There’s been an explosion of interest in new “startup accelerators,” incubation, coworking, startup funding, and new-manufacturing efforts in Baltimore in the last few months; unfortunately this appears to say less about Baltimore than it does about the growth in interest in these efforts worldwide.

Here’s a list of some efforts in this space:

• “Accelerate Baltimore” at ETC Baltimore
• Accelerator led by Cangialosi and Lane
• ETC Baltimore itself (Canton and 33rd street)
• Baltimore Node, Hackerspace on North Avenue
• Sizeable Spaces, coworking in South Baltimore
• Capital Studios, coworking on Central Avenue
• Beehive Baltimore, coworking at ETC Baltimore
• Accelerator effort being driven by Mike Brenner
• Accelerator/cyber/techspace in Harbor East, led by Karl Gumtow
• Innovation Alliance effort being led by Newt Fowler
• Theater/workspace being discussed by Chris Ashworth/Figure 53
• Shared warehouse workspace being discussed by Andy Mangold/Friends of the Web
• Baltimore Angels (Cangialosi et al)
• Invest Maryland fund (DBED)
• TEDCO’s Innovation fund
• Abell Foundation fund (tied to Accelerate Baltimore)
• Wasabi Ventures fund (investing in city, affiliated with Loyola)
• Fabrication Lab at Towson University
• Fabrication Lab at CCBC
• Fab-lab ideas discussed by John Cutonilli
• Highlandtown workspace development led by Ben Walsh
• Mike Galiazzo, pushing Local-Made, (head, Regional Manufacturing Institute)

Did you know about all of these things? Amazingly, many of the people leading these efforts don’t. Or if they do, they’ve not actually talked to the people involved. To me, this is a problem.

Why? Because folks attempting to gather support for these efforts don’t have all the facts. They either haven’t sat down and listened to people’s motivations, and they’re flying blind. Or it means that they have been unable to sell other like-minded entrepreneurs on their vision, which probably means their vision is not that compelling. And that’s even worse.

But this is not all that’s wrong.

Two Serious Problems

One: there’s a tremendous amount of duplication of effort represented in the list above. Why duplicate all of that administrative, accounting, legal, and governance overhead? By pooling more of these efforts together, that overhead can be minimized and shared.

Two: we don’t have enough human capital to support all of these different efforts. We simply DON’T. Many seem to think it will somehow materialize, but from where I sit, with possibly the widest-angle view of the landscape here of anyone, I don’t see that flow of new startups or even new individuals that can support all of this. It just doesn’t exist.

The Opportunity

Baltimore has an opportunity to become a regional and even international destination for people looking to start or join entrepreneurial enterprises. But for that to happen, we need to have stuff here that can actually become a destination.

And unfortunately, the efforts currently underway are not likely to become that destination because duplicated overhead will keep each effort small and parochial.

However, if more of these efforts pooled their resources and talent – and most importantly identified a BIGGER and more IMPORTANT vision for what it is they are trying to achieve, there would be many positive effects, such as ample governmental and foundation support. And that would be hugely helpful in funneling in the sorely lacking regional and international *human capital* that we so desperately need here!

One Possible Vision

Baltimore has an opportunity to become the hub for digital manufacturing and mass-customization technology on the east coast.

Cangialosi and Lane are already talking about supporting some basic fabrication capabilities at their proposed facility on Key Highway. Gumtow’s effort has placed fab-lab capabilities high on its priorities list. CCBC and Towson have fab-labs, though it’s my understanding they may be underutilized. If you’re going to spend money on fabrication equipment at all, it should be utilized 24×7 in order to maximize the asset.

Something bigger – like taking over the WalMart in Port Covington, or the Meyer Seed Warehouse in Harbor East – could support an accelerator, fab lab, and shared workspace. Thinking a little bit bigger would also have the effect of lowering per-square-foot costs dramatically, and even dramatically altering the real-estate ownership structure.

Baltimore is already home to Under Armour, and at some point in the near future (similar to what happened with Ad.com) it will start throwing off new entrepreneurs with experience in consumer products and manufacturing. Where will they go? Will we keep them here in Baltimore?

Focusing on the intersection of manufacturing and technology is important because it represents the one shot we have at rebuilding even a little bit of a middle class here in Baltimore. Because of that, you’ll find abundant support for such efforts — support that can further reinforce Baltimore’s reputation as an international destination for digital and manufacturing.

The More the Merrier?

I am a fan of placing many, diverse bets rather than making a few large ones. But it’s also important to make strong bets. Unfortunately, Baltimore is right now setting itself up to have many weak positions instead of a smaller number of stronger ones.

I strongly urge the folks leading these efforts to get to know each other and coalesce around a bigger unifying vision that can turn Baltimore into an important regional and international destination for entrepreneurs.

Because without agreeing on a bigger vision, it’s likely that these efforts – each led by well-meaning individuals but with individual motivations – won’t ultimately amount to much, and it would be a shame to waste so much time, effort, and talent.

For the many of us who are anxious to move beyond the broken status quo in Baltimore, yesterday’s primary election was disappointing and frustrating.

Still, there’s a lot of valuable information to be gleaned that helps us build a better map of Baltimore’s electorate – from its many problems to its deep divisions.

• Turnout was pathetically low: 70,416 of 380,000 (18.5%). Some have said that “the issues didn’t resonate with voters,” and that could be true. However, a bigger trend to watch for is the decline of turnout generally. Many “seniors,” who made up the core of the voting population, are now dead or dying. How will we address this trend?
• Voters are either displeased with, or not sure about, Rawlings-Blake’s leadership. 48% of voters felt we are definitely on the wrong track with Stephanie Rawlings-Blake. Many more aren’t sure, but wanted to give her a chance with a full term in office. And there are 310,000 other voters who must feel so disconnected that they declined to express any opinion at all. There is no mandate here.
• Otis Rolley swept the online progressive community. Any observer of the online world would have told you that Otis would have won in a landslide; his supporters kept a steady drumbeat on Twitter, Facebook, and on blogs throughout the campaign, and especially election day. But however strong he may have been in that community, he garnered just shy of 9,000 votes. No other candidate received any measurable online presence. This is further proof of Baltimore’s deep digital divide.
• Too many candidates spoil the race. This would have been a very different race if Rolley, Pugh, Landers and Conaway had teamed up to challenge the Mayor. Pugh had nothing to lose by running; she keeps her Senate seat. Landers could have assisted Rolley with his tax plan. Conaway had no business being in the race at all. A two-way race between a Pugh-endorsed Rolley and Rawlings-Blake would have had a very different donor make-up, would have told a different story in the press, and would have had a different outcome.
• Name recognition still carries weight. Dithering City Councilman Carl Stokes won again in the 12th district, despite a strong and credible challenge from the earnest and organized Odette Ramos. “Pistol Pete” Welch held his (inherited) seat, despite challenges from Abigail Breiseth and Christopher Taylor. These were both split-field races against “name brand” incumbents that also demonstrated the persistent racial divides in Baltimore.
• Foolishness and incompetence will eventually get you booted. In a bright spot, it was nothing short of refreshing to see that Belinda Conaway was ousted from her seat by newcomer Nick Mosby. Conaway, in suing blogger Adam Meister for $21M (for his factual articles about her place of residence), spurred Mosby to run, and he won – 2,747 to 2099. One bear down, two to go.
• City Council is broken. Baltimore’s system of government has a strong executive (Mayor) and a weak legislature (City Council). The City Council has been such a refuge of scoundrels that few want to be associated with it. Some suggested that Landers or Rolley should run for City Council president as a way to some day be mayor. Frankly, I wouldn’t trust a Mayoral candidate that was coming from City Council. There’s too much incompetence and corruption.
• Our elections are broken. It’s ridiculous that our choice of Mayor would be made in a September primary, but with no viable Republican or Independent candidates, it’s the way things are. We need to get open primaries, or hold a run-off in November. My understanding is that this can be changed via petition and referendum, which means it is doable outside of the current political structure. This needs to be pursued immediately. Too many voters were disenfranchised in this process, and it’s unreasonable to ask people to switch parties in order to vote.
• The Mayor spent (wasted?) roughly $2 Million on just 37,000 votes. In an election with just 71,000 votes cast, nearly $4 Million was spent. In a real way, the Mayor (and her tax-break seeking contributors) bought the election. The cost in the end to her was roughly $54 per vote. In a city with so much pain and brokenness, I find this morally repugnant. It’s worth nothing that Otis Rolley also spent roughly $50 per vote, so this metric is not a coincidence. It’s the “acquisition cost” of a vote in a top-tier modern Baltimore City election. We need to focus on lowering that cost.
• The incumbent Mayor always wins. This is because the incumbent Mayor influences city business, and city contractors and developers know Baltimore is a “pay to play” town. They pay, they get favors. This allows the incumbent to buy votes – for $54 each.
• Kiefaber was the favorite protest vote. Tom Kiefaber, the embattled former owner of the Senator Theater, who has been raising red flags about Baltimore Development Corporation (and interrupting City Council meetings) was the runner-up protest vote in the contest for City Council president with 5,390 votes. While Jack Young won in a landslide, the fact that a candidate like Kiefaber could get any traction at all shows just how deeply folks distrust – and ridicule – that body and its leadership.
• The Sun missed a chance to create a better horse race. Jody Landers was right to complain that only 2 of the 5 members of the Sun Editorial board live in the city; there is also only one African American. If the Sun is going to pretend to have opinions relevant to city residents, those ideas should come from people that will have to live with the consequences. The editorial bent of the Sun’s coverage did not develop any kind of horse race between candidates, and frankly seemed to be pushing for the incumbent all along. In my opinion this was not just bad for Baltimore, but bad for business for the Sun. How many more papers could they have sold by developing a more compelling narrative?

Those of you that know me know that my support for Otis Rolley was born out of a belief that Baltimore is worth fighting for, and that Baltimore deserves better. I share that belief with Otis, and with Tom Loveland, Aaron Meisner, Brian LeGette, Terry Meyerhoff Rubenstein, and so many others who supported his campaign. I supported Otis because of my beliefs; my beliefs are not shaped because of my support of Otis.

This is an important distinction. Too often when folks think “politics” they think it’s about pitting candidates against each other, and insider interests and gaining financial advantage. But in this case, that has nothing to do with it. I simply believe that we are on the wrong track and that we can do better. I have nothing to gain in my support of Otis – unless you count living in a city that might have a shot at being strong again, and one where its leaders listen to citizens.

But we also learned something else. It’s tempting to think that real change can occur through online organizing and Twitter and Facebook and the coming-alive of the “new” Baltimore or the youth vote, or via SMS messages or what have you. And sure, those things will play a part in any election going forward.

But the most important lesson is that Baltimore is a city of tribes: poor, rich, black, white, Hispanic, digital, homeless, addicted, corrupt, idealistic, and blue-collar – to name only a few. Few of us ever break out of our own tribe. We surround ourselves with our own points-of-view and hear what we want to hear.

For Baltimore to grow, we need to break free of our tribes. We need to be occasionally uncomfortable. We need to do real public service, and build up the kind of roots in our community that ultimately allow meaningful change to occur.

As Otis said last night, this is just the beginning of a campaign to take back our city and stand up for Baltimore’s future. But that won’t be easy. Done right, it will make us uncomfortable, as we reach out across tribes. It will take serious commitment, and much more than “Likes” on Facebook.

In the end, it will require our full and unconditional love – of our fellow citizens, and our city.

A lot of people talk about innovation in terms of fulfilling an unmet market need. Specifically, there’s a lot of emphasis on “solving problems.” (I’m looking at you, Dave McClure.) The theory is that entrepreneurs should work on solving a problem that lots of people have, and not get too focused on some technology. That’s fair advice.

However, when entrepreneurs hear this, their first instinct is to often to go ask people about their problems and then try to solve them. Or they look for markets where there is a lot of money being spent.

“The best innovations are those that solve a problem that people didn’t even know that they had,” says Paola Antonelli, curator of design and architecture at MoMA. Twitter certainly falls in this category. In fact most people were sure they didn’t need Twitter, but now it’s a central part of our media landscape.

This class of innovation is the sort you have to shove down people’s throats at first, but then changes the world forever. And they’re tricky to find because no one will tell you they need them. And there’s no market study that outlines the opportunity.

Thinking about this, and stealing some good ideas from design thinking pioneers like Don Norman, Tim Brown, and Daniel Pink, I’ve settled on four key elements that entrepreneurs can use to think about innovation: design, affordances, emergence, and appeal.

Design

Steve Jobs is famously quoted as saying, “design is how it works,” and he’s right. How it works is determined by the design specifications and constraints. If it is software, the major design elements include aspects like synchronous vs. asynchronous, private vs. public, one-to-one vs. one-to-many vs. many-to-many, market size, viral reach, and mode of access. There are many other elements that determine the nature of a product’s design.

The outward aspects – how it looks and feels – are important insofar as they impose an additional set of operational constraints: what’s possible, what’s most likely, how the “happy path” feels, and how brittle the experience is.

When most people think about design, they think about “how it looks.” We’ll get to that in a minute. When you think about design, you really are determining “how it works,” and it’s the most critical part of creating an innovative product.

Affordances

Affordances are the possibilities that a particular design allows. If your product allows for a particular use, then its design affords that possibility. Sometimes there are negative affordances (a part allows for a hinge to open too widely, possibly damaging the product), as well as positive affordances (an iPod Touch can display streaming video, so it afforded the possibility for HBO to make a mobile subscription TV app.)

Every design offers a wide range of affordances, and you should think critically about what they are.

Emergence

Sometimes a design enables new behaviors that its creators did not predict. Users of the product start behaving in a new way that was not anticipated, though it is allowed by the original affordances (say hashtags on Twitter).

Sometimes the emergent behavior is incorporated back into the original design (such as when Twitter adopted hashtags and @ replies, and tracked their trends).

Emergence is usually a happy accident. Biz Stone, co-founder of Twitter, says, “always allow a seat at the table for the unknown.” That is an excellent design goal. By leaving a few doors open, one allows for this kind of emergent behavior to occur, and to capitalize on it.

Designers almost never consider all of the emergent possibilities that their designs afford. Being open to emergence, and incorporating it into later designs, is key to innovation.

Appeal

This is really a subset of design, but it’s worth discussing all by itself. Your product should have curb appeal and create an emotional connection with people that causes them to return to it again and again.

The finest Swiss clockwork will not go anywhere if it is packaged in an ugly shell. While design is “how it works,” your product’s human appeal has everything to do with “how it works with people.” Because without ongoing engagement from people, most products cannot survive.

So, how it “looks” certainly matters, but only insofar as it affects its ongoing appeal, and “how it works with people.” We know the best products are those that create that emotional, nearly-religious connection, and this can’t be overlooked.

Utility Is Difficult to Predict

I think asking about utility is often the worst way to evaluate a design in its early phases. “Why would I use this? What’s it good for? Who needs this?” are questions that are worth contemplating, but it’s also OK if the answer is “I don’t know yet.”

If a design affords a range of emergent behaviors, if it can be distributed to a large group of users, and it can be made appealing and inspire devotion, odds are it’s something worth experimenting with. The odds that the ultimate utility of an interesting design will exceed early predictions is very high.

I love engineers, and do some engineering, but engineers are particularly prone to evaluate concepts in the frame of “how is it different from XYZ that already exists,” or “what technology does it employ?”

The success of the Wii is one of the wins that stymied many engineers. “The graphics sucked, the games were primitive, and there were better technologies on the market.” And those things were not the point. The Wii won because of its design, it affordances, its appeal, and the emergent behaviors (and user communities) it enabled and reached.

So be playful in your designs. Give things a chance. See what happens. Learn from emergent behaviors. And always leave a seat at the table for the unknown.

Combinatorial Innovation

There are so many new technologies today: tablets, geolocation, video chat, great app frameworks. It is easy to cherry-pick off “combinatorial” innovations that seem compelling, and can maybe even be monetized readily.

But all those innovations are inevitable. If our technologies afford a certain possibility, they will occur. “That’s not a company, that’s a feature,” is one criticism I’ve heard of many “startups.”

These combinatorial, feature-oriented “X for Y” endeavors are often attractive because they can often be built quickly.

Startup Weekend events send an implicit message that a meaningful business can be fleshed out in just a couple of days. And I argue that is not true. That might be a good forum to get practice with building a quick combinatorial technology and working with others, but a real innovation, much less a meaningful business, takes real time.

I think people are often looking in the wrong places for innovation, often because they don’t really take the time to do the homework, observation, and deep reflection necessary to arrive at a true insight. We want things to be quick and easy.

Changing Minds, and Behaviors

The biggest innovations require asking people to change their beliefs, habits, and behaviors.

iPhone: “why would I want a smartphone without a physical keyboard? It’s too expensive. I can’t install apps.”

Twitter: “what is this for? Why would anyone do this? Who cares what I had for breakfast?”

iPad: “an expensive toy. Could never replace a real laptop. Can’t run real office applications. The enterprise will never adopt it.”

Foursquare: “only hipsters and bar hoppers would ever do this. They are letting people know when to rob them. I don’t want people to know where I am.”

And these innovations have taken years of constant attention to bring to their current state. And they are not done.

One Innovator’s Story

Dennis Crowley, founder of Foursquare, was in the room at Wherecamp in 2007 where I was giving a talk about location check-in habits via Twitter (a subject I knew well because of my Twittervision service, which allowed this.)

Dennis, of course, also founded the precursor to Foursquare, Dodgeball, which he sold to Google in 2004 (they promptly killed it.)

But Dennis wanted to see his vision come to pass, and he knew it would someday be possible — though at that point the iPhone had not been released and it would be nearly two years before it supported GPS location technology.

But there Dennis was, doing his homework in 2007, studying user behavior to figure out exactly what behaviors he would have to encourage to make Foursquare work.

He asked me, “so, people are really putting their home and work locations formatted inside tweets in order to update their location?”

“Yep, a few thousand times a day,” I replied.

“That’s cool. That’s really cool stuff,” he said. And from that, and years of similar evidence-gathering and study, Foursquare would be born.

So, creating Foursquare took about five years. (I could have “stolen” the idea and built Foursquare myself. But I didn’t execute on that; it was his vision to pursue.) Dennis did his homework. He was prepared. And his vision preceded the technology that enabled it.

Why, not How

Real innovation doesn’t come from a weekend. It comes from passion, years of study, understanding deep insights and the “why,” and persistence in seeing something new to market, along with the marketing and cheerleading that will make it successful.

The iPad owes much to Steve Jobs’ love of calligraphy. He cultivated a sense of aesthetics because of that initial interest. He didn’t set out to “make money” but rather dedicated himself to changing the world for the better using the entirety of his humanity. Time studying art wasn’t “lost,” it was R&D for the Mac, iPhone, and iPad.

Many of today’s entrepreneurs could stand to do less “hustling” and more reading, exploring, reflecting, and gathering input — and when it is time to make stuff, set their sights as high as possible.

There is more to this world than money, and there are countless opportunities to make it a vastly better place. Rather than using our CPU cycles just playing with combinatorial innovations, let’s devote ourselves to making the world as amazing as possible. Try to take time to reflect on how you can make the world better, and not just on what current technology affords.

Thinking about what works for entrepreneurs and what doesn’t, it occurred to me that it’s not always enough to do the right things. You have to do the right things in the right order.

That sounds hard. It is tough enough to know what the right things are, without also knowing what order to do them in.

But the order matters. Adding a particular investor first helps you get the interest of others. There is a right order to seek investors.

There is a right order in which to seek press and PR for your products, and possibly a different order that’s best for your company as a whole.

You could call it “strategic,” but that implies that it might be hard to figure out, or that a wrong move might cost you dearly. That’s probably not quite right; but there is usually one story that’s better than the others.

I think in the end we are all just telling stories: about ourselves, our companies, and our products. We tell a story to prospective employees, and all sales is really storytelling.

So here’s the trick: tell a good story. If you tell a story that has good characters doing interesting things in a compelling order, you’ll win.

And the inverse is also true. Tell a sad story, or a boring one, or one where the elements don’t build towards a climax, and odds are, you won’t get very far.

So the next time you’re worrying over strategy, or wondering how to get investors interested in what you’re doing, start thinking about your story: the characters, their beliefs, the heroes, and the villains.

Write a story that motivates you, and odds are, others will want to play a part too.

Public education in America has long been the subject of hand-wringing and now, after over 100 years of the same model, it’s time we finally recognize what has worked and what has failed. Education is, in a sense, a kind of technology, and it’s time to ready its next version.

I’ve recently been asked to participate in some discussions about innovation in education; my mother co-founded a primary school in 1980 and I’ve had a chance to consider these topics as a student and a thinker. Here’s precisely where I believe we have failed and what we might do to invent the next generation of education.

Failure to recognize the importance of networks

What makes a successful student? Being around other successful students. We are the average of those around us. This simple fact is what has animated desegregation as well as programs like KIPP, Head Start, charter schools, Big Brothers/Big Sisters, and private schools. If we really want to create social mobility and social justice, we need to change people’s position within the social graph to expose them to self-actualized learners and educated people. This suggests one imperative only and it has nothing to do with schools, per se: If we want children to learn, we must ensure that they are surrounded by people who value learning.

Overconfidence in Curriculum, Testing, and the Educational Machine

If a child’s success is determined primarily by their position within the social fabric, it cannot also follow that the machinery of education has very much impact. Consider that a single child surrounded by a diverse, thoughtful, inquisitive support network of adults and other children will undoubtedly flourish (assuming a base level of socioeconomic security). It is therefore incorrect to assume that the modern educational machine is necessary to produce a successful adult. We should recognize that successful learning can happen in many different ways, and not just through schools.

Confusion about what “school” actually is

The popular conception of “school” is that it is a place where we send our children to learn and be systematically exposed to an orderly program of ideas, culminating in a baseline level of performance that will prepare them for employment. In fact, school provides only a) a basic social safety-net within which children can be placed into a social fabric, b) state-sponsored childcare, c) minimal insurance of the breadth of instruction (via a curriculum), d) minimal insurance of the length of instruction (usually at least 13 years of 180 days each).  School enables some parents to participate in the workforce while insuring a basic safety net for students who would otherwise lack a supporting social fabric.

Confusion and guilt about the role of teachers

Many people intuitively understand the value of a good teacher. But look back on your own school experience and ask honestly how many truly excellent teachers you can recall. Most people will name three or four. Some might name five or six. This suggests that the best experiences in our educational system happen by accident. We all want to value teachers and the work that they do, but when performance varies so widely, it’s difficult to develop metrics that reward those who are making the most difference. Additionally, when others have demonstrated that self-directed learning is possible when children are working within a supportive social fabric, it’s not clear that the model of “teacher as the driver of learning” is sane. The child is the driver of learning, and the teacher is only an informed and enthusiastic member of the child’s social network. Children, not teachers, are the true drivers of learning; teachers are just one part of the child’s social support fabric.

Politicization of education

We have damaged both public education and social justice by conflating the two. Well-intentioned activists on the left identified public education as a civil rights issue. And certainly education is a matter of social justice. But education is a matter of one’s position within the social fabric, and we have been forced to try to use our public school system as the only available tool to manipulate peoples’ placement within it. Well-meaning bureaucrats and school boards make countless decisions that affect people’s placement within social networks – everything from what schools they can attend to what set of classes they can access. People on the right have mistaken left-wing proponents of public education as the enemy, when in fact the enemy is only the many layers of ineffectiveness that plague our system. We can only improve education when we understand the importance of social fabrics and stop fighting each other.

Historic co-opting of education alternatives by both the right and the left

Many on both the far right and left have historically chosen to opt out of public education in favor of religious education, private schools, home-schooling, or unschooling. Because they have been associated with extreme political affiliations, or with the moneyed (and oft-maligned) “elite,” many Americans have found them distasteful. Many intuitively believe that if they pull their child out of public education, they affect the social fabric of the schools they leave behind. However, many also fear that this alone is not a sufficient reason to participate in an underperforming school environment. You hear people say, “I believe in public education; that’s why I’ve got my kid in this school. I hope I’m doing the right thing.” People should put their children in schools only if they provide functional social networks for learning.

Over-reliance on causal thinking

We largely believe the myth that if you graduate as valedictorian and go to the best college that you’ll have a rich and successful life. That may appear true on the surface, but it’s arguable that more opportunities come from the social fabric that results from those experiences than from the credentials themselves. And even optimizing for “rich and successful” doesn’t necessarily translate to “happy and fulfilling.” We all know the old saw that “your degree doesn’t matter; what matters is that you have a degree.” That’s more true today than ever (at least outside of academia itself). The reason for this has more to do with our position within the social fabric than anything else. We need to start giving kids the skills they need to become life-long learners and stop trying to win some imagined game of education.

Vestigial artifacts

We educate children in an industrial model to prepare them to work in industrial environments, as if they were so many machine parts. We take off three months per year so kids can help with farm tasks. These are both obviously ridiculous notions today. So much of the system is the way it is because it has always been that way, and the system begets the system. We must break free. Learning should happen continuously and year-round, individually and in groups, and should be coupled with plenty of play and breaks.

How we might move forward

Buckminster Fuller famously said, “You never change things by fighting the existing model. Instead, make a new model that makes the old model obsolete.” This is happening right now.

First, new instructional tools are emerging. The phenomenal and free Khan Academy website provides deep instruction on hundreds of topics that kids can ingest at their own pace – and as supported by their network of peers and mentors.

Second, social tools like Facebook and Twitter enable people to self-organize face-to-face peer-driven instruction for their children. This will evolve into an effective, mainstream and apolitical home-schooling movement, and it will be a juggernaut.

People will opt out of public education because they will have found something that works better.

If we want to save the mission of public education, we urgently need to get smart about the nature of school, what it is and is not, and figure out a way to offer an effective social safety net for everyone that recognizes this new reality.

The old model simply doesn’t know it’s obsolete.

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.”

David Lee Roth

“He who knows how will always work for he who knows why.”
- David Lee Roth

There are 168 hours in a week and you must decide how to spend them. You’ll probably want to spend some sleeping and eating. What will you do with the rest?

Many people that work with technology pride themselves on knowing how to do things the best way, with the best tools. In fact, the history of technology and its evolution is all about “how” and finding new, better ways to do things.

But in some important ways, “How” is the enemy of “Why.” Why should you do one thing instead of another thing? Why is it sometimes important to choose one technology over another? Some technologists would argue that it’s important to choose the better technology. Better for what?

After about age 15, I have always bristled when people called me a “tech guy.” And I wasn’t sure why. While I may be (on the best days) intelligent enough to pay attention to and use technology well, and maybe to have read a thing or two about algorithms and software, I always felt offended by the label. It was as if people were saying that I knew “how” to do things, but that I didn’t know why.

But I do know why. I’ve read enough philosophy, literature, and scripture to have a sense of what we should be doing on this earth. So calling me a “tech guy” feels wrong. I’m as much of a “why” guy as I am a “how” guy. They’re not mutually exclusive.

People who really know “why” often end up with real power and wealth. To save time, the “why” progeny formed a tribe. They go to the right schools and give each other important-sounding jobs. And they control many people who know “how” (but who may not yet know why.) Too often, though, the offspring of powerful people don’t really know “why.” They took a shortcut and there is none.

I spend a lot of time with tech people; in tech conferences; in the tech community. And many of those people know how to do a great many things. Fewer know “why.” Some have yet to realize it’s worth knowing. That’s OK, because learning why takes time.

It’s troubling to hear good, smart tech people get into the minutiae of a “how” question that doesn’t matter. (For me, home media usually falls into this category.) When I was younger, I might have had time to figure out the details of streaming movies to three televisions. Now I just don’t care. This is why Apple is making a fortune on its products. They generally deliver good results without requiring people to waste time on the details. (Steve Jobs knows both “why” and “how.”)

Here’s a challenge, tech people: learn “why.” And understand that “how” sometimes comes at the expense of “why.” You need to balance your priorities between both and choose how you’re going to spend your time each week. If you know only “how”, and never take the time to know “why,” rest assured you’ll be working for someone else who does.

As a tech-aware person you have a head start, because today it’s not enough to know only “why.” Someone who may know why but excludes technological study from their life can’t understand the world properly today because technology shifts so quickly. Sometimes things that once were important simply become obsolete.

Sometimes I talk to tech people who think they don’t have any real power because they are not part of the old-school power-tribe. But nothing is further from the truth, for inherited power is not real power.

No one has more power than someone who knows both “how” and “why.” Become that person and you change the world.

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?

The 2011 Mayoral contests represent a unique opportunity to make American cities work again. Cities have already begun an inexorable return to relevance as refuges from crushing commutes, and as havens of culture and innovation. Our economy is increasingly hitched to our ability to develop and capitalize on innovative ideas, and that innovation can’t happen when folks are trapped in their cars and isolated in the matrix of suburban sprawl. Cities are the American future.

But in the early 1970′s, they were left for dead: victims of race and class warfare, they became abandoned places – a place where people work or would go to the symphony, but not places to build a life or raise children. Formerly walkable, livable cities degraded into a-la-carte destinations you could get into and out of quickly as 1950′s visions of suburbia gained dominance.

With this shift, cities’ political influence waned, and city politics evolved into a top-down enterprise. Power brokers, political clubs, and church groups conferred power on those who would play the game and wait their turn. In Baltimore, city politics became either a launching pad for state office, or a refuge of scoundrels whose city fiefdoms became ends in and of themselves. Instead of working for Baltimore, all too often our politicians have tried to enrich themselves at its expense. With minimal popular interest and the atrophy of the press, there has been increasingly less oversight. So the machine has lumbered on – unencumbered by the tempering force of investigation, new blood, or real political imagination.

In other contexts, leaders are judged on their ability to lead and deliver tangible improvements. But in our cities, it has become enough for our politicians to just not screw things up even worse than they found them. Enough. It’s time to move forward again.

In 2010 we saw some new trends: long-term incumbents who fit the old standard – of merely not being demonstrably corrupt or incompetent – were booted out. And not because of typical anti-incumbent anger, but because people saw something else: that maybe we could demand better.

In Baltimore, 27 year-old newcomer Bill Ferguson delivered a decisive blow to 27-year incumbent State Senator George Della. Gregg Bernstein defeated long-time incumbent Baltimore City States Attorney Patricia Jessamy. These races shared two things in common: no one thought they could upset the machine, and they used the Internet to organize financial and ideological support.

The simultaneous rise in the demand for urban living along with the use of the Internet for political and community organizing will usher in an era of unprecedented change in American cities. With the 2010 races, the old system was put on notice; in 2011 it will begin to be dismantled.

I support Otis Rolley in his candidacy for Mayor of Baltimore in 2011. At 36, Otis is part of the new guard. He’s qualified – he has a masters’ degree in City Planning from MIT. He has been in Baltimore since 1998. He served 10 years in the public sector and two in the private sector. As an executive, he led the Baltimore City Department of Planning and – shockingly – produced the city’s first actual master plan in 39 years.

In his time at Planning and as a Chief of Staff, Otis was struck with one question: can’t we do better than this?

Indeed we can. Leadership is about creating a culture based on shared values. We need a leader who is willing to stand up for his values and the values of people who care and work hard, and not allow entrenched career “slugs” to dilute those efforts. He proved he could do this at the Department of Planning, empowering those who had a vision for the city, pushing out those that did not.

But while Otis was able to turn around a non-performing department and produce a workable plan for the city, he ultimately realized that the only way to see its recommendations executed was as Mayor. We should give him this opportunity.

Otis can turn around our city the same way he turned around a department: by creating a new culture. Frankly, there are a lot of people in city government who should be looking for other kinds of work. We can start there.

Otis understands that we need to start allocating our resources differently. Economic development has for too long been about big projects, like the currently proposed $900 Million Baltimore Arena redevelopment. While this plan would assuredly enrich some developers and provide ample future backing for political operators looking to entrench themselves for a lifetime in Maryland politics, we should instead be thinking about new ways to capitalize on Baltimore’s biggest economic development assets: its people and its fortunate geography.

If instead we were to invest $900 Million in the infrastructure to support entrepreneurial enterprises and startups, we could potentially create tens of thousands of jobs across a wide range of income levels. A new startup-friendly Baltimore could outperform other regions in terms of standard and cost of living as well as access to a world-class workforce. A strategic focus on manufacturing, both large and small using the latest technologies, could restore what was once a thriving middle class. Arenas, convention centers, stadiums and hotel subsidies just deliver more jobs that don’t even pay a living wage. Otis knows we can do better.

In 2011, we have a choice: do we want to be a good city, or a great city? Otis has a vision that he will articulate over the coming months as part of what should be an open and healthy debate around the future of our city, and not about personal politics. As I have come to know Otis over the past 14 months, I am confident that he is the right leader for Baltimore’s future. If you give him an opportunity to serve, you will not be disappointed.

Baltimore is Otis’ first priority. He has no aspirations for higher office. He wants to work for Baltimore and for all of you. In 2011, we have the wind at our backs – cities are on the upswing, and the Internet is connecting us in unprecedented ways. It’s time to take back our cities and make them the vital, beautiful, functional, and inclusive places we all know they can be. Otis Rolley can help us do that. This is Baltimore’s moment; let’s seize it together.

Also check out Otis’ talk at TEDxMidAtlantic on November 5, 2010: