How Social Media Could Be Adjusted to Make a Positive Contribution

Quite opposed to our previous post ‘How Social Media Currently Rewards Bad Behavior‘, Seth Godin post ‘Amplify possibility‘ provides a much more positive view on the adjustments that would be required to make social media more positive.

His analysis of the current situation echoes the analysis of many: “The social media companies optimized their algorithms for profit. And profit, they figured, would come from engagement. And engagement, they figured, would come from confounding our instincts and rewarding outrage.”

He uses a metaphor that I find powerful. Many people slow down to watch when there is an accident on the road, but we are almost in social media today at the stage where we create accidents to engage and get the attention of people!

However, according to him, “That’s not how the world actually works” Actual influencers, he argues, behave differently. It is more a long term engagement, a commitment over time, the development of deep relationships and expertise.

Thus it should not be too difficult to tweak the engagement rules of social media to reward those behaviors instead of the ones we see. “Amplify possibility. Dial down the spread of disinformation, trolling and division. Make it almost impossible to get famous at the expense of civilization. Embrace the fact that breaking news doesn’t have to be the rhythm of our days. Reward thoughtfulness and consistency and responsibility.”

I find this approach enticing, although obviously that would require quite a focus change from the major social medias of today, and less seeking of profit and market share. Maybe that could be an idea for a social network competitor?

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How Social Media Currently Rewards Bad Behavior

This article explains the position of Ellen Pao (ex CEO of Reddit and now quite opposed to Silicon Valley giants for a number or reasons including accusations of gender discrimination) ‘Social Media Reward Bad Behavior’ or another similar interview in Inc.com ‘Why the Trolls Are Winning the Internet‘. Her point is that she observes that social media today rewards bad behaviors because it is not managed in the interest of the people, and because possibly the teams managing the current tools are not sufficiently diverse.

“It makes me really sad, because the internet is such a powerful tool, and it introduced this idea that you could connect with anyone. And it’s been turned into this weapon used to hurt and harass people.” She is quite strong in her words about the impact of social media on the users today.

One of the reasons she mentions is that “One of the big problems is that these platforms were built by homogeneous teams, who didn’t experience the harassment themselves, and who don’t have friends who were harassed. Some of them still don’t understand what other people are experiencing and why change is so important.”

An important point is that she does not believe that this problem can be addressed at the scale of the current social networks. “I don’t think it’s possible anymore except at very small scale, because the nature of interactions at scale has become very attention-focused: “The angrier and meaner I am online, the more attention I get.” This has created a high-energy, high-emotion, conflict-oriented set of interactions. And there’s no clear delineation around what’s a good or a bad engagement. People just want engagement.“

All in all, her view is quite negative on the possibility for social media to change quickly because of its interest to engage people to spend more time on their platform. Still she provides an interesting path for improvement, which is to make sure there is an increased diversity in the social media teams.

Refer also to our previous post ‘How Facebook Model is Addiction and Growth – and Why It Can’t Change‘

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How to Look at Life From a Different Perspective

I like this quote from Muhammad Ali: “Looking at life from a different perspective makes you realize that it’s not the deer that is crossing the road, rather it’s the road that is crossing the forest.”

I find it is quite a striking example of how to look at things differently, or at least how much distance we need to take to be able to look at things differently.

I find that taking a systemic view of complex situations is extremely helpful. This is an extremely important way to reach the root cause of issues.

One further step, once we have a good systemic view, is to try to go one dimension up so that we take a really all-encompassing view of the situation. This is where we can attain such viewpoints like the one of Muhammad Ali about the deer crossing the road.

Exercising about changing viewpoint and going up in terms of observation level is quite an important skill to better understand our world. Are you practicing?

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How Social Network Legal Protection for Content Should be Reviewed

Since their inception, all social networks have been protected under US Law by a disposition called Section 230. Quartz’s update Section 230 provides quite a comprehensive coverage of the issue. Basically, social networks operate under a status of content distributors, not publishers thus not taking any responsibility in the content itself – thus preventing any lawsuit based on content. While this contributed immensely to their development, as they have grown we can observe that this cannot apply any longer, and social networks have had to take measures by themselves to monitor and regulate their content.

There are many voices now to reconsider whether this section should continue to apply to the major internet content providers. Section 230 states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In reality, social networks are not just distributing, they also produce some content, and decide routinely which content to put first and visible, which in itself is a gesture almost akin to producing a meta-content. Because of their ubiquity, they need to regulate the content they show. De facto, the amount of content regulation they enforce nowadays proves they can’t be satisfied to be just distributors, they are inching closer to being publishers, that have to have an eye on the content they broadcast.

It won’t be easy to change it: “Curiously, some Big Tech companies have come around to support efforts to weaken Section 230. Facebook and Google, for example, were early supporters of the bill that eventually became FOSTA and Facebook CEO Mark Zuckerberg has called for more reform. These small concessions could head off more onerous regulation down the road. But the more cynical read is that the biggest Big Tech companies would gain an advantage over smaller competitors who lack the resources to navigate the legal morass that would follow the repeal of Section 230.“

It will be quite interesting to watch this change unfold in the next few months, and what impact this will have on social network content and governance. At least the legislator understands large social networks cannot be considered as neutral distributors, and some liability will be enforced on the content in the near future.

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How the Right Start-Up Ideas Are About Making What People Want

In this interesting post ‘Billionaires Build‘, Paul Graham of Y Combinator explains what should be the most important criterion for selecting promising start-ups: producing what people want. And, Paul Graham adds, as it means also selecting future billionaires, it should also be the criterion for that selection.

His point is that exploiting people is not a sustainable proposition. Proposing something that people want is. And this needs to be demonstrable: “The crucial feature of the initial market is that it exist. That may seem like an obvious point, but the lack of it is the biggest flaw in most startup ideas. There have to be some people who want what you’re building right now, and want it so urgently that they’re willing to use it, bugs and all, even though you’re a small company they’ve never heard of. There don’t have to be many, but there have to be some.”

In addition, Paul Graham mentions it is important to be interested into what is getting built (which avoids getting out too early), and have a thorough understanding of future users (even better if you are using your proper service first).

Based on my experience what is really important is to have demonstrated that people are ready to pay for the service even if it is just a Proof of Concept with limited capabilities. That it solves someone’s problem by making life easier. If only all start-up founders could take this as a principle!

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How the Value of an Early Start-Up is Only the Team

When assessing a start-up project at the end, beyond the idea and business growth expectations, what is really important is the quality of the team. And that is what should be assessed first.

The ‘team’ means first, more than one person. Many investors shun investing in a single founder venture (there can be exceptions when there are several committed early investors, some of which plan to join the start-up). But in any case there needs to be a small core team with diversified experience and profiles (one commercial, one technical, one funding for example) and it is even much better if there are experienced mentors involved in some sort of advising committee (senior people from the industry, successful founders of start-ups etc).

Then one needs to assess the business-savviness, the resilience and motivation of the team members; and how they will all work together. This is bit harder and requires as a minimum to interview the team before committing to anything like an investment.

The team is what will successfully address the unexpected obstacles on the way ahead of the start-up, and that’s what need to be assessed first, before any look at a highly uncertain business plan.

This is a short series of posts where I want to share some thoughts from my experience as a Business Angel with now about 15 investments over the last 5 years, and review of 100s of start-up pitches per year. Previous posts include ‘How Early Start-Up Valuation is too Often too High‘ and ‘How Start-Up Founders Too Often Define Themselves by How Much Money They Raised‘

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How Start-Up Founders Too Often Define Themselves by How Much Money They Raised

Start-up founders and repeat entrepreneurs often define themselves by stating how much money they raised. That’s great, but what about the sustainable value you actually created?

In the start-up ecosystem one encounters very often founders launching new ventures and boasting about how they previously managed to raise millions on earlier ventures. And that’s about the only way they define themselves. This of course proves that they are excellent sellers for their ideas and at least that they have experience in this part of the start-up adventure. But what about building a sustainable business?

If someone presents himself thus, I will certainly assume that all their previous ventures have been failures, and that they are good at raising and spending money, but with little result in terms of sustainable value. Founders that boast how much they sold a previous venture are better in that they demonstrate their ability to create something valuable and to be able to exit, which is far more reassuring.

Really, we don’t care how much you raised in your previous ventures. What we care about is if you spent the money wisely to build something durable and sustainable. Stop boasting about how much money you raised!

This is a short series of posts where I want to share some thoughts from my experience as a Business Angel with now about 15 investments over the last 5 years, and review of 100s of start-up pitches per year. Previous posts include ‘How Early Start-Up Valuation is too Often too High‘.

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How Early Start-Up Valuation is too Often too High

In a short series of posts I want to share some thoughts from my experience as a Business Angel with now about 15 investments over the last 5 years, and review of 100s of start-up pitches per year. The first aspect I want to tackle is company valuation. Valuation for a start-up at early stage is guesswork, but my point is that often the valuations proposed are difficult to justify with a reasonable business plan. They are too high and thus make it difficult for the business angel to get proper value for his money taking into account the risk involved.

As a caveat, the start-ups I invest in are usually in the physical world, aiming to produce products or services in support of industrial production. In this context, exponential growth may happen but scaling can be expected to be slower.

Valuations are often a guesswork by founders, based on the share they accept to leave to investors, how much time they invested, their own ego and only sometimes business plan considerations. I often see excessive valuations for early start-ups with barely a workable Proof of Concept and no or very limited market feedback (in this I mean actually having sold something to a client – free trials don’t count).

The number founders arrive to is often dictated by the fact they don’t want to be too diluted, but if they want to raise serious money and give out only 10% of their capital, the resulting valuation will be very difficult to actually reach within the 5-7 years of investor commitment – and sometimes even when the company will reach its first development stage.

My experiences makes me increasingly weary about early stage valuation. Founders need to be reasonable even if this means a bit more dilution – they can’t be replaced anyway, and well, everything should be able to win something at the end.

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How Venture Capital Can Destroy Sustainable Innovation

This excellent NewYorker article ‘How Venture Capitalists Are Deforming Capitalism‘ reinforces the fact that Venture Capitalism can have some really bad sides. The point made here is that they can pour so much money in a specific venture that it inflates it, dominating the market, while not being sustainable, crushing other more sustainable alternatives in the process.

The article develops particularly the case of WeWork and how it crushed the market of co-working spaces thanks to an almost unlimited access to capital, therefore allowing the company to buy premium space and rent it out very cheaply. Competitors could not follow suit: “No one could make money at these prices. But they kept lowering them so that they were cheaper than everyone else. It was like they had a bottomless bank account that made it impossible for anyone else to survive“.

The problem here is that there is an assumption that if you capture quickly the entire market, then you can become very profitable. The public promise is that you will generate sufficient scale- and network-efficiency to create extreme value that will benefit everyone; the nasty and less publicized side of it is that if you crush competition you can exploit a monopoly situation and increase prices in the future. There is a fine line between both situations and it is not always obvious which side is really sought by large, well funded start-ups.

The article is quite pessimistic: “The V.C. industry has grown exponentially since Perkins’s heyday, but it has also become increasingly avaricious and cynical. It is now dominated by a few dozen firms, which, collectively, control hundreds of billions of dollars.” Bets have increased on certain ventures, with overall limited return on capital invested. There is less personal commitment.

“A 2018 paper co-written by Martin Kenney, a professor at the University of California, Davis, argued that, thanks to the prodigious bets made by today’s V.C.s, “money-losing firms can continue operating and undercutting incumbents for far longer than previously.” In the traditional capitalist model, the most efficient and capable company succeeds; in the new model, the company with the most funding wins. Such firms are often “destroying economic value”—that is, undermining sound rivals—and creating “disruption without social benefit.””

In a world where funds are more and more readily available due to low interest rates, there may be a need to regulate excessive investments in new ventures that have poor governance and unrealistic expectations. In any case one should be wary of not finding oneself in an impossible competition with an excessively funded start-up.

For more thoughts about the limits of Venture Capital, read my previous post ‘How Venture Capitalists Don’t Really Play the Role We Believe‘

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How Modern Inequality is also Information Inequality

As the Fourth Revolution progresses, we can hear a lot about the rise of inequality mainly in the field of finances and income. But modern inequality is also very much – and increasingly- informational. We already discussed for example in the post ‘How the Transformation of the Press Business Model Makes Access to Quality Information More Difficult‘, but let’s take a wider view of the situation.

There are good quality news outlet out there, that try to stick to journalistic principles. They may be orientated one way or the other, and the editor may favor a certain view on things, but this is generally known as the editorial line of the media. The thing is, access to this media is increasingly paying. Be it traditional press, new news portals and edited aggregators, access increasingly requires subscription.

If you can’t afford subscriptions, or if that’s not culturally on your priority list, what does remain? Public news outlets that are free, some traditional outlets that still manage to be ad-funded, or social networks. And it is this reliance on social networks that is at the origin of quite a number of issues today such as the polarization of society and more extreme groups. Before, the newspaper was displayed to be available for all to read on crowded streets, but not any more.

Thus in the past few years, access to information inequality has grown drastically up to becoming a real societal concern. It certainly needs to be fixed more urgently than income inequality, because the situation may create substantial disruption with groups of citizens living increasingly in parallel worlds.

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How to Deal with the Upcoming Flood of AI-Generated Copywriting

Following up from our previous post about the transformation caused by AI in music, this excellent post addresses the issue of AI generated text content: ‘The internet is not ready for the flood of AI-generated text‘. As it is becoming easy for AI to generate copywriting that could pass for generated by humans, we can expect the internet to be flooded by far more text than humans can currently generate. And it is not ready to manage this flood of content!

One of the subtle ways AI generated text may take over the internet is the ability to quickly generate different versions of the text and find which is the most engaging, thus becoming increasingly better rated on platforms, and overtaking human-generated text. In a world where what matters is to grab attention, this could easily become a discriminating factor.

“Technologies such as GPT-3 may dramatically impact the world of misinformation and disinformation, creating an infinite supply of fake news” – and in the process creating more inequality between those that can pay to have access to quality-vetted information and the others.

What can be done? In addition to having machines that can detect machine-generated content, “One of the most obvious first steps forward, which should be put in place for every output of tools such as GPT-3 no matter or much or how little human editing was involved, is labeling of AI-generated content so that people know what they are reading.”

Welcome to a world where human-generated content will become a rarity for which we may need to pay a bit more!

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How Deepfake Music Is Changing the Music Industry

In this excellent Guardian post ‘It’s the screams of the damned!’ The eerie AI world of deepfake music‘, the implications of modern AI in the field of music are detailed. It seems quite possible nowadays to imitate the voice of any singer including those of the past. And copyright laws won’t generally apply.

This implies as well of course that it is quite possible to imitate perfectly the voice of anybody, which creates at once a potential for fakeness for all sorts of voice recordings nowadays.

It is also the start of an era where the position of the artist will change, with an onus for song- and musicwriters and potentially less for singers, unless they manage to unleash emotional impact. Actually as the economy of music is moving progressively towards live performance, recordings become more and more of a commodity and artists will need to be better performing live.

An interesting point is that copyright law is different in each country. It appears that in the US there is a law “against impersonating famous people for commercial purposes” but not in the UK or in many countries. We can expect some substantial law changes to protect the unwary, artists and their heirs against usage of its voice at least for commercial purpose. Another situation where the law will have to catchup soon!

In any case AI is also upending a large part of the music industry like it is upending many other industries, and that is made easier because at the end music is only a succession of bits, which can be taught to AI. Welcome to a new world of music!

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