Why have newspapers fallen from grace in such dramatic fashion? I wrote an article a few months ago about Rupert Murdoch’s take on what the future holds for newsprint, but his words had given me confidence that they could compete in the opinion and analysis niche. I don’t think editorial boards can trade on that angle if the public thinks they’re run by a team of J.J. Hunseckers.

After seeing a comment posted on Floyd Norris’ blog discussing this same study, it came to me that Murdoch’s thoughts of having people go to alternative media for facts, but return to newspapers for the “insight and analysis” was indeed the problem. The crux of the comment on Norris’ blog was:

“Look at your own newspaper some time with the eyes of a reader who does not receive a paycheck from the NYT – opinion disguised as fact, ‘news analysis’ (contrary to the views of your editors, your readers are capable of assessing information and drawing our own conclusions), constant editorializing and, sad to say, bias in what is or is not “fit” to print based on ideology.”

So apparently using newspapers as an opinion platform is OK if such writing is confined to the Op/Ed pages—but if it bleeds into other sections it becomes a far different and more dangerous animal. So why this backlash now? I think it may be an issue of better diagnosis—and underlines the need for the public to reframe the roles “traditional” (TV, Radio, Print) and “alternative” (blogs, twitter, online magazines) media play in their information intake.

Net Geners (people turning 32 this year and younger) have been inundated with user-generated content, much of which is hyperbolic speculation without a semblance of a fact or citation. As a consequence, they’ve had to evolve sharp lie detectors to help guide the process of separating the wheat from the chaff. Here at Wikinomics, we call that the “Scrutinizers Norm” that has helped shape this generation’s ability to effectively use and interpret the online pandemonium. Given their “trust, but verify” mindset, are newspapers actually more biased now than before? Or are we more confident on calling them out on it, now that we have access to bases for comparison via the Internet?

Secondly, perhaps we need to ask whether newspapers were indeed the relationship to put our trust in the first place. Most are part of the corporate system and have been for some time—effectively marginalizing their ability to live up to the romantic ideals of the Fourth Estate espoused by the Woodwards and Bernsteins of the world. Did they violate our trust? Or shame on us for not seeing though their agendas? I guess it depends on where you feel responsibility for seeking the truth lies.

The article in the WSJ argues that Google’s not-so-new practice of using edge-servers—servers that are closer to dense user populations—as part of their content delivery network is an overture against their pro-net neutrality stance. According to Wired, these edge-servers are co-located at ISPs near their users (which would logically mean major urban centres), which improves the performance of Google’s sites (like YouTube). The WSJ contends that this faster access these edge-servers provide is a breach of net neutrality, as its only for Google content.

Richard Whitt fired back at the WSJ article saying that it missed the point: Google is doing a service by speeding its content to its users, and that they’re not blocking any other content providers from doing the same. The WSJ article also argues that these practices essentially give Google “they’re own fast track to the web”. Wired fired back with a more appropriate analogy, likening Google’s servers to free car washes near their users. I don’t like that one so much, because it implies that it’s for everyone. Really, the speed-up is for Google content. So how does this analogy sound: “It’s like a Audi Roadside Assistance. You’ve got to drive an Audi to get it, but it’s not preventing any Toyota drivers from access to their own Roadside Service.” How does that fit?

I have to agree with both Wired and Mr. Whitt on the unnecessarily alarmist tone the WSJ article took while accusing Google. The WSJ also seemed to spread the idea that equality on the Internet was losing some of its most fervent supporters in Larry Lessig, Amazon, Microsoft, and Yahoo. Again, Wired has done a nice job of exposing those statements as either speculation or as untrue.

I’m just a little floored at how off-base the WSJ article seems, and it looks more like sound and fury than substantiated narrative. Any readers have any thoughts when they read the WSJ article? Or is net neutrality not as cut-and-dried as Google makes it out to be?

Since 2002, Humboldt County has promoted the Humboldt County Election Transparency Project, an initiative set up to ensure adequate rigor in vetting the electronic balloting process. The software—called Ballot Browser—was developed by Mitch Trachtenberg, a local area software engineer. After the ballots (some potentially with chad, just wanted to throw a reference in there somewhere) are scanned by the Premier system, they get scanned a second time. Trachtenberg’s software is then run on these scans to identify where the punches were made.

After the Transparency Project’s audit, it uncovered 197 ballots missing from Premier’s counts. After some troubleshooting with Premier, the cause was revealed to be a bug in their proprietary software, which inadvertently deleted portions of the ballots it had previously counted. As the story from Wired goes, each stack of ballots fed into the scanner is given a “deck” number starting at zero (0, 1, 2, and so on). If during the process an operator interrupts any subsequent deck, the software deletes the deck 0. The scary bit is that the logs would show no evidence of the deleted deck zero, or of its existence entirely.

The error had been revealed earlier in 2004 with a simple workaround: delete the “deck 0” before it has any meaningful data in it, and you’re set. Not a great workaround, but serviceable.

The major concern is this: what would have happened without this auditing system? Odds are that the votes would have been lost into the ether. Not a frightening prospect in wide-margin victories, but what about the tight races? Any thoughts on these Premier/Diebold balloting machines? I’m certain that the software error wasn’t a vast right-wing conspiracy, but does it underline a need to be wary of proprietary software? Or is that alarmist, and this is an isolated incident?

Proprietary software has garnered significant investment by development firms, in part, thanks to its clear-cut business model. Perhaps open source will see further attention as government realizes that the plus of near-ubiquity in proprietary software comes with its fair share of transparency-related caveats. With a few more strong showings by open source in the governance arena, policymakers may have to recognize it as a viable contender.

The site is effectively a Twitter aggregator, scouring the Twittersphere for tweets with stock symbols with a dollar-sign in front of them (e.g. “$AAPL”). When you log on to the StockTwits site and give it a ticker symbol, it gives you a list of the top sixty or so users that have tweeted with that symbol in the text. Ideally, this is meant to be another channel for small investors to communicate with each other in real-time about their opinion of how fresh news headlines will affect stock prices.

Cool? Yes. But what makes it really neat is that it’s another proof-of-concept of how Twitter-based social networks can work. StockTwits collects interesting tidbits about stock information in real-time. Aardvark does something similar, and routes questions in real-time to participants in your network.

Sites like Yammer (internally-facing Twitters) are gaining traction in the corporate world (Yammer boasts Xerox and Mahalo as users), but could they be made more robust with this aggregation service?

Take a look at how prediction markets work: they’re tools to aggregate information within a community (or company). Seems like this is exactly what StockTwits’ platform does, but without the traditional dollar-associated metrics used on the popular prediction marketplaces like InTrade or Inkling (which uses play-money).

I’ll take a bet that if you could create some trust and reputation metrics around the quality of information people are tweeting about, coupled with a measure of strength-of-opinion (the size of a wager, in prediction market-speak), Twitter would essentially be a prediction market in microblogger’s clothes. Right now, the number of followers a user has is the best trust proxy the network has (which is imperfect, and readily deteriorates into a popularity contest). Perhaps a strength-of-opinion measurement could harness emerging work in semantics and artificial intelligence to gauge users’ intensity of conviction based on word choice.

One could track stocks (or more broadly, opinions about anything) with the same granularity and effectiveness seen in well-used prediction marketplaces. In fact, since Twitter sees far more traffic than any prediction market; perhaps the increased liquidity and a broad user base could translate well into even more accurate predictive muscle.

Any thoughts on uses for Twitter-based knowledge aggregation? See any cool start-ups exploring the space?

Mr. Murdoch is no stranger to political controversy and variety; his board seat with libertarian think tank the Cato Institute says one thing, his endorsement of Hillary Clinton certainly says another. His political ideas aside, he’s got some cogent ideas about the role newspapers need to take in competing with their solely-online brethren (The Huffington Post, Slate). In the third lecture of the series, titled The Future of Newspapers: Moving Beyond Dead Trees, Murdoch suggests we’re “moving from news papers to news brands“, and I agree.

Murdoch advocates for a “repositioning” of what created newspaper loyalty in the first place:

“I like the look and feel of newsprint as much as anyone. But our real business isn’t printing on dead trees. It’s giving our readers great journalism and great judgment.”

At their best, news articles are well-explained stories—filled with a coherent narrative, good intuition, and insight. But the Internet is again turning raw information into a commodity. I was having a conversation with another Wikinomics contributor, Denis, and he said that he often only skims the news sections of the Globe and Mail now, as he’s read most of that content on other sites online. Instead, he says he finds himself lingering on the Op/Ed sections, where these journalists earn their keep by offering thought-provoking opinions and occasionally inflammatory polemic. I too find myself focusing on the opinion pieces, as I enjoy exploring what makes people come to entirely different opinions when exposed to the same set of facts.

Now while I agree that newspapers are becoming more brand-aware, what’s the other side of the coin in this argument? What are the concerns? The first one that jumps into mind is kind readers will forget “let the reader beware”, and take things as gospel—conveniently unaware of the editorial colouring. My sister, a journalist with the Winnipeg Free Press mentioned that good writing, even if it is heavy on the opinion, has that expository section where the author sets up the facts, then explores the implications of those facts. I think we’ll need to trust the reading audience to find those sections. As a Net Gener, I fully ascribe to the “trust, but verify” school of thought, which serves me well when venturing down the Fox News rabbit hole.

Here’s a strange idea: maybe internet content could push educators to focus more on teaching critical reading and logic, giving young people even better tools with which they can explore their world. A little idealistic; it’s already going on independently, so why not ride that wave?

Newspapers are no longer confined to the front steps of your home anymore, and by using the internet as their new medium, Murdoch has certainly made me rethink their imminent demise. Online outlets like Slate and The Huffington Post have done fantastic jobs of offering their angle on issues political and otherwise, and have real cachet with their readers. The line that stands out in Rupert’s talk is a harbinger for editors reluctant to embrace a new platform:

“My summary of the way some of the established media has responded to the internet is this: it’s not newspapers that might become obsolete. It’s some of the editors, reporters, and proprietors who are forgetting a newspaper’s most precious asset: the bond with its readers.”

Newspapers will have to fight to carve out those editorial niches, but it’ll pay handsome dividends. But will they take license with that “bond” they have with their readers? The end of that story rests with their readers. They’re a discerning bunch, but navigating the landscape may be more subtle than merely reading the words “fair and balanced” on the nameplate.

Some articles I’ve read suggest that these people feel isolated—cut off from the human aspect of a normal office. Recently, Starbucks has marketed itself as a “Third Space“—a location where people congregate as an extension of their broader social activities (home and office are the other two spaces). For people without a conventional office, it seems like these “Third Space” settings move up a notch in their importance, replacing what was normally occupied by their workspace. That explains why there’s a guy in the corner summing columns on a spreadsheet, or a designer laying out the next Amazon hit as you order your skinny latte.

Yes, I’ll bet a you a Coke that there’s a good cross-section of current cubicle farm workers who think yearning for an office space is horse hockey. But having had to do a significant project with some colleagues who moved out-of-town, it was a little lonely using only a wiki and IM. I discovered that, for me, the office back-and-forth was a collaboration tool.

San Francisco, rife with early adopters, understood the phenomenon and created Citizen Space: an work environment where people can cowork. Coworking aims to capture that energy people feel when they’re surrounded by people immersed in their work. Instead of being a demoralizing, library-quiet space, the environment is collegial and café-like. After seeing the photos, collegial reads more like “college study room”. Brainstorming requests from neighbours are met with willingness, which one writer felt created windows of “spontaneous collaboration”.

At Citizen Space, a reserved desk goes for $425 per month, but drop-ins can use their larger tables for free. The requirements? Be a “groovy cat” and “give back to the universe what you receive today”. Not a bad deal.

So instead of staid remote offices, maybe workers without a fixed work address have an outlet for the home office blues. The steps to regaining that “second space”? Be extroverted, be willing to collaborate, and most importantly: don’t bogart the coffee, man.

The Centers for Disease Control and Prevention call this type of disease monitoring Syndromic Surveillance, where they use information about things that often happen before a diagnosis to gauge the likelihood of a public health concern. I had done some work at school in 2005 looking at a project from the University of Pittsburgh called Real-time Outbreak and Disease Surveillance (RODS), which used over-the-counter medication sales as a tool for predicting community health issues. The sales data is collected through the National Retail Data Monitor Program, which uses the UPC data from each sale, and aggregates them. Any spikes determined statistically significant seem to correlate well with emergency room visits, and appear to do it faster. A study of the system’s effectiveness suggested that electrolyte sales and medications like Gravol/Dramamine spiked before children started presenting in emergency rooms for care.

Google has now weighed in with their Google Flu Trends which, instead of using OTC sales data, uses search keywords. The idea is that if you’re searching for terms like “flu” and “cough medicine” there’s a good chance you need them. Pretty neat.

I think this has the potential to be even more sensitive than the RODS program, as people only buy medicines when they’re sick enough to need them. They might Google about their symptoms before symptoms necessitate the meds, adding to the early-warning lead time.

To think even bigger, could this type of predictive use of Google search words bear fruit in other disciplines? Like, has anyone taken a look at a stock price’s volatility as a function of its search traffic (or keywords paired with a company name)? Perhaps some negative web chatter could presage rough times for the mentioned company, ideally beyond the typical rumour-mongering.

I know. The stock idea seems like a stretch. It’s just that the markets have me feeling unwell. Or is it the flu? Maybe I’ll ask Google.

The traditional knowledge markets like Yahoo! Answers do little active work in matching a question with a resident subject expert, instead relying on the community to keep an eye on the topics they’re best equipped to answer. A new social search service (still in beta) called Aardvark.im from the folks at The Mechanical Zoo aims to actively feed questions to self-proclaimed “subject authorities” who take it from there. As you pose and answer questions you build your “knowledge network”—a social network of your conversation participants. The question routing is done via Aardvark’s algorithm, which according to a VentureBeat article, will involve favouring “friends-of-friends” as the first-line recipients, but does the expert finding for you.

The cool element about Aardvark is that it’s a seamless merger of a knowledge market (a la Yahoo! Answers) and real-time conversation tools (Twitter). Want to know where you can get a good sandwich in your neighbourhood? A quick tweet polls the experts in your city, and you have your answer in real-time. Seems like the service could be structured for use within a company intranet too. For example, you could post a question about quarterly performance numbers or about warehouse inventory levels, and the question would get routed to the resident expert in each department, with the responses in real-time. From my experience, that would trump those long email chains that go back and forth trying to find the right person to answer a specific question.

Speed depends on the number of users on the network, which at around 1,200 the service is pretty small (Aardvark is still in beta)—but given that this is a version of an “applied” Twitter, and that beta invites are in short supply, it’s likely Aardvark will find quick cachet with the nation’s sandwich seekers. And other folks too, I guess.

The Bilski patent involved a method to determine appropriate pricing and apportioning of commodity hedging instruments—a process by which companies can mitigate price risk in volatile markets. Hedging and risk management are on the tips of everyone’s tongues these days: Don has written thoroughly about it, and “risk managers” seem to be the only people on Bay and Wall Streets who still get calls from recruiters (not ones who worked for these guys, of course). But the fundamental question, as seen by the court, was “Is this ‘machine-or-transformation’ test satisfied?”

The test is simple in premise, but as are many legal concepts, is readily abstracted into realms unknown. The decision said it clearest:

“an applicant may show that a process claim satisfies §101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.”

The Bilski patents were not seen as a transformation of the underlying “article” (in this case, obligations and concepts of risk), as these articles were considered ineligible: they were not “physical objects or substances, and are not representative of physical objects or substances.” (Emphasis added) The applicants hoped that their process, which produced “useful, concrete and tangible results” would be sufficient, but when considered in isolation, that wasn’t enough. An aside

But what does it all mean, Basil? What are the implications to future innovation, especially given the shift to knowledge work, where razor-thin profit margins are often a direct product of business processes (albeit, ones with more gravitas and specificity)? For that we go to one of the dissenting judge’s opinions, Judge Newman. She (and I agree) that the redefinition of the “process” to depend on machines or tangibility (or representation thereof) is imprudent:

“…thus excludes many of the kinds of inventions that apply today’s electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today’s Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.”

The other two dissenters, Rader and Mayer, speak to the desirability of a more concise resolution and the devolution of the patent landscape:

• Rader argues that stressing process-machine relationship is outdated given the current state of science and technology.
  

• Mayer’s dissent is a little more vigorous, and disagrees with business method patents wholly as they stand now
  

• The argument is one that patent law is meant to spur innovation and science, not help financiers structure business arrangements.
  

So who is right? One potential school of thought is that since most technology process innovations are tied to machines so closely, that patenting shouldn’t be slowed by this decision, and Newman has nothing to fear.

My stance is this: Hedging, computer aided or not, is still a fundamental business principle: alone, it’s unpatentable. But the idea that something non-physical needs to be tied to a machine to make it patentable is a surprising (and unwise) decision. It seems like the decision failed to speak to the future, but instead seems to gain its only ammunition on the basis of the “transformation” argument. I agree with Rader that the patent could have been just as ably defeated by arguing its scope was too broad, effectively damaging antecedent work in the area.

My Wikinomics Angle: I’m decidedly Mayer-esque in his “Six Million Dollar Man” idea that we can rebuild the system. Why? Because “we have the technology” that necessitates it (apologies, but we needed some levity. This far it’s been Churchill martini-dry). Patents aren’t meant to replace a business model or prevent others from even doing business. Ideally, they’re meant as an avenue through which innovators can be compensated for their role in science and technological evolution. Instead we’re seeing companies set up defensive minefields as a competitive strategy. Weak. In 1995, Michel Robert wrote that innovation was considered to be the business “Fountain of Youth”, as it was the cornerstone to both success (a product of competitiveness) and longevity (a product of success). Jeff Roberts at McGill University in Montreal wrote a great blog post about how IP should mean innovation, not litigation. He’s a sharp cookie, and fear not, he’s not an anarchist. He just advocates that if IP policy is careless with what he calls the “rights-rewards balance”, innovation becomes an afterthought, not the goal.

Wikinomics in law isn’t about free (little joke), and it isn’t about ignoring property rights; that rigidity was born out of the old vanguard that created walled gardens. But the only way to see over those tall-walled enclaves is a return to a founding tenet of past science:

“If I have seen further it is by standing on the shoulders of giants” – Isaac Newton, 1676

[Aside: The whole "useful…" phrase sounds like something written by Teresa Amabile a researcher who studies creativity and innovation. The stickiest phrase I remember from one of her academic papers was criteria for judging something as creative was dependent on it being "novel and appropriate". I also felt that Jerome Bruner said it really well that true creativity would produce "a shock of recognition, following which there is no longer astonishment." Pretty neat reading for you academic folks.] Back to Post

I’m fairly confident that print is not yet dead, but what caught my attention was an article in Wired sounding the death knell for the blogosphere. Paul Boutin feels that the medium isn’t the pithy purveyor of pointed polemic, but an impotent (and often “catty”) soapbox for comment trolls and professional spammers. He decries that the medium is now disconnected with what made it popular and that ubiquitous social media sites make it so easy to post pictures and video, that the written word is now a distant second. Boutin believes that those communiqués are better suited for Facebook and Twitter rather than a blog.

But what I took issue with is the argument against sites like Engadget and The Huffington Post, which Boutin says smack more like online magazines, with teams of writers turning out such volume that the little guy gets swept away in the deluge. His point that now it’s become more difficult to find those little nuggets amidst the sea of PageRank-biased semi-professional bloggers. But isn’t that the point of blogs in general? They’ve equipped the masses to spread the word, and now they’ve exercised their “online constitutional right” to assemble and organize in ways they see fit. Yes, the good old days of the “lone wolf” blogosphere may be past (sic transit gloria), but the Internet is still very much a meritocracy. Sites like Digg and human-driven aggregators like Alltop still let the cream rise to the top. Yes, Google’s PageRank favours the Goliaths of the Internet, but it’s shocking how quickly we start acting as if there were no alternatives and that Internet users have lost all of their “animal spirits“ to seek out quality content at the margins.

Yes, Twitter and Facebook feel better suited for our new brand of SMS vitriol, but blog “nuggets” don’t stay hidden long. And I think that is reason enough not to dissuade the next wave of bloggers from having fun with long-form writing. Perhaps I’m advocating patience, something in short supply these days. Very “Field of Dreams”: if you blog quality, the readers will come—in time. In my case, I’ve got some waiting to do.

*Quote:

“Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.” – John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936 (Back to post)

    In the spirit of honesty, I’m not a VC but I did have fun masquerading as one at a recent conference called BioFinance and got some interesting cards. But if you’re a road-warrior, lugging your card album with you is a pain. Some people have nifty (read: pricey) card scanners, and keep a collection on their laptops/Flickr, but a new startup called CloudContacts offers a service to scan the cards for you, and upload them into the “cloud”.

    You sign up for service ($30 for up to 100 cards), and then mail them your cards. They scan and upload them to your account, and then you can access them through their site. A neat feature is their “one-click connect” which lets you add contacts in your collection directly to Twitter, Facebook, or LinkedIn. I haven’t read any details about tagging and the like, but I’m sure it’s got that in there too. I can imagine one of my tags now: “Scotch-Fan”. That way I can make sure I get to that person early in the evening before they imbibe, ensuring they don’t confuse me with this guy.

    Cool idea, and while I’m a casual fan of the whole cocktail-party-rigmarole, I’m not enough of a big fish (yet) to necessitate the service. The old school method of using Outlook to manage my offline contacts works well enough. But people with schedules full of hand-shaking and frequent-flyer miles should be pleased with another option to tap their rolodex anytime, anywhere.

    But that said, when are we going to see vCards transmitted via Bluetooth to everyone’s Blackberry more regularly? I really thought that would catch on more than I’ve seen in my limited experience. Have any readers had success with vCards during networking functions? Also, has anyone been subjected to unintended vCards, broadcast by some Bluetooth–crazy self-promoter?

P2P lending involves borrowing and lending between participants without the use of traditional financial channels. This is a flagship example of how Wikinomics (and the Internet in general) is fostering a “disintermediation” trend, stripping down marketing and distribution channels. To be fair, P2P lending marketplaces are a version of “disintermediation-lite”, as they do broker transactions, and add a layer between counterparties.

U.S.-based lending firms have also been feeling the squeeze, as they say default rates creep higher and return-on-investment drops for lenders taking the plunge. I did some surfing on LendingStats, a visualization site that feeds from Prosper’s open data feed. I went in expecting to see delinquency rates rise when comparing YTD 2008 with the same period in 2007, and it turns out delinquency rates have dropped markedly. For YTD 2008, 615 of 11,542 loans on Prosper (5.3%) are delinquent (late or defaulted). The same period in 2007 the delinquency rate was 2,429 of 9,356 loans (25.9%). Big difference. So what’s the deal? Seems contrary to what most of us expect.

So I took a look at the average amount per delinquent account between years, and 2008′s average is around $5,800 and 2007 is around $7,400. So not only is the proportion of defaulters dropping, but so is the average amount of the delinquency.

The only thing I could glean from the data that seems consistent with the Big Banks’ experiences was that the average credit score of the delinquent pool is getting better. In other words, people with better credit scores are delinquent more on average than last year (average delinquent score 4.55 in 2008 versus 5.04, lower is better)

[I must disclaim: The figures from LendingStats are on an average basis, and as such may not be as accurate as would be a dollar-weighted measure of credit score etc. But I thought it interesting nonetheless. ]

Where the SEC fits in is that it’s reviewing requests by Prosper and Lending Club to allow a secondary market for the P2P loans arranged through their site. In other words, it will create a marketplace where lenders can sell their loans to others. This reselling scheme smacks like what got us into hot water with mortgage-backed securities, but I guess the trouble will only start if loans are bundled together into a jumbled mess and sold off tranche by tranche. The size of the marketplace probably makes transparency easier—for now. Perhaps some readers have some insight as to whether this is a good idea or not, or the likelihood of history repeating in the P2P market.

Also, I wanted to post another question to the Wikinomics Community: are we getting away from what made P2P work? Many think that it was the personal aspect of P2P that turned people on to it, a welcome change from the rubber-stamp mortgage managers at your local branch. Could a secondary marketplace promote detachment, where the loan buyer doesn’t care (or know) that his $500 is helping Joe the Plumber get his plumber’s license?

Maybe I’m just too sentimental.

The shockwave is moving quickly: venture capital stalwarts Sequoia Capital have been instructing their portfolio companies to prepare for a “doomsday scenario”. Cutting fat, eliminating redundancy, and finding the cheapest darn way to do business is now the imperative of all those wide-eyed, once-well-funded start-ups.

My dad once gave me good advice which I didn’t take. “Son, doctors, dentists, lawyers and teachers are recession-proof. Work smart.” For the most part, it holds true (it seems some lawyers are having a hard time). But it seems like you don’t need to be bricks-and-mortar or an M.D. to stay “recession-resistant”. Like magic, outsourcing marketplaces have been going like gangbusters despite economic woes.

The more people who take pages from Sequoia’s warning to slim down to essential personnel and services find that outsourcing fits the bill nicely. It’s like having talent attached to a spigot—you can match the resource-flow to your cash-flow (and work-flow) on-demand. A Reuters article boasts that Elance (a popular outsourcing marketplace) has increased billings by 65% this year—driven by the need for smaller firms to have a flexible, highly-trained workforce.

If this downturn finds you sitting on the couch, reluctantly watching daytime TV, outsourcing marketplaces could be just ticket to get you off The Young and The Restless and back to the ranks of the gainfully employed.

So I was wrong and a good reader pointed it out, and the mistake was promptly corrected. That’s one of my favourite aspects of the blogosphere: many eyes can spot even small mistakes. So after the favour, I wanted to see if the commenter had a blog of their own I could check out their handiwork. The poster left their email address when they posted the comment so I googled them.

Turns out that the domain it came from was actually a communications firm with a decidedly corporate focus. After reading more closely, it turns out that GE Commercial Finance is one of their clients. So it seems like the kind poster didn’t stumble upon this site looking for Trion, Wikinomics, or another interesting posting from yours truly. So with my slightly bruised ego, I did some further looking about the business of “policing” the blogosphere for corporate mentions, and ensuring people get their facts straight.

So what do these firms do? Shift Communications is one such firm, and they point out that the blogosphere (and other Web 2.0 tools) is a prime forum for public opinion which can influence others. They go on to say blog monitoring is a great way to figure out what people truly think about a product or service. The idea is that the blogosphere is a sort of early-warning system to identify if there are any disconnects between what companies want to portray and how consumers experience their products and services.

So consider this an open letter. I’ve mentioned Shift Communications. Will they find this site? In the hopes that they do, I pose the nice people at Shift a question: How’s business? Have companies been compelled to action thanks to blog-buzz? Or is it only for online PR catastrophe avoidance? In other words, do they sweat the small stuff or was this a one-off?

• The verb “to google”
• SaaS that was easy and transparent to use
• Upping the ante in the e-mail storage capacity wars
• Innovation Time Off (20% of employees can devote time towards projects beyond their daily activities)
• Android and Chrome
• Google.org (their for-profit philanthropy arm)

Their meteoric growth since their IPO, alongside the pressures to manage their ballooning personnel ranks, people have been very critical as to whether Google can sustain their “don’t be evil” motto.

Yes, they did acquire DoubleClick in early 2007, which until then, was best known for serving intrusive ads that left cookies that could follow you from page to page.

But Google has always been quick to atone for any missteps, and their charitable efforts have been so generous, that they always force the public to re-evaluate one’s own concept of philanthropy.

To celebrate their tenth anniversary, and re-affirm their decidedly non-evil status, their Project 10¹⁰⁰ (read: Project 10 to the 100^th) is an example of charitable collaboration.

The contest is a massive request for proposals from the net community for ideas that will improve quality of life for the greatest number of people. The scope of these ideas fall into eight categories ranging from health and education to the eponymous “Everything Else”.

People have until October 20^th, 2008 to submit their proposal along with a 30-second video if desired. Google will sort through the ideas and post the 100 best on the site for the public to vote on (starting January 27^th, 2009). That will whittle the selection pool to 20 candidates, from which their panel of experts will select the five winners. The criteria range from how wide the impact of the idea is (reach) and how long its effects persist (longevity).

The winners will get a piece of the $10 million prize, which will be used to help grow their idea from “30-second YouTube Spot” to “1-hour Charlie Rose Interview” (I’m a big fan of Charlie.)

So if you and a friend think you’re the next Buffett/Gates philanthropy tag-team, give it a shot.

So why are they “worth” that much? Well, according to their CEO Dr. Lars Buttler (a former Electronic Arts executive who worked on Might and Magic and Heroes), the reason is two-fold:

• First, Trion’s goal is to design a MMOG that can truly operate cross-platform. This means that Trion’s games will work across devices ranging from your PC, your gaming console, and web-enabled mobile phones.
• Second, Buttler is convinced that Trion’s other ace is the premise that he calls “dynamic gaming”. This “dynamic gaming” seems to be a flavour of the traditional server-based MMOGs, but Trion exercises more control over the environment, aiming to give the user a “unique” experience. Here, the game can change overnight, at the behest of Trion’s designers.

Superficially, this “dynamic gaming” concept seems more like an attempt to create a new buzzword rather than provide some tangible, novel technology. But, of course, some very clever investors feel like Trion is a hundred-million-dollar-plus investment. Digging deeper, Bertelsmann, Peacock Equity (NBC’s VC arm edit: A JV between NBC Universal and GE Commercial Finance – Media, Communications & Entertainment. Thanks, Alex!), and Time Warner all have vested interests, and Trion has teamed up NBC to issue games that coincide with a yet-to-be-released TV show on the Sci-Fi Channel. This seems like a MMOG version of Andrea’s last article on LiveHive, a Waterloo, Ontario-based company. So that will definitely be a market-share battle to watch, but their markets are still pretty separate.

So the burning question is: Have those savvy investors misspent their $70MM? Kind of. It’s been two years in the making; HP has firmly backed the server side of Trion’s business for over a year. They have surplus cash, and Buttler has been poaching high-end talent from his former stomping grounds at EA. What’s the hold up?

I too feel that cloud-centric gaming is where the EAs and Blizzard Entertainments of the world will compete for market share. The cross-platform MMOG concept is compelling, but it’s highly unlikely that Trion will be allowed to easily branch out to other platforms given their relationship with Bertelsmann (who shares half of the control of Sony BMG). The PS3 is their first console they’re trying it on. That’s going to make it tough unseating the incumbents World of Warcraft or EVE Online. Am I missing the Killer-App part of the pitch? Maybe I’m not ready to be a VC.

Here’s how it works: you sign up for a new account on their website and select the method you wish to use to upload your transaction information. There are a few to choose from, ranging from a handy Firefox extension to a manual uploader application. After that, you select your bank, point it to your financial statements, and let Wesabe to the rest. Wesabe then creates charts and transaction lists for your earnings and spending. I found out that my afternoon Starbucks habit averages only $2.05, which isn’t bad considering a significant number of people are closer to $5.

Each of your transactions are tag-able, and each of the places you spent at are reviewable. Most of the popular places (like Starbucks and Chipotle) have a huge number of useful user comments. Some range from how to maximize Peet’s Coffee’s discount when you buy beans to tips on saving money on a healthy lunch instead of inhaling that double cheeseburger. The user groups are also interesting, as you can find out about smarter ways to shop for car insurance to Household Budgeting 101.

The neat open source aspect of Wesabe is that it has a robust API which allows Wesabe enthusiasts the flexibility to develop whatever their cost-conscious minds can dream up. Wesabe has an articulate stance on how having better information about your spending habits is the first step toward reining them in. There are widgets for Vista, OS X, and even your iPhone.

Looks like those GI Joe cartoons from the 1980′s were right! Seems like knowing is half the battle. Keeping your credit card in your wallet is now the tougher other half.

Fortunately, European traders had recourse in several new electronic exchanges, such as Chi-x and Turquoise. After imagining huddled masses of traders without their exchange, I took some solace that they had those alternatives (even though they come with their own liquidity issues).

Then I got to thinking: what about other mission critical functions that companies and people have come to rely on? Namely those with systems beyond the control of an IT manager just a four-digit extension away? SaaS comes with its well-documented benefits of low capital costs and more, but what about uptime and reliability? The LSE hiccup isn’t exactly SaaS, but it is an example of a centralized service that is crucial day-to-day going awry.

SaaS darlings, Google and Apple found themselves in the crosshairs when their email services Gmail and MobileMe went down for hours on August 11^th. And this was another misstep for Apple, since MobileMe was down for 11 days in July. Steve Jobs meted out his form of justice by canning the executives in charge of the program, but does that allay an IT manager’s concerns?

Seems like those managers are split on their future with SaaS. In an article on InfoWorld those managers who made the move to Google after choosing to leave their established infrastructure were concerned about future hiccups. One manager was especially concerned, as the crash came only days after he had migrated his company completely to Google. Suffice it to say he felt a little foolish. On the other end of the spectrum, the smaller start-ups (with no messy IT systems to divorce) were more than forgiving with Google.

So what’s the point? Regardless of the potential SaaS has for small companies that have never known a complicated IT infrastructure, those companies that make up the old vanguard are still the bulk of the market. SaaS has limitless potential; but with highly-public failures creating doubt in IT managers responsible for adopting these systems, it seems like Google and Apple will have to do more than just satisfy their armchair evangelists, and start appealing to those uneasy decision-makers: those with their fingers on the IT purse-strings.