Milestone Group Quarterly: July 2008

Articles

• Face to Face: Jimmy Wales, Founder, Wikipedia.org
• Investment Viewpoint: Evangelos Simoudis, Managing Director, Trident Capital
• By Invitation:  The Web's Dark Energy, Community policing can help make the Web safe by Jonathan Zittr
• Milestone POV: The Ecosystem Wars and the Zero-Sum Game by Mark Zawacki, Milestone Group Founder & Managing Partner
   

Face to Face:

Jimmy Wales, Founder, Wikipedia.org

Milestone: Looking at all of the different things you are involved in, one has to wonder where the drive comes from?

Wales: I just like to do things that are interesting and cool. My current project is a search engine project, and that's what I'm after. For me it's about seeing a new way to do search and pulling together a team and all the pieces to make that happen. I think that's really critical, because if you are doing something that is cool then the business part of the thing takes care of itself.

Milestone: On the search engine, you say that, with a Wiki search, 'People can edit and add in a way that no other search engine has ever fathomed.' How does that happen? What's the distinction between that and other search engines?

Wales: Basically when you can add and delete URLs, edit the text and reorder things without logging in, you have better search results. But it's still search, fundamentally. It is a very open model, and nobody has ever considered trying to do it this way, it is a very Wiki approach.

What I am really hoping to see is that we get to a place where there is more competition and more openness. I am hoping that people will basically like the idea and copy it. We offer the data and software under an open-source license and we are hoping to restructure the entire search industry.

If we are successful at generating industry standard search, it means that mid-sized companies would be able to have a search engine which they control completely. Right now, search for them is outsourcing it to Google. Our approach means that they can run it in-house and modify it to suit their customers' needs.
 

Milestone: How does this fit within a Web 2.0 framework or is it more in the future, say Web 3.0 and semantics-based searching?

Wales:  I don't think semantics is the future of anything.

Milestone: Really?

Wales: I think it is a complete dead end. It's a fairly useless concept, and there are more than a few people who agree with me. It's why Google is not interested. I mean, anybody who knows anything about search will tell you that, so far, the results out of semantics are very minimal, and not particularly interesting.

As it turns out, getting computers to understand the meaning of Web pages is extremely difficult and not particularly helpful. Keyword based search seems to work perfectly fine. And if you need the human editorial judgment, then you need human editorial judgment; rather than some brief algorithm trying to comprehend something.
 

Milestone: Can you explain what you mean by crowd-sourcing?

Wales: Well, crowd-sourcing is a buzzword that some have come up with in the last few years to describe the idea that when you've got some work that needs doing, rather than paying people to do it (or outsourcing it to some cheaper country), you crowd-source it. It seems to mean you get the general public to do your work for you.

That's just a bizarre way of looking at the world. It's just wrong. And I think any company that says they are crowd-sourcing is really saying that they have no idea what they are doing. They are badly misunderstanding people's motivations, and badly understanding what it means to build genuine community on-line.

Milestone: And, what does genuine community look like to you?

Wales: Well, a genuine community is people coming together, forming friendships and doing things that they find rewarding, interesting, and fun. In a genuine community, you expect to have people getting mad at each other and making up... all that kind of messy human stuff. I don't think there is any really significant difference between on-line communities and other communities when on-line is done well.

On-line community occurs when people are able to find people with similar interests without regard to geography. 
 

Milestone: Is there a distinction that you would make between on-line community development and social networking? Where are the boundaries between the two?

Wales: Normally, when we talk about a social network, we are talking about a Web site or a piece of software that allows connection and that's a useful tool in some communities. Facebook is a pure social network, it's obviously core to what you do on the site. For other sites it may be secondary, or it may not exist at all; and there is some overlap. 
 

Milestone: If you were to speak to the business community or marketing organizations on how to tap into people's passions and how to organize them, what would you tell them? What are the things that they should do and what are the things they shouldn't?

Wales: I think they should just be really, really careful because a great deal of what people are trying to do is so clumsy that they do more harm to their image than good.

One of the simple suggestions is to imagine that the people you are talking to are in church. That's one of the classic social situations where selling something or treating them with an ulterior purpose is clearly the wrong thing to do.

If I am shopping for groceries and somebody is handing out samples of a new food item that seems fine to me. I mean, I am in the store shopping and they want me to try the product and see if I like it. No problem.

But, if I'm at church, (and by the way I don't go to church), and somebody is trying to give out food samples, that seems very bizarre to me. Not to mention that it's quite inappropriate. Most of the time when people are online in their community setting, that's the frame of mind that they are in. They are not shopping and they don't really want to hear from you. If you are trying to market to them, it had better be in a very clearly defined and accepted way, such as a simple text ad.

Anybody that's trying to get involved deeper than that is making a huge mistake.

Milestone: There is a lot of talk about investment going to ideas that monetize the Web. What's the possibility of that, and what needs to be in place to make it happen?

Wales: Basically, what we are seeing right now is that advertising works as a model, and even sometimes sells stuff to people (if they are shopping at that moment). I don't think it's an interesting problem. It's pretty straightforward, monetizing the Web.

Milestone: There is obviously some disruption going on among the larger players in search with Google and Yahoo. Any thoughts on that as it relates to what you are doing in search or generally speaking?

Wales: I think the main reason we have all that interest is that search monetizes really well, so we are getting lots of people interested in breaking into the space. And the big players are trying to stay on top if they can.

It's really hard to see the future of search. I have zero concern that we are going to end up with a single monopoly search engine. Search is not a dispensable business in the traditional terminology of game theory.

There are no network externalities, and so there is no way for older players to preclude the entrance of new players. In other words, if I find a new search engine and I like it, I can switch and it doesn't matter if my friends switch. There is no lock-in effect. Facebook has enormous lock-in effect. Once everybody is on Facebook, which is pretty much now, it becomes very difficult for a competitor to dislodge them.

Milestone: What do you have to do in order to get the future you want out of all of this? Think about your new project in search, what are the things that you think you are going spend a lot of time trying to overcome?

Wales: It's about user interface design and coming up with a good set of tools that people enjoy using.

I use a Web site called Dopplr which is very nice way to organize travel, and I like it very much. It's a social network site, so you link to your friends, you share your travel schedule, and it has lots of privacy controls. You can see where other people are traveling. It's pretty much of a niche, you only need it if you are actually traveling a lot like I am, but I think it's pretty cool.

That's what works.
 

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