Scientific American: Airborne Baloney

I am very excited to say that the January issue of Scientific American has published a feature article by the Skeptic columnist Michael Shermer about my blog post debunking Airborne, the cold remedy fad.

Though the press has generously and frequently covered my venture capital activities, this is the one media appearance that I will save to show my children. I am proud to set an example for them one doesn't need a doctorate to be a scientist--anyone can think critically to draw legitimate conclusions about the world around us.

UPDATE: This Scientific American article has since been submitted as evidence in federal court that science does not support the claims of Airborne, and that the company has engaged in deceptiv marketing. As a result Airborne lost a $23 million verdict payable to its consumers, and $7 milion inpenalties levied by the FTC.  And people ask me why I blog!! 

airborne scientific+american michael+shermer skeptic scam
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Festival of Light Spending

Happy Hanukah! Today is the 5th of 8 days in which Jews commemorate the miracle that happened 2,172 years ago in Jerusalem: after ejecting the armies of the Hellenistic Syrian King Antich IV, the Hasmonean Macabees found only a day's supply of oil in the Temple Menorah, but the oil lasted for 8 days.

An act of God? (If so you'd think His Omnipotence would stretch our oil supply now that we REALLY need it.) More likely, it's a great example of early day entrepeneurship, because Judah Macabee was nothing if not a scrappy entrepeneur. He recruited a great team and executed more nimbly than the much larger, incumbent Syrian army. With only a day's supply of oil, he likely teased that fire, closed the Temple doors to mitigate wind and oxygen levels, and restricted the flame to peak hours of animal sacrifice. Judah, inventor of the low burn rate, knew better than anyone how to Get Big Cheap!

I anticipate a flood of comments and emails accusing me of hypocrisy as I celebrate Hanukah while rejecting faith. But you don't have to believe in mythological deities to participate in cultural events or reflect on history. For descendents of the Judean nation, Hanukah is as good an excuse as any for families to gather, eat, sing, play games and exchange presents. My rebbe Richard Dawkins agrees--when I asked him his opinion of Jewish cultural traditions, he gave me his enthusiastic "blessing" to celebrate them with as much joy as July 4th or Thanksgiving.

Technorati Tags: hanukah atheism entrepreneurship burn+rate
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Borat Introduces Flock

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Bubble Memory

100% actual conversation (except the name is changed) from late 1998, when investment banks--like other go-go firms in the dot-com ecosystem--were starved for talent:

CHRISTINE (my assistant): I have Gilligan Weiner from Robertson Stephens on the line. Are you available?

[I don't know this Weiner but these days a call from Robertson is usually good news. Maybe he's representing an acquiror?]

ME: Okay, I'll take it.... Hello, this is David.

GILLIGAN: Hi, this is Gilligan Weiner from Robertson Stephens, and I'm calling you because you're on the board of Flycast.

ME: Yes?

GILLIGAN: I need to know the company's revenues, and the valuation of the last round.

[is his voice cracking? has he even reached puberty yet?]

ME: I see. Flycast is a private company, and so we don't publish financial information. Why are you asking?

GILLIGAN: I'm doing research and I really need the revenues and valuation for Flycast.

[compelling!]

ME: Well, Flycast is a private company, and so we don't disclose that information.

GILLIGAN: Oh... [awkward silence]

ME: You know, I'd be happy to send you all the financials for Flycast if you would just fax me your tax returns first.

GILLIGAN: Umm, what's your fax number?

[I really swear to--well, whomever atheists swear to--that this is true.]

ME: 650-853-7001.

GILLIGAN: Do you want my tax returns or the firm's?

ME: I really need both.

GILLIGAN: Um, okay, I'll get back to you.

ME: Great, look forward to it.

GILLIGAN: Thank you, Bye.

ME: Bye.

I'd have loved to hear the conversation that ensued, as Gilligan asked the Skipper for a copy of the firm's tax returns to send me.

Technorati Tag: bubble
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Preventing Identity Theft

19th century cryptographer Auguste Kerckhoffs first observed the weakness of security through obscurity, prompting Bruce Schneier to routinely demand that security systems "recover gracefully" from compromised secrets (e.g. passwords can be changed). Unfortunately, the fundamental authentication system underlying our economy hinges on the confidentiality of immutable credentials like social security number, birth date and mother's maiden name. The danger of such "brittle secrets" is that the entire system breaks under pressure. Indeed, under pressure from mostly online identity thieves, the integrity of personal identity in our economy is badly broken.

According to last month's Harris Interactive study, about 50 million Americans have been informed--mostly by their banks or government--that their personal credentials have been somehow compromised. In addition, nearly 10 million Americans are aware of specific instances in which they were victims of identity theft. As staggering as these numbers are, the actual numbers are necessarily higher than what's reported. It would be quite a stretch for you to imagine that somehow your data remain safely stored among all the vendors, doctors, banks, web sites, and government agenices whom you've engaged in your lifetime. More likely, your personal credentials are all for sale in black market exchanges like this one.

In other words, the horses are out of the barn. There's little point trying to re-tool or regulate the world's IT infrastructure to contain consumer data. Even if your concern is future generations whose identities are still safe from thieves, there are so many ways for data to leak that it's futile to expect brittle secrets like our social security numbers to be both useful and sustainably confidential. So rather than fund "extrusion detection" startups, as so many other VC's have done, I have instead looked for technology that can protect our identities in a way that does not presume the secrecy of our credentials.

Cyota, for example, protects our bank accounts after phishers have stolen our credentials; but Cyota, which secures the banks' assets, doesn't address the most common form of identity theft -- application credit fraud perpetrated against individuals. By applying for credit in our names, thieves get cars, phones, credit cards and even mortgages, leaving us to deal with the nightmare of bills, debts, liens and bad credit. For 6 years running, this is the fastest growing crime in the US (and the financial cost per episode is growing). The problem has reached such epidemic proportions that consumers, prompted in part by the data-breach-disclosure letters they receive, will pay for solutions -- even pathetically ineffective ones like credit report monitoring services.

But I did learn from Cyota that if you can't keep a secret from phishers and laptop thieves, and if you can't trust spyware-infected computers, you can still protect your assets through multi-channel authorization of risky transactions. That is, thieves can't get to your assets if you are consulted prior to withdrawals and account changes over a medium separate from that in which the transaction originated.

That's why Bessemer set out to find a company focused on putting consumers in charge of their own finances, through mechanisms that require their out-of-band authorization for any extension of credit. There are many possible mechanisms, including opt-out lists, credit fraud alerts (courtesy of the 2003 FACTA Act), and credit freezes (courtesy of California's Consumer Credit Reporting Agencies Act). We assessed many startups in the field, but the best among them is Lifelock.

Todd Davis, the CEO of Lifelock, got our attention when he disclosed his social security number on TV, proving his personal confidence in the Lifelock service. By focussing on easy enrollment, Lifelock has built by far the largest subscriber base in the industry, with stellar customer satisfaction rates that yield annual churn rates below 5%. Having subscribed my entire family to Lifelock (the kids are vulnerable, too), our finances and credit are now protected from identity thieves. Lifelock backs up its service with a guarantee that it will handle any resolution of ID theft, with a $1,000,000 warranty.

Obviously I'm excited about this investment (like the Men's Hair Club President, I'm also a customer!). Bessemer's anti-fraud practice has been consistently successful to date with Verisign, Cyota (RSA), SiteAdvisor (McAfee) and Coral Systems (Lightbridge). And this was one of those easy investment decisions where several road maps (Consumer Internet, Multi-Channel Authorization, Get Big Cheap) converged.

Technorati Tags: ID+theft identity+theft lifelock bessemer ssn kerckhoffs schneier fraud+alert phishing credit+freeze cyota
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Get Big Cheap

Two weeks ago I presented at Babson College, home of the nation's top ranked Blank Center for Entrepreneurship. (It's a beautiful campus, especially during the New England autumn.) Students asked for my slides, which I forgot to share, but the New York Times story on Wednesday on how cheaply one can launch a web startup reminded me to post a related segment of my talk here. (Be gentle--this was edited for a student audience far from Silicon Valley.)

...Conventional VC wisdom shied away from consumer ventures because consumers are unpredictable, branding is so expensive, and it takes a prohibitively long time to build a competitive distribution channel. So what changed? What’s now so attractive about consumer technology that makes 2006 such a better time to launch new services? Well, there are 7 new factors today that didn’t exist in the 90’s.

1. A psychographic shift in population led to fast adoption of new technologies. It’s just much harder to find someone complaining that the VCR blinks 12:00—in fact it’s hard to find a VCR at all, now that we have Tivo.

2. The blogosphere and social network sites have also accelerated the rate of adoption for new technologies, disseminating relatively objective and credible information on new products, levelling the playing field for startups.





3. Thanks to deregulation, an enormous middle class is emerging from the economic growth engines in Asia.








4. Internet entrepreneurs in Europe and elsewhere can better identify markets and reduce risk by modelling their startups on successful US online businesses like eBay, Paypal, Google, Yahoo and eTrade.


5. Nearly a billion new mobile phones enter the market each year—mostly in the hands of consumers who aren’t already equipped with a PC, TV and camera.


6. Google has enabled direct marketing for nearly every business in the world. An entire ecosystem now grows around it, including such categories as ad optimization, search engine optimization, lead generation, vertical search, local search, and meta-search.

7. XML has enabled the rapid development of integrated web services like MySpace, Facebook, YouTube, LowerMyBills, and Yelp. For the first time developers can whip together a complex community site that mashes up data and features from across the web. This last point is critical, because it enables consumer-oriented entrepreneurs to do something new and exciting: test a business plan without capital.

This dramatically changes the venture capital model. Consumer ventures used to burn so much time and money that most high tech entrepreneurs focused on carriers and large enterprises. In order to assess demand for their wares, they would need to first develop the technology and a sales force to sell it, a 3 year proposition. If the entrepreneur had a track record of success, we venture investors would take our chances on the market and fund those first three years of operation.

During the internet rush of the 90’s, intoxicated by the Internet, we tried to apply the same model to consumer investing—that is, we funded “proven teams” who had a plan to develop and brand a new consumer service. Seduced by the proposition that more capital up front would buy branding and accelerate distribution, many venture investors bought into Neil Weintraut's motto GET BIG FAST.

We all know how that turned out. No matter how proven a team may be, they still can’t predict consumer behavior, and so we spent about $30 billion acquiring eyeballs for web sites of dubious value, and when the capital dried up, so did the businesses.

But today, entrepreneurs have the opportunity to launch web sites so rapidly into a market that adopts technology so quickly, that with some iterative tweaking and feedback from users they can test their ideas in months, and on a shoestring budget. Without the need for capital, they needn’t sport a proven track record of success, and so many many more ideas can be tested, and the winners can come out of nowhere, from anywhere on earth. With the right user experience, the best innovations can attract 50 million users in their first year of general availability, as proven by Skype, Firefox, Wikipedia, YouTube and MySpace.

And so the winning recipe today for aspiring entrepreneurs is GET BIG CHEAP. Don’t waste expensive development on untested ideas, and don’t let a fat marketing budget mask a weak value proposition. If instead you tinker your way to scalable organic growth, you’ll have a valuable business on your hands. Don’t worry about how long it takes—just make sure your burn rate is low enough to accommodate several cycles of iteration.

There's never been a better time to start a company. Find a community underserved by technology – be they disenfranchised American teenagers, bored commuters in Asia, or small business advertisers in Europe – and repeatedly craft a better user experience for them until you GET BIG CHEAP.


[Pictured right: The Free Press House, a Mumbai office building housing firms with more capital under management--including Bessemer Venture Partners--than any other in India. Notice the materials used by the develoepr to erect the building!]

Technorati Tags: babson blank+center entrepreneurship startup get+big+cheap get+big+fast India China
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Silicon Valley Loves Richard Dawkins

As promised, the great evolutionary scientist and Oxford professor of zoology Richard Dawkins made his appearance at Kepler's Bookstore last week. It was unlike any previous book signing -- several hundred fans mobbed the store, with standing-room-only out the door. Clark sold out of every Richard Dawkins book, new and old. (The publisher of The God Delusion is sold out, too. Until the next printing, you can read the first chapter here.)

The crowd was highly engaged, alternating between applause and laughter. In case you missed the show, I am pleased to offer you the re-run, as well as my own introductory remarks, the text of which the professor posted here on his new web site. (Disclosure: my comments are not for the faint of mind, nor endorsed by Bessemer Venture Partners!)

AudioReproduction: 54 meg MP3 file--click to stream or right click and Save the 54 meg MP3 file (via Father Dan)

Video Reproduction. Incidentally, if you hear someone heckling me during the intro, that's Bill Atkinson, co-inventor of the Mac, touting the security of Apple computers.

After the event, the professor was kind enough to dine at my home with some local Valley personalities who support the Dawkins cause. Jurvetson was there (he posted photos), as well as Geoff Ralston, Dan Farmer, and 56k modem inventor Brent Townshend (good thing, too, because when I couldn't start my outdoor gas heater, the inventor fixed it by patching it up with duct tape). Pictured to the right are Bill Atkinson (far left) and Jeff Hawkins (right) entertaining the guest of honor. (They were tickled to learn that Dawkins is a big user of both the Mac and the Palm Treo!)

The success of Dawkins' publication coincides with Michael Shermer's rebuke of Intelligent Design and Sam Harris' Letter to a Christian Nation. Together, these books seem to be making a dent, as their message echoes in popular media like The Colbert Report, South Park, Wired, Newsweek, and even TIME, the bastion of Christian pandering.

Related Link: Buy Dawkins' DVD documentary Root of All Evil.

Technorati tags: richard+dawkins dawkins atheism atheist god+delusion keplers
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British Telecom Dials Up Da Vinci Code

Congratulations to Counterpane, which announced last week that it has been acquired by British Telecomm as part of the global carrier's campaign to deliver best-of-class security services to multi-national enterprises.

The company's founder, Bruce Schneier (whom Economist calls "the security guru") pitched me on his vision in 1999, but it was his book Secrets and Lies that compelled me to invest, along with Accel. (You can see many ideas from that book plagiarized in my blog posts.)

In fact, Bruce's position as CTO of the company seems to have captured Europe's attention--but not for his scholarly works, his media contributions, his cryptographic inventions, his widely read (125,000) newsletter Cryptogram and blog Schneier on Security, or his invention of the Security Monitoring Services industry. No, Britain is all atwitter because a fictional character in a novel once mentioned Bruce's name! That's the big story here, according to the Financial Times, the Daily Telegraph, the Times, and of course the Sun (pictured here).

Oddly they are also reporting a price on the company which is significantly under-stated (I don't know why). Anyway, it wasn't a home run for the investors, but it was a nice outcome.

Regardless, the company's success reflects heroic execution by CEO Paul Stich, VP Ops Doug Howard, VP Sales Kevin Senator, CFO Criss Harms and many others. Launched at the height of the bubble, the team scraped through the downturn years and emerged as the dominant independent company in the high end market for security monitoring services.

Technorati Tags: counterpane bruce+schneier schneier british+telecomm security+monitoring da+vinci+code
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Religion: Even Stevphens

As my readers know, I'm not a big link-poster--I post only when I think I have something original to say. (Of course, that leads to some awfully awkward silences, like most of October!) Though I do often fall in love with my own ideas, I post strictly original content for an entirely different reason--I personally find most link-posts disappointing and redundant, and I'm really not looking for volume (look, Ma, no ads!).

Of course, the only thing worse than a link-post is a link-post with a long-winded caption... like this one!

But the clip below just made me laugh too hard not to share it. Furthermore, with all the recent media recognition of the New Atheism, this video gives me unprecedented hope in the positive direction of our collective intellect.

Thanks to my friend Rabbi Alex Seinfeld for sending me this clip. If you happen to read Seinfeld's blog (and yes, he's related to Jerry), you might guess correctly that I'm Adam, the un-named atheist who pocket-calls the rabbi late at night.

Enjoy!!




Update: This video no longer works. It is a victim of Comedy Central's legal campaign to cleanse YouTube of copyright-infringing material--it appears that Viacom is sore at not being invited to the Big Payoff Party that Mark Cuban describes here. If Mark is right, the strategy was bound to backfire as copyright owners lined up for their payoff. YouTube couldn't license or issue stock grants to every potential claimant--the long tail of plaintiffs like this one is rather long.

I have been unable to find even a link to the content on Comedy Central's site. Suggestions are welcome.

New Update: According to this, Viacom is letting the clips run again on YouTube.

"Like our peers in the media industry, we are focused on finding the right business model for professionally created content to be legally distributed on the Internet," the statement read.

You can see the emphasis on "Like our peers," which means How come we didn't get a piece of the deal?

Disclosure: As I cast my little stones, I should disclose that any criticisms I have for YouTube may in fact stem from (i) Bessemer's investment in the copyright-respecting video service Revver, and (ii) insane jealousy at YouTube's great outcome.

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Richard Dawkins Coming to Kepler's!!!

Michael Shermer's brilliant appearance at Kepler's was such a sellout success for him that he helped us convince the great Richard Dawkins to squeeze Menlo Park into his latest book tour, tickets for which have been selling out across the country. Indeed, the Oxford University professor will appear at Kepler's this Sunday at 5:30pm to sign his latest book The God Delusion, and you don't need tickets.

Dawkins is the pre-eminent evolutionary scientist alive, having authored the classic exposition The Selfish Gene, as well as Unweaving the Rainbow, The Blind Watchmaker, and my personal anti-Bible A Devil's Chaplain. In his latest book, Dawkins coaxes the silent crowds of atheists out of the closet so we can reckon with obsolete religions that retard science, stifle educators, cripple government, outlaw stem cell research, promote terrorism, preclude peace, suppress women's rights, and impoverish the gullible. In its groundbreaking cover story this month, Wired calls Dawkins "the leading light of the New Atheism movement."

From Salon's abstract of their interview with Dawkins:

In the roiling debate between science and religion, it would be hard to exaggerate the enormous influence of Richard Dawkins. The British scientist is religion’s chief prosecutor — “Darwin’s rottweiler,” as one magazine called him — and quite likely the world’s most famous atheist. Speaking to the American Humanist Association, Dawkins once said, “I think a case can be made that faith is one of the world’s great evils, comparable to the smallpox virus but harder to eradicate.

Of course, no news is real news until Stephen Colbert says it is. Here's his interview this week with the "scientist who argues there is no God...with an eternity in Hell to prove it."


I expect that on Sunday Professor Dawkins will talk about his new Foundation For Reason and Science. I hope to see you all there, with plenty of books in hand for the rottweiler to sign.

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I Shouldn't Drink and Jive...

I'm in the back seat of a car connected by Verizon EVDO, on my way home from the happenning Business 2.0 Disruptors roundtable and party on the Hotel Vitale terrace. They served no dinner--only wine--so please excuse my spelling. (It's all a bit of a blur--I hope I didn't make any investments...)

Congrats to NextMedium and Zopa, two Bessemer companies named in Business 2.0's coverage of the top 11 disruptive startups. At tongiht's event, Paul McNamara told me about Coghead (backed by El Dorado), a hosted visual app development environment that sounds so cool I begged him to let me bypass the long line for Beta accounts.

I've always chided my kids for being disruptive--perhaps I should reconsider.

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Finding Vimo

Finding a short, meaningful, memorable and legally unencumbered trademark to name and brand an internet startup is obviously hard to do today, especially in the US where you need the precise .com domain name to prevent web leakage. Just as when we name our children, entrepreneurs must also avoid selecting names that evoke unintended meanings or nicknames. Chevrolet allegedly learned this lesson when it failed to sell the Chevy Nova (Spanish for "No Go") in South America.

So the folks at Healthia were happy to announce yesterday that they have selected a long term moniker for their company (and without retaining a "naming consultant"). The new name Vimo evokes:

(i) vim, as in health, vigor, and vitality;

(ii) the Gujarati word vimo, meaning insurance;

(iii) the Swahili vimo, meaning measurements and also stature;

and, most importantly

(iv) the urban slang vimo meaning sexy, cool and impeccable.

Vimo announced its new name as it launched several impressive new features of its free healthcare shopping portal (full details here). For example, the MyVimo service tracks your doctors for new patient reviews and disciplinary actions. And the insurance comparison tool identifies the particular plans your doctors accept (submit your age and gender here, and then filter the results based on your doctors).

For a limited time, get a free T-shirt from Vimo just for reviewing your doctor. While Vimo's portal will enhance your vigor, the shirt will make you sexy, cool and impeccable.

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If You Live In Massachusetts...

While I blog about the poor state of education in our society and the scientific illiteracy of our elected representatives, my friend and former business partner Chris Gabrieli is actually doing something about it. Let me tell you what he has done, and why you should vote for him this Tuesday Sept 19 to be the Democratic nominee for Governor of Massachusetts.

Education. Chris has spent the better portion of the last six years raising over $35 million for after school program initiatives for Massachusetts children. In fact, this fall ten (10!) schools are providing longer school days for public school children - the first initiative of its kind in the United States - directly due to Chris's work through his non-profit Mass2020. He worked with the Democratic House and Senate, as well the Republican leadership to ensure that the program was funded. As the son of immigrants who came to this country with only their education, Chris and his brother were expected to produce the grades - and they did - and they both went on to carve out impressive careers in business and education (Chris’ brother, John is a professor at MIT). Chris realizes first hand the importance of a good education – and, as a father of five, feels personal responsibility to ensure this for all children throughout the state. He isn't just talking a good game - he's out there doing something about it.

Science: Chris is a scientist by training, but had to leave medical school to return to and save a family business in distress—a healthcare information systems company that he and his father ultimately took public. During Chris’ 15 year tenure at Bessemer, most of his venture capital investments were in cutting edge technology and medicine, resulting in over $1 billion invested in the economy and over 100,000 jobs. He understands the language and the ideas behind the types of innovation that will drive the future of Massachusetts’ economy- and is ready to act on them in order to pull Massachusetts out of its sluggish situation. In 2005, when Gov. Romney threatened to veto the stem cell research bill, Chris led the charge to ensure its enactment - paving the way for groundbreaking research in your state.

Having worked alongside Chris for many years, I'm thrilled at the prospect of an honest, brilliant, and effective candidate stepping up to public service (too bad he doesn’t live in California). I can tell you that the man genuinely cares about Massachusetts, as demonstrated by his volunteer activities over the last 8 years. He is not a partisan politician— Chris doesn't care from where or whom an idea comes, so long as it's a good idea. Building a tunnel that doesn't fall down is neither a Republican nor a Democratic idea - it's simply a good one. Educating our children for the twenty-first century economy is neither a Republican nor a Democratic idea - it's simply a good one. And electing a Governor with a proven track record in education, business, medicine and technology is neither a Republican nor a Democratic idea - it's simply a good one.

That’s why the registered Independents among you (who represent 49% of Massachusetts) should also exercise your right to vote in this Tuesday’s primary. (This will not affect your independent status.)

The roots of our nation’s scientific and academic communities are planted in Massachusetts. You deserve a Governor who will ensure that the next generation of Massachusetts citizens will learn, embrace, and perpetuate the state’s proud tradition of leadership in education and technology. So please email this message to your friends and neighbors, and take the time this Tuesday to vote for Chris.

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Shermer Coming to Kepler's!

I am already jittery at the thought of meeting author Michael Shermer, who will appear at Kepler’s Bookstore Sept 9 at 7:30pm to sign his latest book, Why Darwin Matters: The Case Against Intelligent Design. I hope to be more articulate than my last encounter with a celebrity atheist.

Shermer is the editor of Skeptic Magazine, and founder of the Skeptics Society. He contributes a monthly column to Scientific American, and hosts the Skeptics Distinguished Lecture Series at Caltech, having featured Stephen Jay Gould, James Randi, Jared Diamond, Steven Pinker, Richard Dawkins and Daniel Dennett. He produced the Fox Family TV series Exploring the Unknown, and he has written many life-changing books on science, including The Science of Good and Evil, Denying History (deconstructing Holocaust denial), The Borderlands of Science (debunking pseudo-science), Teach Your Child Science (a fun gift for parents), and—my first exposure ever to critical thinking—Why People Believe Weird Things.

An excerpt of his latest book is available here, in which Shermer explains logically why, according to a 2005 Pew Research Poll, 42 percent of Americans express strict Creationist views. Rather than try to un-convert the converted, Shermer proposes to reconcile evolution with theology (in a gesture that I find overly appeasing to superstition).

In fact, Shermer has long been an effective champion of fostering science education, which has come under fierce attack by Intelligent Design advocates, who all coincidentally happen to be highly vested in their religions. (Shermer, raised a Christian Creationist, had the intellectual courage to step out of line.) He should be encouraged by this week’s profile of brilliant skeptics titled The New Naysayers that appears in Newsweek, which has long pandered to the church.

I hope to see you at Kepler's on Saturday!

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They Stood at the Foot of the Mount

Disneyland is truly magical. Nibbling away at it for 50 years, Mickey has really perfected the process of managing enormous crowds, and crafting an incredible backdrop to enhance the user experience. Scenic facades obstruct every view of industrial Anaheim so that the eye cannot see past the Magic Kingdom. Even the staff's costumes and the waste baskets' decorations are interesting and contextual for their locations. Furry critters entertain you at the breakfast table, and their nightly parade--watch it as many times as you can from different points along Main Street--is followed by fireworks that will ruin your July 4th.

My family and my sister's weren't the only ones there for a last hurrah of summer, so Line Management was top of mind. The FAST-PASSes (reservations for the rides) worked great in the California Adventure Park, the newer part of Disneyland that has (i) better rides than the original Magic Kingdom park (and a great stage performance of Alladin), (ii) a direct entrance from the Grand Californian Hotel, and (iii) much shorter lines.

But FAST-PASSes don't work well in the Magic Kingdom park--the reservation times would stretch out 6 or 7 hours, and each ticket can have only one outstanding reservation. So even though the kids really wanted to ride Splash Mountain, none of us were up for the 90 minute line. Who has time for this?

Fortunately, our kids were creative, scientific, and motivated. They "scanned the ports," discovering an unmarked Singles Line with a 2 minute wait. They also observed that the passenger logs careening through the mountain have only single seats anyway. So we rode the attraction three times in a span of 25 minutes.

As we left, we saw the same poor souls in line, with little progress to show. My son asked me why they don't do what we did. So as we walked along the line we shared our observations, repeating, "TWO-MINUTE WAIT IN THE SINGLES LINE! TWO-MINUTE WAIT IN THE SINGLES LINE!... "

I guess I didn't expect all of them to move, but I was surprised to see NONE of them budge. They heard our words, they looked, and they just stood there. Having already invested 30, 45, or 60 minutes in their folly, cognitive dissonance clouded their faculties. They didn't even dispatch a family scout to investigate our claim. They just stood their ground, silently and creepily resigned to their fate.

As we approached the beginning of the line, finally one man perked up at our news. Animated, he turned to his group to re-consider their strategy. I couldn't hear the content of the consultation, but a few seconds later he visibly slumped, quietly and literally falling back into line. Oh well.

Skepticism is hard when it demands the concession of long-held notions. The more time and energy invested in a belief, the more challenging it is to shake it. I have seen entrepreneurs bang their heads against the wall 5 years after the market ruled against them. And we have all seen how hard it is to acknowledge even overwhelming evidence that vacates age-old mythologies.

I'm so glad my kids are smarter than that. Thanks to their critical thinking, we all enjoyed a couple extra doses of Disney magic.

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Cross Wits With a 7-Year-Old

My son, a math genius much smarter than his father, periodically pesters Papa for puzzles. So yesterday I created for him this CrossNumber puzzle, in which the empty squares must be filled with the proper numerals. I'm proud to report that he solved it on his own, with occasional help from Google. (His mother had removed IE and Flock from his PC as a protective measure, but he has since figured out how to RDP into my PC whenever he needs a browser).

Across
1	(2+7) * (475 - 468)
3	Declaration of Independence
7	(10-1)2 - 12
8	11 in base 3
9	x	÷	x
10	79, in base 8
11	2*x2 = x+1
12	Binary: 110 - 101 = ?
14	Roll dice 72 times. How many 7's?
15	US Route near home
16	The power of Googol
17	Crosses Stanford Linear Accelerator
18	-3, 0, 3, …
Down
1	0, 2, 4, …
2	Days in April
3	Your age, to a computer
4	1st successful commercial jet
5	23 * 32
6	I am my name
10	Emperor Henry V invades Italy
11	Two minutes
13	James Bond's successor
14	Meitnerium
16	Pawns on board

A solution grid is available upon request.

Fluid Enforcement of Airport Security

This morning I flew out to Phoenix for a meeting just a couple of hours after Britain foiled the terrorist plot to destroy several airliners with liquid explosives, and the TSA implemented its new ban on bringing liquids on board US flights.

Now I'm back in Phoenix Airport awaiting my flight home, with time to worry about terrorists. While I wouldn't expect Al Qaeda cells to attack on a day when security is at level Red, I am not generally comforted by the TSA's implementation...

-- The passenger in front of me was allowed to board with a bottle of alleged cough syrup because she had a prescription with her.

-- I was joined in Phoenix by my colleague Brian Neider who was allowed to bring his contact lens fluid on board because he "REALLY needed it."

-- a passenger on Brian's flight smuggled liquid onto the plane in his pocket, undetected by the metal detectors and out of sight of the X-ray.

I hope the terrorists never think of putting explosives in their prescription bottles, or pocketing the bombs, or insisting that they REALLY need their bombs. (I might feel a little better if passengers had to somehow ingest their fluid before allowing it on board, but only if the explosive liquid was sure to kill them before they were airborne.)

OK, attendant is making me shut off my phone...

Blink: The Nonsense of "Thinking Without Thinking"

As my regular readers know, no muse better inspires me to find Time For This than the large scale suspension of thought. For example, I have ranted about Creationism, alternative health scams, and bullshit products. Today’s plea for logic is yet another book review of an allegedly non-fiction bestseller (now the longest-running title on the NY Times list). Malcom Gladwell's "Blink" attacks reason itself, threatening to sap our collective intelligence for years to come. I confess I did pay for this book, but hopefully I can save some of you the frustration, time, and $26 that it cost me. Sorry if I’m too late.

In the pursuit of serendipity (which is arguably an oxymoron, but also my day job), I often supplement my reading list with books collected on shopping sprees through Kepler’s Bookstore. So stacked near the cash register, Gladwell’s book caught my eye on a day I was pre-disposed toward impulse purchases. Having heard many references to the book (e.g. Brad’s reading list), I grabbed it before a second Blink of the eye.

The book's premise is that experts can make instant decisions--synthesizing inputs and knowledge into intuitions that yield better results than long, painstaking, thoughtful analysis. So if you want to be an expert, learn to trust your instincts. Always go with gut feel.

Gladwell backs up his fortune cookie thesis with a smorgasbord of anecdotes that are anything but consistent. Sometimes the subject clearly, consciously understands the elements of the decision (e.g a military commander), and sometimes not (e.g. art dealers wary of fraud). Some happen literally in the blink of an eye (e.g. the tennis coach who can sense a bad serve coming), while others take 150 blinks (e.g. the marriage therapist who plays Let's Guess Who Will Get Divorced). Many are simply lucky guesses validated by time, like the ravings of any psychic who inevitably hits paydirt. And based on Blink, you'd think no one has ever guessed wrong.

One counterexample would be my hasty decision to buy this book. Had I blinked enough times to at least judge this book by its cover, I'd have evaluated the full title, "BLINK: The Power of Thinking Without Thinking." Of course, logic dictates that for any X, "The Power of X Without X" is nil. As usual, the Power of Thinking With Thinking (please excuse the redundancy) would have served me better.

Rather than enumerate every problem with this book (Who Has Time For This?), I can simply refer to Univ. of Chicago Professor Richard Posner's in-depth review in New Republic, which concludes:

...these literatures demonstrate the importance of unconscious cognition, but their findings are obscured rather than elucidated by Gladwell's parade of poorly understood yarns. He wants to tell stories rather than to analyze a phenomenon. He tells them well enough, if you can stand the style. (Blink is written like a book intended for people who do not read books.)

Do you really want your doctor making instant decisions based on first impressions? What about the structural engineer of your home, your child's school teacher, your pension fund manager or your nation's President? My own sickening gut feel is that the man whose finger is on The Button has read Blink (or at least looked at the pictures). Apparently, Stephen Colbert agrees, as he observed in his speech to the National Press Club Dinner about President Bush:

We're not so different, he and I...We're not some brainiacs on the Nerd Patrol. We're not members of the Factinista. We go straight from the gut, right sir? That's where the truth lies--right here in the gut. Did you know you have more nerve endings in your gut than you have in your head? You can look it up. Now I know some of you are going to say "I did look it up and that's not true." That's because you looked it up in a book. Next time look it up in your gut.

Now I hate to always be a spoilsport, so here's an alternate book for your summer reading list: A Dirty Job by Christopher Moore (which Brad also reviews here). Moore authored such classics as Island of the Sequined Love Nun and Lamb: The Gospel According to Biff (indisputably Moore's best work). Excerpt:

"Why do you call this dog Mohammed?" asked the bearded man.
"Because that's his name."
"You should not have called this dog Mohammed."
"I didn't call the dog Mohammed," Charlie said. "His name was Mohammed when I got him. It was on his collar."
"It is blasphemy to call a dog Mohammed."
"I tried calling him something else but he doesn't listen. Watch. Steve, bite this man's leg? See, nothing. Spot, bite off this man's leg. Nothing. I might as well be speaking Farsi. You see where I'm going with this?"
"Well, I have named my dog Jesus. How do you feel about that?"
"Well, then I'm sorry, I didn't realize you'd lost your dog."
"I have not lost my dog."
"Really? I saw these flyers all over town with 'Have You Found Jesus?' on them. It must be another dog named Jesus. Was there a reward? A reward helps, you know." Charlie noted that more and more lately, he had a hard time resisting the urge to fuck with people, especially when they insisted on behaving like idiots.

Like Blink, A Dirty Job is fictional, and it's a dollar cheaper.

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Separation Anxiety

This week my 3-year old boy started summer camp, and so we had to deal with separation anxiety, of a sort.

I delivered him that first morning to the classroom, where most of the kids were crying, clutching onto their parents. Chaos overwhelmed the two counselors, who tried to appease the screaming campers and relieve the parents who were late for work. They didn't have much time to greet my son, or show him around. So I found him a seat at a crafts table and brought him some crayons, paper, and play-doh.

My son looked around, confused. He didn't know any campers. No one was paying any attention to him. The room was strange and cacophonous. How could I simply walk out and leave him there? Should I stay? Help him make friends? Hold his hand? Take him home???

He gestured for me to come close so he could talk to me. But what could I possibly say to re-assure him and make him feel comfortable here? I leaned down, and got real close, so I could hear him in the noisy room.

He kissed me and said, "Bye, Papa." He started coloring, and I mustered the courage to walk out of the room, thinking that just maybe everything would be okay.

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Slow News Day for the Wall St Journal

I must admit that when I picked up the paper on Saturday and saw my picture front and center, my first thought was Shit, have I been indicted for something?

Apparently, though, I'm just a nerd. Big news.

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Return of the Cyber Street Walkers

My second worst addiction is Yahoo! Chess, where you can find players of all skill levels--night and day--for a 4-minute blitz game.

Like any web community, Yahoo!Chess has an Instant-Message window, where the chatter alternates between chess nerds flirting and homophobic racists spouting names at Bush-whacking foreigners. That is, until about a year ago, when the streets of our cyber neighborhood--like those of any thriving economy--attracted the online equivalent of hookers. In order to drive traffic to their pornographic web sites, these clever bots engage players with flirtatious chatter crafted to simulate genuine chess-playing hotties.

While the chat window hadn't previously interested me, I now enjoyed watching these bots fool even chess masters smart enough to force checkmate in seconds with just a bishop and a knight. Finally, profit has motivated the development of artificial intelligence that can pass Turing's Test with an A!

Sidebar: the Turing Test

In 1950, the father of computer science Alan Turing published "Computing Machinery and Intelligence" in which he proposed a practical alternative to the meaningless rhetoric around the question of whether machines can think. Turing observed that it would be difficult to deny the presence of cognition in an artifically intelligent machine if a human judge, communicating textually with both the machine and another human being, cannot identify which is which. An unclaimed prize awaits the programmer whose invention passes the test, and meanwhile an annual prize awards the best contenders. (You can appreciate first-hand the progress made from Eliza in 1966 to Jabberwacky in 2005.)

Unlike other AI engines, the Yahoo! bots do not even incorporate the human being's questions into their responses. Rather, they exploit the disjointed nature and shallow personae of adolescent chat to spoof a teenage girl, as demonstrated by these pearls of wisdom recently quoted--typos and all--from A_busty_babe_cc_32 (interjected with comments from armandolinares001, a naive suitor):

can any guys beat me?

you play good

19/f bored with pics in profile

can i see?

Hi... 19/f :-) Pics in my profile

do you have a profile?

oOOooOooo

yeah, in my profile

ohh

armandolinares001: hi

tee hee

armandolinares001: wat?

are you married?

armandolinares001: no u?

I love cheesy poofs

you play good

19?F/Cali web cam and pics in my profile!

I'm feelin gfrisky

lolol

thats hot

The enterprising authors of these bots obviously found a market because, as I expected, Yahoo!Chess was soon overrun by them, competing for attention in the sort of bot-on-bot action seen below.

With the bots obviously working--so to speak--I was surprised two weeks ago when they suddenly disappeared, just like that. (For readers of the novel Earth Abides, the life cycle of internet scourges like this one recall the rise and fall of species in the power vacuum of post-human Earth.) And then, just as suddenly one week later, they all re-appeared, as if returning en masse from the Hooker Bot Conference in Vegas.


The only clue I have to their mysterious hiatus is the difficulty logging into game rooms that week, often trying several times before I could get in. In their game of cat and mouse with the pornographers, was Yahoo! testing a new filter mechanism? My guess is that it excluded the bots at the expense of user experience, forcing a retreat to the staus quo.

So the bots are back, but like any good internet scourge (email viruses, spam, P2P song theft, click fraud...), the scammers colonized so quickly that they overhunted their prey--the Fooled Chess Player is now as rare as Japanese coastal tuna or American Buffalo.

Meanwhile, if you're seeking a real bot relationship, I recommend you find one with broader and less prurient interests. The best one out there is Spleak, who will buddy up with any user of MSN Messenger.

Ed. note: If you don't believe this story, check out Yahoo! Chess for yourself (and while you're there, invite me to your table for a quickie).

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China Pulls Ahead

Contrast how China makes use of its Great Hall of the People with how the US proposes to make use of its own legislative hall if Republican Congressman Lynn Westmoreland's bill is passed. (Be sure to click on Westmoreland below to see Colbert's brief interview--it's funny and yet depressing.)

Yes, The Ten Commandments are turning America into laughingstock. (Have you seen this legislative gem?) From the NY Times article:

Imagine, several string theorists in the audience mused, if a physics conference in the United States started in the House of Representatives.

China, meanwhile, surges ahead on the strength of science, overtaking us in graduate education and research spending. Heeding the sobering advice of Stephen Hawking to save our species, China this week has even announced plans toward building a lunar space colony.

Our rivalry with China could be the plot of a chapter from Gardner Dozois' acclaimed SciFi collection Galileo's Children.

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Bessemer's Fall 2006 Television Lineup

In addition to Delivery Agent (see prior post on Dwight Schrute Bobbleheads), here are seven other investments Bessemer has recently made on our Television 2.0 road map that address the rapidly changing landscape of video entertainment (in no particualr order):

1. IAG Research

Last week we announced our investment in a research/information service that complements Nielsen data with a new kind of measurement: rather than count households in which an exposure occured, IAG measures the quality of the exposure by surveying hundreds of thousands of TV and movie viewers every month on brand awareness, recall, and preference. By subscribing to IAG data feeds, brands can intellgiently allocate media budgets among the emerging ad platforms like web players, mobile video, and brand integration, precisely comparing each format's efficacy to the traditional 30-second spot. IAG subscribers include Toyota, Lexus, Nissan, GM, DaimlerChrylser, Kia, Verizon, Sprint/Nextel, American Express, Johnson & Johnson, P&G, Paramount, Sony, Merck, Pfizer, the NFL as well as the leading networks including NBC, CBS, FOX, WB, ESPN, Bravo, USA, Lifetime, TBS, TNT, and Food Network.

2. NextMedium

I recently joined the board of NextMedium, the emerging marketplace for Audited Brand Integration. NextMedium debuted its platform last month at the TV Upfronts, where demand from advertisers exceeded expectations. With the decline of the 30-second spot, the advertisers need a new medium for reaching broad audiences with visual exposures affiliated with content and characters that speak to the consumer. Integrating brands into TV, movies, and music videos offers them exposure that works regardless of whether the video is viewed live, on Tivo, through iTunes, on a phone or in a re-run. And the studios/networks need the new revenue stream to subsidize production as traditional ad revenues decline. (Click here to see Cisco's brand integrations in Fox's series 24, especially this one, where Chloe tells Division Chief that the terrorists couldn't hack CTU's system because "Cisco networks are self-defending.")

All indications from advertisers and producers point to audited brand integration as a hypergrowth market. (Indeed, roughly a third of IAG's revenue comes from their In-Program service.)

NextMedium takes product placement (in which products are supplied free for their production value) to the next level by creating a reliable, scalable, and measurable system for selling targeted exposures to brands. Producers propose integrations, advertisers bid for them, and the director selects the brand, incorporating creative concerns. Most importantly, NextMedium buyers pay for performance by bidding a price that varies based on exposures, using audited Nielsen data. I like to think of it, of course, as the Google of branded integration.

3. WorkMetro

As Tivo kills commercials, the cable companies also seek alternative revenue streams. So Comcast, Cox and Time Warner are getting help from WorkMetro (where I have also recently joined the board), which launches localized job listing sites promoted by their cable partner.

Having invested early in Hotjobs, I'm well aware of the competition at the high end, but local job seekers and employers, who don't necessarily use PC's all day, have mostly remained loyal to their local newspapers, where job listings typically generate the profit. Now WorkMetro is taking a bite out of that market, bringing the benefits of the internet and video-on-demand job listings to TV audiences.

4. GoTV

GoTV is the largest producer of made-for-mobile video entertainment. Sprint, Cingular, Nextel, Boost (and soon Verizon and many others) carry channels from GoTV offering news, sports, music, comedy, and more on demand, Tivo style. GoTV is the mobile distribution partner of ESPN, ABC (Lost, Alias...), Univision, iFilm, Sony, and others. Most of the content is produced in-house by GoTV's studio, led by Dan Tibbets who invented the "mobisode" while at Foxlab. The company's CEO is Dave Bluhm, a Bessemer EIR whom our mobile investor Ron Elwell recruited to run the company.

GoTV's servers automatically scale down the frame rate to suit your phone, but by the end of next year, CTIA projects that 22% of handsets in the US will be 3G and video-capable.

5. Siano Mobile Silicon

To serve consumers who want live TV, phone manufacturers are increasingly designing in MDTV receivers from Siano, whose all-CMOS chips are multi-band and multi-standard (DAB, T-DMB, DVB-T , DVB-H) for global coverage.

6. Revver

Skype investors Rob Stavis (Bessemer) and Howard Hartenbaum (Draper Richards) funded Revver, an advertising network that embeds ads within user generated videos, sharing revenue with the creator. Here's a recent favorite playing on the site.

7. Access Retail Entertainment

Access produces MTV-style entertainment in a venue without Tivo's ad-skipping for a growing network of over 5,000 retailers including Journeys, Underground Station, Vanity and Macy's, reaching over 40M youth each month. Cingular, Samsung, Wrigley's and others find that Access generates better brand recall than TV spots.

Dwight Schrute Bobbleheads!

In my previous post Television 2.0, I alluded to 6 recent investments that we have made bringing internet functionality to TV’s juicy markets. The most recent is Delivery Agent, a San Francisco pioneer that has cracked the code on leveraging Hollywood content into high-margin e-commerce.

Delivery Agent promises a new revenue stream for studios and networks in a world of declining ad revenues (e.g. last week J&J pulled out entirely from the TV Upfronts, depriving the industry of its typical $500 million media buy). Leveraging the interactive and transactional capabilities of the internet. Delivery Agent brings community and e-commerce to the loyal fans of movies, TV, and music videos.

Now, on the same web site that streams recent episodes, you can shop for clothes, electronics, cars, or any other prop that graces the scene. Buy Teri Hatcher’s jeans, or a Dwight Schrute Bobblehead. Load up on insignia Olympics jackets from Torino, or DVDs of last season’s West Wing. And subscribe to RSS feeds that keep you on top of the fashions and special offers, like the chance to bid on the actual miniskirt Eva Longoria wore when she tramped over to her young gardener’s apartment.






The company is already executing brilliantly, as celebrated in this week’s Entrepreneur Magazine. The Apprentice, Lost, Days of Our Lives, Da Vinci Code, Law and Order, Will & Grace, Rent, Alias, General Hospital, Martha Stewart, Monday Night Football and 70+ other shows and films have contracted to partner with Delivery Agent. And as more and more programs stream on the web, the conversion ratio of watchers-to-shoppers will obviously rise (Delivery Agent's technology will even enable Click-to-Buy while watching). Ultimately, Delivery Agent’s infrastructure will enable any manufacturer or retailer (online and offline) to drive demand by associating their merchandise with the media in which they appear.