Newly-elected Maryland State Senator Bill Ferguson was recently named to the Baltimore Business Journal‘s Power 20. This week they asked me, as a friend of Bill’s and member of a previous Power 20 cohort, to comment on Bill’s relationship with and use of power.

“Bill is a curious, humble, and earnest young man, and he represents a true shift in how power is conferred in this town,” I said. “He didn’t work his way up through the ranks and spend a few years as a city council person, or wait his turn. Bill was able to win because of a shift in political power that’s taking place right now. He derives his power from the people, not from the system.”

Political power is now being conferred through the accumulation of weak and strong ties with citizens, and no longer by top-down power structures, power-brokers, and kingmakers. Don’t get me wrong; those folks still have an impact (they did in Bill Ferguson’s race – they got behind him when it was clear he was onto something), but that impact is waning. And things that were previously unthinkable are now possible.

It may seem like hyperbole to compare the situation in Baltimore to what took place over the last three weeks in Egypt. But it’s an apt comparison.

For decades in both places, people have felt marginalized by a top-down, tone-deaf government that was more interested in its own well-being than that of its citizens. In both places, decades of neglect and mismanagement have led to a serious crisis of confidence.

People are fed up. They’re tired of feeling marginalized, the failed programs, the broken promises, the lack of accountability and the inability to implement imaginative solutions. For 60 years, Baltimore’s population has been in decline, and places in decline have not had the benefit of oversight, dollars, or creative leaders. Instead, corruption (explicit or implicit) festers.

The Perfect Storm

Several factors are emerging all at once:

• Young people want to live near their work and are tired of commuting (and they’ll accept a pay cut to do it)
• Our roads are full and can no longer be meaningfully expanded due to lack of space and funds
• Fuel costs are projected to rise as China’s demand grows exponentially
• Online networks are having a meaningful impact on real-world relationships and politics

These factors, combined, have made Baltimore the most important jurisdiction in Maryland – practically overnight. Yet our leadership has not caught up with this reality.

Baltimore’s recent rise to relevance combined with the power of communications networks will create stark shifts in the power structure.

Two Kinds of Leaders

Today we have a choice between two kinds of leaders. We can choose between the leaders that the system hands us, or we can choose to put our faith in new, emerging leaders with whom citizens have a legitimate connection and a voice.

It is sadly telling that Mayor Stephanie Rawlings-Blake’s much-promoted (Orwellian, broadcast-oriented) Safer City social media campaign follows just one person on Twitter: the Mayor herself. And it has just 78 followers. Why? Because it’s all for show, and no one legitimately cares about a program to mitigate a problem – people actually want to solve it at the root. To hell with a Safer City: give me a city where everyone can earn a living, and I can bet you it’ll be safer.

But our politicians don’t know that, because they have not taken the time to benchmark ourselves against other cities or learn from best practices elsewhere. Baltimore has more cops per capita than any other city. Why is that?

Because we need them. Why do we need them? Because we have a lot of crime. Why do we have a lot of crime? Because we have no middle class. Why do we have no middle class? Because we have not seriously focused on enabling small business formation, which is the number one driver of jobs. Instead we have given tax handouts to fatcat developers so they can build big projects and enrich their cronies.

Yes, clearly the cure is more cops. As the Mayor told the Baltimore Sun’s Justin Fenton, “Maybe we could do without as many officers, but that’s not what the public wants. They want more patrolmen on the street. They want more police in the neighborhood.”

No, Madam Mayor. What the public really wants is for these root cause issues to be addressed. It takes true leadership and understanding to go beyond just treating the symptoms.

Accelerating Change

Some have called the recent events in Egypt “the Twitter and Facebook revolution.” A few have scoffed at the idea that these tools could spark a revolution and cite eons of revolutionary precedent as proof. But it’s a mistake to dismiss their role.

Online networks are accelerants. They create connections passively where none might otherwise exist. Critical mass for change comes when the density of connections between people reaches a threshold level. Ideas spread between networks instantly. What might have taken 10 years before now takes 1 year.

The Soviet regime could never have survived in the age of networks. Iraq would have collapsed under its own weight if given time and these tools.

And the same repressive structures will fall in Baltimore, for the same reasons.

To quote Gandhi: “First they ignore you. Then they laugh at you. Then they fight you. Then you win.”

50% Off Loaves and Fishes…

Every few years a company emerges that grows so swiftly that it manages to define the zeitgeist and often helps to inflate a bubble that defies any rational explanation. Often these businesses are driven by new, disruptive ideas that take the market by storm and create a real shift in how people do things. Amazon (and online shopping), Google (and the search business), and Apple (music, smartphones, and touch computing) fall into this category. They created real, thick value.

For every one of these, there are others that grow, get tremendous buzz, and then seem to dissipate as quickly as they emerged. Or they settle into a kind of staid middle-age, their torrid teen years long forgotten. Think about 90′s darlings like IOmega, Boston Chicken, eBay, and Home Depot. It can be difficult to predict which businesses will stick around and which will fall away (or become low-growth, boring enterprises).

Groupon has emerged as the “Jesus Startup” of 2010-2011. The industry always needs one, and they tend to conform to an archetype and have a mythical story: the visionary CEO (Marc Andreesen, Evan Williams, Mark Zuckerberg) who experiences a remarkable rise to greatness. For this story and for these 15 minutes, we have Andrew Mason, the humorous and self-deprecating everyman who declares of the fledgling Groupon, “We could still fuck this up.”

The implication is that they’ve done something to “ace” it so far. But the truth is that they are just regular guys that started out doing something else (some kind of social mission charity stuff – blech – don’t talk about that, it’s not compatible with the visionary myth). And after executing on their original idea and experimenting a bit, they found themselves in the middle of a new exploding business model. Kudos for that. But as is the case with most “Jesus Startups,” there’s been a notable lack of critical thinking about what happens next.

Here’s where I think Groupon is weak.

1. Over-reliance on hypergrowth.

Groupon has posted some crazy huge numbers as they push through massive expansion into new markets. When you are turning up a new major metropolitan area every few days, gross revenue numbers are going to grow very quickly as businesses rush to be part of something that’s got so much buzz. As their geographic footprint stabilizes, top-line revenue will start to level out. When that happens, the business becomes much less interesting and has a lower upside (see Home Depot, Gap, Boston Chicken, Microsoft). This is why a push to IPO while this hypergrowth is happening seems to be a priority for the company.

2. Customer fatigue.

If you have been using Groupon, Living Social, GILT, HauteLook, or any of the countless other sites that rely on daily emails to get their message out, I’ll bet your experience has been something like this: at first you reviewed the emails every day; you bought a few things; you are now buying almost nothing; now, you may not look at the emails at all; you still have unused Groupons. Time is money, and people have too much crap. Eventually, people are not going to take the time with this. And when Groupon has exhausted all the “easy hits” that drive people to buy, then what? Besides, I thought email was “dead” and for “old people.” Right? Or did I miss something? (Sure, the deals spread through Facebook or whatever social channels, but email is a huge part of the business model.) As younger folks steer away from email, it’s an open question whether the current “daily deal” model can be sustained.

3. Business fatigue.

Businesses are tripping over themselves to be part of the latest new thing and expose themselves to thousands of customers at a shot. And sure, a Groupon deal can be a great opportunity for some businesses. But many businesses (some say up to 40%) have found that doing a Groupon deal can be a costly mistake that actually damages their business. The economics of the deals deliver a fraction (typically 25%) of the face value, which often does not cover their costs. While there is some breakage (unused deal revenue that can offset losses), this still may not cover the cost and hassle the promotion entails. Additionally, businesses that undertake in smart advertising can promote themselves all year round. A business can do a Groupon deal at most once every few months – otherwise the deal just doesn’t seem “special” enough. Groupon is a great novelty that can help some businesses become better established, but I really wonder if many businesses would participate more than once or twice, when compared to ongoing targeted marketing initiatives.

4. Scale as the only barrier to competition.

There are now thousands of competitors to Groupon (Living Social is the largest). There will be thousands more. The reason why both companies have received such massive investments to date is that they need to get big to create a local sales force in every market in the world, which is obviously an expensive proposition. If they can get sufficiently big, they can build a sustainable business that will dissuade new market entrants simply because any competitor would have to build a worldwide localized sales force. And if you’ve ever had to run a local sales force, you know that it’s a very expensive, messy, people-driven business. The business that Groupon will eventually most resemble structurally is the Yellow Pages. With sales teams in every city, the major directory publishers were able to exert a near monopoly control over the interface between local businesses and consumers, and Groupon is going after the same market. The difference is in Groupon’s use of technology and use of social. Otherwise, the two businesses are nearly indistinguishable. The assumption is that Groupon’s scale will prevent competitors from gaining a foothold, but I don’t see any real reason a focused local competitor couldn’t develop a sustainable business.

5. Tone-deaf on China.

Groupon has undertaken a massive push to expand into China. That sounds great, and any US investor would likely salivate over such an aggressive, prescient-sounding move. Ah, that Mason guy, he really knows his stuff. But my friend, China-expert Christine Lu tells me that Groupon’s Berlin office has recruited 1,000 new hires for China in the last three months – many recent college graduates. But here’s the thing. I’m currently getting a daily deal from a site in Shanghai called Wufantuan that’s indistinguishable from Groupon. (50% off Mexican food in Shanghai was one recent deal.) If you know anything about the Chinese market, you know it favors locals and cloning is part of the culture. To expect Groupon to be able to achieve anything meaningful in China is wishful thinking. Google got run out of the country on a rail. You expect the powers that be there to allow a US firm to “split” revenues with Chinese businesses to provide its budding bourgeoisie with deals on burgers, skydiving, and cupcakes? Um, yeah. OK. If there’s a business there, it will be Chinese. The entire Groupon strategy with China is theater, designed to show investors that they’re “paying attention to that market” while they ready the IPO.

So, the real deal of the day is for Groupon itself. The question is whether there’s enough upside in the model – and enough “bigger suckers” out there for the average Joe to make any money on the offering before the business model settles out and becomes the next eBay, Home Depot, or Gap. These are fine, sustainable businesses, to be sure, but all are way less sexy than they once seemed. (Yes, for about 6 months in 1995, Gap was incredibly sexy.)

Before you decide that Groupon’s the next hot young thing, it’s worth asking whether you want to jump on this model right now. I believe there’s a really nice, long term, but ultimately very boring business in there that should pay a nice dividend. Meantime, the visions of hypergrowth are likely much exaggerated.

I certainly can’t criticize the trajectory that Andrew Mason and company have managed to carve out for themselves. It’s an incredible story and it’ll be fascinating to see how it unfolds. The expectations are so high, they really can’t be met.

My bet is that they will need to move on to more sustainable forms of year-round marketing for businesses and away from the aggressive 50% discount model. That’s a much less sexy place to be and it will require some real creativity to carve out a niche there. But I just don’t buy the idea that they can continue to build a business based solely on deals of the day at such aggressive discounts.

The Groupon model right now is based primarily on creating new relationships between businesses and customers. They’ll be on to something really interesting when they can help to nurture and sustain those same relationships profitably.

From my friend Christine Lu (@christinelu):
Thanks for the mention Dave. I think they’re hiring 1K in the next few months. As in currently in the process of. Things over there have just sounded a bit weird to be a sustainable market entry strategy so I think it’s all a nice way to have a China story to prop up the IPO. The elusive vision of 1.3 billion people using Groupon. Nevermind that clones are already saturating the market and they’ll have Alibaba’s Taobao to deal with. Anyways, we discussed it a bit on Quora.

From my friend Vivian Wang (@vivwang):
The JV is a positive differentiator for both companies and will accelerate market consolidation. There are 1686 other group shopping sites as of December, yet only 29 sites have CIECC licenses to legally operate. Some believe there are only 10 serious contenders that can attractively compete. The real threat is Alibaba and Taobao, so a more international footprint into China seems warranted. One of the smarter things Groupon did was buy Mob.ly back in May, which has been developing on all mobile platforms. For a sector that’s already doing about $79B in transactions, I think the risk seems worth taking.
…
Hope something truly uniquely innovative comes out of this that the world has yet to see. I’d personally love to see Tencent migrate from selling a $1B of games & virtual goods to some seriously tangible merchandise. The foolish side of me actually thinks they’ll have a fair shot at it. Should be fascinating.

And from my friend Francine Hardaway (@hardaway):
I believe all this bargain stuff, especially in the US, is part of the recession and will go away when it is over and we all relax. I agree with you 100% on Groupon’s model; I am done buying stuff I don’t need, even at half price. All the people I know who love coupons (I never have) are armed with sheaves of them, and all that happens is the merchants are in price wars with one another in a race to the bottom. Sites like Groupon and Haute Look might be marketing front ends, but they are also margin-shavers for the people in the businesses they market. This HAS to be unsustainable at the end of the day, whether China is successful or not (and I bet it won’t be, because of all the people who, when we were in China, got up and said they would clone our products in half an hour).

What do you think about Groupon?

Firesheep is a startling plugin that allows anyone to easily impersonate the login credentials of others for dozens of sites. It works on any unencrypted WiFi connection and is stupid-simple to setup. It can be done by anyone in a matter of minutes.

Just to illustrate how easy it is to setup, I was on Virgin America flight VX67 from Washington to San Francisco yesterday.

All I had to do to get going with Firesheep was download Firefox (onto my new MacBook Air) using the in-flight WiFi, and then download the Firesheep plugin for Firefox. Just drag the plugin into Firefox and it installs. Reload Firefox and you’re ready to go.

Click “Start Capturing” and you are instantly snooping on every interaction occurring on the WiFi network. In my case yesterday, that meant snooping on everybody who was using the WiFi on my flight.

What’s At Risk?

Within just a couple of minutes, I was able to impersonate 3 people on Facebook (updating their status, exploring friends, doing anything I wanted to – of course I didn’t). Twitter is also at risk. So is Gmail. And so is Amazon.

Access to Amazon is perhaps the most worrying. Once I realized I was in under someone else’s Amazon account, I quickly shut down Firesheep: this is some scary stuff. What if I had changed the shipping address for the account and done a one-click order on a $10,000 watch or a $2,000 plasma TV?

This was all at 37,000 feet in an airplane (and way more entertaining than SkyMall). Like taking candy from a baby.

Even More Shocking…

Later in the afternoon I was at one of the Internet Industry’s high-profile events: Web 2.0 Summit produced by O’Reilly. There on the hotel’s WiFi, which was setup to serve the summit, I ran Firesheep. Within seconds I had compromised about 25 accounts, including the Twitter accounts of O’Reilly Media and TechCrunch writer Alexia Tsotsis. Change passwords, tweet-as-them, friend and de-friend people? No problem. Here’s what I saw. (Note that my accounts were vulnerable as well.)

How It Works

I have not studied this exploit carefully enough yet to explain it in full detail, but my understanding is that on an open WiFi network, it’s trivial to capture in cleartext all of the web interactions of the users around you on the same IP network. Once you can do that (something Firesheep achieves using the pcap library, capturing port 80) then you can sniff for credential information specific to particular websites. Firesheep supports a couple of dozen out of the box, including all major social networking sites (Facebook, Twitter, Gmail, Gowalla, Foursquare) but also some more obscure sites relevant to coders (Github, Pivotal Tracker). Ouch. It even has an “import” function so others can write exploits for sites that Firesheep doesn’t know about yet.

The bottom line is that these sites all need to enforce the use of HTTPS (secure HTTP) rather than HTTP *before* the login handshake occurs. This will force some emergency changes by many sites over the next few days.

This is not a new exploit – it’s always been possible to do this; Firesheep just makes it stupid easy.

A Note On Passwords vs. Encryption

You’ve encountered WiFI networks that require WEP or WPA encryption passwords. These are secure from Firesheep’s reach. However, there are a lot of WiFi networks that require “passwords” (such as those at coffee shops, hotels, etc) that are in fact open networks. Many do not even require you to login to them to exploit them via Firesheep. To put it in perspective, every Starbucks location is vulnerable to attack.

The only for-sure ways to stay safe from Firesheep for now are to 1) use only encrypted WiFi networks (that use WPA or equivalent), 2) use wired networks that you trust. Any open WiFi network can and will be vulnerable to this attack until vulnerable sites switch to using HTTPS for all authentication. Be very careful out there, folks.

So, it’s a real dilemma. No one seems to be sure how to really address it other than to eliminate or curb the use of open networks, which is probably where it’s going to end up. So open WiFi is now basically over. Expect places that had been using it to post publicly available WPA passwords, which solves the problem.

Technology investment bubbles have given many entrepreneurs the impression that success in tech is all about coming up with a “cool idea,” pitching it to a VC, getting funding, building up the business, and then exiting in high style.

First, this is a fairy tale, second, this will not happen to you, and third, what you’re observing is the product of a highly evolved network of peers, of which you are likely not a part.

What Happens in Palo Alto Stays in Palo Alto

What you see taking place in Silicon Valley is the result not of people betting on “cool ideas,” but of people betting on teams and connections. Before every VC deal, there is an exit strategy in mind. Every VC-backed valley startup is an outsourced R&D play.

Ever notice that many large tech firms grow primarily by acquisition? Most have comparatively lean R&D operations; this keeps experimenting off of their balance sheet, thus improving profits and lifting stock prices. Those stock prices are what give them the fuel to make good sized acquisitions, which in turn is the incentive for startups to grow and for VC’s to fund them.

This is the capitalist cycle in its most fully evolved form. Sometimes those acquisitions work out, sometimes they don’t, but the process feeds the machine and it becomes self-perpetuating. This process is literally the grist for the innovation mill that is Silicon Valley.

Why You Should Forget About VC’s — For Now

If you’re not already plugged into this world (meaning you have a lot of contacts there and have a specific idea of a strategy to get funding and an exit before you start), you probably have no place talking about VC’s at all. So ban it from your vocabulary. They’re not interested in you and won’t be. Yet.

Instead, think about how you’re going to build value outside of that network. It is totally possible, but don’t get distracted thinking about VC’s when you should be thinking about bootstrapping and investment from friends, family, and angels.

The good news? Most software startups can be launched for $50K or less these days. Build the minimum viable product, ship it, and then follow lean startup methodologies to iterate towards something that is valuable to the market. Once you have done that, established a revenue stream and can demonstrate some reason why venture capital investment will help you grow fast and capture a market position that you couldn’t capture otherwise, you may be ready to talk to a venture capitalist.

But more likely, investors will come to talk to you! If your startup shows real promise, VC’s will likely seek you out. If you work with some angel investors, they will likely have networks that can help you secure a next round of investment. It will happen naturally. Stop thinking about VC’s. They will find you. Worry instead about building value.

Think Investors, Not VC’s

Yesterday I wrote a post that suggested that entrepreneurs should always think like investors, and always consider what an investor would think of the company. I stand by this, but I am absolutely not talking about VC’s in the early stage. You are not ready for VC’s in the early stage, especially if you are not “plugged in” to the valley culture.

So, think like an investor. Your investors are: you, your family, angels, and possibly local government business development funds. Forget about VC’s for now. If you build value for your yourself, your customers, and your first round of investors, VC’s will come knocking if they think they can help.

I typically hate writing about topical technology subjects, because most often it’s reactive, worthless speculation.

However, the new Twitter “Lists” feature has me thinking; this is an interesting feature not because of the “tech” but because of the implications on the developing economics of social networks.

First, what it is: Twitter “Lists” allows you to create lists of Twitter users that are stored within Twitter’s servers. You can name those lists (/twitter.com/davetroy/art) and those URL’s can either be public or private.

People can then follow those lists, which really is more like “bookmarking” them, as they do not appear in your Twitter stream. Those lists in turn keep track of how many “followers” they have, and you can see how many people “follow” the lists you create.

Traditional “Follower Economics” Are Dead

Jack Dorsey and Biz Stone always said that the best way to get real value out of Twitter was to follow a small number of people; it was never their intention for people to aim to follow more than 150-200 people (the “Dunbar number,” or people we can realistically expect to maintain relationships with).

With “Lists” you can add someone to a list, but not necessarily “follow” them. So, instead of “following” Ashton Kutcher, you can put him in a list that you call “actors,” or “attention whores.”

You can even put someone in a list (cool people), have them publicize that, and then change the name of that list to something less flattering (douchebags, or worse).

The issue of derogatory lists alone is one that Twitter will need to address.

So traditional “follower counts” are going to be meaningless – instead of “followers” people are going to start talking about “direct followers,” “indirect followers,” and “being listed.” It’s all changing, and I applaud Twitter for being willing to throw the old (flawed) assumptions about follower economics entirely out the window in favor of a new approach.

Buying Influence and Reputation

Within a few hours of the introduction of “Lists” I was put onto a few:

• @danmartell/founders
• @Scobleizer/venture-capitalists
• @christinelu/vc-and-angels
• @DarrellHudson/top-500-techies
• @kim/rockin-this-twitter
• @the_api_book/twitter_history

This early “seed” of my reputation is quite flattering and arguably pretty powerful (though a fraction of what I expect my ultimate “listings” will be). It shows that I am an “investor” and a “techie,” and considered so by some pretty influential people. I did nothing to influence this and would not consider doing so.

But, I am lucky and glad to have been so-described this early on. What if I really wanted to influence what lists I was on, or to appear on as many lists as possible? I can imagine now the jockeying to get onto the lists of all the “A-List” digitalistas will be intense and powerfully ugly.

Imagine the seedy things that might go on at tradeshows in exchange for getting “listed.”

Going forward, the primary question will be which specific lists you appear on (influence of curator, quality, scarcity) and, secondarily, how many lists you appear on (reach, influence).

“1M Followers” will be replaced by “listed by over 50,000,” or even “listed by the top 10 most influential people in microfinance.” And yes, listing counts will be a fraction of follower count, as lists will necessarily divvy up the people you follow through categorization.

Scarcity: You get 20 lists

It looks like people are allowed just twenty lists right now. That’s undoubtedly a scaling and design decision by Twitter to keep things manageable.

Putting aside for a moment all the reasons why people might want more than 20 lists, let’s accept the limitation. You get 20 lists. So it’s a scarce resource. It means Scoble, Kawasaki, Gladwell, Brogan, Alyssa Milano, Oprah, Biz, etc, all each get just 20 lists.

What will someone pay to get onto one of these lists?

Do you think that an author would pay to get onto twitter.com/oprah/incredible-writers? Yeah, I do too. Now imagine that, writ large, and scummier, with people even less reputable than Oprah. Now you see what I’m talking about.

At least buying followers is a scummy behavior that’s amortized over millions of targets; buying 1/20th of one particular follower’s blessing could lead to very high prices and extremely unsavory dealings.

The Coming “Curatorial Economy”

Twitter is doing this thing, and whatever Twitter does in house trumps anything that a third party developer might do, period. So, stuff like WeFollow, etc, your brother’s cool thing he’s making, Twitter directories: they are done, people. Or these external things must at least accept the reality of Lists and what they mean to the ecosystem.

Some folks have been complaining about the user interface for list management, etc, and that’s all moot: it will be available through the API, and you should expect list cloning, lists of lists, mobile client support, etc, pretty soon.

But the genie is out of the bottle. Start managing your reputation in a way that’s authentic and ethical and stay on top of this. And be prepared for what I’m calling the “curatorial economy.” (You heard it here first.)

Everybody’s making collections, and there are certainly people who will pay and be paid for listings. Count on it.

This was originally written as a guest post on Gus Sentementes’ BaltTech blog for the Baltimore Sun.

What if there was a place where freelancers, creatives, entrepreneurs, and financiers could meet up to collaborate on up-and-coming startup ideas? That place exists today, and it’s called Beehive Baltimore.

On October 1st, Beehive Baltimore will celebrate its first nine months of operation as a coworking facility, located in the Emerging Technology Center in Canton.

If you’re not familiar with coworking, it’s a shared workspace for creative professionals who might otherwise work at home or in a coffee shop. These days, anyone who works primarily via laptop and the internet is a great candidate for coworking!

Beehive Baltimore opened February 1, 2009 specifically to cater to these kinds of professionals, and the Beehive community now has over 40 members including people in web design, programming, marketing, public relations, finance and other information-based industries.

Last Thursday, we held an open house at the Hive for prospective members and others in the community to stop by, meet some of our members, and find out more about what coworking is all about.

Beehive is designed to be a community of peers, and does not aim to make a profit. Working in partnership with the Emerging Technology Center in Canton, Beehive aims to connect freelancers, seasoned entrepreneurs, and other professionals via long-term relationships that lead to mutual benefit – and possibly to new startups!

The Hive (as we call it) has also already given birth to multiple events and meet-ups that might not otherwise have a place to meet. Some of the groups that we either have hosted or have helped create include:

• Baltimore Angels (an angel investment group)
• Baltimore Hackers (a computer language study group)
• Baltimore/Washington Javascript meetup
• Baltimore Flash/Flex User Group (a group for users of Adobe’s Flex platform)
• Refresh Baltimore (a web professionals group)
• Barcamp Baltimore (a user-generated tech conference)
• TEDxMidAtlantic (coming on November 5th)

On October 1st at 12pm, Beehive Baltimore will host its first “Show and Tell” event, where participants are invited to share their projects, startups, or prototypes and get feedback from the group.

And on October 15th, Beehive Baltimore will be recognized by the Maryland Daily Record as an “Innovator of the Year.”

Several Beehive members and affiliates will be providing some guest posts for BaltTech over the next two weeks while Gus Sentementes is on vacation. So stay tuned for some voices from the Hive over the coming days!

Beehive Baltimore is part of a large coworking movement. Hundreds of cities all around the world from Los Angeles to Charlotte to Paris to Shanghai have implemented coworking facilities, and we see ourselves as connected to these communities.

And so coworking looks to be an integral part of the tech startup ecosystem – where entrepreneurs, creative talent, and angel investors can all come together to talk about the Next Big Idea.

To find out more about Beehive Baltimore, visit http://beehivebaltimore.org or email info@beehivebaltimore.org.

Here in Baltimore there is a great deal of uncertainty about the future of journalism, as there is everywhere. I have been involved in organizing some efforts by local new media publishers to study options for the future; my interest in this topic is purely personal.

Yesterday I attended a two-hour symposium arranged by the University of Maryland’s Merrill School of Journalism. In attendance on this panel were Monty Cook (Editor, Baltimore Sun), Tim Franklin (Former editor, Baltimore Sun), Jayne Miller (WBAL Television), Jake Oliver (Afro American Newspapers), Mark Potts (founder, WashingtonPost.com). It was moderated by Kevin Klose (former president, NPR) and sponsored by Abell Professor Sandy Banisky.

The discussion was mostly a paean to times long gone: to well-staffed newsrooms rich with sources, and benefit plans to match. It was an apologia from television to print, explicating the ability that cable-subscriber funded news operations have had to survive via subsidies that the press could never extract. It was a cursory overview of myriad efforts to invent new modes of journalism online. And it was a predictable declaration of heresy: “these so-called wanna-be websites” (Jake Oliver) “will never hold a candle to traditional journalism.” (Jayne Miller)

I quote directly.

And herein lies the problem. As observers, these trained journalists accurately state that a small, unfunded website run by “these kids” (many of whom are 20 year veterans of the press) can not effectively compete with some imagined newsroom of the past. However, these “small unfunded websites” are just starting out. They will grow. And these imagined news operations no longer exist, and the ones that still do are shrinking. The old and the new are on a collision course.

While the traditional media sticks its head in the sand and belittles the startup efforts of entrepreneurs and journalists, the world is shifting beneath its feet. And all the time spent on internal infighting, in denial, in testimony before congress, and in bankruptcy courts is time not spent reinventing the future of journalism. Their legacy costs, on health plans and labor unions and real estate and “right-sizing” are costs that aren’t being spent solving the market need.

What are the odds that the existing companies (the ones with the problem) will be the ones who come up with the solution? They are astronomically small. That’s almost never how things play out in markets.

A new, reasonably-funded journalistic startup today has access to all kinds of assets: a large pool of trained, laid-off journalists; incredible inexpensive distribution technology in the form of web, mobile, and Kindle; a motivated pool of citizen journalists; and most importantly, a startup mindset that is focused on being lean, nimble, and experimentational.

If I had to bet on whether a bloated 172-year old company that’s in bankruptcy will find the model, or whether it would be one of a field of startups, I’d bet on the field of startups every time. Why wouldn’t you?

The only coherent argument against new startups is really one of mass and heft – both in terms of startup capital and in terms of depth of connections. However, it is reasonable to expect that a reasonably-funded startup staffed with experienced businesspeople and journalists is going to be every bit as rich with contacts as a comparably-sized post-bankruptcy old-media concern. The difference? Less legacy DNA, less legacy expenses, and a lean, nimble, humble mindset that’s focused on finding the answers in an open market.

Failure of Imagination

Just as the failure to prevent the September 11 attacks was attributed to a “failure of imagination,” we see a comparable failure of imagination in journalism today.

The traditional media companies fail to imagine what the confluence of web, mobile, and citizen journalism might ultimately be able to deliver, and that it might be better than anything journalism has delivered to date.

Potential funders see all options as risky and want to bet first on “traditional” outlets. They see these brands not only as less risky, but as a restoration to a prior order.

“Restorations” are not how markets work. Things don’t get restored. They are creatively torn apart and reassembled.

The first investors to imagine the possibilities present in new journalistic startups will ultimately reap the rewards; rewards which will never be seen again in newspaper companies.

The companies that bring you local news today will most likely not be around in 10 years. A host of new companies will take their place.

The only question for those in the industry today is whether they want to be part of those solutions.

On Monday, my wife and I went out for breakfast and she observed a bumper sticker on the back of an SUV. She said, “I just want to talk to these people and find out what makes people want to put these things on their cars.”

Those of you who know me well know that idle conversation runs a real risk of becoming reality; I tend to act on impulse to create things, especially if I can see a simple (enough) path to bring them to fruition.

Hence was born the idea behind Sticker Movie (working title), a documentary about the tribal meaning behind the stickers that people put on their cars. And so yesterday while working at the Hive, I tweeted that this would be a cool idea.

I immediately got back about 10 responses from people who liked the idea, and so I thought this idea might have some legs. Jared Goralnick (@technotheory) suggested that a project like this might be too much to take on (especially given everything else I am doing), and if I was interested in doing it all myself, he’d be right. But, I like to do what I’ve been calling marshaling the resources of the universe.

And Twitter is great at coaxing the universe into doing stuff. Efforts like @socialdevcamp, @bhivebmore, @baltimoreangels, @ignitedc are all things that wanted to happen and that I’ve helped catalyze in the last few months using Twitter — without having to do them all entirely by myself. And so it will be with @stickermovie — the first crowdsourced documentary.

We are going to start by getting submissions of bumper sticker images, so we can observe broad themes and develop a potential line of inquiry for the filming.  Then we’ll use the power of networks to find an appropriate production team and any necessary funding. Finally, we’ll use networks to help drive the release of the film at festivals, and if it makes it that far, we will use social networks to drive the release theatrically.

So, big ambitions — no idea how it’ll work out, but I think the universe is on our side. It’s an interesting topic. Bumper stickers are a kind of modern tribal marker, and they tell us a lot about our culture and its own ambitions.

If you’re interested in following the @stickermovie story, go ahead and follow us on Twitter. We’ll be starting the sticker image collection shortly, and will keep folks apprised of our progress.

We hope @stickermovie will be another example of using Twitter to marshal the resources of the universe. Stay tuned. And start taking pictures of bumper stickers!

Coworking Is Like Barcamp Every Day

Last time we showed that the Barcamp format is a simple design that promotes certain behaviors and outcomes. Coworking is a design that promotes a similar set of behaviors on an ongoing basis. This shouldn’t be too surprising as both ideas were conceived and developed by a lot of the same people — Chris Messina and Tara Hunt, among others.

In this round, we’ll cover some of the underpinnings of the design of Coworking; in fact there is so much to cover, the next installment will be dedicated to coworking as well.

What Coworking Isn’t

Upon hearing about coworking (independent workers sharing workspace), most people immediately engage their left brains: OK, so you get a space and then split the rent — you get office amenities at a much lower cost, get out of the house, and work in a “real office.” People immediately assume it’s some kind of real estate play and is similar to the concept behind the postmodern “executive suite.” This conception is dead wrong.

This faulty conception is what has led some to think they would start a “coworking space” and then wade into a lease and other commitments assuming that if they build it, they will come. Who were they building it for? The fact is there is no guarantee that anyone will ever come to any coworking space. So, these folks are left holding the bag wondering what they did wrong.

They failed to build a community first.

Timeline: The Birth of Coworking in Baltimore

Implementing something like coworking or a barcamp is fairly straightforward, but just like making a recipe, the order in which you add ingredients is important. These were the steps we took:

• July 2007: I heard about coworking online and discussed it at length with Noel Hidalgo while vacationing in Berlin, Germany
• September 2008: Discussed the concept with Alex Hillman from Philadelphia’s Indy Hall while vacationing in Vienna, Austria
• October 2008: Mentioned the idea to my friend local attorney and business leader Newt Fowler; traveled to Philadelphia to meet with IndyHall founders Alex Hillman and Geoff DiMasi who generously gave us a crash course in coworking dynamics
• November 1, 2008: Held a session at SocialDevCamp East 2 to gauge interest in coworking — formed a Google group with 30 members on the spot
• November 6, 2008: Had our first session at a local coffee shop to see if folks would show up; at least 10 did
• November 2008-January 2009: Regular coworking sessions at the coffee shop Tuesdays and Thursdays; each day had 5+ people show up
• December 2008: Sustained interest confirmed our idea that obtaining a space might be a workable idea; developed an arrangement with a local technology incubator location that would allow us to get started without assuming any significant risk
• January 2009: Incorporated Beehive Baltimore, LLC with a minimal amount of capital from three partners to insure the venture’s success. Secured charter member commitments from 20+ members which would insure our monthly rent number would be covered.
• February 1, 2009: Had a community “barn raising” where our members and their families came to assemble furniture and setup the Hive
• February 2, 2009: Grand opening day of work at the Hive with many members present. We’ve been growing and thriving ever since, hosting events like Twestival and Refresh Baltimore.
• February 15, 2009: Article in the Sunday Baltimore Sun about the launch of coworking in Baltimore

Coworking has an extremely bright future in Baltimore. At each stage along the way, we used tools like Twitter, Facebook, and events to discuss the initiative and get input from our community stakeholders. We figured out who would be served by coworking, drafted them into the discussion, and at each step made sure that we had buy-in from the people who would be the primary users. A chain of dozens of decisions led to a successful outcome; at any stage along the way, failure to observe and listen to our community could have aborted our efforts.

Now that our community is strong, we can exist anyplace; it’s not about the space, it’s about the people.

Some Traps to Avoid

Don’t try to “impress.” It doesn’t matter how “money” your space looks, or how “professional” it appears, or if it’s in a trendy place, or if it’s built with glass and granite. That said, having a pleasant workspace is always desirable, but people interested in coworking are generally not looking to convey a sense of status in their workspace. They are looking for community, company, and mental stimulation. You can get that in a modestly furnished workspace just as easily as in a high-rise office building. Find something that’s sufficiently good and pleasant; if you’re trying to impress people, you’re doing it wrong.

“Amenities” are nice, but people cowork to be around people. The trap of “shared expenses” often leads people to assume that one of the major draws must be that you can share toys like copiers, laser printers, air hockey tables, Xboxes, and fancy coffee machines. Sure, toys are nice. But folks can get good coffee or play videogames a lot of other places. What they can’t get is collaboration and community. Do that well and let the amenities take care of themselves.

Don’t overthink your rules and processes. A common worry among people not familiar with coworking in practice is that it can somehow be dominated by obnoxious personalities and that a well defined governance must be in place to manage everything. This is a huge waste of mental energy. If you build your community first and set the right pricing structure, everything will take care of itself. Communities are self reinforcing, and pricing sets disincentives for ne’er-do-wells. More on this later.

Remember that people are fragile and perishable. Your first and only asset is your community. Listen to them and be sensitive to their voices. They are your stakeholders. If you start holding coworking sessions in a place on the south side of town, don’t setup a formal coworking space on the north side of town and expect the same folks to show up. People are creatures of habit and have their own natural geographic orbits. If you do have to make a major change (like location), don’t assume that just making the change will make it so. Every decision that affects the community needs to be tested and validated by the community.

Don’t be afraid to lead. As a designer of your coworking community, don’t be afraid to make decisions and take steps that you sincerely believe are beneficial. The community will give you feedback if they think you need it. All groups need leadership, and don’t fall into the trap of thinking that just because coworking is a community endeavor that all decisions must be made in tortured group meetings. Your community need not be a democracy, and it’s also not a commune. Your only mission is to be effective — so take the lead. Likewise, encourage other members of your community to take the lead and make stuff happen. If you get mired in egalitarian rhetoric, you’ll accomplish nothing, and people will get frustrated. Avoid meetings: use tools like email and Twitter to stay in constant communication, and opt for one-on-one facetime when that is what’s called for.

Don’t seek institutional validation. You may be tempted to leverage existing perceived power centers in your community to help “seed” your initiative. Don’t bother. It’ll come with strings attached, endless meetings, and you’ll spend lots of time explaining coworking to people who just won’t understand. Act and get things started; then await developments. Your community institutions and the press will scramble to understand what you’re doing once it’s clear you are successful. Then, you can accept partnerships that make sense: on your terms.

Turning the Vision into a Design

OK, so you get the vision of coworking — that it’s about community first and that you shouldn’t try to open a space without finding that community. Suppose you find your community and you’re ready to advance it to the next step — now what? We’ll cover this next time — how to design your coworking community for maximum joy and minimum administrivia. The good news is that you don’t need an elaborate set of processes or a council of elders. On the flip side, you do need to give it some thought. But, that’s what design is: thought.

See you next time — and we welcome your feedback on how you’re using design to shape your life!