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THE DOOR HANDLES ARE INVISIBLE. AND THAT’S ABOUT IT.

WHEN YOU BUILD A COUPE SO PURE OF FORM THAT THE MANUFACTURING PROCESS HAD TO BE REINVENTED, EVEN THE DOOR HANDLES SHOULDN’T GET IN THE WAY.

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THE NEW STANDARD OF THE WORLD


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©2010 General Motors. Cadillac® CTS®

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CADILLAC CTS COUPE / cadillac.com


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P R E M I E R I N G L AT E F E B R U A R Y 2 0 1 1 F O R R E S E R VAT I O N S P L E A S E C A L L 8 0 0 6 0 6 6 0 9 0 W I T H I N T H E U N I T E D S TAT E S , 0 0 8 0 0 4 9 6 9 1 7 7 0 I N T E R N AT I O N A L O R V I S I T M O R G A N S H O T E L G R O U P. C O M 9 CROSBY STREET NEW YORK CITY NY 10013 C O N N E C T M O R G A N S H O T E L G R O U P. C O M / S O C I A L


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Contents

...................................

Blown Away

......

February 2011 SILLY SLY FOX: CEO Kamangar enjoys Indian pole gymnastics on YouTube—and knows how to turn such vids into gold.

Once known as Google’s Folly, YouTube is now looking like a billiondollar winner and a serious player in the future of TV and video. CEO Salar Kamangar leads the charge. By Danielle Sacks Page

58

Cover: Photograph by

MARK LEONG This page: Photograph by

ROBYN TWOMEY February 2011 FASTCOMPANY.COM

5


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February 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contents FEATURES

cover story: 68

The Social(ist) Networks BY APRIL R ABKIN

Renren and Kaixin001 want to be the Facebook of China. Their battle reveals the country’s new, and very chatty, face. Plus: A sample of China’s most popular sites. 76

Tilting at Windmills BY JEFF CHU

Inside Vestas’s altruistic yet self-interested plan to push wind-made goods. 80

The League of Extraordinary Nerds BY CHUCK SALTER

Syyn Labs built OK Go’s famous Rube Goldberg machine. But can they build a business? 86

How to Spend $100 Million to Really Save Education

• It’s Not as Easy as Mark Zuckerberg Thinks • 13 Radical Ideas for Spending His Money • Forget $100 Million. Michelle Rhee Wants to Raise $1 Billion. 98

Molecular Healing BY ELIZ ABE TH SVOBODA

First, Samuel Stupp helped paralyzed mice walk. Now he wants our bodies to repair themselves.

86

FIREBRANDING: Rhee, in Sacramento, where she spent day one of her new lobbying group, Students First

“This is not just about poor kids in inner-city D.C.; this is about the U.S.’s competitiveness, its security, and its stability. We need the people who are getting screwed by the system to do something about it, and in this case, that’s everybody.” —Michelle Rhee, Students First 6 FASTCOMPANY.COM February 2011

Photograph by MICHAEL KELLEY


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February 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contents DEPARTMENTS 13 From the Editor 14 Inbox 17

53

NOW On tap in February: Vintage cars, Buzz’s b-day, Celine whoops Cher, and Glee goes all football on us.

NEXT

25 Who’s Next

Jennifer Caserta of cable’s IFC is bringing back Freaks and Geeks and launching the Onion News Network.

Real change comes from real feelings.

Design 40 Mum’s the Word

Midwest retailer Hot Mama is growing fast by rethinking shopping for moms.

BY DAN HE ATH AND CHIP HE ATH

32 Walmart vs. Target

The big-boxers battle over teeny-tiny local stores.

Ethonomics 42 Do Something

Enough rubber chicken! Here’s how to avoid cruddy conferences.

34 Luring Latinos to

the Multiplex Pantelion Films woos the country’s hottest demo. 35 Samples That Work

BY NANCY LUBLIN

17

Into the Lab After the 2010 earthquake in Haiti, new technologies stepped in with big saves. 47

FAST TALK Bring on the Boomers Tom Brokaw’s wealthy generation is getting older, so companies like GE and Volvo must rethink aging.

A new kind of investor is changing the startup world: super angels. BY FARHAD MANJOO

38 Moviemaking for

the Masses At Xtranormal, your words become hilarious video.

THE BOOM OF THE SYSTEM: Volvo’s Thomas Broberg studies how boomers drive differently.

44 Out of the Rubble,

Birchbox has a novel way of selling the likes of Benefit, Kiehl’s, and Marc Jacobs. Tech 36 Tech Edge

47

53

WANTED What you’ll crave: a natural necklace like no other, and bouquets and boom boxes. For real.

112

NUMEROLOGY All about the Benjamins— the new $100 bill, by the numbers.

Fast Company is printed on 100% recycled paper (minimum 85% postconsumer).

Fast Company Issue Number 152. Copyright©2010 by Mansueto Ventures, LLC. All rights reserved. Fast Company® is a registered trademark of Mansueto Ventures, LLC. Fast Company (ISSN 1085-9241) is published monthly, except for combined December/ January and July/August issues, by Mansueto Ventures, LLC, 7 World Trade Center, New York, NY 10007-2195. Periodical postage paid at New York, NY, and additional mailing offices. Canada Post International Publications Mail Product (Canadian Distribution) Sales Agreement No. 40063884. Canadian GST Registration No. R123245250. RETURNS: Canada Post, PO Box 867, Markham Station Main, Markham, Ontario L3P 8K8. POSTMASTERS: Send address changes to Fast Company, PO Box 2128, Harlan, IA 51593-0317. SUBSCRIPTION RATES: One year (10 issues) $23.95, two years (20 issues) $47.90, in the United States. TO SUBSCRIBE TO FAST COMPANY: Email fstcustserv@cdsfulfillment.com or phone 800-542-6029 (U.S.A. and Canada). PRINTED IN THE U.S.A.

8 FASTCOMPANY.COM February 2011

Photograph by STEVE BONIFACE

Courtesy of H.Bloom (bouquet)

Strategy 28 Made to Stick


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We focus on automating Marriott’s global invoice process. So they don’t have to. Xerox digitized and standardized the invoice process for Marriott Hotels & Resorts®. Now their 11 million invoices take less time to manage, and less space to archive. Which gives Marriott more time to focus on serving their customers. RealBusiness.com

©2010 XEROX CORPORATION. All rights reserved. XEROX,® XEROX and Design,® and Ready For Real Business are trademarks of Xerox Corporation in the United States and/or other countries. All other logos, trademarks, registered trademarks or service marks used herein are the property of their respective holders.


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FastCompany.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“YOU DO NOT REALLY

EXPLAIN THE INTERNET

UNDERSTAND SOMETHING UNLESS YOU CAN EXPLAIN IT TO YOUR

TO A 19TH CENTURY BRITISH STREET URCHIN

GRANDMOTHER.” –Albert Einstein

INFOGRAPHIC

YOUR TIME MACHINE LANDS IN 1835 without anyone noticing your arrival. You have a passenger with you, but you warn them to stay near the machine to avoid causing a dangerous time paradox. You hide the time machine under some trash in the corner of an alley and walk out onto a narrow cobblestone street bustling with street vendors, farm animals, and beggars. Horse-drawn carriages rumble past. A young street urchin scurries up and tries to sell you matchsticks. Barefoot and covered in soot, he tugs at your coat. “Buy my matches! They’re so bright! They will keep you warm all night!” He glances hungrily at a nearby apple cart, whose vendor eyes him suspiciously. You buy a box of matches from the young urchin and ask, “Do you know what the Internet is?” He stares dully at you.

A TALKING TEDDY RUXPIN DOLL

You try to explain the Internet using:

Go With the Flow

Twitter to WikiLeaks, child labor laws to Mexican drug cartels— it’s all fair game for FastCompany.com’s Infographic of the Day feature, including regular new work by Doogie Horner, author of the book Everything Explained Through Flowcharts.

A SIMILE

OLIVER

THE INTERNET

12 YEARS OLD

35 YEARS OLD (1)

Moments later, you are stabbed from behind, and your possession is snatched from your hands by a gang of dancing chimney sweeps. (2)

You pull the stuffed bear out and slip an audio tape into his back. His piercing orange eyes open with an audible click. “Hi!” the bear says, it’s mouth opening and closing in a chewing motion, “I’m Teddy Ruxpin!” The waif screams in terror and runs away.

AN IPAD You pull out your iPad and try to hop on the Internet, but for some reason, you can’t pick up a Wi-Fi signal. “Is there a coffee shop nearby?” you ask the waif.

You’re dead. “You see, the Internet is like . . .” AN ENDLESS LIBRARY A SERIES OF TUBES

A TELEGRAPH WITH SOUND AND PICTURES The urchin says, “What’s a telegraph?” (3)

The urchin says, “You mean like the tubes that run under the city?”

CLARIFY

“Yes, but instead of fecal matter, they carry infomation.”

CONTRADICT

“IT’S A MACHINE FOR TALKING TO PEOPLE THAT ARE FAR AWAY. IT CONNECTS YOU.”

“It’s more like the roads above the city, because goods and information can travel on them.”

“IT’S LIKE A TYPEWRITER THAT SENDS LETTERS INSTANTLY.”

“The Internet is a virtual city that’s constantly expanding. Anything you can do in London, you can do on the Internet. It connects you to the world.”

Mistaken for an escaped lunatic, you are arrested by Scotland Yard.

“IT’S A SYSTEM OF SMALL MACHINES CONNECTED BY TELEPHONE WIRES.”

The urchin says, “What’s a telephone?” (5) The urchin says, “What’s a typewriter?” (4)

BUY MORE OF HIS MATCHES

EXPLAIN

EXPLAIN The urchin scratches his lice-infested head. “Is it like a window?”

BUY THE URCHIN AN APPLE

EXPOUND ON THE METAPHOR You’ve confused the urchin. He wanders away. Moments later, you realize that he’s stolen your shoes.

“IT’S IN THE AIR. THE BOOKS ARE INVISIBLE.”

The urchin says, “I was inside a library once, before my parents died. Is the Internet a building? Where is it?”

You discover too late that the apple vendor doesn’t accept debit cards. You are thrown into debtor’s prison.

“You can buy things through the Internet,” you tell him, “without walking to the store.”

CONTRADICT

You’ve kept the urchin talking too long. His criminal taskmaster sees him lollygagging and whips him brutally with a willow switch, driving him away. Moments later, you notice that your watch is missing.

“The Internet is a door that connects you to the outside world. It allows you to talk to people and purchase goods without leaving your home!”

You’re dead.

To continue the adventure, head to fastcompany.com/doogie. 10 FASTCOMPANY.COM February 2011

The urchin picks a scab off his elbow and says, “Instead of walking over to someone’s house to say hi to them, you can just talk through the Internet?”

outside a pub’s window and listening to music, breathing the cold night air, and smelling roasted lamb inside, you can just stay in your house and listen to music on the Internet?”

You came here to teach the urchin something, but he’s the one who’s taught you an important lesson about the shallowness of modern life. You are simultaneously embarrassed by your hubris and humbled by his simple wisdom.


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With The Hartford behind you, achieve what’s ahead of you.® © 2010 The Hartford Financial Services Group, Inc., Hartford, CT 06155. All rights reserved.


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PUBLIShER Christine Osekoski

EDItOR Robert Safian

ASSOcIAtE PUBLIShER, SALES AnD MARkEtIng

ExEcUtIvE EDItORS

Amie Deutch

Noah Robischon Rick Tetzeli MAnAgIng EDItOR Allegra-Jo Lagani ARtIcLES EDItORS Jeff Chu, David Lidsky, Denise B. Martin DEPUty EDItOR, DIgItAL Tyler Gray

ATLANTA: Ranger Media group

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Jim Horan 310-341-2345, Chelsea McCarthy 310-341-2346 NEW YORK: East coast Sales Development Director Mike Caplan 212-389-5448 Luxury Account Manager Eileen Brady 212-389-5447 Account Managers Meredith Brill 212-389-5494,

Steven Zampieri 212-389-5454 Account Managers, Digital Lara Longo,

Rick Suchan

cREAtIvE DIREctOR Florian Bachleda PhOtOgRAPhy DIREctOR Leslie dela Vega SEnIOR EDItORS Nancy Cook, Linda Tischler SEnIOR WRItERS

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Jessica Salisbury, Freddie Zamora RESEARch MAnAgER Joan Cheung ASSOcIAtE MARkEtIng MAnAgER Stacy Zhao DESIgnER Elliot Stokes EvEntS MARkEtIng DIREctOR Tracey Vitale EvEntS MAnAgER Emily Lewis

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Mark Borden, Aric Chen, Kit Eaton, Chip Heath, Dan Heath, Paul Hochman, Cliff Kuang, Greg Lindsay, Nancy Lublin, Farhad Manjoo, Bruce Nussbaum, Adam L. Penenberg, Ariel Schwartz, Elizabeth Svoboda, Clive Thompson, Alissa Walker

DIgItAL DESIgn DIREctOR Haewon Kye DESIgn cOORDInAtOR Erika Schneider DIREctOR OF WEB ARchItEctURE

Michael Krakovskiy DIREctOR OF WEB DEvELOPMEnt Jason Tagg SEnIOR DEvELOPER Sergey Khaladzinski DEvELOPERS Orlando Caraballo, John Guaragno tEchnIcAL PRODUcER Gloria Chen SEnIOR MULtIMEDIA PRODUcER Michael Shick PRODUctIOn cOORDInAtOR Eric Foster cOntROLLER Eve Pai AccOUntIng MAnAgER Jacqueline Nurse StAFF AccOUntAnt Sharita Neverson AccOUntS PAyABLE SUPERvISOR Marilou Ordillas PAyROLL MAnAgER/AccOUntAnt Chareyl Ramos ExEcUtIvE ASSIStAnt Lori Plevrites OFFIcE ASSIStAnt Lisa Kay Davis

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Letter From the Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Year of the Rabbit I WAS SPEAKING to a group of

Merrill Lynch’s highest networth clients recently when a question shot from the audience: “What’s the most innovative country in the world?” Another panelist onstage with me, CEO Geoff Vuleta of strategy firm Fahrenheit 212, quickly made his case for India. The editor of Wired, Chris Anderson, argued that no single country mattered as much as the growing impact of crossborder collaborations.

FORGET FACEBOOK Tsinghua University students Xu Ya (top) and Cui Yang (bottom) share a dorm room and a love of Renren.

My answer is a little complicated. On the one hand, I can’t so quickly dismiss the U.S. from the equation. The flood of new ideas that we see, from Silicon Valley to South Beach, continues to amaze me (propelled, often, by creative talent that’s immigrated to this country). But I’m also fascinated by China. The pace of change there has been extraordinarily brisk. And while just a slim portion of the population may be engaged in innovative activity, the scale is so enormous that the impact is awesome. Which brings us to the Year of the Rabbit (2/3/11 to 1/22/12). During this year, we will bring you regular coverage of the wave of innovation inside China. In this issue, Beijing-based April Rabkin, who wrote our profile of Chinese media queen Yang Lan last fall (“A Star in the East,” September), takes us

inside China’s booming social networks, Renren and Kaixin001—not just the businesses but also the students and young professionals who use the sites and dominate China’s emerging innovation culture. And Jeremy Goldkorn handicaps other Chinese Internet sites, from YouTube knockoff Youku to Amazon-like Dangdang. Our strategic approach to China coverage is considered: We know that most Chinese businesses have no interest in cooperating with Western journalists, in part because of cultural differences and in part because publicity holds little advantage to them (with products geared to a domestic, rather than international, market). That’s why a small group of the same Chinese business leaders appear over and over in the Western press: They are the few who make themselves available. Our goal is to deliver a more intimate peek at the on-theground reality of working and innovating in China. Of course, any effort to sum up an entire country—particularly one the size of China—will be limited. After all, we present multiple articles each issue on U.S. innovation yet would never claim to be comprehensive. In a place with the scope of China, our efforts are even more an approximation. Still, we hope to give readers a new window into a part of the world that—no matter how much we read about it, or visit in person—presents constant new discoveries. The real question we should be asking is not, Which country is the most innovative? but rather, Wherever innovators are, what can we learn from them?

Robert Safian editor@fastcompany.com

Photograph by MARK LEONG

February 2011 FASTCOMPANY.COM

13


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Inbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arctic Assault: Russia’s $15 Trillion Treasure Hunt

NOVEMBER 2010

The INFLUENCE PROJECT:

LANCE WON’T BLINK Will Armstrong’s

Re: November

HOW TO GIVE FEEDBACK Send us an email at loop@fastcompany.com. Submission of a letter constitutes permission to publish it in any form or medium. Letters may be edited for reasons of space and clarity. JOIN US ONLINE Voice your opinion on FastCompany.com. Become a fan on Facebook at facebook.com/fastcompany. Follow us on Twitter @fastcompany.

SOCIAL MEDIA’S

NEW STARS

STARBUCKS’

Trouble With the Feds Derail the World’s Most Innovative Cancer Foundation?

CUP PROBLEM

$300 MILLION

HIP-HOP BET AT

COKE

OPRAH’S NEW CEO P&G

By Chuck Salter

2010

TURNS GREEN iPAD

APPS

GO HOLLYWOOD

I love a fight. This is the most important fight I’ll ever be involved in. —LANCE ARMSTRONG

founder and chairman, Livestrong

realization that nothing in life is disposable, or our problems will not go away.

COVER STORY

The world’s most famous cancer survivor has been his foundation’s biggest asset, even as it grew into an innovative force in health care. Now his legal troubles may make him a risk. By Chuck Salter

CAN LIVESTRONG SURVIVE LANCE? November 2010 FASTCOMPANY.COM

Living Strong

I don’t know if Lance Armstrong did drugs, and frankly, I don’t care (“Can Livestrong Survive Lance?”). I’m a cancer survivor, and it’s true: Cancer may leave your body, but it never leaves your life. Lance never wavered in his mission to fight the big C, including founding the Lance Armstrong Foundation, which is filled with a talented staff that provides outreach and support information to anyone dealing with cancer (a benefit I never had). Last spring, my husband was diagnosed with prostate cancer. Choice of treatment was a huge consideration, and he marvels at how much Livestrong’s resources guided his decision process. In my book, Lance has paid his dues. Patti Brady Santa Cruz, California

I’m disappointed with Fast Company. The headline and content give the impression that Lance is already guilty. You are contributing to the potential problem you write about—the downfall of Livestrong. Let them catch him before you convict him, please! Otherwise, let’s not tear down another hero. We need them more than ever. Mark Von Der Linn Scottsdale, Arizona 14 FASTCOMPANY.COM February 2011

109

In May 2000, I was diagnosed with the same variety of testicular cancer that Lance Armstrong had been diagnosed with four years prior. I was told I had six weeks to live. I remember being in the hospital that summer for chemotherapy and shuffling (very painfully) up the ward to watch the Tour de France. Armstrong stormed up a mountain and left his rivals in the dust. There I sat knowing that four years earlier he had been in exactly the same position as me. While those toxic chemicals were medicine for my body, watching that ride was medicine for my soul. I didn’t painfully shuffle back to bed—I effortlessly glided. No investigation or verdict can ever tarnish what Armstrong has done for the millions of people battling cancer. Andy Anderson Bangor, Northern Ireland

Solving Starbucks

It’s great that this conversation is happening, but it must be just as consumer driven as corporate driven, if not more so (“What Are You Going to Do About This Damn Cup?”). Innovative compostable-cup solutions do nothing to shift our thinking—they only reinforce our dependence on disposable items. We must come to the collective

Derek McCarty Brooklyn, New York

Give Thanks

As a college student, I use internships to explore job opportunities, and “Two Little Words” is one more useful tool I’ll have when making decisions about my future (Do Something). I’ll think twice before taking a position with a company that won’t acknowledge my work or assistance with a simple thankyou. Sure, it’s a tough economy, but bottomline, manners are a part of corporate culture. Good companies should demand them. Kaylee Gardner San Diego, California

The purpose of interns is not “brewing coffee, making copies, or stuffing envelopes,” as Nancy Lublin suggests. Interns should be shadowing employees or working—with guidance—on real projects. Her abuse of interns portends her attitude toward “little people.” My advice? If you work for an organization that refers to you as a “little person,” leave immediately. You can do better. Saying thank you to someone while using a condescending and belittling title is not saying thank you at all. Max Lent Webster, New York

Toon Town

Phineas and Ferb got a lot of press this fall, but I preferred Fast Company’s coverage (“Unleash the Merch-inator”). Great article. The ability to speak with multiple audiences—without their knowing it—is gold. Having grown up on Pinky and the Brain, I always appreciated its ability to draw in adults. Phineas and Ferb sounds like it has a similar winning formula and will end up a licensing powerhouse. Bradford Hines Hingham, Massachusetts


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O’Reilly Strata Conference

Sifting through tons of data used to be a task left to computer whizzes and weathermen. But mining for insights has gotten faster and cheaper, and TUE businesses from ad agencies to grocery stores will gather in Santa Clara, California, to discuss turning data into dollars. Carol McCall and her team at insurance giant Humana looked at claims and health studies to pinpoint how to tailor drug cocktails to avoid bad reactions, which cost the firm $500 million in claims in one year. With big-data analytics, McCall says, “you can solve things that we couldn’t even see before.” —RACHEL ARNDT FEB

01

Illustration by JENNIFER LEW

PRY OPEN

Transmediale

“People have carpal tunnel because hardware wasn’t designed with humans in mind. The same problem exists with digital interfaces—human TUE elements are often left out of code,” says Carolyn Guertin, a self-proclaimed cyberfeminist, University of Texas at Arlington professor, and speaker at this Berlin festival aimed at pondering the intersections of culture and technology. Just as gender and cultural studies transformed the humanities from “bastions of white male privilege” to supporters of inclusivity, Guertin says, it’s time to open up all things tech. —STEPHANIE SCHOMER FEB

01

February 2011 FASTCOMPANY.COM

17


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now February

read

blow out

“There’s a lot to like feb about urban poverty,” writes Edward Glaeser in thu this provocative new book. When the Harvard economist looks at the poorest cities— Kinshasa, Rio—he sees not just deprivation but opportunity. People in slums are better off than their poor rural neighbors— happier, more likely to find a job, and with more means of advancement. And poverty is higher for new arrivals than for established residents, suggesting the benefits over time of urban living. “Better to hope for a world where cities can accommodate millions more of the rural poor,” he argues, “than to wish that those potential migrants would end their days in agricultural isolation.” With apologies to Henry David Thoreau and Jane Jacobs: Bring on the megacities!

My, how Pixar has feb grown. The studio, officially created when thu Steve Jobs paid $10 million for George Lucas’s computer division of Lucasfilm, cut its teeth making animated commercials for companies including Listerine and Lifesavers. Toy Story in 1995 allowed Pixar to finally shed its ad-agency day job, leading to a boy-centered adolescence and 11 chart-topping fulllength films. Since the Academy Award for Best Animated Feature was introduced in 2001, every movie Pixar has made— totaling more than $6 billion in worldwide box-office sales—has been nominated, and five have won. Still, 25 years is a long time to be putting off the ladies: Pixar has yet to make a movie with a female protagonist. Its 2012 film, which aims to change that, is appropriately called Brave. —ra

Triumph of the City

03

—michael Silverberg 18 fastcompany.com February 2011

Pixar Turns 25

go vintage

cut

What do rich folk do feb when playing the stock market has lost its luswed ter? Buy vintage cars, of course! Collectibles like oldschool Ferraris, Maseratis, Mercedes-Benzes, and RollsRoyces have never been more popular, but the inventory of vintage autos is fixed at roughly 6 million, so high-end collecting has also never been pricier. This past May, a 1936 Bugatti Type 57SC Atlantic sold for more than $30 million to an anonymous buyer—the highest price ever paid for a car, by about $2 million. That sale should be a hot topic at this five-day Parisian expo. Last year, an all-butdestroyed 1925 Bugatti Brescia Type 22 Roadster, submerged off Switzerland in Lake Maggiore since 1936, sold for around $370,000. —Sarah unke

Good news for cows, bad news for cattlemen: The average American wed ate 1.7 pounds less beef in 2009 than the year before. (That’s still 61 pounds per person, roughly the weight of a newborn calf.) Rising feed costs (hello, ethanol!), higher export demand, and smaller supply have beefed up prices and trampled dining-table demand. Beef producers at this annual convention in Denver will talk ways to keep beefeaters from quitting cow. One solution for keeping carnivores craving steak? Push smaller (more affordable) portions, says association marketing manager Trevor Amen. “You can include beef in your diet at any budget.” Well done, beef man. —ra

Rétromobile

02

National Cattlemen’s beef Association Trade Show feb

02

cake, Please: Toy Story 3 has earned the biggest slice of Pixar’s success. It’s the highest-grossing animated film of all time, totaling more than $1 billion.

03

Illustration by david cowles

christine de Grancy/Anzenberge/Redux (Porsche); martyn Goddard/corbis (Talbot-Lago); Scott Weiner/Retna (cher); Tim mosenfelder/Getty Images (celine); Paramount Vantage/Everett collection (There Will Be Blood)

Gearheads: Prices for collectible cars such as the Porsche 356 (left) and TalbotLago are hitting all-time highs.


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AISHITE IMASU Women in Japan give chocolate to their boyfriends and male friends on Valentine’s Day. Men reciprocate a month later, by gifting white chocolate on White Day.

FEB

STRUT YOUR STUFF

BLEND

Spinning disco balls make way for flying aerialists as Cher leaves her Las Vegas show at Caesars Palace this month and passes the torch to Celine Dion, who’s coming back for round two. Here’s a look at how the two hit makers stack up. —SUZY EVANS

Pack your party hat and your sustainably made kazoo if you’re headed SUN to Phoenix for this year’s annual event. Two new decisions by the Environmental Protection Agency should make this a banner year for biodiesel. In October, the EPA approved raising the ethanol blend rate in gasoline to 15%, from 10%. The agency also announced that petroleum manufacturers must blend 800 million gallons of biodiesel into their U.S. product mix in 2011 and 1 billion gallons in 2012. (Biodiesel producers moved just 500 million gallons of the stuff in 2009.) According to the EPA, biodiesel, made from animal waste and agricultural oils, reduces greenhousegas emissions by as much as 86% when compared with petroleum. But this conference shouldn’t be a nonstop celebration: The $1-per-gallon biodiesel tax credit has yet to be resurrected. Passed in 2004 to encourage use of the fuel, the credit expired a year ago, and efforts to renew it have gotten lost in the legislative shuffle.

Celine vs. Cher

05 SAT

TOTAL ALBUMS (live, studio, compilation, volumes, box sets)

VEGAS SHOW YEARLY GROSS (average)

TOTAL ALBUMS SOLD IN THE U.S.

$29 million

$ 12.5 million Cher

$ 80 million

VEGAS SHOW RUN

3

YEARS

2008–2011 Cher

5

42

5

YEARS

Cher

VEGAS SHOW TOTAL PERFORMANCES

717

2003–2007 Celine

46

BILLBOARD NO. 1 HITS (The Billboard Hot 100 Singles)

192

Cher

31

Celine

EMMY AWARDS

Cher

ACADEMY AWARDS

0

1

Celine

Cher

0

Celine

FACEBOOK FANS

42,172 Cher

1

Cher

2,108,031

5

SINGLES THAT MADE THE TOP 100

5

51

4

Celine

21

FEB

06

—ADAM BONISLAWSKI

Celine

EBAY AUCTIONS

NUMBER OF PERFUMES

Cher raised $1,025 for A Home in Haiti with a “Twitter Package”: following the winner for 90 days and retweeting.

Cher

1

Celine

Celine

YOUTUBE TRIBUTES

Celine

Cher

Cher

1

$ 50 million

Celine

Celine

VEGAS BAND SIZE

GRAMMY AWARDS

Cher

National Biodiesel Conference and Expo

174,000 Cher

Illustrations by RAYMOND BIESINGER

356,000 Celine

Celine sold the $25,000 staircase from her Vegas show for $10,100 to support the children’s cancer charity Fondation des Gouverneurs de L’espoir.

4

Celine

There Will Be Biodiesel: New EPA regulations spell sad news for petrol dealers. February 2011 FASTCOMPANY.COM

19


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ANA BEHIBEK

NOW February

In Saudi Arabia, sales of Valentine’s Day gifts, including roses and candy, are banned. Some florists deliver in the night, and black-market flower prices rise 500%.

CHART

Post–Super Bowl XLV Episode of Glee

It’s official: Glee is bigger than the Beatles. In just two years, TV’s only SUN musical comedy has charted more than 90 tracks on the Billboard Hot 100 Singles, besting the Fab Four’s group record of 71, which took more than three decades to secure. To be fair, the cast’s boffo sales (6.5 million albums, plus 17 million singles) are still a far cry from the 600 million posted by John, Paul, George, and Ringo. We suggest the folks behind the remaining Hot 100 record holder—Elvis Presley, who charted 108 singles—take a cue from Michael Jackson and Katy Perry, whose songs will be featured in this blockbuster episode: If you can’t beat ’em, sell ’em your licensing rights. —DAN MACSAI FEB

06

Face Plant: By snagging the post–Super Bowl slot, Glee is poised to draw record-high ratings, which could drive the show’s biggest sales week ever.

POWER DOWN

Say No to PowerPoint Week

Suffering from PowerPoint fatigue? You’re not alone. Tech conferences, MON including Demo and Finovate, have banned boring slide shows in favor of short, fast-paced product demos. For young companies, dissing checkerboard fadeaways and cheap gradient backgrounds does more than entertain an audience; it could make a sale. “It’s not about bullet points or the company, but what have they built?” says Finovate CEO Eric Mattson. “If you show your product to us, and we go, ‘Wow, we can grasp that in seven minutes, and we want that,’ then the customers will want it too.” We’ll buy that—no pie charts required. —MARGARET FEB

07

RHODES

FEB

14 MON LIVE ON

National Donor Day

Fox Broadcasting/Photofest

Saturn may not have survived the recession, but the automaker’s event, launched with the United Auto Workers in 1998, has. From marrow to kidneys, hearts to umbilical cords (used for their blood), the need for donation remains urgent. Here, the cost of common transplant procedures. —JENNIFER VILAGA 20 FASTCOMPANY.COM February 2011

Illustration by FERNANDO LEAL


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JEG ELSKER DIG

NOW February

In Denmark, suitors send anonymous handmade notes called gaekkebrev on Valentine’s Day. If the identity is guessed correctly, the note maker must also gift an Easter egg on Easter.

FEUD

TOUCH

The biggest upset for the FEB Cricket World Cup may have happened before SAT the 43-day-long tournament even begins. Following concerns over security, Pakistan was stripped of its status as a host country in April 2009 and told it would have to host its home games in neighboring India. The Pakistan team threatened to withdraw, but after its opening matches were rescheduled to take place in Sri Lanka, the team decided not to skip the spotlight. And this year, it’ll be a big one: ESPN Star is broadcasting the games in 220 countries as part of a $1.1 billion deal.

All the world’s a display— or it soon will be, if companies like Intel have TUE their way. A sponsor at this Las Vegas expo, Intel is the computing power behind concepts like a vending machine covered in a giant LCD touch screen. When the screen senses snack-searchers approaching, it switches from ads to product displays. And—surprise!—a hidden camera records which ages and sexes consume which snacks. So while the trend in digital signage may be “getting the customer involved with the digital boards,” says event cofounder Chris Gibbs, the future will be about getting those boards to first interact with us. —RA

19

Jiminy Cricket! India’s Sachin Tendulkar has many nicknames: the Master Blaster, the God of Cricket, and the Little Champion. He’s 5 feet 5 inches tall.

STS-1: Columbia, 1981 Cost: $214 million Distance traveled: 1,074,000 miles Orbits: 37 Mission: Ensure safety of the space shuttle in takeoff, orbit, and landing Results: After 10 years of R&D, the shuttle proves that safely returning a crew to Earth is possible.

22

STS-51L: Challenger, 1986 Cost: $328 million Distance traveled: 18 miles Orbits: Zero Mission: Deploy a communications satellite and a device to measure Halley’s Comet Results: It explodes 73 seconds after liftoff and kills seven astronauts.

—JEREMY GORDON

STS-31: Discovery, 1990 Cost: $499 million Distance traveled: 2,068,213 miles Orbits: 80 Mission: Launch Hubble Space Telescope into orbit Results: The Hubble’s 20-year run gives scientists major insights into the expansion and age of the universe and the life cycle of stars.

STS-34: Atlantis, 1989 Cost: $499 million Distance traveled: 1,800,000 miles Orbits: 79 Mission: Launch an unmanned, Jupiterbound Galileo probe Results: The probe completes an eightyear in-depth study of Jupiter and its moons.

Digital Signage Expo FEB

22

STS-71: Atlantis, 1995 Cost: $407 million Distance traveled: 4,100,000 miles Orbits: 153 Mission: Dock to Russia’s Mir space station Results: The 100th U.S.–manned launch lays groundwork for the International Space Station. Russians and Americans trade spit in space for biomedical research.

FEB

27 SUN ORBIT

NASA’s Space-Shuttle Program Ends Unless the new Congress approves an appropriations bill sending hundreds of millions of dollars to NASA, the space agency will launch its final space-shuttle mission on February 27, at 3:35 p.m., give or take 10 minutes. As the $115 billion reusable-orbital program retires, we look back at six notable missions from its 30-year history. —MS

STS-107: Columbia, 2003 Cost: $1.1 billion Distance traveled: 6,600,000 miles Orbits: 255 Mission: Conduct 58 research projects on cancer drugs, building foundations, and firefighting Results: Minutes before its landing, Columbia disintegrates, killing seven astronauts on board.

Punit Paranjpe/AFP/Getty Images (Tendulkar); Stocktrek Images/Getty Images (Earth)

Cricket World Cup


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Strategy p. 28 Tech p. 36 Design p. 40 Ethonomics p. 42

NEXT

WHO’S NEXT

Jennifer Caserta Executive Vice President and General Manager IFC

Big idea:

To transform the fledgling cable channel IFC into a major media player by acquiring critically acclaimed, low-rated series such as Freaks and Geeks, while also producing original programs, including the soon-to-belaunched Onion News Network, a comedy starring David Cross, and a

Photograph by PHIL KNOTT

February 2011 FASTCOMPANY.COM

25


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NEXT Who’s Next reality show about the world of competitive beard growing. “Like everything on IFC, it’s slightly off-kilter,” says Jennifer Caserta, 39.

Credentials: Caserta worked her way up through the ad sales and marketing departments of Oxygen, the Food Network, and Court TV before joining IFC as vice president of marketing in 2004. She left two years later to run Fuse, the music channel, but returned in 2007 to take over IFC’s TV and online programming as well as its marketing and communications. For one of her first missions, Caserta hired a research firm to go into viewers’ homes— sometimes with beer and pizza— to help IFC observe people’s daily TV habits. The firm even filmed the experiment. “It sounds really creepy,” Caserta says, but the lessons were invaluable: IFC’s core audience likes TV that takes risks and wants more series. The research emboldened her to snag the rights to shows she calls “too good for the mainstream,” including Arrested Development, Undeclared, and The Larry Sanders Show.

Peeling The Onion: IFC just launched the Onion News Network, the first TV iteration of the newspaper turned website, complete with on-air reporters, local news stories, and White House “correspondents.” Caserta describes it as a spoof of Anderson Cooper 360, The Situation Room, and Fox’s The O’Reilly Factor. In a whocan-tell-what’s-real twist, the net is hosted by “Brooke Alvarez,” an anchor played by real-life former Fox Newser Suzanne Sena. Backup plan: Caserta attended New York’s LaGuardia Arts high school (made famous in Fame) and even danced in The Nutcracker with the New York City Ballet for three seasons, starting at age 11. 26 FASTCOMPANY.COM February 2011

Growing up in the MT V Generation: When it came to her career, she turned to her other passion, cable TV. “Giving me more channels is like, Whoa! What more can I ask for?” she says.

musician and stay-at-home dad, for 10 years. Obsessing about TV runs in the family blood. Caserta says she would not be surprised if her 5-yearold son pursued a career in television. He already recites the TV schedule from memory.

Thinking like a dude: IFC’s viewership skews mostly male. Caserta dubs the women who watch the channel Chicks Who Watch TV Like Dudes. She considers herself among them, calling her broader cultural tastes “typically male.” She counts Curb Your Enthusiasm, Robot Chicken, and The Soup as her favorite non–IFC shows. She also loves the classic rock of Led Zeppelin and the Who.

Office space: In addition to

Family of T V savants:

AMC (formerly known as American Movie Classics), the Independent Film Channel now goes

The mother of two has been married to her husband, a

the expected IFC paraphernalia and family photos, Caserta’s Manhattan office has posters of her favorite movies, Superbad and the 1979 Coney Island gang flick The Warriors. Also on the walls: an autographed picture of Metallica’s Lars Ulrich and a leather jacket with punk markings from an IFC promo shoot.

Independent What Channel? Like its corporate sister

by just three letters. “Over the last two years, we’ve refined the brand,” she says. While it still shows independent films, including comedies such as Office Space and anything by director Quentin Tarantino, the channel now features a broader array of programs. “We’re not talking about black-and-white, subtitled foreign films or breakthe-bank-max-out-your-creditcard indies,” she says.

In the works: Thom Beers, the producer responsible for Deadliest Catch, pitched IFC a reality-show pilot about competitive beard growing, tentatively called Whisker Wars. Caserta says beard aficionados take their sport just as seriously as physical athletes. Caserta hopes the show will be the latest quirky addition to IFC’s roster. —ARI KARPEL Illustration by GLUEKIT

Karolina Wojtasik/IFC (Whisker Wars); Patrick Riviere/Getty Images (dancers); John Shearer/ Getty Images (Cooper); Everett Collection (Superbad); Don Farrall/Getty Images (beer, pizza)

Ding-dong, IFC here!


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NEXT Strategy

MADE TO STICK

Passion Provokes Action

Forget dry statistics, say DAN HEATH AND CHIP HEATH. Real change comes from real feelings.

28 FASTCOMPANY.COM February 2011

individuals like Karen Gatt who have emotional turning points; it’s organizations like yours. If you want change, close out of PowerPoint and start looking for the right feeling. Curt Lansbery, CEO of North American Tool, a manufacturer of industrial cutting machinery, turned to emotion when nothing else seemed to work. Lansbery was frustrated that his employees weren’t maxing out their 401(k) investments, even though the company matched a percentage of what employees contributed. “They do not realize how much free money they are leaving on the table by not participating,” he says. So one year, at the annual 401(k) enrollment meeting, he brought in a big bag, unzipped it, and upended it over a table. Cash started pouring out. Conversation came to a halt. Lansbery had tabulated exactly how much money his

employees had failed to claim the year prior: $9,832. Now it was sitting in front of them. He gestured at the money and said, “This is your money. It should be in your pocket. Next year, do you want it on the table or in your pocket?” There was a stunned silence.

When the 401(k) enrollment forms were distributed a little later, there was a flurry of signups, including Kelli Harris, a purchasing agent. “You always find reasons not to save money,” she says. “The money sitting in front of me made me realize I need to start doing this.” Seefeel-change. Healthy greed motivated Lansbery’s employees to save, but it was a darker emotion—

Katie Sokoler

AT A MOTHER’S Day dance in 1999, Karen Gatt, 26, hit bottom. Weighing almost 300 pounds, feeling ugly and humiliated, she wanted nothing more than to slink to a corner and avoid attention. “I spent a lot of that night just looking around the room at all the other women, staring and admiring the clothes they wore, how their hair was done so nicely, and how beautiful they all looked. . . . They looked the way I wanted to look. They smiled the way I wanted to smile. . . . As I looked at their faces, something inside of me clicked. From that precise moment, I knew I had to change my life.” She did. She lost 150 pounds, kept it off, and wrote a book about her experience called The Clothesline Diet. It’s a familiar narrative arc—a searing emotional moment that sparks a life change. One famous therapist describes this as a three-step sequence: A person sees something that makes her feel a particular way, and as a result is motivated to change. Seefeel-change. Actually, it wasn’t a therapist who said that. It was John Kotter, now a professor emeritus at the Harvard Business School. And he was talking about organizations, not people. It’s not just

WHO YA GONNA CALL? Rather than relying on facts and figures, the New York Public Library made an emotional video to encourage patrons to help it stave off 2010’s proposed budget cuts. Pranksters Improv Everywhere re-created a scene from Ghostbusters, the video earned 3.5 million views, and NYPL avoided the ax.


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disgust—that eventually sparked a change at CedarsSinai Medical Center. As reported in SuperFreakonomics, a urologist named Leon Bender became frustrated when he took a South Seas cruise and observed that the crew was more diligent about hand-washing than the staff at his own hospital. Frequent hand-washing by doctors and nurses is one of the best ways to prevent patient infections, and studies estimate that thousands of patients die every year from preventable bacterial infections. Bender and his colleagues tried a variety of techniques to encourage hand-washing, but the staff’s compliance with regulations was stuck around 80%. Medical standards required a minimum of 90%, and CedarsSinai was due for an inspection from the accrediting board. They had to do better. One day, a committee of 20 doctors and administrators were taken by surprise when, after lunch, the hospital’s epidemiologist asked them to press their hands into an agar plate, a sterile petri dish containing a growth medium. The agar plates were sent to the lab to be cultured and photographed. The photos revealed what

30 FASTCOMPANY.COM February 2011

CASH ON THE TABLE North American Tool CEO Curt Lansbery learned from Hollywood: A big pile of money gets noticed. Unlike Ocean’s Eleven, American Gangster, and Las Vegas, he used the tactic to encourage 401(k) contributions.

wasn’t visible to the naked eye: The doctors’ hands were covered with gobs of bacteria. Imagine being one of those doctors and realizing that your own hands— the same hands that would examine a patient later in the day, not to mention the same hands that you just used to eat a turkey wrap—were harboring an army of microorganisms. It was revolting. One of the filthiest images in the portfolio was made into a screen saver for the hospital’s network of computers, ensuring that everyone on staff could share in the horror. Suddenly, hand-hygiene compliance spiked to nearly 100% and stayed there. (Which suggests, secondarily, that the screen saver is a vastly under-

utilized tool for social change.) Knowledge is rarely enough to spark change. People have to want change. Say it’s your job to lure companies to set up shop in Detroit. That’s no easy mission. Ordinarily, economic development folks are fountains of facts: School statistics. Workforce data. Infrastructure info. What if you focused instead on creating a spark of desire? Imagine showing off a series of photos, starting with one of a huge, beautiful home with the caption: “Here’s what $250,000 will buy you in Detroit. And here’s the red-brick factory

building you can buy for onetenth of its cost in Boston. And here are the experienced workers whom you could hire for $12 an hour.” Suddenly, the business owner starts to feel a little twinge of desire. Detroit is far from perfect—but, man, think of what we could afford to do there! This focus on feeling is unnatural in the business world, where we tend to cling to the rational and factual. But knowing something isn’t enough. The obese know they need to lose weight, employees know they need to save, and doctors know they need to wash their hands. It takes emotion to bring knowledge to a boil. Dan Heath and Chip Heath are the authors of the No. 1 New York Times best seller Switch: How to Change Things When Change Is Hard, as well as Made to Stick: Why Some Ideas Survive and Others Die.

heaths@ fastcompany.com

NBC/Everett Collection (Las Vegas); Warner Brothers/Everett Collection (Ocean’s Eleven); Universal Pictures/Everett Collection (American Gangster)

NEXT Strategy


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WE’LL CUSTOMIZE THE RIGHT PLAN FOR YOU

Mini-(Wal)Mart vs. Micro-Target The next frontier for big-box retailers is teeny-tiny. BY M A RGA R ET R HODES

YELLOWBOOK DIRECTORY The go-to source for local businesses

YELLOWBOOK.COM Advertise online where millions search

may have seemingly saturated the suburbs with locations, but both have struggled to thrive in cities. Now the big-box retailers are radically rethinking the size of their stores. Target announced that it will open its first small-footprint outposts in L.A. and Seattle

SOCIAL MEDIA See what your customers are saying

DIRECT MARKETING Customize the message for your target

end of 2012. But tailoring scaled-back offerings to diverse neighborhoods while still delivering low prices could prove tough, says Brian Sozzi, retail analyst at Wall Street Strategies. “Logistically, it could be a nightmare,” he says. “But will they undercut momand-pop shops? You bet.”

next year, with plans to push quickly into 12 other cities. Walmart, which has experimented with smaller prototypes called Neighborhood Market and grocery-specific Marketside, plans on opening two dozen microstores in San Francisco and 30 to 40 small-format storefronts across the U.S. before the

WALMART AND TARGET

TARGET STORE SIZE

WALMART STORE SIZE

Small Box 20,000 sq. ft.

EXPERT ADVICE Consult with those in-the-know

Average 152,500 sq. ft.

Small Box 80,000 sq. ft.

Average 185,000 sq. ft.

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Miami

Number of stores:

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www.yellowbook360.com 1.800.YB.YELLOW

1

NUMBER OF STORES

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2

3

4

10,000

5,000

1962

32

5

6

7

8

9

10

11

12

13

14

15

16

2010

18

19 20

Walmart $408.2 billion

Walmart

Target

17

TOTAL REVENUE (2009)

Target $65.4 billion


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THIS IS WHAT SUCCESS LOOKS LIKE FOR FLOWERS BY JAN. Yellowbook used a full spectrum of marketing tools to find the right solution for Flowers by Jan. Our marketing consultant assessed their business fully, then created a powerful online ad, a custom video ad, a print ad, and also provided transparent reporting to track the campaign’s success. To discover all the colorful new tools from Yellowbook, visit yellowbook360.com.

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Luring Latinos to the Multiplex Lionsgate’s Pantelion Films wants to do for Hispanic filmgoers what Tyler Perry has done for African-Americans. Is this progress? By M a lia Wollan When film executive Jim

McNamara goes to a movie theater, he has trouble walking past Latino teenagers without stopping to ask what movie they saw and why they chose it. Even more than the newest nubile starlets, it is these bicultural, bilingual teens from Miami to Detroit whom Hollywood studios want. Latinos are the largest and fastest-growing minority group in the United States, and statistics from the Motion Picture Association of America indicate that they are big movie fans: In 2009, Latinos purchased 300 million movie 34 fastcompany.cOm February 2011

tickets and went to more movies per capita than any other ethnicity. Last fall, looking to attract the ever-growing number of Latino moviegoers, film studio Lionsgate partnered with Mexican media conglomerate Televisa on a new venture called Pantelion Films, which will release 8 to 10 movies a year, catering specifically to Latinos. With Pantelion, Lionsgate is attempting to replicate its success marketing Tyler Perry’s films—including the $297 milion Madea franchise, featuring a crotchety matriarch played by

Perry—to African-Americans. “Latinos don’t see themselves reflected in Hollywood movies,” says McNamara, former chief executive at Telemundo and Pantelion’s new chairman, who was raised in Panama. His new company aims to change that. Released at the end of January, Pantelion’s first film, From Prada to Nada, focuses on two formerly rich sisters—one of whom proudly quips “no hablo español” with an Anglo accent— who are forced to move in with relatives in a scrappy, Latino part of East Los Angeles. While the movie is in English, many of

the punch lines are in Spanish. Hollywood’s previous attempts to market Spanishlanguage and Latino-centric films have largely failed. Even though movies in Spanish like IFC’s Y Tu Mamá También and Focus Features’ The Motorcycle Diaries found success in the art-house market, they did not broadly appeal to the Latino population. Those teenagers McNamara chats up in movietheater lobbies generally opt to see commercial blockbusters in English. Language is not the company’s key strategy—only about half of Pantelion’s releases will be in Spanish. “When a movie is in Spanish, if a Puerto Rican is speaking Spanish, or a Mexican is speaking Spanish, it identifies them,” Pantelion’s chief executive, Paul Presburger, says of the language’s countless dialects and geographically diverse slang. “Whereas when we do a film with Latino stars in English, it unifies.” Whether in English or Spanish, the new films will provide opportunities for Latino talent. “There are fewer Latinos in the movie industry per capita now than there were 50 years ago,” says Kathryn Galan, executive director of the National Association of Latino Independent Producers. “We’re still waiting for our Latino breakout stars.” In an effort to connect with this demographic, Pantelion will borrow tactics from other ethnically specific movie distributors. Lesson one comes from Perry, whose loyal fans count on seeing a few heavily branded Perry films a year. This steady stream of new releases has brought in more than $517 million in ticket sales since 2005 and made Perry a magnate. Pantelion staff also studied the successful distribution of Bollywood films. Still, targeting an ethnic slice of society is fraught with potential clichés. In 2009, director Spike Lee likened Perry’s films to “coonery and buffoonery” and asked how Illustration by edel rodriguez

2010 Pantelion/OddLot Entertainment (Valderrama)

next Strategy


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such fare persists when the country has a black president. Pantelion will let the target audience decide if something is offensive, executives say. “AfricanAmericans are going to see Perry’s films; they’re the ones enjoying them,” Presburger says. Nonetheless, the Pantelion staff reads scripts with a careful eye for hackneyed images of Latino life and culture. “We get out of the stereotypes of narco kings and drug dealers and gang members,” Presburger adds. Some are skeptical that Hollywood can so easily shed those timeworn tropes. Charles Ramírez Berg, a professor of media studies at the University of Texas at Austin, has spent his academic career cataloguing the stereotypes of Latinos in cinema from silent films to today’s box-office hits. At the top of his taxonomy are el bandito, the criminal; the f loozy, whom Berg calls the “harlot with a f lower behind her ear”; and the Latin lover. “Stereotypes in film persist because they serve a function: They provide an efficient way to tell a story in under two hours,” Berg says. “Now films are being made by and for Latinos, so the next question is, Will they break out of stereotypes or just repeat them?” Wilmer Valderrama in From Prada to Nada

Photograph by THOMAS PRIOR

IT’S RAINING BRANDS Birchbox cofounders Hayley Barna, left, and Katia Beauchamp

Random Samples No More Birchbox aims to help the $52 billion beauty business learn which free trials become full-size sales. Hayley Barna, 27, and Katia Beauchamp, 28, are getting stronger. “Every 10 new customers, one push-up,” Barna says. Those push-up relays in the duo’s fuchsia-strewn New York office may soon be daunting: Birchbox, their subscriptionbased e-commerce company, has grown to 5,000 members in four months, and roughly 50 people join each day. For a $10 monthly subscription, Birchbox sends consumers a box of deluxe-size samples from brands such as Benefit, Kiehl’s, and Marc Jacobs. Samples—whether given away in department stores or mailed

with magazine subscriptions— have long been a staple in the beauty business, mostly because women like to test products before purchase. That sample-before-sale mentality is the reason 90% of women shop for new cosmetics in-store rather than online. But beauty companies haven’t yet figured out how to effectively target beauty junkies or track which freebies translate into sales. “You can sample yourself out of business really quickly,” says Vicky Tsai, founder of skin-care line Tatcha, one of Birchbox’s 20-plus partners. “We give away samples, but we know it’s a lot of wasted money,” agrees Louis Desazars, CEO of Nars Cosmetics. “Birchbox customers are more engaged with the samples they get.” Birchbox members are encouraged to fill out surveys about each product, and that feedback is sent back to the beauty brands. Roughly 10% of members opt to participate, earning points they can then swap for full-size beauty products through

Birchbox’s online store. Barna and Beauchamp, who began brainstorming the new model while at Harvard Business School, didn’t want to stop at surveys, though. They tailor samples to women’s coloring and makeup routines, but they also nudge members to experiment with new looks and techniques with online tutorials, videos, and interviews with beauty pros. “The model works because the selection is pre-edited for you,” says Karen Grant, vice president of beauty at research firm NPD Group. Beauchamp hopes the combination of customized samples and rich online content will create a virtuous cycle: Consumers fill out more surveys, brands get better feedback, consumers get better products. “We want it to be about discovery,” she says. Member Jessica Jacobs, 23, agrees that the model works: “They send products I wouldn’t necessarily spend money on, but once I get them, I realize I really like them.” —SUZY EVANS February 2011 FASTCOMPANY.COM

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NEXT Tech

TECH EDGE

Rise of the Super Angels FARHAD MANJOO explains how an emerging class of investors is reinventing the startup economy. FOLKS IN SILICON

Valley are fond of attaching friendly, anodyne labels to forces that seem bent on world domination (hello, Facebook). So it’s no surprise that the latest group of alleged tech marauders goes by a name that might be better suited to a Japanese cartoon boy band: Beware the super angels! These crafty interlopers represent a hybrid between the two investing models that have long ruled the normally placid world of startup funding. Super angels raise funds like venture capitalists but invest early like angels and in sums between the two, on average from $250,000 to $500,000. By being smaller, faster, and less demanding of entrepreneurs than VCs, super angels are getting first dibs on the best new ideas. Mint, Digg, and Ustream are three of the prominent super-angel-funded companies with traction. The established order in Silicon Valley is used to funding disruptive ideas, not getting crushed by them. Many are now spinning dark conspiracy theories about the super-angel cabal and preemptively floating blame that when the startup bubble pops, it’ll all be these angels’ fault. This anxiety is likely to prove superinflated. Indeed, by streamlining and downsizing venture capital, super angels may be

36 FASTCOMPANY.COM February 2011

pushing Silicon Valley toward accepting something that has long been missing in these parts: economic rationality. For too long, tech funding has operated like a moldering Reno casino. VCs place dozens of million-dollar bets every year and fully expect to lose almost all of them; the strategy is that for every hundred Cuils (a one-

Super angels give startups much less money than VCs, but they expect a lot less in return. Typically, they don’t take a seat on the startup’s board; they take a small stake in the firm and hand over their funds in weeks rather than months. This frees up entrepreneurs to work on building great products rather than worry about satisfying

time presumed Google killer), one Google-size payout (or a few) will put them in the black. But treating business funding like roulette often pushes new companies to act unwisely. In order to get acquired or go public to satisfy their VCs, startups raise too much money (Brightcove), expand too quickly (remember Webvan?), and give away products for free (Ning). Over the 10-year period ending this past June, the VC industry “returned” –4.2%.

their funders—which, after all, is the only way they’ll succeed. The irony is that even as they bring new cash into the tech world, super angels might actually be helping to deflate an incipient startup bubble. “The reason crap startups got funded in the dotcom era was because there were a lot of crap investors putting money into them,” says

Paul Graham, a founding partner at the incubator firm Y Combinator. “Nobody expected actual profits. They just wanted to sell it to the next fool.” But super angels—a clubby bunch ruled mainly by veterans of some of the Valley’s most successful startups, including Ron Conway (PayPal), Jeff Clavier (Yahoo), and Mike Maples (Twitter)—aren’t dumb money. They have little interest in flipping their shares on Nasdaq (that is, to crap investors like you and me). They can make money on much more likely outcomes. In October 2009, for instance, several angels— including the ubiquitous Conway—put a total of $1 million into Hot Potato, a Foursquare-like check-in service. A few months later, Facebook purchased it for a reported $10 million. That may pale in comparison to the billions that Google earned when going public, but it was a remarkable return in such a short time. If super angels can turn several small investments into $10 million to $20 million sales every year, they’re poised to do a lot better than VCs. Does that mean the end of VCs? Graham notes that by exerting competitive pressure, super angels may push VCs to become more agile. The other possibility is that VCs will edge out of the web game and push deeper into industries better suited to their largesse— capital-intensive fields such as biotech, clean energy, and telecom infrastructure. Witness the $1.1 billion poured into 4G provider Clearwire or the $400 million behind Bloom Energy. So super angels may aid VCs, investors, and founders? No wonder they’re called super. manjoo@fastcompany.com Illustration by FRANK CHIMERO


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I’m mobile. Process paperwork practically anywhere with the mobile ScanSnap S1100 document scanner. On-the-road doesn’t mean out-of-

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pocket when it comes to office resources like scanning paperwork for sharing or to file electronically. Just plug-in USB power and scan business cards directly to contact lists. Press one button to scan paperwork directly to email, searchable PDF, JPEG, or to applications like Word and Excel®. You can even scan to Evernote® or Google Docs™ and retrieve your paperwork from just about anywhere. The ScanSnap S1100 helps you spend less time on paperwork so you can spend more time chasing down the next big thing. Check out ScanSnap. While you’re there, enter to win a Gift Card. Visit http://us.fujitsu.com/fc

© 2011 Fujitsu Computer Products of America, Inc. All rights reserved. Fujitsu and the Fujitsu logo are registered trademarks of Fujitsu Ltd. All other trademarks are the property of their respective owners.


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Moviemaking for the Masses Writers are flocking to Xtranormal, a company whose free text-to-movie technology lets users convert their words into animated video.

BY LUKE O’BR IEN

ANIMATED SHORTS, DIY–STYLE Users have made more than 9 million projects on Xtranormal.

38 FASTCOMPANY.COM February 2011

   

THERE’S SOMETHING hilarious about seeing a cartoon bear cuss like George Carlin in a computerized voice while planning vehicular homicide. For this, the world can thank Xtranormal, an online animation company that plops anyone touched by the muse into the director’s seat of his own comedy sketch. Xtranormal puts simple tools at the disposal of regular people. Choose from a selection of several dozen characters. Enter text (profane or otherwise) for your characters (bears or otherwise) to act out. Set your camera angle. Sprinkle in sound effects. Presto! You have your own mini-movie, ready for its online premiere. Characters range from critters to sports stars to prominent politicians. They speak in different accents in robotic voices built from the same phonemes that create the tinny automated messages on voice mail. Although Xtranormal is working on making its natural-language processing a little more natural, intonation can be a problem. My attempt to re-create the gun-shop scene from Terminator using Sarah Palin (standing in for the murderous cyborg) and Larry King fell flat. More successful are videos that stick to waggish dialogue. The first Xtranormal clip to go viral—and the one the company is still best known for— was a send-up of slavish iPhone customers. Created by Brian Maupin, a Best Buy employee clearly drawing on personal experience, the “iPhone4 vs HTC Evo” short racked up more than 10 million views on YouTube and launched a meme: two animated characters (usually bears)—one of them a cynical know-it-all, the other a fool— lampooning the clueless and the arrogant. Targets have included

doctors who think they’re superior to veterinarians; controlfreak moms trying to raise perfect kids; and humankind in general. “We appeal to anybody who’s trying to make an inside joke,” says Xtranormal CEO Graham Sharp. Since Maupin’s video made it big this summer, large companies have taken note. After Xtranormal-inspired satire became popular among adindustry insiders, Geico designed several whimsical TV ads using Xtranormal’s free text-to-video application. Most directors, though, are just homespun auteurs with something to say. “We’ve really simplified animation to the point where anyone can use it,” Sharp says. This populist approach is new for Xtranormal, which was founded in 2005 in Montreal by screenwriter and animation guru Richard Szalwinski. According to Sharp, the company’s original goal was to produce an application to give film studios a storyboarding tool during preproduction. Hollywood loved the idea, but the animation and controls were too basic. Not true for the do-it-yourself crowd. After a management shakeup that resulted in Szalwinski’s exit in May 2010, Xtranormal moved in a different direction. Its revenue now comes from selling special characters and sets to users (a look-alike of President Obama is free, but a replica of Abraham Lincoln costs extra). While the company has yet to make a profit, Sharp anticipates getting into the black during the first half of 2011. With plans to go mobile and allow for collaboration over social networks, the challenge for Sharp and his team will be to keep things simple while giving Joe Public more options to unleash his inner Tarantino.

Courtesy of Xtranormal

NEXT Tech


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Offers so good, youÕll think youÕre getting less of the City. But donÕt worry; youÕll still get everything you expect from a world-class destination like San Francisco. To see just how affordable San Francisco is, visit onlyinsanfrancisco.com/sfmeetingsoffer.

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next Design

Mum’s the Word Midwest retailer Hot Mama is building an empire by rethinking shopping as a mom. By Steph a nie Schomer Sitting on a cuShy, oversize red couch in a blue polka-dot dress, white knit tights, and cowboy boots, Morgan, 6, contentedly watches Ratatouille, one of her favorite movies. Her 4-year-old sister, Maya, is dressed to match and has settled on the slate-gray carpet near a coffee table covered with toys. Both snack on animal crackers, paying no mind to the crumbs that fall around them. It looks like a happy home. But this isn’t their home. This is Hot Mama, a fastgrowing Minneapolis-based chain of clothing boutiques for moms—and their kids. “They ask to come here,” says Anne Trujillo, the 37-year-old mother of Morgan and Maya. “It’s fun 40 fastcompany.COM February 2011

for them, which makes it fun for me. I get some time to focus on myself.” And time equals money. Hot Mama opened six new stores in 2010, bringing the chain to 17 locations in seven states. Executives say revenue for fiscal 2010 hit $15.1 million, a 62% increase over 2009. Same-store sales were up 30% for the year and 45% for September (back-toschool, when stay-at-homes go public again, is Hot Mama’s Christmas). Each location entertains kids with video games, movies, toys, and coloring books—all centrally located to help Mom keep an eye on the little ones. Every aisle is wide enough to accommodate a two-seat stroller, and sales employees double as

babysitters—it’s common to see one holding a toddler as she runs a sweater to the fitting room. The goal is to give every mother 15 minutes of shopping peace; most stay nearly an hour. The boutique is a hip mom’s haven, packed with clothing from more than 200 brands, including Splendid, Trinity, and Michael Stars, as well as premium denim (no mom jeans allowed!) from Hudson and Joe’s Jeans. Hot Mama is the brainchild of CEO Megan Tamte, 37, and her husband, Mike, who serves as CFO. The couple—both sun-kissed, something that seems out of place in frosty Minneapolis—met at North Park University, a small Christian college in Chicago. They married shortly after

MoM With a MiSSion CEO Megan Tamte refuses to stock mom jeans or sweatpants.

Photographs by chad holder


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graduation. Mike went off to work as a CPA, while Megan stayed home to raise Ally, now 13, and Ryan, 11. Megan’s first shopping trip with Ally in tow proved unsuccessful—the tot was fussy, Megan was unfamiliar with her postbaby body, and help was nowhere to be found. Leaving a store frustrated and empty-handed is something that most moms can relate to, but it

In 2004, the first store opened in the downtown shopping district of Edina, an affluent Minneapolis suburb. The location positioned the retailer among the storefronts of Anthropologie, Banana Republic, and Monique Lhuillier. Customers say it’s the service that sets Hot Mama apart. Sales employees—or “stylists”—go through three certification

“Our customers want to be dared,” says Hot Mama CEO Megan Tamte. “If they’re in this store, they want to be hot. They take that word very seriously.” gave Megan the idea of a better shopping experience for mothers. Hot Mama remained just that—an idea—for years as Megan spent her days as a stay-at-home mom. Her “aha” moment came during an episode of American Idol. “I was watching other people make their dreams come true instead of chasing my own,” she says. “I just realized, ‘This is really dumb!’ I don’t watch TV anymore.”

programs in their first few months on the floor: denim, body type, and maternity. “All women have issues with their body,” says Hot Mama president Kimberly Ritzer. “Our stylists can outfit any woman, aged 25 to 65, based on her body the minute she walks through the door, but they also build personal relationships to find a style that makes her feel comfortable. It’s like shopping with a girlfriend.”

And, indeed, it’s not unusual for customers and stylists to shed tears when the perfect pair of jeans restores a mom’s confidence. “They’re offering something unique,” says Nikoleta Panteva, a retail analyst for IBISWorld. “Moms want to be catered to, but they’re underserved, and the demographic Hot Mama is after has high disposable income. It’s created a valuable concept.” Admittedly, “Hot Mama” is a dicey name for a store whose wares are not strictly maternity clothing. But Mike and Megan aren’t apologizing for the name. “Yes, it limits our clientele. But we’re serving a niche,” he says. “You can go to other stores to get our product, but not our service.” “Our customers want to be dared,” Megan adds. “If they’re in this store, they want to be hot. They take that word very seriously.” The boutique continues to stretch across the Midwest—

revenue is expected to edge over $20 million this fiscal year, and the Tamtes plan to have 50 locations by 2014. But Panteva warns that the Tamtes’ goal of a nationwide presence may require tweaking the model: “As they approach cities like Los Angeles, New York, and their surrounding communities, they might have to create a more posh atmosphere to serve a pickier, more brandaware shopper.” The Tamtes aren’t worried. “[CEO] Howard Schultz calls Starbucks a third place—not work, not home, but a place of comfort,” Megan says. “That’s what I want Hot Mama to be for women everywhere.”

Playdate More than 250 square feet of Hot Mama’s floor is given over to toys and video games.

February 2011 fastcompany.COM

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NEXT Ethonomics

DO SOMETHING

The Hidden Boon in Boondoggles

There are a lot of professional conferences to attend, and NANCY LUBLIN knows how to find the ones that are worth your while. CONFESSION: I’m addicted. Signs of my habit hang around my neck like a noose. Evidence is in my pockets, my tote bags, my calendar. My eyes have dark circles, and I’m distracted at work. It’s true: I’m a conference junkie. It all started quite innocently. In my twenties, I attended maybe three or four conferences a year— the Independent Sector gathering to meet colleagues; Renaissance Weekend for personal development and networking. I knew my habit had escalated from casual attendee to devotee, but until I sat down to write this, I didn’t realize how my addiction had ballooned. I estimate that in 2010, I attended at least part of nearly 30 conferences. Maybe Lindsay Lohan and I can be roommates at Betty Ford? The obvious conclusion is that not all of these events are deserving of my time. But what makes a conference worth it? I took up the issue with some friends— while we stood around chatting after a panel at a conference in New Orleans. Andres Glusman, Meetup’s vice president of strategy, said that a good conference has to include two things: social fun and actual learning. Danielle Brigida, the digital marketing manager for the National Wildlife Federation, added that warm weather helps. She also said South by Southwest is on her calendar forever, even if the 42 FASTCOMPANY.COM February 2011

content has jumped the shark. By their standards, I don’t need to go to the Skoll World Forum again. The people were terrific, but I didn’t learn much. There was too much grandstanding and not enough real conversation, which is what sometimes happens when funders and fundees are in the same room. And the weather? Well, it’s in England. Plus, it was expensive! Going cold turkey isn’t an option. Some of these gatherings are healthy for me and good for

************************** ************************** ************************** **************************

my organization too. But which ones? What are the criteria? The quiz below will help you determine if the one you’re considering is a valuable use of your time. One last note: I dedicate this column to my CTO, George

Weiner, whom I have not seen in a month because he’s been at BlogWorld & New Media Expo, Net Impact Conference, Independent Sector, and some “impact” thing at his alma mater. lublin@fastcompany.com

Travel-Worthy or Time Waster? Take Nancy’s Quiz Before Attending Your Next Conference.

1. PEOPLE. The conference is: a) invite-only b) open to anyone, but some of the attendees are people you are dying to meet c) open to anyone but focused on a niche topic you love, so you might bond with a few good folks d) the equivalent of a buffet in Atlantic City: open to everyone, cheap, and a little bit dirty.

2. LOCATION. The conference is in: a) the city where you live and/or work b) a location you’re dying to visit c) an undesirable market but within three hours’ commute d) Cleveland. 3. TIMING. The conference will take place: a) over three workdays during a slow period at the office b) over a non–holiday weekend and includes an open bar c) during that Lady Gaga concert you were planning to see d) on the same weekend as your sister’s wedding.

4. PRICE. The conference is: a) all expenses paid, including travel and hotel b) free, but you cover your own travel and lodging c) kinda pricey d) going to require a second mortgage. 5. YOUR ROLE. You are: a) a featured speaker b) like any other participant—treated equally and on lots of panels c) hoping to ask a public question d) encouraged to be seen but not heard. BONUS!

FOOD. Samantha Smith is one of my favorite interns and a conference junkie in the making. She suggests a bonus of five points if the food is plentiful and free.

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SCORING GUIDE: (a)=10 POINTS EACH (b)=7.5 (c)=4 (d)=2 40–55 POINTS. Pack your bags and kiss the kids goodbye! Davos, TED—here you come! 30–40 POINTS. Worth doing. A couple of tips to maximize the benefits: If you’re on a panel, go last. Be the cleanup hitter that pulls things together. Look at the attendee list in advance. Who are these folks? Make a list of the people you’d like to meet—and schedule those meetings in advance. 20–30 POINTS. This conference doesn’t quite meet the bar. Invest your time and money in better bets more suited to your availability, resources, and skills. 10–20 POINTS. Schedule a nice dental checkup instead, and maybe get a dog. Do something—anything—else. This is a boondoggle not worth the bother.

Illustration by FRANK CHIMERO


© Siemens AG, 2011. All Rights Reserved.

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The world of tomorrow needs

answers that last. That’s why we’re building them today, with customers all over the world.

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the world’s largest independent database of corporate climate change information. Yet we’d never claim to have all the answers. That’s why we’re working with 190 countries. Thousands of cities. Tens of thousands of companies. In energy, industry and healthcare. We’re working with the world today to create answers that last for the world of tomorrow.

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Out of the Rubble, Into the Lab Since the 2010 earthquake, not-for-profits and corporations have developed new technologies to better deliver services to Haitians, transforming aid in disaster areas everywhere. by Jocelyn c. Zucker m an

44 fastcompany.CoM February 2011

Jokebed Auguste, a 31-year-old single mother from Mirebalais, in Haiti’s Central Plateau, has come to see her cell phone in a whole new light. A team leader in one of the cashfor-work programs run by the international relief agency Mercy Corps—she oversaw 15 colleagues in an initiative to clean up roads and canals—Auguste was among the first Haitians to begin receiving payments for the project directly through her phone. The convenience of the T-Cash system means she doesn’t have to stand in line for hours at the bank, but even more impor-

tant is the security. “There’s no cash for people to steal,” she says, “and nobody knows how much money you have, or how much you’re taking out.” The “mobile wallets” are one example of a handful of new technologies that emerged in the aftermath of the earthquake that rocked the Caribbean nation one year ago— and that will likely impact disaster-relief and development efforts for years to come. More thAn A third of Haiti’s

banks, ATMs, and moneytransfer stations were destroyed in the earthquake (and even

Courtesy of the Bill & Melinda Gates Foundation

LifeLine About 85% of Haitian households have cell phones, according to the Red Cross. Phones enable cashless financial transactions and emergency messaging.


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before the disaster, fewer than one in 10 Haitians had ever used a traditional bank). So last June, the Bill & Melinda Gates Foundation and the U.S. Agency for International Development created a $10 million competition to jump-start financial services by mobile phone. “When the earthquake happened,” explains Amolo Ng’weno, deputy director of the foundation’s Financial Services for the Poor Initiative, “we were sitting in Seattle watching on TV and saw the long, long lines of people trying to get money.” She and her colleagues figured that if they could get companies to build mobile financial services, it would not only help get money into the hands of Haitians but also reduce the risks and costs of financial transactions. AMONG THOSE COMPETING for the

award is Voilà, a mobile provider with more than a million Haitian subscribers that is the partner of Mercy Corps on its T-Cash program. In December, the charity also began transmitting $40 monthly vouchers to thousands of families who have taken in quake survivors and suffer from strained resources. Recipients type in a code on their phones in designated shops to indicate they want to make a purchase with the funds; the merchant then confirms that transaction on his own phone. “Normally, when you have money in your hands, you spend it easily,” explains Auguste. “But when it’s on your phone, it’s a whole process you have to think about.” The hope is that, over time, mobile banking will give Haitians access to savings and

other financial programs that weren’t widely available before the quake. IT WAS ALSO in the aftermath of the quake that Voilà and the International Federation of Red Cross and Red Crescent Societies (IFRC) created a shortmessage-service application that could target cell-phone users based on their specific location. In the days following the January 12th disaster, more than 1 million SMS messages went out every day containing information in Creole about emergency treatment, vaccinations, and other IFRC programs. Voilà also helped the group establish a hotline, in English and Creole, that allowed victims to call (at no cost) for information about hygiene, water and sanitation, and condom distribution. In August, when storms were bearing down on the country, the IFRC sent messages to subscribers near the northern

coast instructing them to prepare or relocate. SMS messaging continues to play an important role in the ongoing cholera crisis, replacing oldfashioned practices like pamphlet distribution. (Cell phones also have been key to the continued success of Noula, a call center established last year by the Haitian government and Solutions Inc. that incorporates a database of major health-care facilities and enables callers in distress to get information on the nearest places to get help.) ANOTHER IMPORTANT initiative came out of a conference call organized by the U.S. State

Illustrations by PETER GRUNDY

Department shortly after the quake. Attended by various nongovernmental organizations and players in the tech community, the call addressed the synchronization of the missingpersons databases that had been launched by everyone from The New York Times and The Miami Herald to CNN and your random bighearted geek. Within 36 hours, Google engineers built and launched Person Finder, which linked the different databases through a common, backend technology. Aid agencies could embed Person Finder on their own websites and any information entered would automatically go into the centralized pool. An extension of a program that Google had developed after Hurricane Katrina in 2005, Person Finder was so successful that the Chilean government used it after the earthquake in its country, and moving forward, it is expected to be the go-to app for missing people. TRACKING-DEVICE technology

was revolutionized by the quake as well. In particular, a program called Last Mile Mobile Solutions, or LMMS, which had been developed by a Canadian software company and the Christian organization World Vision, found an entirely new application. LMMS is a digital system that replaces paperwork associated with ration cards and registration. Capable of functioning in places without electricity or Internet, LMMS had been piloted in Africa but had never been used in a “rapidonset emergency” situation. Nor had it entailed distributions of anything other than food. In Haiti, World Vision began using

the system’s laptops and handheld devices to register people at distribution sites (beneficiaries receive photo IDs with scannable bar codes) and to track goods dispersed. The result was not only fewer errors but also vastly shorter waiting times: Instead of spending the entire day standing in the hot sun, Haitians now were able to join the line and walk away an hour later with their food and supplies. Similarly, the Salvation Army automated its distributions tracking, replacing handwritten ration cards with bar-code Trackpad technology, developed by the delivery company UPS to find displaced pets after Katrina.

Some look at the developments in Haiti and see the potential for a model wireless society—the first “copper-free” country in the world. Whether that comes to pass or not, the technological fruits of the Caribbean nation’s disaster are already spreading far beyond the country. World Vision hopes to soon roll out its LMMS system in Pakistan and China, and Otto Farkas, the organization’s director of humanitarian and emergency affairs, resource development, and collaborative innovation, has visions of LMMS one day being adopted by all aid organizations, in every emergency situation. “This is the holy grail,” he says, “to get realtime data that’s all integrated.” He concedes, of course, that such cooperation isn’t just about solving a few technological glitches. “We can’t just throw technology at the human challenges,” he says, “but certainly, technology can help.” February 2011 FASTCOMPANY.COM

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FAST TALK

GE APPLIANCES & LIGHTING Louisville, Kentucky

Bring on the Boomers

As the first of the 77 million baby boomers reach retirement age, their $2 trillion worth of annual spending power is driving companies to rethink aging. Interviews by STEPH ANIE SCHOMER

Marc Hottenroth Industrial design leader

Hottenroth, 43, heads GE’s team as they learn how to design better appliances for older Americans. “We hold empathy sessions to help our designers understand what the aging population goes through every day—we tape their knuckles to represent arthritic hands, put kernels of popcorn in their shoes to create imbalances, and weigh down pans to simulate putting food into ovens. We have a moving-parts kitchen that helps us build products like our wall oven, which is at a height where people don’t have to stoop down or stretch awkwardly over the stove to take that turkey out of the oven. Designing for boomers is critical—someone turns 50 in the U.S. every seven seconds. They won’t give up style or performance, and they won’t buy something made specifically for the aging because that’s not how they see themselves. But if it’s easier to use and it speaks to their needs, they’ll love it. And if something is easier for a 65-year-old to use, it’s going to be easier for a 35-year-old to use.” Photograph by BILLY DELFS

February 2011 FASTCOMPANY.COM

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fast talk Baby Boomers

phIlIps homE hEAlthcArE Framingham, Massachusetts

deb Citrin

senior director, strategy and business development Citrin, 50, is rethinking how to market products for the elderly—by targeting their aging children. “Baby boomers are still managing their lives and taking care of their children, but they’re also taking care of their aging parents. Every 2.3 seconds, somebody over the age of 65 suffers a serious fall. Our Lifeline service with AutoAlert automatically calls for help if a fall is detected. I am a baby boomer, and my mother has the Lifeline pendant. We also have a service that notifies adult children if Mom or Dad hasn’t taken their medication. Boomers are willing to spend dollars on aging successfully and managing health. If we help them care for their parents—and help the parents age at home—the boomers will remember our products as they themselves cross the 65-year mark.”

BoEInG Seattle

Pete Guard

Cabin-experience strategy leader Guard, 52, is leading Boeing’s efforts to improve in-flight design and comfort for aging passengers. “Air travel isn’t the wonderful experience it was 20 years ago. We have to get back to some of that comfort. As boomers age, their vision, mobility, and hearing may become a challenge, but the last thing we want is to make them seem less than capable—they’re an independent group. Those oversize phones with giant buttons are an insult. We’re replacing those awkward bifold lavatory doors with panel doors, and we have redesigned the latches on overhead bins to make them more intuitive. We can make the seats more lightweight and decrease the thickness of the back without compromising comfort, creating more leg room without cutting the seat count.” 48 fastcompany.com February 2011

Photographs by José MandoJana (Guard); JosHua dalsIMer (Citrin)


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mIt AGElAB Cambridge, Massachusetts

rozanne Puleo and lisa d’ambrosio research fellow and research scientist

Puleo, 36, left, and D’Ambrosio, 43, use a suit called AGNES (the age gain now empathy system) to research the changing needs of boomers. Puleo: “The suit has a pelvic harness that connects to a headpiece, mimicking the spine and restricting mobility, range of motion, joint function, balance, and vision. We’ve suited up students and taken them to the grocery store to purchase foods with low sugar, low sodium, and low fat—foods commonly purchased by older adults. They found that it was very challenging to locate these items on the shelf. That’s valuable information that we can take back to organizations.” D’Ambrosio: “The fact that we have people living longer than ever before has significant implications for how we live as a society. We have to make sure that as we all age, we’re able to maintain our qualities of life. That starts with the generation approaching retirement now. They’re not planning on being relegated to the couch. They see it as retirement from a job, but not from life.” Puleo: “It’s a matter of learning what works best and what’s most user-friendly, not just boomer-friendly. We have to find solutions that transcend age.”

Photograph by GuIdo vIttI

February 2011 fastcompany.com

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fast talk Baby Boomers

GEnErAl mIlls Minneapolis

Marc belton

evP, global strategy, growth, and marketing innovation Belton, 51, is boosting boomers’ health by creating engaging and interactive communities online. “It’s our job to create healthier products for boomers—if you don’t, you’ve got no street cred. But life isn’t just about health benefits; it’s about engagement and community. People like to talk about themselves and be part of a story. One of our websites, Eat Better America, asks consumers to submit their favorite unhealthy recipes, and our team will healthify them. We recently launched a site with Yahoo called Vitality, which celebrates people who begin a new career during retirement. A campaign tied to Cheerios, which has seen tremendous growth in the boomer market because of the hearthealth benefits, features an online community where consumers talk about why they want to take care of their heart, whether it’s for their kids or their work or staying vital as they age. We highlight heroes of the campaign—one man used to be in terrible health but now runs marathons—to inspire others. We’re creating a conversation.” 50 fastcompany.com February 2011

Photograph by aaron woJaCk


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thomas broberg senior safety adviser

Broberg, 42, studies the driving habits of the aging to develop cars that will keep them—and other drivers—safe. “Baby boomers are going to live longer, and healthier, than any generation before, which means there will be a higher percentage of older drivers on the road. There’s a misconception that they’re involved in more accidents than younger drivers, but they’re not. They just have different reactions. We recently tracked senior drivers’ eye movements in intersections and learned that they focus on line markings and road signs, while younger drivers focus on moving objects like other cars, bicyclists, and pedestrians. We have to consider this significant behavioral difference as we design safety technologies. The solution is to build cars with senses. We have cars today that can recognize a potential collision, feel if the driver is responding or not, and automatically apply the brakes if necessary. The next big step toward a crash-free future will be designing cars that can communicate with one another and everything that is around them.”

VolVo Göteborg, Sweden

Photograph by steve bonIfaCe

February 2011 fastcompany.com

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WANTED

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Monique Péan Nihiru Necklace To craft the perfect piece of jewelry, sometimes you have to journey to the ends of the earth. Designer Monique Péan realized this on a 2007 trip to Shishmaref, Alaska, a community south of the Arctic Circle where the land is slowly sinking into the water. After traveling to the village by sled, Péan worked with native artisans to find fossilized walrus ivory and woolly-mammoth bone that they then carved by hand. The materials have since become her calling card, used throughout her work. This season’s collection, inspired by the waters of French Photograph by STEVE COHEN

Polynesia and the art of Paul Gauguin, features stunning pieces like the Nihiru necklace. It carries a hefty price tag of $13,015, but there’s no guilt associated with the splurge. In addition to fossilized woolly-mammoth bone, the necklace features 18-karat recycled rose gold, white diamonds found through fair-trade mining, and smoky topaz. “My aim is to blur the lines between absolute luxury and conscious living,” says the 2009 CFDA/ Vogue Fashion Fund runner-up. We say: Mission accomplished. moniquepean.com —STEPHANIE SCHOMER February 2011 FASTCOMPANY.COM

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This stainless-steel watch is a re-release of the Bauhaus-inspired 1962 original created by artist and designer Max Bill. The clean lines and simple black band of the Automatic Max Bill Watch fit nicely with the aesthetic of men’s fashion today: classic, preppy, well made. ($850, momastore.org)

FASHION

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SOUND STRATEGY

TDK, best known for its cassette tapes, is hoping a next-gen MP3-compatible boom box will help revitalize its brand. BY DAN MACSAI

In early 2009, shortly after being folded into Imation, TDK discovered that its target customers—urban male audiophiles—were getting nostalgic. “They fondly recalled making mixtapes using TDK cassettes,” says Jessica Walton, director of global brands at Imation. They also claimed to be tired of MP3 players, which have made music “less about sharing and more about the device itself.” So, with help from Portland, Oregon–based Ziba Design, TDK decided to update music’s most social portable stereo: the boom box.

1

2 --> Early sketches reimagined the boom box but “reinterpreted too far,” says Thorpe of his team’s cubelike designs. To better evoke the original, they chose a large rectangular face with prominent circular drivers. They also added a handle, because a boom box isn’t a boom box unless you can take it outside to annoy the neighbors.

--> McDonald’s, MTV, Evian, and Budweiser all ran ads in 2009 featuring the boom box, and NPR aired a segment lamenting its demise. “There was a cultural wave growing behind the boom box,” says Ziba creative director David Thorpe. “It was begging for a reinvention.”

3 --> Because the boom box should also

chosen finish— tone-on-tone black with a champagnegold trim—was designed to echo the look of a traditional TDK cassette.

be a “social centerpiece,” as Thorpe puts it, most mock-ups had old-fashioned knobs (so users can adjust the sound), visualizers (so they can see it), and various ports (so they can plug in mikes and instruments).

4

6 5 --> The design team toyed with adding a CD player but nixed it in favor of USB compatibility, which “looks forward to the future of digital music,” says Thorpe. But the MP3-player dock is hidden beneath the aluminum handle—not featured prominently as on most iPodfriendly stereos—because “we didn’t want to design a TDK product around another device.” 54 FASTCOMPANY.COM February 2011

--> Although developers tossed around cutesier names, such as “Boom 1,” TDK ultimately picked the more straightforward Boombox. “We wanted to call it what it is,” Walton says. Two- and three-speaker models ($399 and $499, respectively) are available online now and at stores late next month. Courtesy of TDK; MoMA Design Store/MoMAstore.org (watch)

--> The


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Hand-delivered Bouquets

The Manhattan-based

florist H.Bloom wants to take high-end bouquets to the masses. “It’s like Netflix,” says Bryan Burkhart, 36, who started the business in 2010 following a career in software sales. Similar to the DVD–rental service, H.Bloom sends its clients weekly or monthly deliveries of fresh-cut arrangements at their 56 fastcompany.CoM February 2011

homes or businesses. Customers pay on a sliding scale starting at $25 a bouquet. The company designs two options for each price point up to $85; members select the arrangement online. Burkhart says the subscription model allows him to cut costs and waste by ordering only the flowers he needs from growers in

Europe and South America. Members can cancel or put their orders on hold when traveling. The service expanded to Washington, D.C., in December, and Burkhart plans to open in other yet-tobe-named cities in the latter half of 2011. By tweaking the business model, he hopes to transform the $36 billion retail floral industry. (hbloom.com) —Suzy EvanS

Courtesy of H.Bloom (bouquets), À la Carte Maps

A subscription-based service for floral arrangements on the cheap


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Savvy travelers know where in Paris to find Notre Dame, but what about tracking down the best crepe vendor? Explore 15 cities with À la Carte’s hand-drawn maps. Each one features street names and metro stops, alongside charming tips culled from locals. When in Rome . . . (roughly $12, alacartemaps.com)

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The King Cole Bar New York The duKe spiriT London rock band

archive

le parKer Meridien hoTel New York

ligHt My Fire As the smoke clears from bars and restaurants, matchbooks find new industries—from fashion to music—to call home. The fight for a smoke-free

America continues—35 states have some form of a smoking ban—but not everyone can breathe easier. “We’ve had to reinvent the product, remind people that it’s a promotional tool,” says Alex Nackman, marketing director of Admatch, a 41-year-old matchbook supplier in New York. “People don’t throw matches out like they do business cards.” And at approximately 50¢ apiece, they’re a cost-effective way to market. Juicy Couture has had original designs created to sell in stores, and music venues and bands have started handing matchbooks out in lieu of pricey T-shirt giveaways. (“Indie musicians,” Nackman says. “It hasn’t been Coldplay yet.”) But aside from affordability, what’s the appeal? “Fire speaks so instantly to life,” says Yael Alkalay, founder of Red Flower, a New York bath-andbody company. After suffering a stroke more than a decade ago at age 26, Alkalay recovered and started the company with a newfound appreciation for the everyday. Aside from coupling matches with the purchase of candles, Red Flower hands out 50,000 matchbooks to customers each year as mementos of the store. “Matches have a certain charm,” she says. “If you’ve got them, you’ve got light, you’ve got warmth.” —StEphaniE SchomEr Photograph by sTeve Cohen

spuTniK Denver bar and grill

WilliaM Beaver house New York luxury residences

The Cove resTauranT Leland, Michigan

KaTe spade New York

Megan & noah person­ alized wedding favor

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BuTCher and singer Phila­ delphia steak house daKoTa sioux Casino & hoTel Watertown, South Dakota CasiMir New York restaurant

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Mafia ii video game Sources: Admatch, Atlantis Match

February 2011 fastcompany.CoM

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YouTube CEO Salar Kamangar and hiS tEam havE tranSfOrmEd gOOglE’S fOlly intO a mind-blOwing—and luCrativE—glObal platfOrm that iS rEdEfining thE EntErtainmEnt buSinESS. bY DANIeLLe SACKS

PHOTOGRAPHs BY ROBYN TWOMEY 58 fastcompany.com February 2011


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MAXIMUM COOL: YouTube CEO Salar Kamangar (front) and his team: Margaret Stewart (user experience), Shishir Mehrotra (monetization), Hunter Walk (product), and Robert Kyncl (TV and film)


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SalaR KaMangaR

floats unnoticed through Youtube’s sprawling san bruno, california, offices dressed in a navY blue hooded sweater and jeans, laptop cocked on his hip. he might as well be just another anonYmous, nomadic programmer rather than Youtube’s newlY named ceo. The exceedingly shy 34-year-old escorts me into a corner office filled with a cornucopia of Silicon Valley souvenirs, including hundreds of conference badges and, naturally, a Segway. “None of this is mine,” Kamangar tells me. The office belongs to YouTube founders Chad Hurley and Steve Chen, even though neither technically works there anymore. Kamangar’s own desk is a naked cubicle right outside. Jeff Zucker he isn’t. Sitting stiff ly on Hurley’s tan couch, Kamangar has a nervous demeanor, which only begins to melt after I accept his offer to take a spin through his favorite YouTube channels. “This is pretty funny. Have you seen this before?” he asks, sounding almost like a teenager. He props his worn Lenovo on his lap. “It’s Indian pole gymnastics,”


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which is exactly what it sounds like. With his eyes glued to the screen, he shows me vintage footage of bluegrass f latpicker Doc Watson; the fan-created Lord of the Rings prequel “The Hunt for Gollum,” which, he tells me, has been mistaken for a Peter Jackson f lick; and Sal Khan, the young hedgefund manager who ditched his career to become the most prolific math instructor on the web and whose audience, says Kamangar, surpasses those for recorded Stanford and MIT lectures. Kamangar’s tour is a peek into a side of himself that he doesn’t show the public, even if some of the videos are the kind of baseline entertainment that has made YouTube beloved by audiences but infamous to advertisers. (I mean, seriously: Gymnasts flinging themselves onto a pole is a few steps above talking-cat voyeurism.) Since YouTube’s earliest days, Kamangar has envisioned the site’s transformational potential. Unknown to many, he was the driving force behind Google’s acquisition of YouTube for $1.65 billion in 2006, less than 20 months after Hurley, Chen, and Jawed Karim registered the domain youtube.com. Google’s youngest VP at the time, Kamangar ran Google Apps, including Google Video. “As quickly as Google Video was going, we realized it wasn’t that likely to catch up with YouTube,” he says. He felt that while Google Video obsessed over comprehensiveness, YouTube’s founders made the smarter bet of cultivating its vibrant community. Despite YouTube’s issues with copyright infringement and a fuzzy business model, “we realized that YouTube is a rocket ship and that this is an incredibly big space. I started agitating for it,” Kamangar says. “I was the most passionate voice for acquiring YouTube: ‘The price tag seems really high, but it is going to be worth it.’ ” Ever since, the sharpies and know-it-alls have been highly skeptical that YouTube would ever merit its exorbitant cost (which, in the wake of Google’s $6 billion offer for coupon service Groupon, doesn’t seem all that expensive anymore). The conventional wisdom has been to lampoon YouTube as “Google’s folly,” an earnings millstone that becomes more expensive to operate every time a new video is uploaded, a “Technicolor cataract of skateboarding dogs, lip-synching college students, political punditry, and porn,” as one writer on Henry Blodget’s Business Insider site characterized it in 2009. Kamangar joined YouTube in the fall of 2008 to co-lead the operation along with

STAR MAKER: Kamangar loves that YouTube is creating the stars of tomorrow—and that advertisers want in.

founder Hurley (who decamped last October, paving the way for Kamangar’s promotion). Since then, YouTube has accelerated its momentum as the world’s largest video platform. Its monthly global audience has mushroomed from 344 million unique users to 500 million. It has relentlessly experimented with new revenue models, such as creating branded channels and charging advertisers only when viewers actually watch an ad; nurtured a new generation of producers that are building huge audiences by es-

chewing traditional Hollywood fare; and ushered the YouTube experience onto every screen, particularly TVs. All of these efforts are translating into more and more money. Google does not break out specific numbers for YouTube, but financial analysts who cover the company estimate that YouTube’s revenue has grown from somewhere between $100 million and $250 million in 2008 to just shy of $1 billion in 2010. Google has hinted that profitability is nigh. A company spokesperson would only

“ONLINE VIDEO IS A TREMENDOUS BUSINESS OPPORTUNITY,” SAYS KAMANGAR.

“WHAT SEARCH LOOKED LIKE 10 YEARS AGO.”

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DISCOVERY NETWORK: Stewart’s goal is to make sure there’s a flood of personalized content waiting for users every time they visit YouTube.

say that revenue has increased more than sevenfold since 2007. And yet, the skeptics persist. They believe that YouTube still needs more Hollywood content if it is to compete with Hulu and Net f lix—services that YouTube dwarfs in size and global scope. “It needs to make deals with more TV networks and studios,” says David Hallerman, principal analyst at eMarketer. YouTube sees it differently, and Kamangar and his team are seizing the opportunity created by the site’s vast breadth. “When cable came along, those new special-interest channels wouldn’t have worked on ABC, CBS, or NBC,” Kamangar says. CNN was mocked at the start (Ted Turner’s folly!), as was ESPN (Australian-rules football?). “On cable, there is no kitesurfing channel, 62 FASTCOMPANY.COM February 2011

no skiing channel, no piano channel,” adds the avid kitesurfer, skier, and pianist. “Technolog y and business-model limitations mean those things aren’t going to appear in the traditional medium. So what’s really exciting to me is that we’re helping define a new way for content creators to reach an audience, and all these topics I care about suddenly have a home.” In other words, video delivered via the Internet is creating a world with hundreds of thousands of channels, and YouTube is helping people build these next-generation networks and sharing in the upside. “Not only has YouTube created the largest online video community in the world, it’s shaping the way video is produced, distributed, and monetized,” says Google chairman and CEO Eric Schmidt. Hunter Walk, YouTube’s head

of product, puts it bluntly. “YouTube is emerging as the first global TV station,” he says. “The living room for the world.”

SHISHIR MEHROTRA and Salar Kaman-

gar started at YouTube the same week in the fall of 2008, but their paths to San Bruno couldn’t have been more different. Mehrotra, a coder since first grade and a veteran of both his own startup and a six-year hitch at Microsoft, had joined Google six months earlier to run the project code-named Mosaic, which became Google TV. Susan Wojcicki, who runs Google’s ads business, came to him and said, “Hey, we’ve got a little problem. YouTube is burning through cash. And we need somebody to help them with monetization,” Mehrotra, 31, recalls. He told her, “I don’t know shit about the ad space. You really want me to do this?” She made Mehrotra an offer he couldn’t refuse. Kamangar’s journey to YouTube was a little more willful. He was a rising star at Google, employee No. 9. (He met Sergey Brin at a Stanford job fair and was hired, he says, as “the gofer. I did everything they didn’t want to do.”) He is forever etched in company lore as the guy who codeveloped AdWords, cracking the code on how Google’s search engine would make money. After four years running Google Apps, Kamangar got antsy for something new. “I enjoy problem solving,” he says. “If you have a seed of an idea, how do you operationalize that, how do you scale it, how do you bring together the best team to see it through?” That’s exactly what YouTube needed, since questions were mounting about how and whether the site would make money. Kamangar had gotten to know Hurley and Chen after the acquisition, but his conversations with the CEO intensified in 2008. “Chad and I started talking more about the challenges he was having,” he says, “and I got more and more passionate, seeing what was possible.” Kamangar and Hurley met in Menlo Park several times for burgers at the Dutch Goose, a pub near both of their homes, to hammer out the details of their working relationship. Kamangar, who grew up in California after emigrating from Tehran at age 2, before the Iranian Revolution, was chasing the startup thrill that has led many of his former Google colleagues to places like Facebook and Twitter. “Why did Salar end up here?” observes Walk, 37, who had relocated from Google to YouTube a year before. “This [place] feels like the magic that he experienced in the early days of Google.” “My first realization was how much I didn’t know,” admits Kamangar. “I was new to the rights and licensing challenges, and Infographic by WALTER C BAUMANN


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CONCERT S

HOME PAGE

CONTENT ID

SPORT S

ORIGINAL CONTENT YouTube shares ad revenue with top content creators. “I’m able to make a living doing just this,” says Dane Boedigheimer, whose The Annoying Orange has been the No. 1 web show since February 2010.

“This has been a game changer for us,” says Chris Maxcy, YouTube’s head of music partnerships. Live-streaming concerts have drawn between 5 million and 10 million live views. YouTube teamed up with Vevo and American Express in 2010 for its Unstaged series. EXAMPLES

BON JOVI, U2, THE NATIONAL, ALICIA KEYS, ARCADE FIRE, JOHN LEGEND & THE ROOTS

The IPL, a short-form cricket league in India, pulled in 55 million views during its first season on YouTube. “It helped us engage brands that were not talking to us in the past,” says Gautam Anand, Google’s director of content partnerships in Asia.

The U.S. home page’s 18 million daily visitors give brands “big impact to a concentrated audience,” says Joel Lunenfeld, CEO of Moxie Interactive, which has created home-page ads for Verizon and Avatar. EXAMPLES

VERIZON, HASBRO, KRAFT, DREAMWORKS, FOX

Like sponsored ads on Google, promoted videos pop up around search results. Advertisers pay only when users click PLAY.

To prevent hosting illegally posted videos, YouTube learned how to identify them. Copyright owners— including early adopter CBS—decide whether to take down the video or sell ads against it. One-third of YouTube’s 2 billion mone tized views each week come from Content ID.

EXAMPLES

EXAMPLES

PROMOTED VIDEOS

EVIAN, PANASONIC, STOUFFER’S, WRIGLEY, MAYBELLINE

EXAMPLES

IPL; MAJOR LEAGUE BASEBALL

CBS, LIONSGATE (MAD MEN ), SONY

EXAMPLES

THE ANNOYING ORANGE, NEXT NEW NETWORKS, MACHINIMA, NIGAHIGA, THE YOUNG TURKS

Double Rainbow

CONTENT

YouTube has the competition reeling with ambitious initiatives to expand programming and ad formats.

REVENUE

By Rachel Arndt

BR ANDED CHANNELS

MOVIES/ T V HOW TO YouTube has given rise to a generation of teaching stars. Makeup artist Michelle Phan’s tutorial on Lady Gaga’s “Poker Face” look has racked up 24 million views and paved the way for Phan’s deals with Colgate, Lancôme, and others. EXAMPLES

MICHELLE PHAN (MAKEUP), SAL KHAN (MATH), VIEWDO (GUITAR)

YouTube tries to offer longer-form content not available elsewhere. WWE posts full episodes of Friday Night Smackdown to YouTube 24 hours after airing them on TV. “We’re making six figures a month” in ad revenue, says Brian Kalinowski, WWE’s EVP of digital media. EXAMPLES

WWE, STRIKER, SUNDANCE FILM FESTIVAL, BBC CHANNELS 4 AND 5

CLICK-TO -BUY

ADVERTISING AS CONTENT To promote its Trivial Pursuit: Bet You Know It edition, Hasbro ads pit users against YouTube stars, generating more than 250 million impressions.

Call-to-action spots with videos can transform viewers into consumers: Monty Python videos directed viewers to the troupe’s DVDs on Amazon, increasing sales 23,000%.

YouTube gives brands a lot of latitude, including breaking the fourth wall. For The Expendables, Sylvester Stallone shoots the site to smithereens and talks to viewers. Channels “allow us a flexibility like no other in engaging a user,” says Dimitry Ioffe, CEO of the Visionaire Group.

Google predicts these digital billboards will add more video and become more social in the next few years, turning into a $50 billion industry. EXAMPLES

EXAMPLES

CEE LO GREEN (ITUNES), MONTY PYTHON (AMAZON), CHARITY: WATER

DISPL AY

EXAMPLES

LIONSGATE ( THE EXPENDABLES ), SAMSUNG, TIPP-EX

BLIZZARD ENTERTAINMENT, HTC, ABSOLUT, VOLVO

EXAMPLES

KRAFT (PAULA DEEN), HASBRO, THE LAST EXORCISM

February 2011 FASTCOMPANY.COM

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it was far more complicated than I expected.” The baggage he inherited was immense. “[YouTube] suffered early on from a reputation problem with the quality of the content,” says Tracey Scheppach, innovations director at VivaKi, the digital-media division of ad giant Publicis. Advertisers feared their brands might end up next to some lowbrow home video. Kamangar’s first move: rebuilding the senior team with people he could set loose with their assignments and who brought an outsider’s perspective. “That was one of his big contributions,” Walk says. The closest connection any of his senior execs had to the entertainment world was Walk’s public-access talk show during college at Vassar and his mid-1990s internship at NBC’s Late Night with Conan O’Brien. (“My first startup,” Walk says.) And the top team is surprisingly devoid of engineers. Kamangar isn’t one (he was premed at Stanford and then wanted to become a scientist before landing at Google), and the only computer-science guy, Mehrotra, was put in charge of revenue. But that approach dovetailed perfectly with a key insight Kamangar brought with him from his early days working on AdWords. “Like search, video needs a business model that’s unique to video,” he says. “Google didn’t just take the

Butler came up with the “Real Women of Philadelphia” competition and hired Food Network star Paula Deen to be the ringmaster. On the launch day of the eightmonth campaign, Kraft bought YouTube’s home page, which attracts on average 45 million views a day and costs some $375,000. In a video embedded in the ad, Deen invited women to invent Philly creamcheese recipes and cast themselves in their own videos as TV pros. The goal: to drive viewers to Philly’s Real Women community, which included Kraft’s YouTube channel. The launch video “was seen by 51 million people,” Butler says. “Ten million of those people watched the entire video to the end, and almost 100,000 clicked through to our site.” By November 2010, in addition to the 25 million recipe views, he says, Real Women helped boost Philly’s revenue by 5%, the first material lift in five years. “You look at those numbers; they almost don’t even make sense,” he says. “It’s bigger than TV.” YouTube says 94 of the top 100 brand advertisers have now run campaigns on the platform, and what’s attracting them is the increasing body of research that shows that adver tising on YouTube works. According to an effectiveness study by the U.K. firm Decipher Media Research, promoted videos—

to its display-ad business (already driving $2.5 billion in annual revenue, of which YouTube has been called a significant but unspecif ied par t). During Adver tising Week in New York, where TrueView debuted, Google predicted that by 2015, 50% of display ads will include video, while 75% will have a social component. Most important, the company anticipates that these innovations could help make display advertising a $50 billion industry.

JuST before Thanksgiving, I spied Batman on the 10th f loor of a Gotham skyscraper f lapping his cape. Actually, it was comedian Mark Douglas in a black rubber suit, standing in front of a green screen along with two producers of his show Key of Awesome, the homegrown pop-culture spoof that has become the second-most-viewed web series on YouTube. “Our Ke$ha parody has 49 million views right now,” says Tim Shey, cofounder and president of Next New Networks, which houses Douglas’s production studio and bootstrapped the show. “That’s twice as many views as the original video that it was parodying. When Ke$ha’s second music video came out, Sony invited

“we’re removing the barriers to assembling a tv-size audience,” walk saYs,

“WiTHOuT HAviNG TO TAlk TO ANYBOdY iN A suiT.”

banner ads that were on other sites and slap them on the search-results page.” Mehrotra and company stripped out the Google products serving text and banner ads. Why? Because they weren’t leading people to other videos. While outsiders waited for a single revenue-generating magic bullet, Mehrotra’s team worked to build a multitude of ad products crafted around the way people use the site. Many of the things that YouTube users regularly do— start their experience at the home page, search for a video, visit a channel, watch a movie trailer or a music video—translate into appropriate advertising opportunities. The new ad products began to attract major brand advertisers to the site. “I used to be one of those dudes who watched YouTube in my basement,” says Adam Butler, a 32-yearold brand manager at Kraft Foods for Philadelphia Cream Cheese. “The Philly consumer is very different from me. Is our consumer going to go there?” He quickly learned that YouTube is a haven for how-to videos, ideal for cooking. “I had no idea,” he says, “and it spans across a ton of demographics.” 64 fastcompany.com February 2011

v ideo ads that appear prominently on YouTube’s search-results page, competing with the content that users have searched for—triple unaided brand awareness. These results have yielded two insights— that ads should be content and that any ad a user chooses is quite resonant—and those have helped inform Mehrotra’s latest initiative, which seeks to overhaul the way ads are consumed and sold on the site. TrueView, as it’s known, gives viewers the option to skip an ad entirely—but charges advertisers a premium if their content is chosen and watched the whole way through. (Another TrueView option, akin to part of Hulu’s ad program, lets users choose one of a slate of ads to watch.) Nissan, Sony Pictures, and Ultimate Fighting Championship have been early adopters. “We [the industry] want the new 30second spot,” says Publicis’s Scheppach, who runs a group that’s pioneering new ad models for emerging media. Based on her research, there’s “300% to 400% improvement of advertising value if you pick the ad,” she says. Ultimately, Google sees this idea of “cost-per-view” advertising spreading even

us down to preview it, as if to say, Are you going to parody this one too?” YouTube started its partner program in 2007 to encourage audience-attracting producers like Douglas to create more and better content. It sells ads against their videos and gives them more than half the revenue. “Although it began with just a handful of partners and a bit of hand-holding, we built the partner program with an eye toward massive global scale,” says George Strompolos, who spearheaded the initiative until last October, when he left to build his own digital-media startup that will leverage the YouTube platform. Kamangar is never more passionate than when discussing the content creators on YouTube. It’s personal for him. “My sister is a concert pianist,” he explains over lunch on the patio outside YouTube’s Googley cafeteria, “and I’ve seen how difficult it is for a pianist to break through.” Tara Kamangar, his younger sister, has performed at Washington, D.C.’s National Gallery of Art and L.A.’s Walt Disney Concert Hall. Because of YouTube, “she has an audience and an


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awareness that she wouldn’t otherwise. That’s one reason I live and breathe YouTube: I’m working on a platform that enables people to exercise and get appreciation for their special talent, whatever it is.” “I don’t think we’re a media company,” says Walk, who helped build Second Life into a global platform in the early 2000s before moving on to Google. “We’re a media catalyst. We’ve built the technology platform, aggregated the audience, and now have the monetization tools that allow anyone who wants to create and distribute content to do it successfully through a single point at a global scale.” There are now more than 10,000 partners in the program, and Marc Hustvedt, editor-in-chief of the web-video analyst Tubefilter, estimates that the top 350 to 400 have been able to quit their day jobs and earn a living off the platform. “YouTube makes it easier for us to run a media company,” says Next New Networks CEO Fred Seibert, a 40-year entertainment vet with stints at MTV, Nickelodeon, Comedy Central, and Hanna-Barbera Cartoons. Next New Networks’ 16 networks, on topics such as filmmaking (Indy Mogul) and DIY fashion (ThreadBanger), draw 160 million views a month, and the company expects to be profitable in early 2011. (This success has led to speculation that YouTube is acquiring Next New Networks. YouTube and Next New Networks declined our requests for comment.) The site’s tools—tagging, annotations, search, related videos, playlists, and response videos—help creators boost viewership, engagement, and ultimately revenue. They also allow creators to interact with fans in a way that conventional TV can’t match. That has been key to the success of top partners such as the sketch group Smosh, Dane Boedigheimer (The Annoying Orange), and Fred Figglehorn, the squeaky-voiced creation of teenage comedian Lucas Cruikshank, who made the successful leap to TV last summer with a hit movie on Nickelodeon. (As these creators get big-time Holly wood agents and managers, the YouTube tool they are now angling for is upfront money for more ambitious projects.) YouTube even lets partners sell their own ads, splitting the revenue. Rio Caraeff, the Chuck Taylor–donning 35-year-old CEO of Vevo, the so-called Hulu of music videos that gets 80% of its traffic from YouTube, says his business sells all its own ads (typically those that roll before the music video). “We’re elevating music,” he says, “to the same level of CPM as premium television content online.”

YOUTUBE’S attitude about “premium television content”—a value judgment created by others that assumes that 30 Rock is qual-

PERSONAL EFFECTS: Walk wants YouTube to be able to predict user interests well enough to fashion individualized versions of shows like the evening news, SportsCenter, and Entertainment Tonight.

itatively better than Key of Awesome—is complicated. “We see barely any difference between [ad] rates for premium and other content,” Mehrotra says. “We almost never get asked anymore.” When he tells me, “The cost of creating content is quickly going to zero—it’s a lot more about how creative you are than about how big your studio is and whether you are in Burbank or not,” it’s hard not to imagine sphincters tightening all the way from those Burbank back lots to Beverly Hills talent agencies. “TV companies have grown very fat off the success of the traditional TV model,” says United Talent Agency’s Jason Nadler, who reps new-media stars such as Smosh and Cruikshank. “They have to be very circumspect of a business model that aims to smash paradigms.”

And yet, despite Mehrotra’s rhetoric, YouTube has worked hard to mollify Hollywood. A program called Content ID alerts participating copyright holders when their content is uploaded to YouTube, giving them the option to remove it or to monetize it by placing ads against it. Although studios still privately grumble that Content ID is not as sophisticated as they’d like, YouTube says more than 100 million videos are in the program. Content ID accounts for one-third of the more than 2 billion views that YouTube monetizes each week. Google has also stepped up efforts to invest in or acquire digital-video technologies that would benefit YouTube, such as Widevine, a contentpr ot e c t ion s olut ion it pu r c h a s e d i n December that is currently used by Netflix. continued on page 104 February 2011 FASTCOMPANY.COM

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the social(ist) networks China’s fake Facebooks started as mere copycats but now drive innovation in advertising and gaming. They’ve also built something unique in their country: a place where people can find love, speak out, and be whoever they want to be.

by

april rabkin

photographs by Mark leong

illustration by alex gross

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“Knowanyonewho hasanyneeds?” “I’mnotsure,Ican askaroundforyou.” “Don’tyouhave anyneeds?” “Ijustwanttobe withsomeoneIlove.” “Really,I’mnotbad. Giveitsomethought.”

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It was the worst pickup attempt that Dong Jin had ever heard. You might think that something was lost in translation, that surely this sounds better in the original Chinese, but you would be wrong. That all this was unfolding online—Dong, 26, a Beijing teacher, was being approached by a college student who had just friended her on the Chinese social network Renren—made it even weirder. Scenes like this (many of them, fortunately, less awkward) repeat themselves hundreds, if not thousands, of times a day on the Facebooks of China. The real Facebook is not available behind the Great Firewall of China, except to netizens rich enough and technologically savvy enough to buy access to proxy servers, because government censors have blocked it as a foreign threat. Twitter and Google are offlimits too. According to the recent WikiLeaks disclosures of U.S. State Department cables, the latter fell victim to politburo member Li Changchun, who launched a personal campaign against it after Googling himself and finding an abundance of critical material. In the absence of these web titans, dozens of Chinese copycats have sprung up, but none tell a story of evolving, modern China like the fake Facebooks, some of which mimic Facebook down to page architecture and color scheme. The leading social networks on the mainland are Renren, which, like Facebook, 70 fastcompany.com February 2011

initially targeted the college crowd, and Kaixin001 (kaixin means “happy,” and the 001 was added to give a techy feel to the name), aimed at young professionals. In some ways, social networking in China is much like that in the U.S. It has spread well beyond its original target demographic. Office workers stay logged on constantly. Artists, singers, and secretaries post status updates a dozen times a day from their laptops or their cell phones. Grandmothers grow potatoes on local versions of FarmVille. As with Facebook, the membership rolls are astounding and growing rapidly. In a 1.3 billion–strong nation where less than a third of the populace is online, Renren claims about 165 million users. A slogan on a chalkboard in an employee lounge at its HQ claims, “Every day the number of people joining Renren.com would fill 230 Tiananmen Squares.” Kaixin001 says it has 95 million users. In significant ways, though, online life behind the Great Firewall is different. For one thing, there is no dominant site. By blocking Facebook, the government has unwittingly ignited an especially fierce and litigious competition between Renren and Kaixin001. The two networks have pushed each other strategically and technologically, devising ingenious new ways to advertise to audiences that are even more saturated by marketing than Americans. Also, according to Netpop

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Research in San Francisco, Chinese Internet users are twice as conversational as American users; in other words, they’re twice as likely to post to online forums, chat in chat rooms, or publish blogs. And to the joy of advertisers and marketers, social media is twice as likely to inf luence Chinese buying decisions as American ones, which explains why brands such as BMW, Estée Lauder, and Lay’s have flocked to China’s social networks. Sites like Renren and Kaixin001 are microcosms of today’s changing China—they copy from the West, but then adjust, add, and, yes, even innovate at a world-class level, ultimately creating something unquestionably modern and distinctly Chinese. It would not be too grand to say that these social networks both enable and reflect profound generational changes, especially among Chinese born in the 1980s and 1990s. In a society where the collective has long been emphasized over the individual, first thanks to Confucian values and then because of communism, these sites have created fundamentally new platforms for self-expression. They allow for nonconformity and for opportunities to speak freely that would be unusual, if not impossible, offline. In fact, these platforms might even be the basis for a new culture. “A good culture is about equality, acceptance, and affection,” says Han Taiyang, 19, a psychology major at Tsinghua University who uses Renren constantly. “Traditional thinking restrains one’s fundamental personality. One must escape.” Put another way, a lot of people in China have needs—and one of them is a place to be whoever they want to be.

Do not call wang xing the Mark Zuckerberg of China. Mark Zuckerberg is the Mark Zuckerberg of China. In 2003, Wang dropped out of a PhD program at the University of Delaware and returned to Beijing to create a local version of Friendster. It flopped. Two years later, he heard about this new thing called Facebook and decided to copy it. Wang’s story is a Chinese version of a timehonored tech-sector tale. A graduate of Tsinghua, China’s MIT, Wang says that his purpose in starting Xiaonei (“on campus”), which was later renamed Renren, was “to make a better world.” With that in mind, he and his two business partners pooled 300,000 renminbi (about $45,000) in savings and rented three tiny, adjacent apartments just off campus, where they lived, worked, and sequestered themselves for weeks and weeks during the fall of 2005 and into early 2006, subsisting on takeout, instant noodles, and code. Wang, an idealistic geek with a predilection for padding around his office in plastic slippers, saw their goal as a noble one: “Everything that helps information flow is good for society.”


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Xiaonei’s soft launch coincided with the biggest party of the year at Tsinghua, the December variety show, which includes skits and song and dance, and is put on by the electronic-engineering department. Tickets are always hard to come by. (Truly.) Wang, who had somehow finagled a monopoly on distribution, turned the process into a Xiaonei membership drive: To gain admission to the show, one first had to join his fake Facebook. In just a few days, Xiaonei garnered 4,000 members. The following month, the company chartered a bus to provide free trips from the dorms to the train station from which students would depart for their Chinese New Year trips home. Again, to get access, you had to join Xiaonei. Here’s another reason Wang cannot be called the Mark Zuckerberg of China: He sold. In 2006, Oak Pacific Interactive bought Xiaonei for about $4 million, Wang says. It seemed like a lot of money at the time, but today, Renren, as the new owners renamed it, is estimated to be worth as much as several billion dollars. “There is no regret,” Wang says now, sounding at turns philosophical, pragmatic, and fatalistic. “We should look forward. How many days do each of us have in our whole lives? We can live for 80 years on average. That’s 30,000 days, 2.5 billion seconds. Which one makes you think life is short? The process is more important than the result, because we all have the same result— death. It’s the same destiny.” Today, Wang rarely uses the social network he founded. But in a larger sense, he accomplished what he set out to do: to increase information flow. Studies show that Chinese college students now get more information via Renren’s news feed than they do from search engines or other news sources. That Xiaonei was so clearly a Facebook knockoff does not bother Wang. When asked how he could be so comfortable with copying, he says he has nothing to say about intellectual-property rights. In fact, many Chinese have remarkably lax views on IP. Copying usually isn’t seen as wrong as long as you’re making something better or cheaper. (A Facebook spokesman declined to comment, except to say that his company is “focused on innovation to build something meaningful.”) Wang went on to start Fanfou, a Chinese version of Twitter, which was shut down in 2009 by the government for political reasons but recently relaunched. His most recent startup is a Chinese version of Groupon called Meituan, a two-character name that seems a good way both to understand what Wang intended to do with Xiaonei and to describe what his baby has become for millions of Chinese netizens. The first character, mei (美), means “beautiful” (the Mandarin for America

is meiguo, “beautiful country”), and tuan (团) can be read as “company,” “group,” or perhaps best for this context, “network.”

in his renren profile photo, Han, the Tsinghua sophomore, sits in a beam of sunlight f looding through a window, a white splotch of overexposure half as big as his face helping to fill the frame. It’s a play on his given name, Taiyang, which sounds like the Mandarin for sunshine. “Renren is a display,” Han says. “Everyone wants to be understood. Everyone wants others to understand who they are.” He pauses before correcting himself. “Or who they want to be.” Han logs on to Renren several times a day from his laptop and even more often from his cell phone, to update his status messages and read his friends’. Lately, Han, who plays the French horn, adores karaoke, and eagerly participates in campus singing contests, has been updating mostly about music, onstage nerves, and audience reactions. To Han, Renren is a personal marketing platform. “People create an ideal version of themselves. It’s like an ad. You have to simplify yourself,” he says, using his hands to shape a box. “You make a brand to help other people understand you, like a product.” Liu Neng, a sociologist at Peking University, says that Han’s generation has come to

see social networks as “a place of escape. Online, they find a sense of security and a sense of social worthiness. It’s a place where they can derive their own youth culture. These are things they cannot get from their real lives, where they feel pressure.” The pressure comes from the aggregate demands of the Chinese family, party, and nation. Traditionally, the wants and needs of the individual have been secondary; the primary emphasis is on duty, conformity, prescribed roles, and sacrifice for the greater good. (As Han delicately puts it, “Before, Chinese people didn’t like narcissism.”) This falls especially hard on the balinghou (literally, “post-1980s”) and the jiulinghou (“post1990s”) because they are, for the most part, only children—the first generations to be born under the nation’s one-child policy. The idea of doing what you want because it makes you happy is a novelty, but one that blooms on these social networks because they are “based on creative and humanistic values and respect for individual human needs,” says Liu. “Renren has a humanistic value system.” As is true of any evolving culture, this one doesn’t entirely dispense with the old in favor of the new. For instance, the balinghou and jiulinghou cohorts typically have unusually strong bonds with their parents, which manifest themselves in unusual—one might even say fruitful—ways. On a typically busy

Wang Xing, who started the site that is now called Renren, says his goal in creating a social network was “to make a better world.” Today, he almost never goes on Renren.


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workday, Liu Yuan, 29, an administrative assistant at Lenovo who’s an avid player of Happy Garden, the FarmVille of Kaixin001, asks her mother to tend her crops. “She’ll grow and harvest vegetables for me,” says Liu, who thinks nothing of sharing her login and password with her mom. “When I’m at work, she’ll send me a text asking what kind of vegetables.” She says that many of her friends ask their mothers to do the same. (What makes this simultaneously perverse and loving in an onlyin-China way is that, as youths, many of those moms were working on real farms as forced laborers during the Cultural Revolution.) “Young people need a public space,” says

Xiaonei founder Wang. “They don’t have a physical public space, so they need a virtual public space.” Wu Guohong, a psychology professor at Shanghai’s Fudan University, explains it a bit differently: “Chinese people’s behavior on the Internet has gone above and beyond the traditional expectations of being subtle, stiff, shy, and bowed to authority. Traditionally, the Chinese have had no outlet, no freedom of expression. I think the extroversion of the balinghou and jiulinghou generations on social-networking sites is just a sort of overcompensation for lack of real-life outlets.” That’s particularly true for people who would typically live on the social margins of

Dancer Yuan Xiaowen, 25, left, and dance-studio COO Xia Yu, 30, use both Kaixin001 and Renren. Xia uses Renren “to express my feelings and thoughts, which I’m too busy to do in real life.”

Chinese society. Take Marco Qu, a 25-yearold gay Beijing DJ. Last year, he went to a Halloween party in drag—long black wig, black bikini, rings around his nipples, a whip in his hand. “Drag queens are pretty rare in China,” he says drolly. “They’re mostly underground.” At the party, someone took pictures, some featuring him draped around a Boy Scout, and posted them on Kaixin001. The album was titled: “Female ghosts.” Within two weeks, users had posted more than 24,000 comments, mostly positive. “I don’t know who took the pictures, but they’ve been posted and reposted on other websites as well,” Qu says. “Some friends were making fun of me, but people friended me because of that.” He has even met several of his new friends in person. In a nation where homosexuality is still typically frowned upon—gay-themed movies are banned from TV and cinema—and was removed from the official list of mental disorders only in 2001, this feels radical, and it is, even for Qu. In his own Kaixin001 profile, there is no mention of his sexuality. It’s actually not possible on Renren or Kaixin001 for a man to say he’s “interested in: men,” as one can on Facebook. And Qu hasn’t posted any drag-queen pics. “If people know me, they know I’m out, but if they don’t ask, why should I put it on my page?” he says. “Sometimes life is easier if you don’t.” With politics, too, these online public squares seem more open than the offline versions. “We can focus on a few social topics, including racial issues, including democracy,” says Liu, the admin at Lenovo. “It’s freer.” But there are limits. While both Renren and Kaixin001 decline to specify what they do to comply with government directives on content, Internet companies in China must censor a range of sensitive keywords, including terms related to the Dalai Lama, the 1989 Tiananmen Square massacre, and Chinese dissidents including 2010 Nobel Peace laureate Liu Xiaobo. But in a modern twist on the venerable Chinese tradition of pun and wordplay, netizens quickly find words and images that can, in small ways, subvert censorship and make their views known. For instance, the government recently added the ongoing cases involving melamine-tainted infant formula, which sickened hundreds of Chinese kids, to the list of censored topics—what bloggers call “Directives from the Ministry of Truth.” So one Kaixin001 user, who insists he lacks a photo of himself, posted, as his profile pic, a snapshot of a can of formula. And bad news, political or otherwise, can spark the proliferation of one clever status update, found most often on Renren: a simple picture of a cup. The Mandarin word for cup, bei, conveniently sounds a lot like the one for tragedy.


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BEHIND THE GREAT FIREWALL OF CHINA The electronic barriers that keep foreign websites out have created a safe space for copycats. A look at the Middle Kingdom’s parallel Internet universe. BY JEREMY GOLDKORN

THE GOOGLE OF CHINA = Baidu baidu.com Baidu, China’s dominant search engine, has a home page and ad-revenue model very similar to Google’s, and like its U.S. counterpart, it’s moving into other services, including the popular discussion forum Post Bar (tieba.baidu.com) and the Q&A site Baidu Knows (zhidao .baidu.com). Baidu’s stock price and traffic grew when Google halted China-based searches after its mid-2010 spat with the Chinese government over censorship.

YELP = Dianping dianping.com

EBAY = Taobao taobao.com

If there’s one thing Chinese people like to do as much as eat, it’s talk about food. Dianping has a fanatical following. It is China’s biggest consumer-reviews website, originally focused on restaurants but increasingly covering other services and stores. The user community ensures that phone numbers and addresses are accurate for most of the nearly 1 million locations listed, and are unshy in both their criticism and their praise. This is especially important given that most Chinese readers assume that food reviews in magazines and entertainment websites are essentially paid advertorials.

Taobao has become so popular among younger Chinese that many consumer-product manufacturers, including giants like P&G, have opened Taobao stores, finding it easier to sell there than to drive traffic to their own online stores. It’s part of Alibaba, the online giant started by the charismatic, elfin former schoolteacher Jack Ma as a huge online bazaar of companies selling goods for export.

WIKIPEDIA = YOUTUBE = Tudou, Youku tudou.com, youku.com

TWITTER = Sina Weibo t.sina.com.cn

YouTube has been blocked in China for nearly two years. Its two main copycats also host TV shows and films licensed from copyright holders, because the Chinese appetite for user-generated video content still isn’t strong. Youku raised $203 million in its December NYSE IPO; Tudou has also filed for a U.S. offering.

Fanfou.com, originally China’s most popular microblog platform, was shut down with a few other Twitter-like startups in 2009, after ethnic riots in the restive western region of Xinjiang. Twitter was blocked by China’s Great Firewall at around the same time. Shortly afterward, Sina, one of China’s mammoth portals, launched the microblog service Weibo, which has 50 million users. Its influence in China is akin to— and possibly greater than—Twitter’s elsewhere, and it could challenge the social networks’ popularity. Weibo incorporates some Tumblr-like features, making it easy to post video and photos. And you can say so much more in 140 Chinese characters than in English.

AMAZON = Dangdang dangdang.com Dangdang, one of China’s earliest VC–funded sites, has, like Amazon, sought to become a general retailer but is still best known for its books. Dangdang, which recently filed for its IPO, does face threats from joyo.com, which was purchased by Amazon in 2004 and rebranded as Amazon China. Both face tens of thousands of competitors who sell their wares on Taobao (see top right).

CHINESE-ONLY: Tencent QQ.com It’s impossible to understand the Chinese Internet without knowing about Tencent, the biggest online player by market cap, traffic, and registered users. Tencent started as the instant-messaging platform QQ—the name is a corruption of ICQ—and IM is still Tencent’s hallmark. But it also has a massive news portal, myriad online games, forums, blogs, microblogs, and just about any web-based service that users want. It makes more money from the sale of virtual goods and online services than from advertising.

HULU = Qiyi qiyi.com In early 2010, Baidu took in a $50 million investment from Providence Equity Partners—perhaps not coincidentally also a Hulu investor—to launch the Hulu clone Qiyi. Access to Baidu’s search data gives Qiyi a crystalclear picture of what Chinese Internet users want to watch, so the site is on track to become a powerful player in online video. But lurking quietly is state broadcaster China Central TV’s cntv.cn. If Qiyi, Youku, and Tudou begin eroding its market share and viewer numbers, expect some official action to crush them. Illustration by ARNO GHELFI

GROUPON = A thousand

tuangou websites Dozens of clones have copied Groupon’s design and business model, but no single one has broken out. That’s in part because many Chinese were already used to a different online model for discount shopping called tuangou (“group buy”). It started with groups of Internet users living in the same city who wanted to buy the same product; they banded together online to pressure retailers into offering discounts for bulk purchases. This is still common, as are websites that do deals with retailers for bulk discounts and then try to find buyers online.

EXPEDIA.COM = Ctrip ctrip.com With annual revenues for 2010 estimated at well over $500 million, Ctrip is the biggest online travel merchant in China, selling domestic and international air tickets, hotel bookings, and package tours. Known for excellent customer service—for clients lacking credit cards or online payment capability, Ctrip will send a courier to collect cash—the site does have to reckon with legal restrictions on selling travel abroad and visa complications for Chinese passport holders.

Hudong, Baidu Baike hudong.com, baike.baidu.com Baidu operates a popular Wikipedia clone called Baike that leverages its massive traffic, but the independent community hudong.com is probably closer in spirit to Wikipedia. Both sites censor controversial or “sensitive” content about history and politics.

LINKEDIN = [None] The Chinese seem to like their professional networking done offline. Several variants have sprung up, including wealink .com, hengzhi.cc and ushi.cn, but none of them has managed to build significant traffic or community. Invite-only ushi.cn, the newest, has a minuscule but active group of members, many of them venture capitalists who invest in Internet properties. HengZhi, also invite-only, seems to be headed in the direction of an exclusive club with lots of offline activities, while Wealink might as well be Weaklink—it’s a bland, low-traffic LinkedIn clone.

WORDPRESS, BLOGGER = Sina blogs blog.sina.com.cn In 2005, Sina recruited a horde of celebrities to blog on its new self-publishing platform, quickly sending previously popular blogging platforms into relative obscurity. Today, all of China’s major portals—Tencent, NetEase, and Sohu—boast blogging platforms, but Sina’s ad-revenue-driven offering remains the most popular. February 2011 FASTCOMPANY.COM

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Tsinghua student peggy Jiang, left, spends the first half-hour of every day on Renren. Front to back, Baocheng ge’er, Li Yunwei, Shi Yongjiao, Yin Yue, and Shen Mating—students at Minzu university of China—use the site all day long.

Just as Facebook inspired Xiaonei, Xiaonei inspired a raft of facsimiles, including 51.com (for rural users); Qzone (younger netizens who use its instant-messaging service, QQ, a knockoff of ICQ); and the most successful, kaixin001.com. When Kaixin001 launched in March 2008, it was clear that there were only two major differences between it and Xiaonei. One was the site’s dominant color: Xiaonei featured blue, like Facebook but just a shade darker, while Kaixin001 went red. The other is that Kaixin001 shrewdly targeted young, whitecollar workers—in other words, grown-up Xiaonei users. Kaixin001’s founder, Cheng Binghao, was formerly the CTO at Sina, China’s biggest Internet portal. Within months of its spring 2008 launch, Kaixin001 had built a strong following in two key sectors in Beijing— techies and media professionals. That fall, Oak Pacific, which had bought Xiaonei, tried to purchase its fledgling rival. The offer was rejected, so Oak Pacific bought the domain name kaixin.com and set up a site nearly identical to Kaixin001—basically a knockoff of a knockoff of a knockoff of Facebook. In May 2009, Kaixin001 sued Oak Pacific for unfair competition, asking the courts to force kaixin.com offline. Meanwhile, Xiaonei hired Saatchi & Saatchi’s Beijing office to help rebrand it, seeking to make itself more attractive to Kaixin001’s market. The name it chose was Renren, meaning “everybody.” But it wasn’t until this past October that Kaixin001 won a partial victory. The Beijing 74 fastcompany.com February 2011

Second Intermediate People’s Court ordered Oak Pacific to cease all use of kaixin.com and pay 400,000 renminbi ($60,000) in damages. The company has not yet paid or relinquished the domain name; it has simply rerouted traffic from kaixin.com to Renren. So far, the court has done nothing to enforce its ruling. This brings to mind an oft-reposted status update on Renren: “In the West, law is like an .exe file. In China, law is like a .txt file.” In other words, in the West, the law works. In China, it exists, but doesn’t operate— something that Kaixin001 knows all too well.

if there is an upside to the legal wrangling, it is that these rival social networks have pushed one another to innovate, to create truly new features—and as speedily as possible, since any popular new idea nearly instantly gets copied. “Almost anything is easily duplicated,” says Mark Natkin, managing director of Beijing-based Marbridge Consulting, which focuses on China’s telecoms and Internet sectors. “It very quickly ceases to be a source of competitive advantage.” Early on, for instance, Xiaonei added a feature that Facebook still doesn’t offer—the ability to see who has viewed your profile. (The other Chinese networks copied it.) “People want to know whether they are popular,” Wang explains. “We have different standards for privacy [than the U.S.].” The feature is useful for flirting. “If someone looks at your page every day, you can tell they are interested,” says Hua Kuoman, 32, a teacher.

The major innovations have come in social gaming, the biggest driver of traffic and revenue. The most popular game is Happy Farmer, a third-party app developed for Renren in 2008 by a firm called Five Minutes. This was the inspiration for Kaixin001’s Happy Garden—and for Zynga’s FarmVille, which debuted nearly a year after the Chinese versions. Three-quarters of Renren users have played Happy Farmer; by comparison, less than 10% of Facebook users play FarmVille. Gaming’s immense popularity has opened up new channels for advertising. In April 2009, Lay’s potato chips launched its Happy Farmer campaign—more than a year before FarmVille had any product placement. “We let users grow Lay’s potatoes, which are bigger and beefier and create more profit for the user, and then we let them create a Lay’s factory,” says Alex Miller, advertising product manager at Renren. Before the campaign, he says, 45% of users surveyed had tasted Lay’s during the previous month. Within two months, that figure had jumped to 65%. Both networks have been much more aggressive than Facebook and Zynga in sprinkling product placement throughout their games—and according to Nielsen, this is quickly becoming the biggest revenue source for China’s social networks. Players of Kaixin001’s Happy Garden can plant seeds and squeeze juice for Lohas, a soft drink made by COFCO, China’s biggest food manufacturer; they can also enter a lottery to win Lohas. And players of Happy Restaurant can earn virtual currency by hanging ads for companies on the


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walls of their virtual eateries. After meals, they can also hand out sticks of Wrigley’s gum. Renren has been more in-the-user’s-face about advertising. Its pop-up and banner ads constantly barrage the user with promos, usually for virtual gifts—a big source of revenue and a chance for consumer brands to do quick, targeted promotions. Last year, for instance, the food maker Youlemei picked one of February’s coldest days for a campaign aimed at users in frigid northern China. On that day, members could send friends a cup that came complete with digital steam and the words, “Have a hot cup of milk tea on me.” Renren has gone so far as to place promotions in members’ news feeds. It calls this Top Feed, but it’s virtually indistinguishable from the river of friends’ status updates and nonad news. “The click-through rates are very high,” Miller says, though he declines to give precise numbers. “People say, ‘What’s that? It’s in the top of my feed, right where my friends should be. Let me click that video.’ ” Kaixin001 has been more minimalist, a nod to its target audience, which it claims is more sophisticated than Renren’s. In a nation where advertising redef ines ubiquity— cafeteria trays promote mobile phones, gym mirrors with built-in screens flash ads as you work out—it has sought to be a bit of a haven. “A visitor from Facebook asked me, ‘Why don’t you have any ads?’ ” says deputy general manager Guo Wei. He points to a sample page that has no ads save a public-service announcement soliciting clothing donations. “Our ads are not rare; they’re just nontraditional.” Take the 50th anniversary of Mini, which

the carmaker marked with a campaign that included sponsorship of free virtual gifts. Lured by the brand’s prestige, Kaixin001 users in one day sent their friends 1.5 million virtual Minis, Guo says; 4 million people pressed a congratulations to mini! button—and automatically told their friends they had done so. The next best thing to showing off your own auto in car-crazy China? Showing off the car you’d have if you could afford one. “Advertising, at the very least, should not annoy the consumer,” Guo says. “Kaixin001 should feel like the most important site on the web. It should feel like my own space.”

if you need a reminder that China is still a relatively poor country, you need only look at the revenues of these burgeoning networks. Ads are cheap: While Facebook posted more than $1 billion in revenue in 2010, Kaixin001 scored about $40 million. (It predicts that will roughly double in 2011.) Renren, which hopes to go public this year, declines to disclose full revenue figures but brought in at least $50 million. Those numbers will undoubtedly rise. Both networks say they’re adding hundreds of thousands of users daily, and China’s Internet penetration rate is still only about 30%, versus some 75% in the U.S. One question for Renren is whether it will be able to retain its users, or if they will “graduate” to Kaixin001. And a major challenge for all networks will be to keep people engaged and online, especially because many users are too poor to own computers and rely on

niu Mu and guo Jian, above, use Kaixin001 for band meetings. Renren user Kelly Cui Yixin, right, with her boyfriend, Jian Jiang, says her Tsinghua classmates go on the site “to satisfy their vanity.”

Internet cafés. For them, Jin Meizi’s story could be a cautionary tale. A lounge singer from Jilin, in China’s northeast, Jin was nearing 30—the age after which singletons are called “leftovers”— without much hope of marrying. A friend urged her to join a social network to meet guys, so one day, she did. Like many Chinese looking for love or lust, she used a fake identity, but she was puzzled that she couldn’t find most of her friends online. Turns out she meant to sign up for Kaixin001, but accidentally registered at Kaixin instead. No matter: She began chatting with a guy who seemed nice. He also seemed familiar, even if his name did not. Soon, the truth emerged—he was an ex-boyfriend of hers named Li Yueming. He had also been using a fake name, and had been emboldened to approach her because of the cloak of cyberspace. “In a restaurant, you can’t go up and introduce yourself. Something you say might bother them,” says Li, a sound engineer. “Online, you can say things you might not say in person, so you come to understand each other better.” Si x months a f ter reconnec ting, L i proposed—via chat on Kaixin. They wed in November 2009. But the passage of time hasn’t diminished their embarrassment at how they rekindled their romance. “We didn’t tell anyone,” says Jin, who at 28, is relieved never to have been called leftovers. “Only we know.” They found what they needed. Today, they no longer go online. loop@fastcompany.com


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CORPORATE PHILOSOPHER: Morten Albaek of Vestas has recruited Bloomberg, the WWF, and the UN to support his scheme.


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TILTING AT WINDMILLS

Wind-turbine manufacturer Vestas is launching a WindMade trustmark to compel shoppers to consider the energy behind their consumer goods. But will people adjust their buying habits? By Jeff Chu | PHOTOGRAPH BY CHRISTIAN WITKIN February 2011 FASTCOMPANY.COM

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No. It’s a step,” Albaek says. “What we are trying to do is to create a new model: Is it CSR? Is it sustainability? Is it business development? Is it marketing? Is it PR? You can just say yes.”

t Morten AlbAek hAs soMething to sAy: “i wAnt to chAnge the world.” Coming from a philosopher turned corporate marketer, you might expect something a little more original. But he doesn’t stop there: “I want to surprise the world by creating something that has never been created before, something unique enough to inspire people to think, innovate, act, and react differently.” Yes, roll your eyes at Albaek’s fantastic idealism, but wait, because there’s more: “We could be at the beginning of a new enlightenment period.” In Albaek’s vision, this new enlightenment will have its Lockes and its Rousseaus, but they won’t be philosophers or writers—they’ll be multinational corporations and their execs, who throw their collective weight behind a troika of blue swirls. The cute little logo is called WindMade, and it will be used on consumer products certified as having been produced with wind power. If successful, it would be the world’s first global trustmark driven by a corporation. (Think of the Energy Star sticker on appliances, or the USDA Organic label on produce.) Albaek sees WindMade as much more than just a logo; it’s an opportunity for companies to show that they are committed to greater transparency about how they do their business—the kind of power they use is just a starting point. “Many companies still base their businesses on keeping consumers ignorant, but there will be a tremendous and increasing clash between companies and consumers if we don’t take upon ourselves the responsibility of behaving sensibly,” he says. “The strongest brands in the world must step up.” Obviously, Albaek has another motive: He’s a senior exec at Vestas, a company that makes all of its money from wind-power plants, and getting companies to commit to wind would produce a huge . . . windfall. But as the WindMade team has traveled the world during the past six months, quietly courting potential partners, it has been met with enthusiasm that has surprised even the biggest cheerleaders among them. The fledgling coalition already includes the media-information giant Bloomberg and the Global Wind Energy Council, an industry consortium. The WWF has signed on as a partner. And the UN Global Compact is backing the trustmark, the first time it has ever done so. The WindMade campaign will officially be announced at the 2011 World Economic Forum, in Davos. Later in the year, consumers may start seeing the WindMade swirls on store shelves, and by the beginning of 2012, Albaek hopes to have 1,000 companies signed up as WindMade partners. Whether this plan succeeds or fails, it will be a fascinating case study of one company’s attempt to take the concept of the multiple bottom line to a new—and, yes, potentially world-altering—level. “Will WindMade change the world on its own? 78 fastcompany.com February 2011

•••

rustMArks Are like Any other stArtup: MAny lAunch, A few gain widespread recognition, but only a minuscule number ever affect what we buy. Perhaps the most successful trustmark in the United States has been Energy Star, which identifies products that meet federal standards for energy efficiency. According to the 2009 Conscious Consumer Report by the branding firm BBMG, 87% of Americans surveyed said they recognized the Energy Star logo, and 75% sought it out at least sometimes. The logo was created by the Environmental Protection Agency in 1992, but for years, surveys showed that less than a third of Americans knew what it meant and many fewer said that it made a difference in what they bought. Growth in the number of products that carry the mark has helped—Energy Star stickers can now be found on everything from fridges to laptops to new homes. The key conversions came not among consumers but from manufacturers. Home builders, for instance, began to see “a competitive advantage. Fiveand-a-half million homes are sold each year, and only a quarter million are new. Among all those, wouldn’t it be great to stand out?” says Sam Rashkin, who heads the EPA’s Energy Star housing program. As marketplace recognition has grown, so has the EPA’s understanding of how to turn that into purchases. “Consumers will pick the product that is environmentally beneficial as long as they don’t have to give up anything else,” says Ann Bailey, director of Energy Star product labeling. Energy Star has enjoyed two advantages that are tough to replicate. It’s backed by government standards, and studies have shown that, as skeptical of government as we may be these days, we still trust it much more than corporations. Energy Star was also a pioneer. “There are probably more than 700 trustmarks now—that’s a conservative estimate—all competing for time and attention and trust,” says BBMG chief creative officer Mitch Baranowski. “There’s a race on now to certify and label, and because of that, there’s a lot of confusion and clutter, and questions about who to trust.” Baranowski says the race is happening because shoppers want it. “We see an increased consciousness among consumers who really care about where things come from,” he says. “Trust and transparency are the biggest brand drivers going forward.” Which is precisely what Albaek wants to hear.

w

•••

ind hAs long been venerAted As A vehicle for chAnge, a bringer of clarity, even a deliverer of prosperity. In the Shinto genesis story, Fujin, the wind god lately reincarnated as a Mortal Kombat character, cleared the newborn earth of murk and mist. Vayu, the mercurial Hindu lord of the wind, is said to control the breath of life. And Njordr, of Norse mythology, is described in legends as having the ability to calm the sea, quell fire, and create wealth. Albaek’s ambition for WindMade seems no less grand, and perhaps no more probable, than these ancient myths. “I truly cannot see why there should not be 1,000 corporations—and I mean that literally, so maybe let’s even say 1,001, like the Persian fairy tale!—that will join, that will be progressive enough, intelligent enough, modern enough to show the world that the corporate world can lead in fundamentally changing how we act and react to the challenges that confront us,” says Albaek one blustery afternoon in Denmark, as he Additional reporting by Stephanie Schomer


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drives from his office in Aarhus to give a talk to a group of school counselors. (Topic: finding meaning in your work and life.) He rambles from Greek philosopher Thales of Miletus to American Idol to the global obesity epidemic to the Renaissance. Eventually, he returns to business. “In the future, the corporations of the world will be divided between the sensible and the unsensible. The unsensible are dinosaurs,” he says. “The ones who will join us will help us create a revolution, just as the Enlightenment created the sensibility that created the acknowledgment that we need to change.” Getting his project going has been much more prosaic. It began, aptly, in the upper atmosphere, during a flight on the Scandinavian airline SAS. In the seat pocket, Albaek found an envelope for donations to Save the Children, which had partnered with SAS. What if, he wondered, a corporation had started the charity? (In fact, it was launched in the wake of World War I by Eglantyne Jebb, an English do-gooder heartsick at the plight of ailing, starving European children.) What if Vestas started a charity? This kind of thinking has propelled his quick rise through Denmark’s corporate ranks. At age 26, Albaek, then a young philosopher, was plucked from the academy by Danske Bank, which wanted to see what new ideas this upstart could inject into Denmark’s largest and fustiest bank. He dreamed up enough to earn six promotions in seven years. He also found time to become one of Denmark’s most prominent talking heads, appearing frequently on TV to discuss everything from romance to world affairs, and to cowrite Generation Fucked Up?, a 2005 book in which he spars with political scientist Rasmus Hylleberg about the degree to which Danes born in the 1970s and 1980s are lazy, entitled, lacking in responsibility, and hypocritical. (The short version of Albaek’s stance: Very.) Four years later, Vestas CEO Ditlev Engel lured Albaek, who is now 35, to oversee global marketing. Albaek quickly settled on an answer to his questions of charity: He wanted to try to save the earth. His original idea was to launch a Vestas-sponsored charitable venture to provide renewable energy— wind, of course—to remote African villages. But he worried that a Vestas-only initiative would necessarily have limited reach. As he and his team brainstormed ways to have a broader effect, they solicited the input of the New York–based creative agency Droga5. It suggested that Vestas create a trustmark called WindMade and a foundation that would manage it and funnel its revenues toward extending renewable energy in developing nations. WindMade now has a three-pronged approach that Albaek has dubbed TEA—the T is for transparency, the E for enlightenment, and the A for activation. (“America has voted for its Tea Party,” he says, “but I think we need to create a different one.”) Transparency will come in two forms. First, Bloomberg, the inaugural corporation to join Vestas in the WindMade coalition, will build and maintain the WindMade Index, a public ranking of major companies’ energy mix and how much of it comes from wind and other renewables. The creation of the index fits neatly into Bloomberg’s push to complement its dominance in financial data with information in areas such as renewable energy. “A growing number of investors are looking to what we call ‘extra financial’ information to better understand how companies are managed,” says Cur> THE WINDMADE tis Ravenel, Bloomberg’s head of susLOGO tainability. “The data they need are data we think is important to better understand how companies are addressing long-term sustainability issues.” Second, companies will register for WindMade certification. PricewaterhouseCoopers has been hired to vet applicants for WindMade. To carry the continued on page 105

THE TRUST GAME

In a marketplace saturated by certification labels, some have gained consumer loyalty and others miss the mark. By Stephanie Schomer

> ENERGY STAR Launched by the EPA in 1992 with the goal of reducing greenhouse-gas emissions through energy efficiency, Energy Star reaches consumers by promising savings—of time, money, and energy. Consumers who know it: 87% Consumers who choose it: 56% Why it’s trustworthy: Consumers see government-backed labels as unbiased, and it doesn’t hurt that this one saves them money.

> USDA ORGANIC The label launched in 2002 with the National Organic Program, both the result of 1990’s Organic Foods Production Act. Consumers who know it: 62% Consumers who choose it: 23% Why it’s trustworthy: Like Energy Star, the government gives this label a trust boost. It took 10 years to write the standards, and now third-party certifiers make sure that the tens of thousands of organic farmers nationwide adhere to them.

> GREEN-E ENERGY The Center for Resource Solutions, a national not-for-profit, started Green-e Energy in 1997 to certify renewable-energy utility programs. Consumers who know it: 21% Consumers who choose it: 7% Why it’s trustworthy: Green-e tracks each megawatt hour of renewable electricity.

> FAIR TRADE CERTIFIED Fair Trade U.S.A. ensures that farmers are treated and paid fairly. The organization started certifying coffee in 1998 and now certifies more than 100 product categories. Consumers who know it: 18% Consumers who choose it: 6% Why it’s trustworthy: In 2009, the organization helped generate $48 million in additional income for farmers.

> LEAPING BUNNY CERTIFIED

CONSUMER DATA SOURCE: BBMG’S CONSCIOUS CONSUMER REPORT, 2009

The Coalition for Consumer Information on Cosmetics launched the Leaping Bunny program in 1996 to help consumers choose products made without new animal testing. Consumers who know it: 11% Consumers who choose it: 5% Why it’s trustworthy: Products that say “not tested on animals” may refer only to the end product; Leaping Bunny Certified means that every ingredient is cruelty-free. February 2011 FASTCOMPANY.COM

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THE LEAGUE OF

The geek darlings behind Syyn Labs have created feats of fancy for the likes of Google, Disney, and the band OK Go. Now it’s time for their biggest challenge yet: Create a business from their techy passion projects. by Chuck Salter

photographs by ANGELA BOATWRIGHT


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NERDS

February 2011 FASTCOMPANY.COM

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“We’re

chain reactions that performed simple tasks—known as a Rube Goldberg machine after the legendary cartoonist who devised the a sensationalism service,” says concept—at the heart of indie rock band OK Go’s “This Too Shall Brent Bushnell. Pass” video. After it became a viral hit in the spring of 2010 (20 milAsk cofounder Adam Sadowsky and he says, “We’re a one-stop lion views and counting on YouTube. Check it out—again. I’ll wait), production company: We make physical art that moves people.” corporate America came calling. Everyone from Google to Sears has “We want to be the ‘engineering is cool’ group,” Bushnell adds. tapped Syyn to build something that inspires wonder, gets their Another cofounder, Eric Gradman, sums it up this way: “We’re a brand noticed, and is infused with the kind of unbridled joy that glorified drinking club with an art problem.” tends to get squashed out at most companies. Syyn Labs, the art collective/budding company that Bushnell, Syyn is discovering that the playfulness game can be a tough Sadowsky, Gradman, and four others founded last year at Barbara’s racket. Most clients just want what worked for the last guy, and bar at the Brewery Art Colony in Los Angeles, is all that and more. Sadowsky, Syyn’s president and sole full-time employee, insists, “We’re It’s the best of what happens when a bunch of nerds, including a not a Rube Goldberg company.” These guys can make a car-battery physicist and a psychology PhD, get together to obsessively create commercial beguiling, but it may take some beer and an all-nighter something mind-blowing simply because they love the challenge. in the desert to do it. And clients like Sears . . . well, that’s not how Syyn’s first official project was to help build the complex series of Craftsman tools get made. Can these nerds transform their art collaborative into a true business without losing its mischievous, anarchic spirit? It would be their most audacious project yet. Syyn is itself the embodiment of a Rube Goldberg machine: an eclectic cast of characters, featuring seven founders and some 50 volunteers, ages 24 to 40, whose assembled talents cause a domino effect of creativity. “I have a hard time categorizing them,” says Cristin Frodella, a senior product-marketing manager at Google who hired Syyn to build a machine to publicize its global online science fair, which was set to launch in January. “They’re fun, smart, geeky, and really pluggedin.” Gradman, who at times sports a red Mohawk, is a fire-juggling circus performer, rock musician, semiprofessional whistler, and software engineer. Bushnell is a video-game developer, serial entrepreneur, and Silicon Valley royalty (he’s the son of Atari founder Nolan Bushnell). Heather Knight, the only woman among the dozen or so regulars, has worked at both the MIT Media Lab and NASA’s Jet Propulsion Lab and is earning a PhD in robotics the robotiCiSt the fire Starter at Carnegie Mellon while simultaneously startHeather Knight Eric Gradman ing Marilyn Monrobot Labs, a robot theater company. “It was cool and all, making things for space,” Knight says, “but I was looking for a creative outlet.” OK Go front man Damian Kulash set the Syyn machine in motion. The band, already known for imaginative productions such as its dancing-on-treadmills hit in 2006, thought a music video featuring a Rube Goldberg machine would be captivating. They just needed someone to build it. In late 2008, Kulash, through his nerd circles, posted the project on the online discussion boards for Mindshare L.A., a monthly gathering of art and tech hipsters run by Syyn cofounder and designer Doug Campbell. (Think TED with booze and a great DJ.) The Syyn members, who banded together after meeting at Mindshare, applied for the OK Go project because it sounded like fun. “They definitely had the right mix of talents,” Kulash says. Despite their inexperience—this was Syyn’s first time working together and its the ConneCtor the mad SCientiSt first Rube Goldberg machine—Kulash chose Doug Campbell

Dan Busby


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them because “I thought having a large group of people would provide different ideas that would help the machine feel more musical.” Syyn was also willing to work for “low dough” over six months, and like Kulash, they were creative workaholics. A revolving group of staff and volunteers pitched in when available, creating a sense of chaos. “The project was a wild, untamed beast,” says Kulash, who served as artistic director. Many of the components required dozens of iterations before they worked and looked film-worthy. “We were winging it,” says Syyn’s Hector Alvarez, a founder and a former ad agency art director. “We spent months learning the physics.” The finished product— 89 specific interactions, from tumbling domithe illuSioniSt the gamer noes to raining umbrellas and a TV-smashing Dave Guttman Brent Bushnell sledgehammer, all in sync with the music— took 85 takes to execute in a single shot. “I don’t think any of us anticipated it would be seen as a skill set that’s beneficial to other companies,” says Sadowsky, 40, a serial entrepreneur who has started video-game and tech businesses. But the unintended consequence of the Rube Goldberg machine—its 90th interaction, if you will—is that the phone started ringing. The company has since built RGMs for both Disney and The Colbert Report. It created a “DNA Sequencer,” a 100-foot music-pulsating light sculpture in the shape of a double helix for Glow, an outdoor public-art event in Santa Monica. The group consulted on stunts for a TV game show and is in talks to make spectacles for a Las Vegas hotel and the opening of a Hollywood movie. It’s building two pieces for Coachella, the arts-and-music festival in California, a natural fit for these Burning Man regulars. And this being L.A., Sadowsky, a former child actor who appeared on the 1980s the produCer the ringleader Jason Bateman sitcom It’s Your Move, has Hector Alvarez Adam Sadowsky already met with TV networks about developing a reality show to chronicle Syyn’s adventures. As of December, the company had generated around $350,000 in revenue —a good start, but not ductions director James Frost brought in Syyn on a commercial for enough to support a full-time team. Sears’s DieHard batteries. Syyn set out to create what must be the As their eclectic project list indicates, Sadowsky and company first car organ: 24 cars (and their horns) powered by one battery and aim to strike a balance between corporate projects that pay the bills controlled by a keyboard. After wiring the vehicles through the night and ones that are simply fulfilling. In a perfect world, each project out in the middle of the desert, it wouldn’t play. “The creative direcwould be both, as with its work for Google’s science fair, where a tor of the agency said to me, ‘What is going on?’ ” Frost recalls, indihamster running on a wheel triggers a chain reaction that ends with cating that the plaintive cry was less restrained than his retelling. neon-orange lava erupting from volcanoes on a world map. “We want “When the client comes to the shoot, they expect it to work.” to show through spectacular displays of physics or robotics that a “I asked Adam [Sadowsky], ‘What happens if I can’t get it to bunch of nerds can have a fun time and do great stuff,” says Bushnell. work?’ ” Gradman says. “He said, ‘They’ll probably sue us.’ ” But GradBut for most clients, they’re buying buzz and not the messy, nerdy man solved the wiring issue, and mod icon Gary Numan was able to process behind it. After directing the OK Go video, Zoo Film Proplay his 1979 hit “Cars” on the car horns. Syyn embraces this flirtation with disaster as a badge of honor. “These guys thrive on the pressure,” Frost says. The incident underscores Syyn’s main challenge. Big corporations don’t seek out high-wire danger. And they don’t regularly hire companies with a “staff” that works mainly nights and weekends and puts a premium on

“I don’t think any of us anticipated [that building a Rube Goldberg machine] would be seen as

a skill set that’s beneficial to other companies.”

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For an exclusive tour of Syyn Labs’ new Rube Goldberg machine for Google’s online global science fair, go to fastcompany.com/syyn.

behind the SCeneS of Syyn labS’ produCtion of ok go’S “thiS too Shall paSS” The dazzling Rube Goldberg machine at the heart of the band’s video was Syyn Labs’ first creation. It took six months and more than 100 trips to Home Depot. The team learned to put the smallest, most unreliable stuff early in the sequence, because when it failed, it could be reset more quickly. “Our enemy was physics,” says Syyn president Adam Sadowsky. Syyn’s crew couldn’t believe all 89 components worked even after the video debuted. “For the first six weeks, I was nervous it’d fail.”

Syyn team, makes this feel like a company rather than a hobby. And yet Syyn’s nerd core remains untamed. On a weeknight in midOctober, a dozen members of the group stand around sipping “safety juice” (Tecate beer), assessing their chances in chess boxing (yes, a real sport), and reviewing their progress on the Google machine. “We’ve shot flame balls in the air, trained hamsters, played with Slinkys, and built rockets,” Campbell says. “That’s a week at the office.” The fireballs, it should be noted, were strictly for their amusement. Before everyone resumes building, they insist that Dan Busby, one of Syyn’s founders, demonstrate his contribution again. With a flip of a switch, Busby, a physicist by training and an electric-vehicle engineer by day, summons a dazzling white ribbon of electricity that dances between 5-foot-tall metal rods angled like a TV antenna, perfectly evoking a mad scientist’s lab, before flipping a circuit breaker. “Awesome,” Bushnell marvels. “Do it again!” someone else says. High-voltage debauchery, just as Syyn’s tagline promises. Who wouldn’t want some of that juju? salter@fastcompany.com

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Sara Ross Samko (wooden track, tire, Legos); Edwin Roses (all others)

having fun. “I couldn’t tell who was doing what,” says Michael Blum of Riverstreet Productions, which hired Syyn to create a teaser ad for the Disney XD channel. “They seemed to have a shared brain.” Sadowsky is trying to set up a pipeline of projects. One source: a new deal with award-winning production house Motion Theory (which did Katy Perry’s “California Gurls” video). He’s also adding a jigger of discipline, setting up weekly meetings (ugh) where the core group decides which gigs to pursue. Sadowsky takes the lead on assigning who works on which projects, and he’s developing a workflow, budgeting on a per-second basis for RGMs, and reminding people to log their hours so they can get paid. (Gradman: “Yeah, I don’t do that.”) Sadowsky is trying to balance that process with the kind of serendipity that leads roboticist Knight to say, “As far as job satisfaction, we’re off the charts.” Last October, for example, David Paris, a Miami caterer visiting L.A. on vacation, heard Syyn encouraged volunteers, so he simply showed up to help. Paris played such a big role on the Google machine that Syyn not only paid him but also invited him to join the team. Now he’s moving to L.A. “We want this to get big enough so guys can quit their jobs,” Sadowsky says. Until a few months ago, the group’s “office” was still Barbara’s bar, and it had to build the DNA Sequencer in one member’s backyard. Now Syyn occupies an airy warehouse in a former paint factory in an L.A. industrial area. As much as anything, the move, says the


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FAST COMPANY Salon Dinner

Chicago Innovation Awards

SOMETHING TO TWEET ABOUT

HONORING 2010 INNOVATORS

On November 30, 2010, Fast Company, with partner Morgans Hotel Group, feted the December 2010/January 2011 issue with an intimate dinner at the Clift hotel in San Francisco. In attendance were cover story subjects Chloe Sladden, Robin Sloan, and Ross Hoffman of Twitter, as well as other high-level business executives in the Bay Area from such companies as Cisco, HP, and Method.

Each year, the Chicago Innovation Awards celebrates the creative spirit of the Chicago region by honoring the area’s most innovative new products and services. Winners for 2010 included Abbott Labs, Chicago Transit Authority, crowdSPRING, Lextech Labs, Master Lock, MJSI, Molex, Smart Medical Technologies, SoCore Energy, and USG. On November 1, 2010, 850 people attended the sold-out celebration at Chicago’s Goodman Theatre. To learn more, visit chicagoinnovationawards.com

FROM TOP LEFT: David Curell, general manager, Clift; Christine Osekoski, publisher, Fast Company; Ellen McGirt, senior writer, Fast Company; Chloe Sladden, director of media partnerships, Twitter; Robert Safi an, editor, Fast Company


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How to Spend

$100 Million to really save education

• It’S not aS eaSy aS Zuckerberg tHInkS / by anya kamenetz • 13 radIcal IdeaS, from cHarleS beSt, randI weIngarten, dIane ravItcH, and more • forget $100 mIllIon—mIcHelle rHee wantS to Spend $1 bIllIon / by Jeff chu

t

86 fastcompany.com February 2011

he elite has becoMe obsessed with fixing public schools. Whether it’s Ivy League graduates flocking to Teach for America or new-money foundations such as Gates, Broad, and Walton bestowing billions on the cause, “for the under-40 set, education reform is what feeding kids in Africa was in 1980,” Newark, New Jersey, education reformer Derrell Bradford told the Associated Press last fall. Facebook founder Mark Zuckerberg is the latest entrepreneur to join this rush. He announced in late September that he planned to donate $100 million to the city of Newark to overhaul its school system. Zuckerberg, a billionaire by age 23, has little experience in philanthropy and no connection to Newark; he met the city’s mayor, Cory Booker, at a conference and was impressed with Booker’s ideas for school reform. Plans are still sketchy, but Zuckerberg has endorsed merit pay for teachers, closing failing schools, and opening more charters. So will this princely sum produce a happy ending? Unlikely. The Zuckerberg gift, like all social action, is based on a particular “theory of change”—a set of beliefs about the best strategy to produce a desired outcome. The United Way has one theory of change about the best way to feed the hungry (direct aid funded by international private donations). Che Guevara had

a very different one (self-help through armed revolution). Unfortunately, the theory of change behind the recent infusion of private money into public schools is based on some questionable assumptions: First, public schools will improve if they harness more resources. Second, charter schools and strong, MBA–style leaders are the preferred means of improvement. And third, a school’s success can be measured through standardized testing. The Newark Public Schools already belie the first assumption. They allocate $22,000 per year per student, more than twice the national average of $10,000. Yet Newark graduates only half its charges. Privatesector education crusaders often counter that it’s not just money they bring to the table—it’s a mind-set. Whether from Silicon Valley or Wall Street, they believe that empowering the chief is the key to a school’s success. These execs are expected to foster competition, raise expectations, emphasize metrics, and take on the unions. It’s a logic embraced by Mayor Michael Bloomberg, for one, in his decision to appoint a magazine publisher, former Hearst Magazines chairwoman Cathie Black, as the chancellor of the New York City Department of Education. Zuckerberg wants to follow this playbook by insisting that Newark install Mayor Booker as the head of its school


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Illustration by mark weaver

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how to spend $100 mIllIon

system, which would require skirting state law. Already, local activists have threatened a lawsuit, a move Zuckerberg shrugs off. “For me, this is more like a venture-capital approach where you pick the entrepreneur, the leader that you believe in, and then give them a lot of leverage,” he told the blog TechCrunch. Venture capitalists, and those who take the VC approach to school reform, love the independently run public schools known as charter schools, another trend Zuckerberg is likely to promote in Newark. Charters function like an educational startup. They give ultimate power to leaders, freeing them from many district rules, including union agreements, and they depend on a round-the-clock work ethic. Sadly, charters fail at similar rates to startups—and when they do, children can be the casualties. A 2009 national study from Stanford’s Center for Research on Education Outcomes found that 37% of charterschool students performed worse than their counterparts at public schools: 46% matched up, and just 17% showed clear gains. Of course, such “performance” stats hinge on one central metric: standardized test scores. And it’s here, I believe, that the philanthropic narrative of school reform breaks down. A growing chorus of educational iconoclasts, including Diane Ravitch and Sir Ken Robinson, argue that such scores are exactly the wrong gauges of success. What do they really measure? “Taking tests again and again does not make kids smarter,” Ravitch says. “Their motivation does not improve, their interest in their education does not increase, and their achievement does not improve.” Judging schools based on test scores means pushing students to conform to a single standard deviation, rather than cultivating their individual passions. Many of the people who disagree with Ravitch and Robinson (and me, for that matter) are smart and dedicated. The face of their movement is former Washington, D.C., schools chief Michelle Rhee, who is profiled on page 94, revealing why she’s pushing her new billion-dollar program. Also included in this package: suggestions from a wide range of experts, from elementary-school principals to philanthropists and union chiefs. Put it together, and you’ve got a foment of ideas all aimed at benefiting children. Whatever your policy position, that’s a good thing. Our continued prosperity in a postindustrial economy depends on creativity and innovation. And that’s why Zuckerberg’s decision to follow the popular script disappoints me. I wish he had taken his $100 million, and some of his smartest people, and designed a new framework for education from the ground up, much the way he built Facebook from a dorm-room idea to a global brand. Is it possible to craft an education platform that’s as participatory, offers as much opportunity for self-expression, and is as magnetic to young people as Facebook itself? That would be a theory of change worth testing. —Anya Kamenetz kamenetz@fastcompany.com 88 fastcompany.com February 2011

13 radical ideas How would you Spend $100 mIllIon? tHe anSwerS are aS varIed aS tHe edu-expertS we aSked.

“In the first few years of life, there are 700 new neuron connections formed every second. The achievement gap between a child born into extreme poverty and one of the professional class is evident by age 3. Yet public policy doesn’t engage the first five years of life. We still think of those years as belonging to the family, though this period is crucially important to the development of our workforce. With $100 million, I would build new centers for preschoolers, infants, and toddlers, with three teachers per classroom. Data show that kids with this level of instruction and focused play enter kindergarten in a position to compete.” —Daniel Pedersen, president of the Buffett Early Childhood Fund Illustrations by steven noble


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“I can’t believe that in all the furor over testing, people aren’t debating the test itself, like whether the questions are any good. One hundred million dollars should be used to empower

Joy Hakim to write from scratch standardized tests for all the subject areas and grade levels.

Ten years ago, Hakim decided to write her own American-history textbook, A History of US, directed at middleschoolers. Textbooks by definition are supposed to be dry and boring, and it’s presumed they can never be riveting because they’re written by committees of people whose objective is not to offend any groups and to check off state standard 1B and state standard 2D, etc. The result is that textbooks are never fascinating reads. But A History of US is fascinating. Hakim brings characters to life in a way that a novelist can. It’s politically progressive but also patriotic in a well-reasoned way. You would read this book for fun, even though technically, it’s a textbook. What if a standardized test were written not by a bureaucrat but by somebody who deeply loves the subject? If there were such a thing as a standardized test that wasn’t crazy boring and dry, then we might actually have a test worth teaching to.” —charles best, founder of DonorsChoose

“I’d focus on the arts—music and visual arts and dance, all the things that make kids joyful. kids need a reason to come to school, and testing is not a good reason.” —diane ravitch, NYU education historian and author of The Death and Life of the Great American School System

“What’s missing is more time for parents and teachers to meet. Everyone talks about how important that relationship is, but these 10-minute conferences are of no value and we handicap teachers by having them do this type of work on their own hours. Give parents time off for parentteacher conferences, just as we do for jury duty—it could be an employment policy. And have the student there; it makes the whole meeting more powerful.” —Deborah Meier, senior scholar at New York University and human development leader of the Coalition of Essential Schools

“I would use the funds to attract the best teachers for two programs. One would be a Saturday

academic program for struggling students, and I would try to deter-

mine whether an extra three to five hours a week could drive their reading and math scores in a particular way. I would try the same thing in July, since it’s clear that with poor kids, the summer is a time when they really fall behind. We could figure out that you need X hours in reading and X hours in math to make a difference. Then you work on scaling all of that up.” —Geoffrey canada, CEO of the Harlem Children’s Zone February 2011 fastcompany.com

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hoW To spenD $100 million

ReThink Teaching

spent well, $100 million could give the entire profession a boost.

random clip and asked to critique and grade it. Just being able to define what we mean by good teaching is highly contentious, but it’s a necessary step. If we’re going to help some random teacher in the middle of nowhere improve his or her practice, we have to define what good teaching looks like. We have to say, ‘Yeah, that’s a 1,’ or, ‘Yeah, that’s a 4.’ ”

—Will Richardson, cofounder of Powerful Learning Practice, a company that helps schools build online communities, and author of the book Blogs, Wikis, Podcasts, and Other Powerful Web Tools for Classrooms

“Unlike most professions, teachers don’t get enough professional development, and the development they do get is in furtherance of learning how to use some textbook. We’re not an agrarian society anymore; we’re a postindustrial nation. And the thing that’s coming around the corner is going to have something to do with technology or things yet unimagined. We have to do everything in our power to make kids prepared for that. The question I often ask is whether or not teachers are

prepared for it. I would establish urban think tanks for teachers—a dedicated space to think about public education and how to change it, to identify different approaches that teachers can bring back to their classrooms.” —Damian Jones, assistant principal at Francis W. Parker, a private school in Chicago

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“I definitely wouldn’t try to do what we’re currently doing better. The old system is becoming so irrelevant to the way the world works. I would spend $100 million on freeing up educators—one day a week, maybe—to talk and figure out how to create something different, not just better; how to teach learning skills, not just content; and how to turn classrooms into laboratories, workshops, and places of performance. What’s killing us now is the standardization that’s happening in schools. God,

“I would build an online professional-development platform for teachers. They could upload videos of their own practices and have them graded by their peers and experts against a series of rubrics. Then other teachers could log on and search for, say, group discussions and the best (or the worst) videos to watch and learn from. It’d be a tough sell for some teachers, but for those who don’t have access to mentors or who teach in remote locations, it’d be the best solution. We could also make the platform more social, so whenever teachers search for a topic, they’re served a

“Let’s make teaching a year-round profession and expand the school year—not the 180 instructional days for students, but the time for teachers to work and plan together. We need more time for teachers to collaborate, so they’re not so isolated in their classrooms. And I would put instructional coaches in every school. They would go into classrooms with a shared research base on what good instruction is and they would coach teachers. So when you go to these schools, you’d see similar types of good teaching taking place.” —Fred Tempes, director of WestEd’s Comprehensive School Assistance Program

iStockphoto

that’s just what we need— that every kid in the country is going to learn the same thing.”

—Dan Meyer, former math teacher; current PhD candidate at Stanford; and author of Dy/dan, a mathteaching blog

Illustration by Mark weaver


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“I would build more highperforming charter schools, like the ones we’ve opened in Houston. kids with a seat in these schools will average significantly higher wages over their lifetime than if they weren’t at these schools. but it also creates the fedex effect: where fedex’s success forced the u.S. postal Service to offer overnight delivery, something it thought couldn’t be done,

charter schools force the district to compete and improve. public schools are feeling very accountable today, but they feel very accountable to the state and federal government, their biggest funders. the main focus from schools should be looking at the kids and parents as the customers they’re serving.” —Mike Feinberg, cofounder of KIPP, a network of free, college-preparatory public schools across the U.S.

“Lowering class size is one of the most important things. We have 35 students in our sixth-grade classes. Breaking that size down would mean more attention on each child and more differentiated instruction. After that, I would love to bring on the interactive whiteboards.” —Cole Young, principal of Humboldt Elementary School in Arizona and winner of the 2010 Terrel H. Bell Award, given to a handful of principals by the U.S. Department of Education

“Keep schools open for instructional services—beforeand after-school programs, GED programs, recreational activities—for both kids and their families.” —Randi Weingarten, president of the American Federation of Teachers

“I would use the $100 million to improve

coordination among different education services. The majority of

schools do not have direct access to all of the kinds of support their students need—whether it’s social, like mentoring, or a health check for asthma or vision—all of the things we know affect a student’s academic performance. Those resources are not always talking to each other. I would pull together a panel with representatives from each of those agencies and task them with developing a structure to channel their resources. For example, now kids who get in trouble get a probationary officer who ends up being a mentor for that child. But if we just match a student to a mentor the minute he starts to fall behind— before he gets in trouble—it’d be a lot less expensive. Today we’re spending more on the students who have already fallen off the track than we do on keeping students on track.” —John Jackson, CEO of the Schott Foundation for Public Education

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HOW TO SPEND $100 MILLION

BUILD A BETTER CLASSROOM KIDS SITTING IN A GRID OF DESKS, LISTENING TO A LECTURE? HOW VERY QUAINT. HERE’S HOW TO PROPEL CLASSROOMS INTO THE 21ST CENTURY. “I don’t care whether they’re poor or what color they are, 14-year-olds are only making 14-year-old decisions. They’re goofy. At East Side Prep, a private school in California that serves almost exclusively black and Latino students, every student meets daily with a tutor. Practically, it allows teachers time to plan together. It eliminates the stigma of ‘Oh, you have to go to a tutor,’ because everyone has to. And there’s less time for kids to be left up to their own devices.” —Gloria Ladson-Billings, author of The Dreamkeepers: Successful Teachers of African American Children

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PERSONALIZED SCHEDULES: “The model we have now is one teacher and 28 kids in a box, and when we receive more dollars, our instinct is to hire more people. Education has suffered from a lack of imagination over the past 100 years. Personalized education means literally knocking down the walls between classrooms to create large, open spaces and 9 or 10 different stations where kids can learn—some staffed by teachers, some staffed by virtual tutors, some with kids working independently on computers or in groups. Each day, the kids come in and look at monitors to see which stations they should be working at, like the monitors you might see at an airport.”

—Joel Rose, CEO of School of One

“Public education right now is like telling doctors and nurses that they have to save lives without any materials: You can’t have any tools, you can’t have any medicines, but you still have to save lives—and if you don’t, we’re going to punish you in some way. That’s what education feels like. We’re expected to produce great citizens after students go through 12 years of school, but we’re not given any tools to make that happen. I would make sure that we have updated textbooks in the classrooms, supplies for labs, and instruments for music.” —Kara Smith, teacher at Lake City High School in Idaho 92 FASTCOMPANY.COM February 2011

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TELEPRESENCE: “A French-language class could connect with students in Paris for two-way communication or a class could invite a remote lecturer. At one pilot program in Arizona, the district delivered Calculus III to three different schools with five students per site, and it was cost effective. Learning today is not confined to the four walls of a classroom.”

—Renee Patton, U.S. public sector director of education at Cisco

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BEAUTIFUL BUILDINGS: “The environment in which a class is happening has a humongous psychological impact on both teachers and students. We’re asking children to be in these places for eight hours a day—they’re institutionalized, prisonlike, decrepit, with no lights or windows or books. It’s not sending a great message about what we value—it’s saying we don’t value them, we don’t value schools.” —Justine Haemmerli, program administrator for graduate/public-school partnerships at Bard College

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INTERNET EVERYWHERE: “The idea of a computer lab is misguided. Every student should have direct access to the Internet. This changes the role of the teacher in a classroom, from a purveyor of preexisting knowledge with a frontal presentation into more of a coach. The teacher could provide a starting point for a theme, to unify and excite the class, and then spend time with individuals to see where they get stuck or motivated or excited. The transformation in education will be massive, and if we let the Internet do its thing, the textbook market could go from $8 billion to $800 million to $80 million, and yet there will be more and better content and it will be available to more people.”

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DIGITAL LEARNING LIBRARY: “The iPad is a really good platform for the classroom because you can embed curriculum-based videos and games. Having a much more interactive experience for kids makes a huge difference in getting them excited and focused. Kids are instinctively creative—it’s about fostering their inventiveness, not just drills.” —Paula Kerger, CEO of PBS

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FLEXIBLE FURNITURE: “We need to create a dynamic learning environment, so a lot of different kinds of things can happen that appeal to different learners at different times of the day. Students sit for seven hours a day in desks that are attached with a metal bar to chairs; they are incredibly uncomfortable. VS America designs school furniture that is flexible and allows students to move. I think creating flexible spaces that teachers can reconfigure—to encourage collaborative, project-based learning—is really effective at engaging students.”

—Laura Stein, associate creative director at Bruce Mau Design and creative director and designer for the book The Third Teacher —Interviews by Rachel Arndt, Elizabeth Green, Anna Phillips, and Maura Walz

—Albert Wenger, managing partner at Union Square Ventures

Illustration by FRANCESCO MUZZI


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FORGET $100 MILLION.

MICHELLE RHEE WANTS TO SPEND A BILLION!

HOW—AND WHY—SHE CREATED HER NEW INTEREST GROUP, STUDENTS FIRST / By Jeff Chu

T 94 FASTCOMPANY.COM February 2011

HE DAY AFTER WASHINGTON, D.C., Mayor Adrian Fenty lost his reelection bid last September, Michelle Rhee, the city’s schools chancellor and No. 1 lightning rod, had an OMG moment. For three years, Fenty had constantly spent political capital defending Rhee as she fired hundreds of teachers and principals, closed schools, and earned both education reformers’ adoration and teachers’ unions’ wrath. He eventually paid with his job—and she knew she’d soon pay with hers. What am I going to do? she thought. She went to Hawaii with her fiancé, Kevin Johnson, the former NBA star, charter-school founder, and Sacramento mayor. At this point, she was flooded with job offers. “I know how you are. You just want to make a decision and jump into the next thing,” Johnson said to Rhee. “I’m not going to let you do that. We’re going to take our time.” She replied, “That’s not how I operate.” “Well, this is the way you’re going to do it this time,” he said. On October 13th, Rhee announced her resignation. Suitors—rumored to include Chicago mayoral hopeful Rahm Emanuel and New Jersey Governor Chris Christie— kept coming after her. She says one privatesector exec offered her well north of $1 million a year, “and I literally wasn’t

going to have to do anything.” Says Johnson: “She was getting really antsy because she doesn’t like being in limbo.” In October, Charlie Rose interviewed Rhee at the Forstmann Little conference in Aspen, Colorado. As they discussed the problems with America’s education system, a plan began to crystallize in her mind. Later that day, Rhee flew to Sacramento and went with Johnson and his mother to dinner at Mulvaney’s, one of her favorite restaurants. Johnson could sense something was up. “She just had this clarity and this peace,” he recalls. He gave Rhee his business card, and she started scribbling on the back. By dinner’s end, they had the outline of an organization that would throw huge amounts of money behind the brand of reform that Rhee has long advocated, first as founding CEO of the New Teacher Project and then as D.C. chancellor. It would be set up not as a charity but as a political-advocacy and membership group, along the lines of AARP or the NRA, and it would rely on private donations and Rhee’s star power. “This is it,” Johnson told her with a smile. On December 6th, Rhee announced on Oprah that she would not work for anyone else. Instead, she was starting an Photographs by MICHAEL KELLEY


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AFTER THE FALL: Rhee is going national with her new lobbying group, Students First.


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hoW to spend $100 million

DAY ONE: RHEE SPENT STUDENTS FIRST’S LAUNCH DAY IN SACRAMENTO. FROM LEFT, SHE VISITED HER FIANCÉ, MAYOR KEVIN JOHNSON, AT CITY HALL AND TAPED A SEGMENT FOR NBC NIGHTLY NEWS. JOHNSON GATHERED

organization called Students First. She planned to raise $1 billion and recruit 1 million supporters in year one. Right after the show, Rhee’s 11-year-old daughter, Starr, texted her, saying, “I plan on signing up to be a supporter.” A base of a million people and a billion dollars would be unprecedented within education reform. Rhee is reluctant to name her potential donors, but IMG chief Theodore Forstmann tells Fast Company that he is “very supportive of everything she stands for—and will continue to be.” Philanthropist Eli Broad says he “expects to be a major contributor.” “People supporting the status quo have spent hundreds of millions of dollars a year to maintain it,” Broad says. “I think she’ll be a game changer.” In the coming weeks and months, Rhee plans to push her main points. She wants to change the tenure and seniority rules that she says have favored adults and their jobs over kids’ educations. She’ll campaign for parents to have more control over what public schools their children attend. She will lobby for cities to choose mayoral, rather than board, control of schools, because she believes that concentrating authority—as in New York and D.C.—is a prerequisite for real reform. And given the soaring spending but middling performance of American public schools, she’ll advocate stronger fiscal responsibility. A key pillar of Students First’s strategy is to build grassroots support, much as Barack Obama did during the 2008 presidential campaign—with thousands of small donors and on-the-ground campaign workers. Johnson has pushed Rhee 96 fastcompany.com February 2011

hard on this: “They didn’t do as good a job as they should have on community involvement in D.C.,” he says. “Unless you have the grassroots folks who want it even more than the policy makers, it’s never going to happen.” Rhee may have to modulate her sales pitch to succeed. “An important segment of the education community sees her as divisive, anti-teacher, and confrontational,” says Jeffrey Henig, a professor of political science and education at Columbia Teachers College. Andrew Rotherham, cofounder of the ed-reform not-for-profit Bellwether Education Partners, adds that Rhee cannot act as she did in D.C. “There is a half-life to the ass-kicking Michelle Rhee,” he says. “She’s also the very thoughtful Michelle Rhee of the New Teacher Project. She has to strike that balance.” In a series of interviews in New York and Sacramento, Rhee told Fast Company the inside story of the genesis of Students First, discussed her hopes for the organization, and talked about those audacious goals. FC: When did you get this idea? It’s been percolating in my and Kevin’s minds for four or five years. He has always talked about the inside-outside—a great superintendent can’t change the system alone. You have to have a great mayor and work both sides of the system. And you need to mobilize people. The problem was, we could never think of a call to action. It seems that, especially after Waiting for Superman [Davis Guggenheim’s ed-reform documentary, which features Rhee], many

people want to do something. In April, Kevin and I went to see a first cut of Waiting for Superman. We were talking to the producers, and they said, “We need a call to action!” By the way, I think that movie should be required viewing. I get emails all the time from people who saw it, who want to know, What can we do to help? What finally helped you answer that question? It occurred to me that we were going to politicians and appealing to their sense of what is good and right, but they have the unions helping fund their campaigns. You’re going to go with the money people who get you into office. I started to get the feeling we were playing the wrong game. Wrong? Is that the right word? It was a noble effort. Explain the organization’s name. We were originally thinking of calling it Fix Our Schools, but we were talking about other options. When Students First came up, someone said, “How cool would it be if you were on Meet the Press, for David Gregory to say, ‘This is Randi Weingarten from the American Federation of Teachers and Michelle Rhee of Students First’?” You’ve said that no other organized interest group is devoted to kids. That bothers some ed-reform groups working on these issues. Yes, there are organizations doing good work, but they’re not playing at the national level. That’s going to drive the influence that you can have. I’m talking about building an organization that has


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ABOUT 100 FRIENDS, FAMILY, STAFF, AND SUPPORTERS FOR AN OPRAH VIEWING PARTY AT SACRAMENTO’S OLD CITY HALL. AT RIGHT, RHEE IN THE MAKEUP CHAIR BEFORE A TV APPEARANCE.

equal heft with the current interest groups that are driving the agenda.

Who knew there were so many people who wanted education reform in New Mexico?

The arguments on tenure and seniority really rankle the unions. [After Rhee announced Students First, Weingarten issued a statement saying, “We wish Michelle Rhee well and hope she learns, as we have, that promoting education reform through conflict and division will not serve the interests of children.”] People make it sound as if I hate the unions. No. The unions are doing what they are supposed to do: representing the interests of their members. But let’s talk about layoffs. There are lots of problems with seniority-based layoffs. The L.A. Times looked at which teachers were recently laid off in Los Angeles and bumped that list up against the teacher-performance data they have there. Many who were laid off were in the top quintile. That’s just insane! The union president says this is the only way to do it that’s fair. But it’s in direct contradiction to what’s right for kids. If they had done it by quality, not seniority, it would have been more cost effective and better for stability; you would have laid off fewer teachers. Those are the kinds of policies we’re going after—and they exist everywhere.

What kinds of political candidates will you back? Colorado is a place where a lot of humancapital issues are being addressed, and Democratic state senator Mike Johnston is an example of someone who is driving that. Another good example is Democrat Gloria Romero, who ran to be the superintendent of public instruction in California and lost. She took some bold and courageous stands, so the teachers’ unions got behind the other candidates. She got no cover.

So will you be working on the federal level? This is going to be a national movement, but we’ll work mainly at the municipal and state levels. That’s where the laws need to be changed. People think about the obvious cities—New York, L.A., Denver, Detroit— but I’ve gotten a disproportionate number of emails from places like New Mexico.

What kind of activism are you hoping for from parents? In California, there’s a new law called the Parent Trigger. It says that if 51% of parents sign a petition, they can take over a school or turn it into a charter. In November, I went and met with a group of parents trying to pull the trigger in Compton. My job was to rally the troops. It was terrifying to hear some of the parents’ stories. This group was about 75% Latino, 25% AfricanAmerican, and some of them had been told, “If you sign the petition, you will get deported.” They were scared. If 51% of the people in that community are willing to say, “Enough is enough” anyway, that’s huge. How does your D.C. experience inform your call for more grassroots involvement? In D.C., we weren’t able to connect all the dots on this. We need to be invited into communities. We can see a need all we want, but there has to be a grassroots component that can compel others to act for

change. Who goes to school-board meetings? Not many people. But board members are driven by the loudest voice in their ears. If you get 200 people to show up and say, “Let me tell you something . . .” it will make a difference. We need more sunshine put on the folks making the decisions. Why are you the right person to do this? A flight attendant told me the other day, “You say things that normal people can understand.” Maybe part of the reason is that I talk a lot about my perspective as a mother. You’re sounding more like a politician. We’re going to be in the political arena, we are going to be putting pressure on politicians to be more radical on education, and we’re going to make sure the politicians are not compromising things away. But I’m not a politician! But you’re sounding more like one, which maybe you have to be. The number of people with school-age kids in this country is something like 20%, but 20% does not a movement make. We need to create a sense of urgency among a much broader group of people. This is not just about poor kids in inner-city D.C.; this is about the U.S.’s competitiveness, its security, and its stability. We need the people who are getting screwed by the system to do something about it, and in this case, that’s everybody. We need collective outrage for this to succeed. People have to want the change, and then we can help them get there. chu@fastcompany.com February 2011 fastcompany.com

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BIONANOTECH GURU “I have an interdisciplinary brain,” Samuel Stupp says.


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Making paralyzed Mice walk was just the first step for Samuel Stupp. now he and his teaM are on a Mission to help our bodies repair theMselves. By elizaBeth svoBoda

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saMuel stupp the mice in the video flickering on his colleague’s computer screen were moving their legs. their back feet trailed behind them from time to time, but the fact that they were walking at all was astounding. only a few weeks earlier, they’d been paralyzed from the waist down. then stupp’s team at northwestern university injected them with made-toorder molecules. now the mice were trying to run around their cage. “i wasn’t satisfied with the video, so i went to the lab to see it myself,” remembers stupp. “i was totally stunned.”

oh

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didn’t trust his eyes.

Those mice were the first living glimpse of the future that Stupp is hoping to accelerate in his role as the director of the Institute for BioNanotechnology in Medicine at Northwestern. It’s a future in which molecular self- assembly—where researchers direct molecules to spontaneously combine into ordered structures—will help the body heal itself. The prospect is straight out of The Six Million Dollar Man, but one better, since damaged parts will be replaced with actual human tissue instead of metal. The intrepid Stupp, 61, first made his name as a materials scientist in the highly technical field of self-assembly, which has traditionally involved developing products for industrial use—a computer chip, for example, or a protective coating. But back in the late ’90s, when “regenerative medicine” still sounded like something from a sci-fi novel, he began to wonder if he might be able to apply the principles of molecular self-assembly to biology. “I have an interdisciplinary brain,” Stupp says in a lilting in-between accent (born in Costa Rica, he speaks four languages fluently). “We had this idea that you could have a single platform that would cover an extremely broad range of conditions. “It’s always easier when you specialize in something, and there is a place for that,” he continues. “But if you’re trying to solve these kinds of problems, you cannot do it without interdisciplinary research.” So he has built a lab in his own image, boasting biologists, physicists, chemists, and nanotechnologists, as well as materials scientists; he has also forged partnerships with neuroscientists and surgeons. With his shiny bald pate and unf linching gaze, Stupp reminds 100 fastcompany.com February 2011

me of actor-producer Bruce Willis, and when he says he’d want to make movies if he weren’t a scientist, it makes sense. It’s the directorial thrill of fitting the right puzzle pieces together, the synergy of assembling a diverse team and watching the sparks fly, that appeals to him. “You can motivate and inspire people to a higher level of creativity. I guide the process, give the 35,000-foot view.” The potential of that process is breathtaking. One day, the specialized molecules—the “noodle gels” and macroscopic scaffolds— that Stupp and his team are creating could repair injured spinal cords and treat brain disorders. Success would mean better lives for countless patients and enormous profits for Nanotope, the startup Stupp founded to commercialize the lab’s discoveries. And even failed ideas can serendipitously turn into better ones. “When you see something interesting, you have an idea what might happen,” Stupp says, “but you might discover something completely orthogonal that you didn’t predict.”

The InsTITuTe for bIonanoTechnology In

Medicine (IBNAM) takes up the 11th floor of the towering Robert Lurie Medical Center at Northwestern’s downtown Chicago campus, just steps from the shore of Lake Michigan. When I arrive, Stupp is running late, so Dorota Rozkiewicz, one of his junior colleagues, gives me a whirlwind lab tour, complete with superlatives about her boss. “He does great science, but many people are innovative,” she tells me conspiratorially, between spiels about the state-of-the-art mass spectrometer and the clean room. “He also has this vision of where the work is going—which subjects will be a great success in the future.” Rozkiewicz and I are still chatting in a conference room overlooking the lakeshore neighborhood when Stupp enters, so soundlessly that I don’t realize he’s there. He typically works on dozens of projects at any one time, but he doesn’t seem stressed, or rushed. Instead, he fetches me a bottle of water and insists I tell him how I


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got into writing. It’s only when he starts talking about Materials scientists were early to the evolving universe of IN THE ClEAN ROOm what motivates him that I get a real sense of the magninanotechnology, which involves manipulating materials Dorota Rozkietude, the ambition, of his self-imposed mission. “I don’t on an atomic scale to produce molecular structures that wicz, a materilike the idea of applied research—develop a product and can’t be achieved with traditional manufacturing techals scientist, is that’s your focus,” he says, looking straight at me without niques. Nanotechnology, in turn, gave rise to molecular now working hesitation. “I want to leave behind a scientific legacy that self-assembly, where researchers create molecules prowith biologists. can be used by other people in other fields.” grammed with instructions that allow them to join together Stupp didn’t always have such a strong sense of his scieninto complex structures. By the time Stupp secured a job in tific calling. He grew up in Costa Rica, where his Eastern European the materials-science department at the University of Illinois at parents had f led after Hitler rose to power, went north to attend Urbana-Champaign, he was already fascinated by self-assembly. UCLA, and then pursued a materials-science PhD at Northwestern. It “I saw the potential,” he says, “in designing a molecule that would seemed a practical choice, since he was hoping to go back to Costa Rica assemble into a nanostructure that would have a specific shape.” someday and he knew the country’s economic situation was shaky. It wasn’t until 1995 that one of his nanotechnology experiments steered him onto an entirely new scientific course. He was trying to make molecules called rodcoils line up side by side to create a large polymer sheet with one side shiny and the other sticky, properties that might make the sheet useful for industrial applications. But something unexpected happened. Instead of forming a single thin membrane, the rodcoils coalesced into trillions of tiny individual structures that looked like mushrooms. Stupp initially wrote off the result as a failure, but he quickly realized that the mushroom-shaped nanoparticles might have a host of advantages. “It was not our target, but it was extremely interesting,” he says. The structures had optical and electrical properties, and could produce an electric current. And their formation showed Stupp and his team the principles of how to build nanofibers. “I said, ‘We could actually make a nanostructure that could do something within the body.’ ” Stupp’s mind started to race. What if he could inject the nanomolecules into the bloodstream so they could serve as microscopic vehicles to deliver therapeutic compounds? Even better, what if he could modify the nanomolecules so that they would attract the body’s own healing compounds to an injured area, kick-starting the repair process without introducing any foreign cells at all? The “mushroom” paper Stupp published in 1997 attracted lots of

“It wAs not our tArGet, but It wAs extreMeLy InterestInG,”

says stupp of the failed experiMent that led hiM to realize that self-asseMbly Might have applications in biology. February 2011 fastcompany.com

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attention, and Northwestern lured the rising star to its materialsscience program in 1999. The very next year, Stupp founded IBNAM, the lab he hoped would bring his interdisciplinary ideas to fruition. At first, Stupp struggled to find his stride in the nascent world of regenerative medicine. Since he wasn’t a biologist or a clinician, he didn’t know how to design studies to evaluate the real-life usefulness of a given medical approach. He started tinkering with potential therapies without a clear idea of how to get them to patients. “We published a paper in November 2001 about a molecule that could be used to help tissue regenerate,” he recalls, “but there was no real biology in that paper.” Shortly afterward, when he started seriously considering trying to treat spinal-cord injuries with molecular self-assembly, he decided to recruit his friend and colleague Jack Kessler, a Northwestern neuroscientist. “Clinicianscientists like Kessler understand very clearly what the problems are to be solved,” Stupp says. “We may know generally that it would be great to have a therapy for spinal-cord injury, but that’s different from knowing how you would go about testing it in an animal model.” He also had a hunch that Kessler would be intrigued by the project, since his own daughter had become paralyzed after a bad skiing accident. Stupp proposed to Kessler that they use a nanofiber structure containing portions of a protein called laminin. In in-vitro experiments, these laminin components had helped develop neural stem cells into more-specialized neurons—a reaction that had the potential to encourage healing in the brain and spinal-cord tissue over time. The particles Stupp had designed would assemble spontaneously into cylindrical nanofibers. Inside the body, he hoped, these

“He reALLy HAs A knACk for knowInG tHe potentIAL of peopLe

and what teaMs will work best together,” says a young scientist involved in stupp’s project to regrow cartilage.

nanofibers would supply a framework for the neural cells to grow onto. “The beauty of this approach,” Stupp says, “is that it just involves injecting something that looks like water.” Kessler supplied the biological expertise, including the knowledge of how to conduct experiments with live animals, and designed a study to assess the effectiveness of the treatment by injecting the nanofibers into partially paralyzed mice. The cross-disciplinary collaboration hit pay dirt. Six weeks after Stupp and his colleagues injected the fibers into the mice in the spring of 2005, the mice began to move their legs again—and headlines followed. Characteristically, by the time people got excited about his spinal-cord work, Stupp was onto something new: cartilage. “I get dozens of emails saying, ‘I have problems with my knee, I need more cartilage,’ ” he says, gesturing forcefully to convey the sheer scale of the need. “It’s a huge deal.” (Osteoarthritis, he notes, is a $65 billion industry.) To regrow damaged cartilage, which does not usually

designer Molecules

tHe stupp LAb’s bIoACtIve nAnofIbers CouLd HeLp MAke reGenerAtIve MedICIne A reALIty.

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mark seniw

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orking on

an atomic scale, scientists at northwestern’s institute for bionanotechnology in Medicine create molecules that assemble themselves into structures that could deliver healing compounds to injured parts of the body, or even stimulate the body’s own healing mechanisms. The molecular graphics representation at left shows one such biologically active nanofiber formed by self-assembly. stupp is particularly excited about the recent discovery that when bundles of certain self-assembled nanofibers are heated, cooled, and exposed to salts, they form what he calls a “noodle gel,” in which living cells can survive. stupp hopes the noodle gel could transform treatment of degenerative brain disorders like parkinson’s disease.


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come back on its own, Stupp devised self-assembling polymer nanofibers. Once inserted into the body, these nanofibers would form microscopic scaffolds that bind to a growth-factor compound that circulates naturally in the body. When the scaffolds had harvested enough of this compound, Stupp predicted, its high concentrations would direct existing cartilage cells to start multiplying and growing into the scaffolds. To vet his approach, Stupp enlisted materials scientist Ramille Shah, a member of his IBNAM team. She’d been turned on to Stupp’s bionanotech vision as an undergrad—“He sort of opened my eyes to the field,” she says—and then worked with cartilage during a tissue-engineering PhD stint at MIT. Shah did a series of in-vitro studies in the lab to establish that new cartilage cells would actually thrive in the matrix of the self-assembling molecules Stupp had devised. Then her husband, Nirav Shah, an orthopedic surgeon, stepped in to help test the technique on rabbits, drilling a series of tiny holes into the bone just beneath the damaged regions and seeding the holes with a gel containing Stupp’s molecules. The intervention worked—a result that Ramille attributes in part to Stupp’s shrewd management skills. “He really has a knack for knowing the potential of people and what teams will work best together.”

Dozens of people crowD InTo a confer-

ence room set up like a mini-auditorium, with multiple tiers of seats, for the biweekly lab meeting in late August. The first speaker is Mark McClendon, a grad student in chemical and biological engineering, who proposes piggybacking on Stupp’s noodle-gel idea to create a tube that could serve as an artificial blood vessel. Throughout the presentation, Stupp keeps up a volley of questions about how the vessel will be manufactured. Could the vessel be constructed with a multilayer structure—an outer layer of smooth muscle cells and an inner layer of epithelial cells? He doesn’t hesitate to interrupt, to interject an even-toned “I doubt that,” during these talks. Between bites of cold-cut sandwiches, lab members from every specialty follow his lead, jumping in with ideas. One biology expert says that McClendon needs to find a way to measure how effectively the cells in the gel vessels are combining into tissues, while a chemist recommends an ion that will help the vessel solution gel more quickly. Bombarding up-and-coming talents with questions, criticisms, and alternative possibilities is, Stupp says, the ideal way to train scientists to think beyond the boundaries of traditional disciplines. But he also understands the importance of encouraging his collaborators to trust their own instincts. Researchers who’ve worked under him report that he is hands-on in helping them choose their topics of study, and more hands-off thereafter. In a sense, then, Stupp’s approach to science is as self-assembling as the molecules he creates: He sets the bar, articulates the genetic code of an idea, and watches as the crack team he’s selected pitches in to pull things together. He steered Rozkiewicz, who was trained as a materials scientist in the Netherlands, toward trying to create cells from scratch, using molecules created in the lab. She admits the research has forced her outside of her scientific comfort zone; dealing with cells instead of chemicals, she says, “you have to work with biologists and they use a different language, different terms.” But she can’t resist the challenge of such a revolutionary project. “You have to understand what makes them tick,” Stupp says of his way of delegating work to his colleagues. “How is it that they think?” He can do that, physicist Monica Olvera de la Cruz points out, because he listens. “Stupp takes the time to drink good coffee, to look at people,” she says. “He pays attention to human beings in a way I’ve never seen from someone at his level.”

“I wanT To show you,” sTupp says urgenTly.

He clicks on a movie file on his laptop. On the projector screen at the front of the room, the tip of a pipette deposits a thin line of a substance that looks a little like Vaseline. A microscopic close-up shows the nanofibers that make up the gel bundle right next to one another, like a line of soldiers standing at attention. The spaghetti-shaped noodle gel, Stupp explains, serves as a conduit—it’s ideal for delivering proteins, stem cells, and other healing agents exactly where they’re needed. “I can put live neurons [nerve cells] in the liquid, and when I draw the noodle, what I really have made is a cell wire,” Stupp says, trailing his hand off to one side as if to conjure the wire from thin air. “A surgeon could just draw it right in tissue.” Like Stupp’s career in regenerative medicine, the noodle gels originated by accident. Materials scientists in the lab “were doing something else and this showed up from left field,” he says. The peptide molecules Stupp was working with arranged themselves into a flat sheet when they were heated, but when they were cooled, they shattered into bundles of fibers that lined up neatly as they were squeezed from a pipette. To understand why, Stupp turned to Olvera de la Cruz, a specialist outside his own wheelhouse, who figured out that the sheets were breaking into bundles for much the same reason as streams of water from a faucet combine into droplets: to minimize their surface area. She dubbed the phenomenon “two-dimensional Rayleigh instability.” Now that the noodle gels have made the July 2010 cover of Nature Materials, Stupp is off and running, musing on the thousand and one variations that might transform this single good idea into an entire field of study. Why couldn’t he put the noodles in damaged hearts to restore them? The noodle would act like a live wire, conveying an electrical signal from one part of the heart to another. And for people with degenerative neurological disorders like Parkinson’s disease, the noodles could spirit new neurons to the parts of the brain that need them the most. “If you could make a noodle starting where migration of stem cells in the brain starts and draw it to where there’s been a brain injury,” he says, “the noodle will be an artificial highway for the cells.” He recently formed a high-profile partnership with neuroscientist Georg Kuhn of Sweden’s Gothenburg University to test this concept in the lab, with the eventual goal of trying it on humans down the line. In fact, Stupp hopes to shepherd several of his lab’s innovations into clinical trials within the next couple of years—particularly the treatments for spinal-cord injuries and cartilage damage, as well as a heart-repair technique based on molecular self-assembly. He knows human testing will be a protracted and complex undertaking; in the best case, it will be more than five years before any of his therapies make it to the clinic. But this fall, Stupp’s startup, Nanotope (in which Northwestern is a stockholder), formed a multimillion-dollar partnership with London-based orthopedic and medical-device company Smith & Nephew to develop a cartilage-regeneration product based on Stupp’s animal studies. The agreement stipulates that Smith & Nephew will cover all human-clinical-trial costs. “Some things may not work, but then some things will,” Stupp says. “That is very encouraging, the breadth.” More than a decade of out-of-the-box science has taught him that frustration and revision are the constant companions of meaningful innovation. “You have to be in a learning mode, always on your toes. It’s like you’re moving all the time. You have to keep learning new languages in order to survive.” elizabeth Svoboda is a Fast Company contributing writer. Her last article for the magazine was “Creative Cures” (November 2010). svoboda@fastcompany.com February 2011 fastcompany.com

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YOUTUBE CEO SALAR KAMANGAR AND HIS TEAM HAVE TRANSFORMED GOOGLE’S FOLLY INTO A MIND-BLOWING—AND LUCRATIVE—GLOBAL PLATFORM THAT IS REDEFINING THE ENTERTAINMENT BUSINESS. BY DANIELLE SACKS

PHOTOGRAPHS BY ROBYN TWOMEY

MAXIMUM COOL: YouTube CEO Salar Kamangar (front) and his team: Margaret Stewart (user experience), Shishir Mehrotra (monetization), Hunter Walk (product), and Robert Kyncl (TV and film)

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Blown away

continued from page 65 But for all this effort, Hollywood players still view YouTube primarily as a great promotion platform rather than a home for their crown jewels. Kamangar’s savviest move to remedy this problem came last September when he hired away Robert Kyncl from Netflix. During his seven years there as the VP of digital content, Kyncl negotiated thousands of ondemand titles for Netf lix’s streaming service. Kyncl is now YouTube’s global head of TV and film entertainment. Says Kamangar with a coy smirk: “He wasn’t convinced right off the bat, but we convinced him. I spent quite a bit of time going to L.A.—well, he can tell you about our late-night drinking sessions.” Kyncl, still less than 90 days into the job when we meet during one of his regular trips from L.A. to San Bruno, understands exactly why he’s there: “What I generally call myself is the translator between Silicon Valley and Hollywood,” says the 40-year-old exec. “What they [Hollywood] want is somebody who helps them monetize content in the right way, not in pennies but in dollars. That’s our objective.” Kamangar and Kyncl aren’t showing all their cards yet, but YouTube will probably not compete directly with either Hulu or Netf lix. “We don’t want to simply replicate what’s out there,” Kyncl says. Adds Kamangar: “We want to bring to you the kind of content that you can’t get on TV, that’s already made for TV.” He points to the success YouTube has had offering Major League Baseball games in Japan and live-streaming Indian Premier League cricket matches across the world, drawing 55 million streams (and more U.S. viewers than Indian ones). “Historically, it’s been hard for content creators to gain worldwide distribution,” adds Walk. “They would have to sublicense, fragment, lose touch with their users, and in fact have the majority of the world be too cumbersome for them to even license to in any timely fashion.” YouTube has had great success with globally broadcasted live concerts that the North America–bound Hulu and Netf lix can’t match. Last November, on the cusp of the release of Bon Jovi’s greatest-hits album 104 fastcompany.com February 2011

and international tour, the band gave an intimate concert in a 2,100-person venue in New York’s Times Square and streamed it live via YouTube around the world. “YouTube gives us a worldwide audience,” says band manager Paul Korzilius while on the road in Japan. He says the YouTube team globally marketed the show from Britain to Japan and let Bon Jovi use its new moderator tool to give fans an opportunity to interact, helping the band pick the concert’s set list. “The numbers are mind-boggling when it’s all said and done,” he says. “The record debuted in the top five in more than 20 markets around the world. It definitely worked as far as selling the record.” If youtube Is goIng to be the living room of the world, it needs to create an experience tailored to every screen that people will use to enjoy video, particularly that big one in people’s living rooms. “In 10 years,” Kamangar says, “most people will have access to any video channels that they want” delivered via the Internet. “YouTube cares about being on larger-screen and consumption devices, whether they’re tablets or TVs.” And YouTube isn’t waiting a decade. “Every six months, people’s understanding of television changes, so you feel like you’re inventing the future,” says Margaret Stewart, head of user experience. Stewart, 39, melds anthropology, visual design, and software engineering when figuring how those half a billion users a month watch a nd intera c t w ith YouTube. “It ’s this nuanced balance between creating the best possible frame without having the frame take over the experience,” says Stewart, who studied interdisciplinary interactive television at New York University in the mid-’90s before becoming an experience designer for web 1.0 personal-publishing innovator Tripod, and then Google. “It’s our game to lose.” Walk wooed Stewart from Google, in part to help create a version of the YouTube experience that more closely resembles the passive, TV-viewing one. Everyone at YouTube will tell you how happy they are with the average YouTube session clocking in at 15 minutes, while at the same time making it clear that they’re jonesing for the five hours a day that people spend watching TV. “There’s still a lot of room for us to grow,” says Walk. YouTube execs don’t ref lexively assume longer sessions require long-form content. “We don’t think the way to get people to watch for an hour is to make sure they watch two 30-minute chunks of video,” Mehrotra says. “It may be a whole bunch of five-minute shows that are stitched together well.” Last summer, Walk’s product team

launched Leanback on its beta TestTube site, which allows users to create a customized channel based on content they subscribe to, content their friends are watching, as well as some additional channels curated by YouTube. “What we’d like to do is make it easier for you to be able to know that there is great content waiting for you, and you can just press play,” Walk says. The team concedes this is still a work in progress, and the critics agree. “The whole experience of YouTube on your TV is pretty f lawed right now,” says James McQuivey, media technolog y analyst at Forrester Research, who says that not even one in 10 users with TV access to YouTube uses it. “Here’s where thinking like an algorithm could help them.” To a degree, this is exactly what they’re doing. In December, Walk’s team released a beta version of Personalized Channels, which tries to replicate for video the predictive experience that Pandora creates for music. “How do I find everybody’s needle in the haystack without them having to sort through it themselves?” Walk asks, noting that the size of his haystack is both YouTube’s biggest asset and liability: Users upload 35 hours of video every minute. Walk says solving this is “going to be about user experience and front-end design as much as it is about algorithm, infrastructure, and servers,” with Stewart emphasizing the complex it y of a n automated, emotionally driven product. “Things that are funny or sad, those are messy queries to deal with,” Stewart says, flashing her charcoal gray nail polish. “Just because I wanted to laugh yesterday doesn’t mean I want to today.” But they’re clearly chuffed at the early signs of progress: Walk couldn’t wait to tell me that viewing sessions on Leanback were 30 minutes—double the average for the regular site—before YouTube announced it to the world in December. After spending two days with the team, I think back to when Kamangar and I were on the couch in that corner office, f lipping through his favorite YouTube channels. One video he showed me featured wingsuit f lying: “They ski off a mountain,” he said, cracking his first smile during our interview. We watched as an adrenaline-amped dude dressed in a modified jumpsuit and skis barrels off a snowcapped peak, seemingly plummeting into the abyss. K amangar was transfixed as the jumper miraculously takes command in midair, guiding himself down in breathtaking fashion to a safe landing below. “I’m not going to ever be a wingsuit flyer,” Kamangar said. But he may be more of one than he realizes. sacks@fastcompany.com


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TILTING AT WINDMILLS

CORPORATE PHILOSOPHER: Morten Albaek of Vestas has recruited Bloomberg, Lego, and the UN to support his scheme.

Wind-turbine manufacturer Vestas is launching a WindMade trustmark to compel shoppers to consider the energy behind their consumer goods. But will people adjust their buying habits? By Jeff Chu | PHOTOGRAPH BY CHRISTIAN WITKIN February 2011 FASTCOMPANY.COM

77

Tilting at Windmills continued from page 79

label, a product will have to be made with newly installed wind power. So let’s say Tesco, which has discussed a possible partnership with WindMade, wants to put the WindMade logo on its house-label dried apricots. According to the draft standards, Tesco would have to draw at least 12.5% of its power from a wind farm built after 2010, another 12.5% from wind (new or not), and another 25% from any renewable source. Enlightenment—taking transparency and information to the consumer—will come with the help of publicity stunts. The first, which was set to be unveiled in New York, London, and Abu Dhabi in January, on the eve of Davos, will be an art installation called Blue Box, based on work done by Yale urban ecologists who calculated the amount of water it typically takes to make a range of ubiquitous consumer products. A mobile phone, for instance, will be placed in an acrylic box designed to hold 165,144 liters. The idea is to dramatize that wind power consumes little water, unlike other kinds of H2O-hogging rival power sources. The E-is-for-enlightenment part of its campaign got a credibility boost when the UN Global Compact decided in November to give the WindMade effort its backing. The compact, a coalition that brings corporations and UN agencies together in support of a range of do-gooder causes, has never before given its official blessing to a trustmark. UN secretary-general Ban Ki-moon is expected to cite WindMade in his Davos speech as an example of the kind of publicprivate partnership necessary to battle climate change, and the Global Compact will have a seat on the WindMade Foundation board. “We have long tried to establish links with the consumer, but it has never really worked,” says Global Compact executive director Georg Kell. “For the first time, we have a label that has the power to be a fundamental force.” Both the WindMade team and external analysts say that the toughest part of brewing their TEA will be the A, activation. Even if you can give consumers data, even if you can convince them of the importance of those data, and even if you can get the WindMade mark into stores, how do you get

shoppers to open their wallets? Last spring, Vestas commissioned TNS Gallup to survey 25,000 people in 20 nations. In nearly all of the countries, consumers claimed they would eagerly buy products that were better for the environment. (The U.S. was a notable laggard, with only 70% agreeing, versus 91% in China.) But studies have repeatedly shown that consumers don’t do everything they tell a pollster they’ll do. Paul Rice, president of Fair Trade U.S.A., knows about the challenges of activation. His organization has been cultivating the Fair Trade label since 1998, but it was after the participation of big brands such as Starbucks (in 2000) and Dunkin’ Donuts (2003) “that people realized it had legs,” Rice says. And yet: By Rice’s count, only a third of Americans know what the Fair Trade label is, and according to BBMG’s numbers, it’s just 18%. Albaek knows that WindMade will need big consumer brands in its coalition, yet those are precisely the companies that he has found the most difficult to attract. “Perhaps it was too naive of me to think that you could have 25 corporations signing up quickly for something that was still so undefined,” he says. He has also been surprised by a strong strain of what he calls “old-fashioned thinking.” He cites a conversation he recently had with the chief of sustainability for one of America’s largest food companies. “He said one thing that I found remarkable. He will not create transparency before consumers demand it,” Albaek recalls. Other potential WindMade partners have voiced greater enthusiasm for the concept, yet getting them to sign on has been tough. One company said it could not yet meet the criteria, while another was not prepared for the millions it would cost to switch to wind. For any consumer-products manufacturer that does join, though, there remain some other major questions: Will anyone choose a toy or a cell phone or a pair of shoes because of wind rather than uniqueness or utility or style? The proof of WindMade’s potency will be if, when faced with two of the same product, the consumer chooses the WindMade one. As important as WindMade may be, and as ambitious as it is, one of the smartest things about the label is that it’s actually pretty low-risk for Vestas. When asked how much is at stake financially, CEO Engel responds cheerily, “Not a lot, I think!” Vestas has committed to investing $1 million a year in the WindMade Foundation for the next two years. It will also spend about 10% of its annual marketing budget on WindMade—mere pennies relative to the $331 million it spends each year on research and development.

But the reward is potentially enormous. Even if WindMade doesn’t gain the consumer traction Albaek hopes for, it has already succeeded for Vestas. Many companies have opened their doors to Vestas and to pitches about the power of wind; several are poised to buy Vestas turbines. Albaek and his colleagues acknowledge that upside but quickly turn the focus back to WindMade’s broader potential. “If this works, it won’t just be people buying WindMade products,” says WindMade project manager Bragi Fjalldal. “We could have WindMade neighborhoods, a WindMade Olympics, even WindMade cities, and even WindMade countries. If we succeed, five years from now, someone will be working on, say, SolarMade. If we do this right, other industries will want to do this. It will be a new model.” If. One day late last October at Vestas’s main R&D facility in Aarhus, several members of the WindMade team decide to climb one of the company’s offshore windmills. Though the sky is slate gray, it’s a calm day at sea. The water sparkles, a carpet of iridescent blue. Even 300 feet up, the air is remarkably still—how is it that all these turbines are even moving? Allan Laursen Molbech, the group’s tour g uide, has done this before. He dar ts through the nacelle—the capsule-like casing that houses the turbine’s mechanical guts— pointing out the transformer, the hydraulic units, the electrical components. He even crawls into an air duct and then maneuvers himself underneath the turbine. One of Molbech’s visitors begins to get dizzy and nauseated; another takes off her glasses and closes her eyes. Molbech continues his work, dismantling the engine and hoisting a massive piece of carbon fiber high above his head. Then he smiles: “It’s much easier and much more practical working in virtual reality than in reality.” This is all happening in Vestas’s 3-D virtual-reality simulator, where nearly every detail of the company’s windmills can be modeled and examined. “We can address all the complexities,” explains Molbech, who is Vestas’s virtual-reality administrator. “What does this component do? Is there even enough room for someone to make a repair?” If only Albaek could do the same for a marketing-side initiative like WindMade. The day after the virtual-reality turbine tour, he muses on the science and relative certainty of one part of Vestas’s business versus the art and chance of his own. “Will this work? I don’t know,” he says with a halfsmile and a shrug. “I have hope.” He’ll need that—and a very strong wind at his back. chu@fastcompany.com February 2011 fastcOmpany.com

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112 FASTCOMPANY.COM February 2011

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