorming session in East Palo Alto that included some of Silicon Valley’s most economically deprived children.
The kids were asked to draw pictures of how they thought technology would change in their lifetimes. One teenager drew a picture of himself with his thoughts coming out of his brain and flowing into a computer. Then all his friends had their thoughts coming out of their brains and into computers where all the thoughts of all the friends merged into one big web of shared thought.
Charlene thinks this is one of the most prescient illustrations of what has happened on the internet. If there is a transformational revolution occurring these days, it is not in the technology itself, but in the communities who are usurping the power traditionally held by large companies and government.
As far as the Web 2.0 companies that are popping up faster than the kernels in a heated microwave bag, they are enablers of the revolution but, in the end, they will follow traditional business patterns and end up consolidating, getting purchased or in a few rare instances they'll go public public like the survivors of the dotcom era.
Worse, but winning
As she sees it, the world of commerce will continue to be dominated by big business, but these Goliaths will transform. The companies that will prevail in this new era are ones that understand that the best way now to aggregate power is to give it away. “Technology will take power from institutions and pass it to communities. Communities will have the power. The revolution is in mindset.”
Why won’t smaller, hipper more creative and agile startups dodge and weave their ways past today's incumbents? Because the big guys own distribution. Why won’t the new companies use the internet to build their own distribution? Because most eyeballs go to where habit brings them. “Portals can wipe out a point solution [from a small specialized Web 2.0 company]. They will copy it, make it two shades worse and still win. “
Key is the fact that most peer-to-peer systems require ad support for sustenance and advertisers will generally go to where the traffic already exists and all that tilts back to the bigger companies.
But revolutionary tools and services, as has historically been the case, will be developed by small entrepreneurial companies. You can start that online beauty store on your own. You can even be wildly profitable on a small scale. But despite all that, the odds are piled steeply against your entrepreneurial gem becoming the next stellar IPO.
“It’s still best to get acquired,” Charlene told me. Your hot little company becomes a plugin in for Office Live. More people get to enjoy what you started. Then, you can either stay under the safe wing of the big company or pocket your money and start a new enterprise.”
In terms of business development, this sounded a bit to me like everything is as everything has always been. Maybe so, but on the end user side, Charlene see a fundamental global change in the shift of control from the sellers to buyers.
Politicians serving people's needs ?
“The world of politics and business are all about control,” she said. “But, in the new world you get more powerful by giving up the control. It’s not about Web 2.0 it’s about social control. Technology is going to change how people relate to each other.”
And, as she sees it, it is going to force not just companies, but elected officials as well to do something truly radical—serve the needs of their constituents.
“The revolution is in the relationship. People don’t want to be talked to. They want to have relationships. Online communities can say: ‘I’m not going to sit here and take your political platform anymore. I’ve banded together with the people on my block. Give us what we want or we will go to another candidate or another company.’”
Charlene noted that there are a few politicians who have started blogs (one example is here) that seem to be more authentic than when Joe Trippi was ghost-writing Howard Dean’s blog. All four candidates to head up the Ontario province blogged in the last election. But so far, most of them are simply toe-dippers, not fully immersed.
In fact at least one company, Traction Software builds blogging platforms for government institutions, and it’s a business that wasn’t around even four years ago. Traction was funded by In-q-tel, the venture arm of the CIA who apparently sees blogging’s potential. “Imagine how differently 9/11 would have played out if the intelligence community had had a restricted-access information-sharing feed going on,” she speculated.
Finally, Charlene discussed the impact of multiple identities, not in the psychiatrist’s office where they used to be treated, but on the Internet where a great many people develop them.
She said, “The role of identity and reputation is changing. People have multiple identities online. You can have a sterling reputation on eBay, but you can’t use it elsewhere. You can maintain multiple names and persona online, all of which are authentic in relationship to a particular topic.”
I hang out in the startup neighborhood of the technology sector where vision usually stretches well past reality and should. As I start this new book, I wanted to do a reality check with someone whose hand is closer to the pulse of traditional business sector. That is why I turned to Charlene for my first interview.
It was also the first time I had spent much closeup time with Charlene and I found her candid, interesting and visionary. I found her views on what is happening and will happen very close to my own. But she has more clearly defined who and what is revolutionary and what things will remain the same.