Why I deleted my Facebook account (not a manifesto)
Last night I finally got around to deleting my Facebook account (really deleted it, not Facebook’s sneaky soft delete). This isn’t a manifesto about all the things wrong with Facebook or a big-think piece on privacy. It just comes down to this:
For years, I refused to get an EZ-Pass that would let me go through toll booths without having to wait in line to pay with cash. I commute on the highway a lot and the EZ Pass would save me a ton of time and effort (I live in a place that gets tons of tourist traffic in the summer, and the toll lanes can get backed up for 10 minutes or more). But I didn’t want to have “someone” be able to track my comings and goings–that’s how they always catch the bad guys in Law & Order. Well, I finally broke down because I figured there’s not THAT much data on the transponder, it’s extremely limited about what it can say about my activities, and it’s hard information to get to.
Cut to Facebook. I don’t use Facebook that much, but it still has FAR more information about me than an EZ Pass transponder, that information is more personal, it’s now much more widely distributed, and frankly I don’t trust Facebook even when they don’t mean to screw up. Plus I’m stuck reading tons of boring crap in my News Feed. Like Betty White said on SNL the other night, “back in my day seeing pictures of people’s vacations was considered a punishment.”
Both EZ Pass and Facebook offer some benefit at the cost of privacy and anonymity. The hangups about EZ Pass are trivial compared to Facebook and the benefits are real. So while I’m keeping my transponder, I’m ditching Facebook.
How journalists should spend their time
I’ve been writing a lot about how valuable press releases and content produced by government, school and businesses can be in the new news ecosystem. My company is based on making it easier for “organizationally sponsored” news content to get to the audience that it’s most relevant to. But that doesn’t mean I think journalism is nothing more than reprinting press releases.
A post from the U.K. in The Inquirer today makes this point for me: they rail on the U.S. press for its treatment of Gizmodo’s iPhone prototype revelations. (I can’t do justice to the acid tone of U.K. tabloids, so I recommend reading it yourself.) Basically they say this: the U.S. tech press — and a lot of the U.S. press in general — is so concerned with “access” and “respectability” that it refuses to challenge, criticize or offend the subjects they cover.
I agree. That’s why I think it’s ridiculous that the press still spends so much time rewriting press releases that are are factual, newsworthy, and well-written. Yesterday was a prime example. The New York State Inspector General issued a report (via press release on readMedia’s newswire) about financial abuses at the New York State Theater Institute. It was big, important news and media in New York State should (and did) cover it. But compare the stories in the Albany Times Union and the Associated Press (here reprinted at Syracuse.com) to the original press release. The Times Union adds some historical context and reactions from the somnolent Board of Directors (shocked!) and the accused’s defense attorney (a hatchet job!), but essentially they used a senior reporter to rewrite the content of the press release as a “straight” news story. The AP gets a statement from the defense attorney, too. But both stories get most of their content and news value straight from the press release and rewrite it in their own words. Why not just print the press release and add a few lines of context?
An ink-stained wretch rewrites Apple's iPad press release
To me, rewriting a press release is not journalism. It’s a fetish for “objectivity” and distance from a subject at the expense of inexpensive newsgathering and straight reporting. Journalism — where reporters and editors can add real value — is finding and telling stories that audiences want and need to hear but that the subject might not want told. “Comfort the afflicted, and afflict the comfortable” type of stuff. That type of journalism is what’s threatened as news organizations lose their hold on local ad dollars, and it’s what most of the handwringing about the “death of newspapers” is about.
But journalism is expensive. Gizmodo proved that in hard dollars and cents. It’s time consuming and not necessarily lucrative. So “journalists” need to use the rest of their time as efficiently, inexpensively and profitably as possible. That’s my advice to journalists: Stop rewriting press releases, use the ones that matter to your audience, add context that only you can bring and find the stories that the press releases can’t — or won’t — tell you.
Bad assumptions about the content value chain
We think a lot about the “future of news” at readMedia because our clients play an important, hidden role in the news business. Two posts by smart guys from different parts of the news ecosystem got me thinking about the value chain of the news business, and how bad assumptions about where “value” lives can lead to bad conclusions about what the new news organization looks like.
Howard Owens, founder and publisher (and most everything else) at The Batavian, just wrote about the difference between creators and consumers of news. In it, he argues that the vast majority of people are consumers of content (readers and watchers) rather than creators of content. This is in opposition to people like investor Fred Wilson and former TV Guide writer Jeff Jarvis, who both see content creation (and specifically news creation) becoming democratized to the point that citizen journalists produce the lion’s share of news content in the future. Experience and data are on Howard’s side, especially when you realize that Jarvis considers “content” to include telling people you’re going drinking at a bar.
The definition of content and an understanding of who makes it is critical to the future of the news business: somebody has to write and publish the news, right? Well, the writing and publishing (and delivery and monetization and all of that) is not just one activity. It’s a bunch of activities in a value chain, and new technologies–especially the internet–are pulling apart those activities, fast. (For a good primer on how the media business is being sliced into pieces, check out Andy Kessler’s classic Media 2.uh-oh post.)
I think “news creation” is the key here because I agree with Robert Niles that there are no new revenues for journalism, so the focus has to be on the cost side of the business. I was never a consultant, and I’m kind of lazy, so rather than paste in a graphic of the value chain of the business of news, I’ll just drill down on the editorial part–the creation of news. (I was never a journalist or editor, either):
For a long, long time, newpapers’ (and other local media) monopoly profits allowed for people-intensive, expensive processes at each point of the value chain. “News discovery” and “news reporting” came from an army of beat reporters and stringers. “News analysis”–where I’d put some of the big-think overviews of news and trends–was produced by senior writers who had grown up from the beats. “Aggregation” has always been a primary function of a news organization and I’ll talk more about that, but for here let’s just mention AP and other wire copy, comics, syndicate features, and the like. Copyediting was a huge and expensive layer in the newsroom, with some organizations largely directed and driven by the copy desk. And then finally this content must be organized in a way that’s compelling and useful to the audience AND to advertisers.
What I want to drill down on is “news discovery” and “news reporting”. That’s where important, everyday, bread-and-butter news is created. It’s the core of value in a news organization. (Aggregation is extremely important. It’s a “value add” in the chain when done well. But note that to have a “value-add” you need to have “value” first.) And Howard is absolutely right: 90% of an audience simply wants to read the news, not write or even contribute to it (via comments, for example). Now, when you’re talking about the entire United States, giving 1% of people the ability to create and publish news online as easily as major media companies do is radical–that’s more than 3 million people publishing stories. A lot of it is bound to be good; some of it may even be “news discovery” or “news reporting”. It’s easy to see that TV news criticism, for example, is not rocket science and need not be done by professionals. But when you scale down to a city or town, 1% of the population doesn’t add up to much, and the chance of that content replacing the news content created by someone paid to do it is slim. Very, very slim.
So it’s those assumptions about who will discover and report on news, and how many people there really are to do it, that lead to some naive conclusions about the future of local news. News will not be spontaneously created by a community, and then curated by an aggregator who adds value. There really is a risk about who or what replaces the traditional newsgathering function.
But there’s another bad assumption about the news content value chain that most people don’t even see, much less debate. And getting that fixed leads to a more hopeful view of how a new news organization can work.
Most people in and outside of news organizations believe that “news discovery” and “news reporting” have, and will be, created out of whole cloth by either professional journalists or the new citizen journalism. But the fact is that a huge proportion of news–especially local news–originates not from journalists discovering the news, but from the organizations in the community telling the media about it. Meaning: the reporter got a press release.
Consider that a recent Pew Research Center study showed that 72% of the news stories they studied “originated” from government or colleges–only 12% from citizens, and 15% from original reporting. readMedia’s own research confirms this: in an analysis we conducted earlier this year, we saw that 50% of local news stories in 5 daily newspapers originated directly from a press release sent by the organization that was the subject of the story.
I don’t think this is bad. I think that there’s a huge opportunity for news organizations to focus more of their efforts on news aggregation and curation and value-added interrogation of the content produced by local government, business and citizens by treating the press releases of local organizations as high quality user generated content.
This brings me to the estimable Ike Pigott, whose post yesterday on the Future of Journalism points the way to a world where black is white, up is down, there are dogs and cats living together and journalism stops treating PR like a late-night booty call:
The embeds of the future will work for the company, and be paid by the company to provide news about the company in a multitude of formats. Print, newsletter, video, blog, podcast, moving billboards, tattoos — whatever it takes. Because the bits and pieces of Corporate America that have a story to tell will still have their stories – just no ready outlets.
How is this different than what you have today? Surely there are corporate PR departments and external agencies already doing these things, right?
No.
What is required is an internal producer who writes in external voice — like the neutral point-of-view so often described by Wikipedia. People can smell marketing and propaganda coming around the corner, and they know when the pitches and puff pieces are missing that edge of neutrality. An accurate and fair piece is accurate and fair, no matter who writes it.
The current newsrooms of record will find their roles specializing even further. Where they have already ceded the “hunt-and-gather” function, they will soon cede some of the writing function. Why bother spending the man-hours to reconstruct a perfectly balanced wheel? It rolls just the same, and since it was likely written by an Embedded Journalist (who just happens to be employed by the company or trade organization,) it will carry the style, tone and quality that news consumers expect.
The remaining journalists will build their utility around curating, aggregating and delivery. They will be the line of defense that says “This story from ACME stinks to high heaven, and I will blast them for their inaccuracy.” They will be well within their rights to do so, and in some cases they may have no choice.
Like Ike said, is this a perfect world for journalism and news (or even PR)? No. The best news organizations will still have people like Howard Owens who know their territory, develop relationships with sources and their audience, and who have the news judgment and ability to both create and curate news content of value. But a news ecosystem that recognizes what non-news organizations themselves can contribute is a pragmatic one, and a practical one, and one that allows news organizations to continue to bring valuable information to their audiences from some of the few people who are really content creators.
How Aol’s Seed.com Should Have Covered SXSW
In my last post, I complained about how the fetish for original reporting makes reporters and editors treat the PR industry like a shameful late-night booty call. My main complaint isn’t one of attribution or credit, but business sense: if there are people out there writing good quality, useful news content that your audience will like, why not just use it and be clear where it comes from, rather than paying someone to rewrite the whole thing?
For me, this comes down to the realities of the news business these days. Like Robert Niles said, there are no new revenue models in journalism: the only place to move the needle anymore is on the cost of producing news content. Demand Media, Associated Content, and now AOL’s new Seed platform are all leaders in producing content at disruptively low prices, but both Demand and AC have forsworn applying their methods to covering or generating “news” or journalism. Seed is different: it has explicitly said that it’s part of AOL’s mission to “redefine journalism for the Internet age.”
But based on the way it decided to cover the bands playing at South by Southwest–paying an army of freelancers $50 per article for every band they covered–I don’t think Seed was thinking radically enough, and I believe what’s holding them back is the same journalists’ gag reflex around any content that smells like PR.
Rather than get hundreds of freelance reporters to interview and profile 2,000 bands in two weeks–from a standing start–why didn’t AOL simply tell all of the bands that they’d publish a band-written profile, and give them some helpful guidelines (not requirements) for what to write? I’ll bet they didn’t do the latter because it would have been “promotional” or “PR” rather than “reporting,” but who cares? What’s the goal of the project? Presumably it’s to have informative content on Spinner.com for readers to find out about all of the new bands they’d see at SXSW. And who do you think is more motivated to provide the content–a freelancer getting paid 20 bucks/piece or the band itself?
Seed.com’s strategy is a wasteful as a way of doing business in the new news world. Let’s say that some percentage of self-published content from the bands was crap. We should also agree that some percentage from the freelancers is just as bad. Even if the bands produced more junk, at least AOL would have gotten that junk for free, instead of paying $100,000 for it. But I don’t think the band-produced content would be junk–I’ll bet it would have been idiosyncratic, well informed, passionate, and fun. It would have been user-generated content, for crying out loud. And yes, promotional–but none of the Seed freelancers was going to treat these bands like they were covering Watergate.
Radical transformation in the news business is going to include awesome technology platforms, for sure. But it’s also going to require questioning all of the assumptions about how a news business should function. Seed took those assumptions as a given, and just tried to do the old way on the cheap.
Why are people so willfully stupid about how news gets made?
Another shocking expose about the lazy, corrupt “old media” this week from Down Under via Crikey, which “tackles the stories insiders are talking about but other media can’t or won’t cover.” In conjunction with the University of Technology, Syndney, employing 40 students over 6 weeks, Crikey discovered the dark secret of the news media: between 42% and 70% of the news printed originated from PR. Horrors! What has become of the independent media?
Let’s leave aside their methodology, their definitions, and the fact that they say, “PR driven” rather than simply “PR” and accept Crikey’s claim at face value. Let’s grant that much of the news that shows up in a daily newspaper or broadcast news originates from the public relations function of something that’s being covered by the newsroom.
Here’s my question: why are people so stupid about how the news works? I don’t simply mean uninformed. I mean willfully, stubbornly, self-righteously self-deluded and stupid.
Crikey should know better: their brief claims to know what’s “really going on” in media. But it’s not just Crikey. New media guru Jeff Jarvis retweeted the link with a knowing/scolding comment, “Spin Zone.” Reporters and editors at all levels of the media–from the local weekly up through the New York Times–pontificate on panels about how useless PR is to them, and how press releases go into their circular file.
Where do these people think news comes from? I don’t mean the sexy investigative journalism and enterprise reporting most people think of when they walk about “news,” I mean the day in, day out happenings around town. That kind of news originates from the people who make it. When soldiers return from a deployment in Afganistan, how do you think the news media finds out about it? The National Guard tells them. When some local dude gets busted for workers’ comp fraud, how does that get into the newspaper? The Tax Department issues a press release. When the most awesome moving company in the Northeast opens a big new warehouse in town, it may not be the Pentagon Papers but it sure is interesting to the local community, and they find out when Gentle Giant announces it.
I mean, employees who write stories for newspapers are called reporters, for crying out loud. They report news that’s interesting and useful to their audience. So when they get a press release that’s clearly newsworthy, they can and should report that news to their readers.
This relationship between the news media and its sources is eternal, and frankly it works just fine. What’s surprising (and a little galling) to me is the denial that exists among news mavens about how this all works. Reporters, editors and news pundits treat PR like a regular booty call that they don’t want their friends to know about.
The problem with this shame and denial by the news media is that it’s leading them to make stupid, wasteful decisions about how to run their businesses. And not just the old media: new media suffer from the same assumptions and delusions.
Take Jeff Jarvis. He clearly disdains PR and press releases as “spin” and worse. Yet the core of his link economy philosophy is, “cover what you do best and link to the rest.” Don’t replicate coverage elsewhere, he says to the mainstream media (and its new media heirs): focus on your core expertise and link to what’s already been created if it’s valuable to your audience. So why not embrace the fact that local news is being made and written about constantly by members of the community and link to their press releases (maybe with some commentary or context) rather than making a fetish of rewriting it for the sake of journalism? The “new news ecosystem” could run much leaner and put its efforts toward enterprise journalism and original reporting if it isn’t rewriting good, relevant press releases.
I think this same fetish for “original reporting” hurt Aol’s Seed.com reporting project at South by Southwest. Rather than get hundreds of freelance reporters to interview and profile 2,000 bands in two weeks–from a standing start–why didn’t Aol simply tell all of the bands that they’d publish a band-written profile, and give them some helpful guidelines (not requirements) for what to write? I’ll bet they didn’t do the latter because it would have been “promotional” or “PR” rather than “reporting,” but who cares? What’s the goal of the project? Presumably it’s to have informative content on Spinner.com for readers to find out about all of the new bands they’d see at SXSW. And who do you think is more motivated to provide the content–a freelancer getting paid 20 bucks/piece or the band itself?
Seed.com’s strategy was also wasteful as a way of doing business in the new news world. Let’s say that some percentage of self-published content from the bands was crap. We should also agree that some percentage from the freelancers is just as bad. Even if the bands produced more junk, at least Aol would have gotten that junk for free, instead of paying $40,000 for it.
It’s time for the news media to be honest with themselves and their readers about how news gets made, and embrace the “professional user generated content” that organizations produce. It’s the right thing to do because it’s transparent, and it makes good business sense.
How to Fix Executive Pay: Get Skin in the Game
Executive pay–particularly at public companies–is broken, and I know how to fix it.
The problems come down to agency theory, the idea that CEOs and managers (as agents) have the incentive and ability to look after themselves at the expense of the principals (you, me and everyone else who owns stock or invests in a mutual fund). Basically, it’s much easier for a CEO to convince the Board of Directors to pay him a bunch of money from the company coffers than it is for shareholders to act together to stop it.
Stock options and restricted stock grants are two solutions that are supposed to align the interests of managers and shareholders. In theory, making the management an equity holder in the business drives them to seek long-term stock appreciation, which is what shareholders want, too. But there are two big flaws in this theory:
- Managers game the system by focusing on short-term appreciation and cashing in options based on those gains, getting in-the-money option grants, repricing out-of-the-money options (among other shenanigans); and
- Option and restricted-stock grants are asymmetrical rewards, meaning that the managers have a lot more to gain from the grant they they stand to lose from this equity stake.
The first point is the one that people generally focus on: back-dating option “scandals,” new option grants, CEOs who take bundles of money off the table by selling options are all standard business-section features. I think the second point is the more important one.
CEOs, asset managers, traders and other “agents” don’t have real skin in the game. Option and restricted stock grants are all gravy on top of their base comp and bonuses. If they pay off–kaboom! Massive, often dynastic wealth follows. If they don’t, then in the worst case the options expire un-exercised or the restricted stock declines in value reducing the upside that the manager hoped for, but otherwise not changing the managers’ status quo ante wealth. And let’s face it, these guys get plenty wealthy from pay that is completely decoupled from the performance of their company or fund. (That’s for another post.)
So, how do you get skin in the game? The way company founders, entrepreneurs and old-style banking partnerships do: require a big investment from the manager if they want equity.
In my last post on conservative entrepreneurs, I talked about how risk averse true entrepreneurs are. That’s because they stand a lot to lose if they screw up: most entrepreneurs have almost all of their net work tied up in their companies. That means that they gain a lot if the company does well, but get wiped out–comprehensively, “lose-the-kids-college-money” wiped out. That kind of risk focuses the mind like nothing else, so that entrepreneurs tend to carefully manage their downside while looking for the opportunity to maximize their wealth.
It’s that kind of entrepreneur we want running companies and managing funds: not swashbuckling CEOs who bet the farm and rake in millions in salary and bonuses even when shareholders see their portfolios decimated, or traders who lever up 30-to-1 on a derivatives bet because they get massive gains on the upside and a government bailout if the trade goes to hell.
So here’s my prescription for turning the business and financial leadership of the country into true entrepreneurs, with all of the risk and reward that entails:
- Award no stock-based compensation as a grant.
- Any equity participation must be in the form of an investment by the manager of his or her personal wealth. No stock purchases funded by company loans, unless they are full-recourse loans with personal guarantees by the manager. (To soften the blow, the personal guarantee can exclude the primary residence and maybe some minimum asset threshold–like $100,000.)
- All management equity positions must be disclosed at least quarterly. I’d like to see the stake as a % of the manager’s total net worth as long as I’m asking.
- To sweeten the deal, the Board could offer 100% warrant coverage of any investment made by the manager.
- There should be a lockup period (6 – 12 months) after the manager leaves the company before he or she can sell the equity stake.
I’d also like to see a requirement that senior management invest a significant (50%+) portion of their personal wealth in whatever company they lead, but I’d settle for very full and rapid disclosure of how much they invest and how big a chunk of their wealth it represents.
This is what old investment banking partnerships looked like: to become a partner (and thereby receive equity participation in the profits) you had to put real skin in the game. When business was good, you made a lot of money. When it was bad, you tightened your belt. And if you let your partners get careless with their trading bets, you got wiped out. There was no agency risk because the managers were as focused on shareholder wealth and profits as any investor.
I’d like to hear what you think.
Conservative entrepreneurs
I want to hate Malcolm Gladwell, but then he writes something interesting enough that I have to grudgingly like his work again. As with all of his work, though, the good and important stuff needs to be parsed out of his articles, which share with his books the tendency to over-inflate a point, or keep making it with the wrong examples.
In this case, I’m talking about his piece in the January 18 edition of the New Yorker (not yet online, but there’s an abstract available) called “The Sure Thing.” His thesis is that entrepreneurs are not the swashbuckling risk-takers that they’re believed to be in the popular culture. They’re actually quite conservative, minimizing risk wherever possible and carefully exploiting their greater expertise or knowledge in deal-making. Gladwell’s point, I believe, is that it’s important to understand these behaviors from a public-policy perspective because if policy makers (and boards of directors, managers and educators) want to increase entrepreneurialism, they shouldn’t incentivize risk-taking per se to get it.
Where Gladwell goes wrong in his article is using John Paulson, the hedge-fund manager who famously bet on the housing price collapse in 2007 and 2008, as a prime example of his thesis. Paulson is no entrepreneur: he’s a trader who made a very successful bet with a strategy that had better downside protection than most short, negative-carry bets. He didn’t build a business, create new value or new job or add to the sum of wealth in the economy–he transferred money from losers on the trade to his investors and himself.
But he’s dead on with the story of Ted Turner, and how he built his media empire not through high-stakes gambles, but by having a vision of how to build his business, picking the battles to fight and going into those battles with as much certainty of the outcome as he could create.
Gladwell’s article would have been much stronger and more prescriptive if he had defined what he meant by “entrepreneur” and extended his observations to the less visible entrepreneurs in the economy. That would have helped with his diagnosis of what went wrong with Wall Street and banks, how CEOs should be compensated, and would have let him make even better recommendations for encouraging true, productive entrepreneurship in the economy.
So what is an entrepreneur? I like Wikipedia’s definition with one important caveat:
a person who has possession of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome.
The key terms are “possession,” “new” and “significant accountability,” with the stipulation that the last point should explicitly include the risk of significant financial and/or reputational losses. The entrepreneur needs real skin in the game! I also believe that the new “enterprise, venture or idea” should be one that creates new wealth and value in the economy, including adding new jobs.
This definition excludes John Paulson (who was already wealthy, didn’t have his personal wealth on the line in the trade, and didn’t create new wealth in the economy) but includes everyone from Ted Turner to those who build a new chain of restaurants. It also excludes sole proprietor and small family businesses, which I’d count as “self-employment” rather than true entrepreneurship. I also don’t count most of Silicon Valley startups and their leaders as entrepreneurs for reasons I’ll elaborate on in another post.
So what does this mean for people setting public and managerial policies? Entrepreneurs create new jobs; presumably so does entrepreneurial management within larger companies. How do you get more of that? Here’s my first cut as some prescriptions.
- Get out of the way: Neither government, boards of directors or even distant managers should try to overdetermine outcomes. Entrepreneurs need latitude to find advantage and opportunities in a marketplace where commercial value can be found and exploited. Goal-setting works; “industrial policy” rewards game-playing.
- Give them something to work with…: As Gladwell observes, undercapitalized businesses, startups (vs. acquiring and improving an existing business) and poor planning result in failure–in unsuccessful entrepreneurs. Policy makers should make sure entrepreneurs have what they need without being too prescriptive (see point 1). Education is important, for sure. But what about making it easier to pass on a family business to an ambitious member of the next generation? In lieu of estate taxes that might be paid on a business being passed down to heirs, the Federal government (via the SBA) could provide personal loans to children who have worked in the business for at least five years and want to continue to operate it. The interest on the loan would balance out the loss from the estate tax and the company stays with a knowledgeable, ambitious operator.
- …but make sure there’s skin in the game: As I said, entrepreneurs must have something to lose–that makes them conservative about the downside and work hard for the upside. The advantage of the personal loan in lieu of estate tax scheme in point 2 is that the child is making a personal commitment and is on the hook for the loan. This also applies to corporate managers. Rather than issue stock options to CEOs (all upside reward, no downside risk) or restricted stock (which is still a grant of value, even if it declines), CEOs should be required to invest a significant portion of their personal wealth into any company they run. The board can juice the upside with matching options or warrants, but the CEO should have a lot to lose.
- Don’t throw money at the problem. Trying to make another Silicon Valley doesn’t work. Frankly, Silicon Valley doesn’t work as well as it used to, or as well as people think it does now as an engine of transformative wealth and value creation. Yes, amazing companies come out of the Valley and it’s the envy of the world. But I’d argue (and will, like I said) that the venture-backed startup culture is very different from an entrepreneurial one, so investing in that model is doomed to fail.
- Mitigate the catastrophic personal consequences of failure: Entrepreneurs (and CEOs, companies and entire industries) should be allowed to fail and go bankrupt, fortunes can be lost. Our culture in the US does a very good job of supporting this failure and these consequences keep the entrepreneurs focused on good risk assessment. But public and managerial policy can reduce some of the worst outcomes so entrepreneurs can focus on the business. Failed entrepreneurs shouldn’t lose their kids’ access to health care, so whether that means portable, affordable non-employer based insurance, a buy-in to Medicare or some comparable policy, there needs to be some way to minimize that kind of personal collateral damage.
That’s my first whack at entrepreneurial public policy. In the future, I’ll elaborate and extend on some of these points, particularly around creating incentives for good performance.
What is a rock star hire?
I write all of readMedia’s job postings, and I read a lot of others to see how other people describe jobs and the people they want to hire. I’m more than happy to steal good ideas and crib from people who write better than I do. I stole the “smart and gets things done” formula from Joel Spolsky, a guy whose writing about business and technology I have followed for years, and whose hiring advice I really admire.
A good job listing should do a few things well:
- Describe the job and the requirements for it as clearly and explicitly as possible;
- Be specific about what we want the person to do;
- Be honest about the real “need to haves” and “nice to haves” in a candidate;
- Talk about the company, why it’s a good place to work, and why someone should want to work with us;
- Convey some of the personality of the company in the way you communicate all of this;
- …MOST IMPORTANT, do all of this well enough to make the best candidates excited about working for you.
There are basically two types of job descriptions: corporate and everything else. It’s not even worth talking about the standard corporate job post. Written by some HR drone, approved by a legal department charged with minimizing risk, dictated by hiring managers who believe buzzwords and acronyms are the same as qualifications, these postings are all different versions of the same bad formula. They’re written by companies looking to fill a position, and attract applicants who are looking to get a job.
The “everything else” runs the gamut from the sublime to the ridiculous. I think that the “everything else” writers at least share my last bullet point in common. They’re writing a non-standard job posting because they believe it’s the way to attract non-standard (and presumably better) applicants. But in all of the job postings I read there is still a surprising amount of conformity in the tropes and formulas they use to describe what they want.
The most annoying of these cliches is the “rock star” qualification. Leave aside whether any CEO or manager really wants to hire rock stars. (I’d rather hire awesome session musicians.) The problem with the rock star description is that no one bothers to define what it means to be a rock star OVER AND ABOVE the job requirements. Without that definition–without both the candidate and the hiring manager knowing what the “rock star” qualification means–it doesn’t advance the goals of the job description and it’s useless as a requirement for hiring.
Let’s look at this from the perspective of the applicant. Undefined, asking someone if they’re a “rock star” is like asking them if they’re “good looking,” “in shape” or “funny” in a personal ad. Who’s going to say no? Everybody thinks they’re above average. So unlike a job listing that says, “A record of carrying—and beating—a quota” (which can be proven or disproven objectively), asking for a rock star asks people to misidentify their qualifications.
It’s worse for the hiring manager who is looking for the “rock star” in a pile of applicants. Why? Because an applicant who is a dream come true is pretty obvious to everyone. You know a rock star when he or she walks in the door and then your job switches from finding a great hire to convincing that person to come on board.
Usually the challenge for hiring managers and CEOs is picking among a few applicants who are good–they’ve got everything the job description asked for–but are great in different ways. (Or someone is good but not great, and you need the discipline not to hire someone simply adequate.) How do you decide?
At readMedia, we finally sat down and defined what a rock star is. The first thing we did was throw out the term “rock star,” because it’s a stupid way to describe a hire. We prefer “superstar” 
What is a superstar? It’s someone who meets all of our needs for a position while delivering at least some of our wants.
Needs are determined by the requirements in the job description. That’s why it’s so important to write clear and specific requirements at the front end–you want to attract people who fit the real requirements of the job and then screen and interview for those qualifications during the hiring process. Any potential superstar must fit all of the needs or you’ve either 1) written a bad job description or 2) decided you don’t care about hiring adequate people, much less superstars.
Wants are more generic and should reflect your own company philosophies and culture. True superstars aren’t simply qualified to do a job–or even super-qualified. For readMedia, they’re people who make the whole company better than someone who meets the same needs. What we want is:
- Knowledge, experience or perspective we lack: Given the choice between two equally qualified software developers, we would choose one who worked in a very different company or organization, a different part of the country, or in a different industry (though on similar problems to ones we face).
- Different friends, contacts, former colleagues or other outside connections that we don’t have: We don’t want to live in an echo chamber, and we want to continually expand our network for future hires, business contacts, and ideas.
- “Interestingly” and valuably brilliant: We don’t want Mensa members, but it’s great to work with people who are really smart in a way that makes all the work they do–and the way they think about our business–better than we can do ourselves.
Defining what a superstar is has helped us because we can screen and interview for those qualities, and then we can all talk together about whether the candidates possess them. What used to be a gut feeling is now a rigorous process. It lets us find the superstars who don’t necessarily interview like rock stars or who catch an interviewer on a bad day. And so far it has allowed us to bring on some great team members who I wouldn’t want to do without.
When will the IRS come gunning for Demand Media and Associated Content?
Demand Media, Associated Content and even AOL’s Seed initiative got a lot of press a couple of weeks ago thanks to posts on ReadWriteWeb and TechCrunch about “content farms” and their pernicious effect on the web. I won’t rehash the arguments except to say that most of them are “moral” rather than practical discussions of the business of mass-produced content.
Practically, I think all three companies–particularly Demand and AC–could have bigger problems with their models that I haven’t seen anybody write about yet. These companies get their content from freelancers who write on topics posted by each company. These huge freelancer networks make it possible to deliver huge volumes of content; in Demand’s case, more than 4,000 stories and videos per day. What struck me, though, is how rigidly controlled the freelancers’ work is by the mother-ship media companies. That level of control is going to invite big tax and labor problems for Demand Media and Associated Content.
Here’s the problem: the IRS and state labor departments want company labor payments on payroll, and are constantly on the hunt for businesses that put employee costs under 1099 filings, rather than W2. Why? Because W2 payments include payroll tax withholding (like Social Security and Medicare) and ensure that businesses are contributing to workers’ comp and state unemployment funds. 1099s put the reporting and withholding burden on the employees and generally lower labor costs for a business.
So what does the level of control over the freelancers have to do with whether Demand and AC pay people via W2 or 1099? Over the past several years, the IRS and labor law have steadily tightened the requirements for who is an independent consultant or freelancer and who is not. Current tax regulations weigh 20 factors to determine if someone is an employee, and each one is subject to interpretation by the IRS. My non-legal, non-accounting sense of the relevant ones for the “content farms” are:
- (1) Instructions and (2) Training: Demand and AC provide extensive support and instructions for how to create their content and carry out assignments.
- (3) Integration and (10) Order or sequence set: These guys are content factories–the whole business is built on the integration of the content creators (i.e. freelance writers and editors) in an algorithmically optimized, tightly controlled assembly line. Take away the freelancers and there’s nothing there.
- (4) Services rendered personally and (6) Continuing relationship: Demand and AC have lots of repeat submissions and even spotlight particularly successful contributors.
- (17) Working for more than one firm at a time and (18) Making services available to the general public: I think Demand and AC have good ground to stand on here, but the IRS might not see it that way. While most contributors likely don’t make much money, and likely must work for someone else. I’ll bet that many of the contributors do neither–they’re either unemployed or not employable as writers and editors (yes, I know that many are talented consultants and freelancers).
Now, I think that Demand Media and Associated Content have defensible claims for their hiring practices–to me, the people banging out copyedits at $3.50 a story in their spare time are not generally employees–but the IRS is not going to look at the business model, they’re going to look at whether a company is avoiding tax payments. And given the recession, the IRS is going to try to get every dime it can from businesses.
Demand certainly doesn’t help its case by having both an application to become a freelancer that describes “your coworkers.” If I were a case manager at an IRS office, or an auditor at a state Labor department, I’d certainly make a run at both of these guys to get a few more dollars for the state coffers.
So, any bets on when this happens? Or has it already?
The importance of “in-house” beat reporting
At this point, it’s no use rehashing the state of the news business or the state of journalism (two very different things). That’s been done to death by Alan Mutter, Ken Doctor, Jay Rosen, Jeff Jarvis and countless others. So let’s just stipulate that the news business as we’ve known it is comprehensively melting down, and that some new version is going to rise up to replace it. Someday I’ll jump into the conversation about what that new thing might look like, but for now I want to talk about one specific thing only.
One of the holes opening up in the news business is bread-and-butter local news reporting. Local newsgathering is pretty expensive, but until recently it was paid for by the local media monopoly on advertising (before the internet, where could car dealers and local retailers reach buyers? Before craigslist, where could you sell your junk?). Without that monopoly, the relatively big news staffs at mid-tier dailies and local TV affiliates start to look pretty fat, so the bosses have been trimming newsrooms to the bone.
So the casualty is the kind of “who, what and when” news that helps local communities stay informed about their neighborhood, town or city. You know, about a brownfield site cleanup in the South Bronx, or your neighbor in Tonawonda busted for tax fraud, or even just a guy down the street getting a promotion in the National Guard. Who’s going to write and report on this news?
You should. Organizations have to take responsibility for getting the word out to their audiences, especially local ones. You’ve got to be your own newsmaker–your own beat reporter. And you’ve got to publish that news so people can find it.
The good news is, most organizations already do this by sending out news releases, event announcements and other newsy tidbits all of the time. They’re already covering their own news. And the dirty little secret of the newspaper business is how much of this organizationally produced content they use already. Now that the news business doesn’t have the cash flow to pay a $50,000-a-year reporter to rewrite a vanilla news release, why not just print the release and add some quick context?
I think this is a huge opportunity for local organizations and the media (old and new) that cover them. Let’s dispense with the fiction that back in the good ol’ days reporters and editors ferreted out every interesting news item on their own and recognize the critical role local businesses, state and local government, non-profits, and even political and advocacy groups play in the news ecosystem. Let’s stop acting like publishing a press release–especially a really juicy piece of news–compromises journalism and instead treat it as another piece of relevant local content in the new news business.
