Posts about investment

Philanthropy and the news

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On a trip to Silicon Valley with my new dean, Sarah Bartlett, I heard technology people express concern about the state of news. That is good of them, for they have had a role in the disruption of news — and I’m glad they have. Now they need to consider taking the fruits of their technology and the innovation, efficiency, productivity, profitability, and wealth it has created and turn some of it and their attention toward the good of society and perhaps, with it, journalism.

But not as philanthropists. That was my plea to them. We in journalism need them to bring their innovation and investment to news, to teach us how to see and exploit new opportunities to improve news and sustain it. More on the role of technologists another day.

Today, I want to talk about the role of philanthropy. As I was thinking about my trip to the Bay Area — and in the midst of a magnum opus Twitter conversation about the future of news sparked and stoked by Marc Andreessen — I tweeted this:

My good friend Jay Rosen got angry with me, accusing me of being hostile to nonprofit news.

Not true, I replied. I am expressing a preference. Given a source of capital and given the state of innovation in news and media — this is 1472 in Gutenberg years — I prefer to see that precious resource go first to sustainability. Don’t buy a hungry man a fish — or a news-starved community another article. Don’t just teach them to fish. Build the damned fishing boats.

A few months ago, I went to an event in Washington for nonprofit news organizations put on by the Knight Foundation and Pew. Again and again, we heard that the problem with too many of these good organizations is that they put no resource into development — whether fundraising or sponsorship or events. I often hear journalists say that every dollar they get should go straight into reporting; anything else feels practically immoral to them. But so is letting their good work die and disappear: no more fish, no fishing boats, just fishwrap.

I also hear journalists say that they don’t want to concern themselves with the business of journalism. Clearly, I disagree. That is precisely why I started the Tow-Knight Center in Entrepreneurial Journalism.

In New Jersey, I have been doing a lot of work alongside the Dodge Foundation, Montclair State, and others to try to build the foundation for a sustainable news ecosystem that can grow and improve. We are working with sites to make them profitable by improving the services they sell to local merchants, by experimenting with new revenue streams like events, by building a network to share content and audience and — soon, I hope — advertising. We just received $2 million from Knight and one of their wise conditions was that we not spend the money on operations — on buying more stories — but instead on building infrastructure. That is why we are hiring a sustainability director to manage just that. (Know anyone who’d be great at the job?)

So I do see a role for philanthropy in news, an important role. But I’ll caution journalists — as will every foundation I know — that there is not enough money in the endowments of all the foundations interested in supporting news to pay for the work that needs to be done. Similarly, charity and patronage from individuals and companies can do much, whether that is supporting the work of public radio or now crowdfunding a worthy project from a journalist. But neither can that do it all. Charity runs out. That resource is precious and should go where it is most needed.

So now I’ll have the temerity to propose not rules but suggested guidelines for the use and role of philanthropy in news:

1. Philanthropy should support that which the market will not support. And it should wait patiently to determine what that is. In other words, just because something is not being done now does not mean that philanthropy should swoop in and take it over if the market may find opportunity in it.

2. Philanthropy should not compete with the market. We heard this some years ago when a new non-for-profit news entity sprouted in San Francisco and an executive at the crippled Chronicle complained that it could kill the paper. Thank goodness for the paper, the charity was worse run than it and the paper outlasted it.

3. Philanthropy should help build the economic sustainability and independence of news. Here’s the most self-serving thing I will say from my perch in a university: This includes training the next generation of news innovators. It also includes investing in infrastructure and innovation, new methods and models. Innovation in news requires patient capital that will fund not losses but instead experiments and daring failures. Philanthropy can do that.

4. Philanthropy — and journalism , too — should measure its success by the outcomes it accomplishes. Journalists have something to learn from foundations here: It’s not enough to produce content and build audience. Journalism has to help communities better themselves. That starts with listening to the public and its needs.

5. Charity is finite. Yes, you can start a news organization on charity. Yes, we could support a great deal of the investigative reporting we have philanthropically. But I am more ambitious than that; the need is greater. The souce for investigative reporting is (1) whistleblowers and (2) beat reporting. We need to support beats at scale. That’s why I’m doing the work I’m doing in New Jersey and why I’m starting a new training program for beat businesses in a box. Charity doesn’t scale. Sustainability does.

Philanthropy is precious, important, useful. It is a gift to use well and wisely. It isn’t an excuse not do do our jobs. And our job is to rebuild journalism into a service that will last.

Cross-posted to Medium and HuffingtonPost.

Covestor’s launch

covestor.gifThe Wall Street Journal today mentions Covestor, a new service that enables investors to share their trades. I invested in the company, which was founded by the sonorously monikered Rikki Tahta, a fellow former board member on Moreover.

Here’s the idea, from various of the company’s self-descriptions: “Covestor.com aims to de-institutionalize money management. They provide a real-trade sharing service that offers self-directed investors the opportunity to compete with, and be rewarded like, professionals. By sharing the work they already do for themselves Covestor enables them to build their reputations, and eventually earn fees based on proof of their investment record.” And from the home page: “The smartest investors aren’t all professional money managers. Every day, adept unsalaried players around the world are matching, or beating, results of the pros. We think it’s high time for these unsung investment talents to get more recognition, more resources, more of the rewards.”

So it’s not a wisdom-of-the-crowds play. It’s a wisdom-of-the-wise play. Those who have demonstrated track records of success — and prove that by revealing their actual trades — can benefit as others see their value. How? When other investors watch what works for a successful investor and follow his or her lead. Now we can see who is succeeding — and why — instead of relying on the advice of brokers and analysts whose track records are not so clear and whose money is not where their mouths are.

At another level, part of what’s fascinating about this is, as the Journal begins to point out, people today have a different sense of privacy — or better put, a different sense of the value of openness. My parents and grandparents would not reveal such facts, even anonymously. But the key to social linkage on the internet is that you have to give up something to get something: You won’t meet other skiiers unless you reveal that you are one. This is true of social services: Facebook, MySpace, dating services. But it is also true of other arenas that want to benefit from social intelligence: You can’t call yourself an expert investor unless you show your stuff. And now you can benefit from that, thanks to Covestor. It’s also true that the more you reveal, the more value you get back.

Covestor verifies your trades (by your allowing it to take your data in directly from a broker or by Covestor manually confirming your status). You get to control your identity: you can keep it within the Covestor community or you can export your identity to, say, your blog with a widget that reports and certifies your track record.

Now I’m a dolt at investing — except, of course, for my very wise investment in Covestor and Rikki; after all, I still own Time Warner stock and I never bought Apple stock. But I will benefit from Covestor by following the leaders. Because I’m a dolt, though, I won’t do the best job actually describing the service. Om Malik, who’s much wiser and probably thus richer, does a better job:

You sign-up for the service, and plug-in your online brokerage account information and your portfolio shows up on the site, and the system creates its relative performance to the broader indices, sector indices and also creates a risk profile. It’s not a fantasy game; instead it is your real portfolio, where real money is at work.

The site, while no-frills has all the elements you would see on say Morningstar fund screen. You can see a person’s holdings as percentage of their portfolio, with relevant charts and other relevant data. Lets say, you are good at picking broadband stocks; others on Covestor can track your investments. There are shades of social networking, with a built-in reputation system. There are other features that help you gauge the quality of investment information you are getting from a person.

If the “covestors” agree with your investment style, then these covestors can allocate say a small portion of their own investment dollars to mimic your investment style. The more successful you are, the more followers you get. Think of yourself as their virtual money manager – an attractive proposition for those who take (very vocal) pride in their investing prowess. It is not that different from a blog, where unique voice or view points lead to a ‘following.’

See also Seeking Alpha’s report.

Oh, my

Softbank invests $11 million in OhmyNews to go global.

OhmyNews and Softbank shared an understanding that OhmyNews will have to strengthen its Korean main operation to effectively realize the globalization of citizen participatory journalism. To this end, Softbank will invest US$5.2million to OhmyNews. OhmyNews will spend the invested funds on the expansion of OhmyTV, an Internet television arm of OhmyNews, to advance citizen participation in the video journalism and the development of OhmyNews’ English language edition, pushing citizen participatory journalism to the next level. Softbank will own 12.95 percent of OhmyNews’ outstanding shares as a result of this investment.

Softbank and OhmyNews will jointly launch OhmyNews International Co. Ltd. in early March and use this business arm to globalize citizen participatory journalism. Using the company as a global stepping stone, Softbank and OhmyNews agreed to work together in spreading citizen participatory journalism worldwide, which was pioneered by OhmyNews based on the concept that “every citizen is a reporter.” …

As its first international news venture, OhmyNews International will establish ‘OhmyNews Japan’ before August 2006 in Japan. ‘OhmyNews Japan’ will provide Japanese citizens with a multimedia platform of citizen participation, hence introducing a completely different kind of news media to Japan’s media market that will live up to the spirit of Web 2.0.

Until now, OhmyNews has been largely a Korean phenomenon and many have wished and wondered about expanding it to other countries but so far, this has not happened. The question has been whether Ohmy is uniquely suited to the Korean media, political, cultural, and technological landscape or whether it will work elsewhere. I’m moderating a panel with EunTaek Hong, editor-in-chief of Ohmy, at the Online Publishers Association next week and I’ll be eager to hear more. [via Craig]

Advice capital

Stowe Boyd has a smashing post today suggesting a shift form venture capital to advice capital. As VCs find themselves unable to throw big buckets o’ money at ever-smaller, nimbler, quicker startups, it becomes impossible for them to manage their real assets: time, distraction, and knowledge. I think that this provides opportunties for strategic investors who have more than money to offer and also for smart, independent people (such as bloggers, Boyd suggests) who can offer advice, connections, and questions. The challenge is to make this more than a show advisory board but a real relationship and a longer-term commitment for both than old-style consulting (thanks to payoffs in long-term equity). I’ve started down that path with a few companies myself.