Silicon Insider: Potpourri of Tech Musings

Nov. 17, 2005 — -- I'm off to the U.K. for the annual "Silicon Valley Comes to Oxford" gathering at Said Business School at Oxford University. The event, now in its fourth year, was born from a birthday present (a guest lecture at the brand new school) from my staff at Forbes ASAP, and has now grown into a tradition that attracts hundreds of MBA students and Thames Valley business executives to a day of master classes, speeches and a public roundtable in the evening.

This year's Valleyites include Craig Newmark (founder of Craig's List), Reid Hoffman (co-founder of LinkedIn), Evan Williams (co-founder of Blogger.com), and Robert Young (co-founder and former chairman of Red Hat Software). But as impressive as this group is, the real stunners are the MBA students themselves -- the most international of any B-school on the planet. They are brilliant, articulate and ferociously entrepreneurial.

Each year, I ask the assembled evening crowd of 500 students and CEOs how many consider themselves to be entrepreneurs. The first year, perhaps 10 percent nervously raised their hands. Last year, the percentage was more than 80 percent. It gives you hope for Britannia.

So, as I pack and prepare my notes, some random thoughts on what is proving to be a very interesting season for high-tech:

Wednesday was the formal official debut of Pajamas Media, now officially renamed Open Source Media, or OSM. Since I'm writing this on Monday night, I can't tell you how the press conference went. However, I have been talking a lot with these folks over the last couple weeks, so I have a pretty good idea what is coming.

I'll predict that some of the press coverage will be pretty dismissive, even vicious. Ignore those stories. Trust me, the press is scared to death of the rise of a financially independent blogosphere -- even as individual reporters, facing layoffs, are trying to figure out how to become part of it. Instead, entertain yourself by trying to read between the lines of these MSM stories: which stories were made more vicious by angry copy editors, which try to emulate the cocky style of blogs themselves, and which are secretly auditions for a future slot on OSM.

Meanwhile, there are some serious questions you should ask about the OSM announcement:

Answer those questions and you will have a good idea if the blogosphere really is about to explode as the Next Big Thing, whether OSM is the blogosphere's first Apple/Netscape/Google, and whether you should start thinking about jumping on board as a player, employee, investor or shareholder.

Just got an e-mail from an old San Jose Mercury-News employee describing the flattened morale there in light of the triple whammy of falling circulation numbers, the rumors of a pending breakup or sale of Knight-Ridder, and the golden-parachuted early retirement of more than 50 veteran staffers. The first two have received a lot of attention in the last couple weeks (including in this column) as early indicators of the slow death of newspapers in the U.S.

But, to this old Silicon Valley hand, it is the last event that, to my mind, is the most conclusive. If there is one thing I've learned over the years covering high-tech companies, it is that money, even technology, is less important than talent. If you follow the paths of the handful of the top people in any industry, you can pretty accurately predict where success will strike next. Intellectual capital contributes more than any other factor to the bottom line.

The Mercury-News (like just about every other major paper in the country) has either forgotten that, or has decided it no longer matters. There, on the list of 52 buyouts, which included some of the most talented and experienced reporters and editors at the paper, were the names of the two newspapermen I admire the most in the world, the two men who taught me most everything I know about newspapering: columnist Leigh Weimers -- "Mr. San Jose," the most beloved writer in the South Bay; and Pete Carey, two-time Pulitzer winner and the gold standard of investigative reporting on the West Coast.

You might be able replace people like Leigh and Pete. But you have to start with enormous talent -- and that talent is going online these days, not to newspapers. Also, you need to spend 30 years seasoning that talent -- newspapers don't have that much time left.

You may have noticed the sudden recent burst of stories about the blogosphere in the last few weeks, some of it sour, most of it with that stunned amazement we last saw with the rise of e-commerce companies -- i.e., "Who are these people? Why is everyone talking about them? Are we missing something?"

Given this flurry, one recent story was almost buried that, in quieter times, would have gotten a lot more attention. It too, I think, is a bellwether of things to come.

The story is that Andrew Sullivan, onetime enfant terrible editor in chief of The New Republic, and lately one of the world's most popular bloggers ("The Daily Dish") is moving his site over to Time.com, as the first storefront in what Time is calling a new "blog neighborhood."

This might seem like a retrograde move -- and time may prove that to be the case. But for the moment, it illuminates two important trends:

1) The growing need of successful bloggers to either create or sign on to some sort of financial/technical/organizational infrastructure. Otherwise, their very success is beginning to grind them down. Combine Andy's move with the OSM announcement, and you see an early indicator of the first mass consolidation (and shakeout) in this industry.

2) The race, about to begin, by the more astute players in the Mainstream Media to sign up major bloggers to their own private rosters. This is not only going to accelerate the industry's consolidation, but also eventually lead to a bidding war between startups like OSM (offering equity) versus the MSM (offering security and salaries). Bet on the startups; but either way, the content creators (like Sullivan) win.

Finally, there was Monday's announcement by AOL that it would begin offering old TV shows online for free, if viewers are willing to watch a couple minutes of commercials. Approximately 30 old series will be available, in broadband, on a six-channel network called In2TV on AOL.com beginning in January.

Eventually, the number of offerings is likely to jump to 100 series, from sitcoms to dramas to cartoon shows.

Not surprisingly, this led to a lot of slack-jawed media coverage, most of it involving variations on "Welcome Back, Kotter."

In fact, there are some major back stories here that will only become clearer with time. The first is that this likely signals the beginning of the end for TV Land, Nick and Nite and, eventually TMC and AMC -- not to mention the retail sales of DVD sets of vintage series. Why spend a lot of money or set your viewing to someone else's schedule when you can just get the show online?

The second story is that this is the first serious commercial model for television in the Tivo Era. If it works, In2TV won't just be offering old series, but, you can bet, brand-new ones. Think of what that means for commercial television.

Finally, with all of that content floating around out there in digital, don't be surprised to see a secondary market in re-cuts and re-edits by enterprising young hacker/producers.

Welcome back, Kotter, indeed…

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called "the Boswell of Silicon Valley," most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years; and a 16-part interview series in 2001 called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books: his latest, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight" (Wiley).