Google Air Google Real Estate

Google Air: A social marketplace of customers A social marketplace of customers

In contemplating how to remake an airline with Googlethink, I had just about given up. What can one do with such a commodity service, particularly one that has deteriorated so badly? Air travel's business model today is based on overselling seats, billing us for checking bags, charging for pillows and pretzels and just about everything they can think of but air, jamming planes to the point of torture, treating customers as prisoners who can be kept on runways for hours without the food and water an inmate is allowed, and withholding information-all the while raising prices. Google couldn't fix that. No one could.

But then I applied Google rules about connections and the wisdom of crowds with Zuckerberg's law of elegant organization and my own first law and asked how travelers on planes, trains, and ships or in hotels and resorts could be given more control (of anything but the c.o.c.kpit, of course). And I wondered, what if pa.s.sengers on a plane were networked? What if a flight became a social experience with its own economy?

Start here: Most of us are connected to the internet on the ground. Soon, we'll be connected in the air as planes, like hotels, finally get wireless access (after earlier failed attempts). Wi-fi is good for airlines because they will have something new to charge us for and because it will keep pa.s.sengers busy and perhaps less likely to grumble and revolt at delays (though we might just blog and Twitter every problem and indignity as it occurs). Once connected with the internet, pa.s.sengers could connect with each other. It would be easy for the airlines-or pa.s.sengers themselves-to set up chats and social networks around flights and destinations so we could hook up before and during a flight. We could organize to share cab rides once we land, saving each other money. We could ask fellow pa.s.sengers for tips about restaurants, museums, and stores and ways to get around. If the wi-fi were reasonably priced and if there were electric plugs at our seats, we could also spend hours happily playing games with each other.

Back when the 747 was introduced, it was supposed to offer lounges where pa.s.sengers could hang out together. That didn't last long as every inch was soon crammed with revenue-producing seats. Lounges are supposedly set for a comeback in the new Boeing 787 Dreamliner and Airbus A380 superjumbo jets. So imagine if in our onboard, online social network, we could find people we want to meet-colleagues going to the same conference, travelers with shared interests, future husbands and wives-and we could rendezvous in the lounge. The flight becomes a social experience.

I know this vision sounds far-fetched given our current experience of air travel. But play along. Socialization could be a key to decommodifying the airline. What if pa.s.sengers chose to fly on one airline vs. another because they knew and liked the people better? BMW drivers mingle with each other on Facebook; Lufthansa pa.s.sengers could do likewise and they'd have more in common-shared affection for travel and for a destination. Remember: Your company is the company you keep. Your customers are your brand. Airlines might want to encourage more interesting people to fly with them because interesting pa.s.sengers would attract interesting pa.s.sengers. Airlines could offer discounts and benefits to people who are active and popular in the social network. Today, airlines offer only seats: commodities. What if, instead, they were to offer experiences and societies? I know, the last thing we want most of the time is to get stuck with a talkative twit in the next seat. Maybe that's because, by the time we get on a plane, we're in rotten moods. Suspend disbelief still. Imagine returning to the days when we met interesting people in chance encounters in the air. Maybe pa.s.sengers could choose to sit next to each other. Next to the right talker, I might tolerate a middle seat. It would probably have to be David Letterman or Oprah sitting next to me. But it could happen.

These pa.s.senger networks raise the possibility of creating a new economy around the flight. Airlines could set up auction marketplaces for at least some seats, as JetBlue began doing experimentally on eBay in 2008: What's it worth for you to fly to Orlando next Monday? Rather than buying seats only from the airline, if late-booking pa.s.sengers could also buy seats from fellow customers in an open marketplace, that could solve some of the airlines' overbooking problems, reducing the need to pay b.u.mped fliers. Yes, speculators could arbitrage seats, but if they're paid-for and nonrefundable, what problem is that for the airline? Resellers become market makers. This exchange sets a new market value for seats that in some cases will be higher than the airlines' own fares.

The airline could use the exchange as a prediction market to forecast and maximize load. It might see a surge in demand for a destination, perhaps for reasons it could not predict (a new conference or festival, good media coverage for a getaway, a travel bargain, or currency fluctuations unleashing pent-up demand). With sufficient notice, the airline could add capacity, which would keep it ahead of arbitrageurs. The airline always controls supply and now it would know more about demand. Similarly, if a flight were light the airline could offer pa.s.sengers alternatives at big discounts to enable it to cancel the flight and reroute equipment long before departure, creating savings at the bottom line. The airline would increase efficiency and profitability; the pa.s.sengers would get a dividend; and the environment would get a break. An open and flexible social marketplace could transform the airline economy.

Why shouldn't airlines also turn frequent-flier miles into an open market? In these miles, airlines created a virtual currency with greater reach and value than the fake currencies of Second Life or Facebook. But miles are essentially illiquid. Airlines make it next to impossible to get frequent-flier seats unless you're flying to Krakow on Christmas Day a decade hence. Their other offers-use miles to buy a TV-are bad deals; Google search tells me so. Miles have been devalued to the point that they offer ever-lessening incentives to choose one carrier over another; they no longer act as the decommodifier the airlines intended. So open it up: Let us bid on frequent-flier seats, upgrades, and silver status with miles. Let us barter miles with each other (I'll sell you this iPod for miles I need for my vacation). The currency would regain value. It also means more miles will be redeemed, but that sword hangs over airlines' heads in any case.

These exchanges bring subtleties. In some cases, I won't want to reveal my ident.i.ty (telling strangers I'm leaving town); in others, I will (because I'm doing business). As seats are traded, ident.i.ties and credit cards must be in the system for security. And so on. Yet creating such a network could rebrand the pioneer as the social airline-the fun airline, the nice airline, the airline where I'm back in control. (I would use the social network to start a movement to save my knees from the a.s.ses who slam their seats back into them. In an open market, I might even pay them not to.) Now imagine if airlines used these networks to capture the knowledge of their smart-about-traveling crowds and convert that wisdom into value. On our return trips, airlines should ask us to rate and review the hotels and restaurants we frequented. They should ask natives to share insider advice on eating and shopping in their towns. Similarly, hotels should capture guests' reviews of nearby restaurants (as Hyatt has begun doing with its Yatt'it travel community), and cruise lines should gather shopping tips for every port. Travel companies have currencies to pay for the information: They could reward us with frequent-flier miles or discounts on our next trips. And because they know who we are, they could anonymously aggregate data to enhance the information, as I suggested for restaurants: "American Express Platinum customers recommend...." Or: "Canadians traveling to Florida really like...." Airlines could collect an incredible database of live knowledge from real travelers with fresh information. Over time, they'd outdo TripAdvisor and Fodor's-or the airlines could supply them with branded content, which in turn promotes the airlines. The airlines themselves become publishers by listening to, gathering, and sharing the knowledge of customers.

The key to remaking an airline in this mold is giving control, respect, and organization to the customers, helping them find each other and organize into conversations and markets. The customers have value to give. Airlines can capture that value in new ways to improve prices and the bottom line (see the discussion of Ryanair in the chapter, "Free is a business model"). But pa.s.sengers won't give their value if they are not valued, if they are still treated as cattle and criminals.

At a party at the World Economic Forum at Davos, when I met one of the Google cofounders, I mentioned that I was exploring the idea of what an airline would be like if Google ran it. I said I thought it would be social. He grinned and told me about a technology entrepreneur who had founded just such a social airline, but it had to shut down when employees were caught in a scandal smuggling drugs. Pity.

Google Real Estate: Information is power Information is power

I've already aired my enmity for real-estate agents and their oligopolistic fee structure. So I start this chapter not by suggesting how they can remake themselves but instead by speculating how others can disrupt, undercut, and destroy their business.

I should explain why I feel this way about agents. I have had some bad eggs. I also know there are nice agents. It's not personal. It's financial. I do not believe that agents add 6 percent's worth of value to a home sale. The only reason they could demand that commission is because they have controlled the multiple-listing service (MLS) that is key to having your house seen by buyers. Agents aren't the only parties ripping us off in the process. t.i.tle insurance is particularly irksome, as is the necessity of having surveys done and redone, as are home-inspection rackets that have never found the flaws I have found after moving in. Let's not forget lawyers, who make the process unnecessarily complicated so they, too, may soak us. Then there are newspapers that charge too much for inefficient advertising.

The real-estate business is ripe for disruption. Attempts so far have failed because they only try to break open the existing structure, to create discount brokerages that can get homes into that precious multiple-listing service. Even though the U.S. Justice Department in 2008 reached an ant.i.trust settlement opening up the MLS to discount brokers, we are still trapped in their closed system of mutual back-scratching. We need to replace the system. If tomorrow we all listed our homes on craigslist or an equivalent, we would pull the rug out from under the MLS. Some real-estate agents-the smart ones-list homes in these alternative databases today. Shoppers may also list their desires to buy or rent homes or find roommates (as happens on craiglist), and someone-say, Google-could write an algorithm to link seekers and sellers directly, making the internet itself the marketplace. Other services feed the market with information it needs to be efficient. Zillow.com, for example, collects recent home sales so both buyer and seller can judge for themselves what a fair price would be.

As soon as the first real-estate agent (or agent's husband, as often happens) reads this chapter, I know I'll get an angry email or blog comment telling me I just don't understand the value they bring. But if you must explain your value, it's not as great as you think. With all due respect, that reaction betrays the same defensive, protective thinking torpedoing other industries covered in this book. The wiser reaction to such a challenge would be to see the opportunity in it. I'm not necessarily out to destroy agents. I want to wake them up. If you're the smartest, most compet.i.tive agent around, you should want to leapfrog your cozy compet.i.tors, disrupt their businesses, and exploit the new opportunities online brings. Or a newcomer will.

Sellers and buyers still need services. Perhaps the next-generation agent should offer them a la carte. First, sellers want buyers to find their homes. That's marketing. Agents say that's what they offer now, but they don't much. As I said earlier, when agents put an ad in the paper it's to market themselves as much as the home. I'd start a company that does nothing but help market homes in the open internet, creating listings on craigslist, taking pictures and making videos, making web pages for the homes, making sure those pages show up in searches, even buying ads on Google. Thanks to Google, you can do this on your own with links to as many photos as you want (free on Google Picasa); video tours (free on YouTube and easily shot with a $100 Flip Video camera); maps to area attractions (free with Google Maps); an aerial view (thanks to Google Earth); and lists and reviews of local restaurants (thanks to Yelp, also on Google Maps). Home sellers can add links to their own favorite hangouts and best grocery stores and add tips about where the kids can play. You can sell not just the property but the experience, the lifestyle, the community. It won't be long before you can introduce buyers to our neighbors, linking to their blogs or Facebook pages. Many homeowners wouldn't want to do this themselves, so there's a business opportunity to help. I'd sell these services and options for flat fees, not a percentage of the sale price.

The other problem with selling a house is ha.s.sling with tours. I'd start a company that offers concierge services to schedule and escort would-be buyers. The concierge doesn't have to sell the house (as a buyer, I don't need anyone to open closets and point out how allegedly large they are, thank you very much). Buyers could pay the concierge to chauffeur them from home to home. Sellers could pay the concierge to hold open-houses (and make coffee and cookies)-and I think that if buyers knew they wouldn't be trailed by sellers' agents, they might be more likely to visit a home. I would not be surprised to see local home-tour bloggers emerge, taking tours, taking pictures, and treating new homes on the market as news. I'd read it and buy ads there.

Closing is the final ha.s.sle. We need to change laws to simplify the process and shift control and advantage from lawyers to home buyers and sellers.

There are also technology opportunities. I'd like a mobile-phone application tied to Google Maps and global positioning so, as a shopper, I could enter my requirements-houses this large in this price range in this area-and the phone could map out a day's house hunting, scheduling the day and giving me directions so I get to open houses at the right hour. The application could show me photos and videos. It could contact concierges, agents, or sellers to make appointments. Who wants to drive around with an agent in a high-mileage Mercedes when you can go it alone? Or maybe I'm just being antisocial.

Buyers can use the tools of the web and mobile technology to research a prospective neighborhood. New services such as EveryBlock.com list all kinds of data around addresses-crimes, building permits, even graffiti cleanings. Outside.in organizes local blog posts around locations so you can read what your neighbors are talking about. With smart searches, home buyers can get school data and local news archives. They can look up and contact Facebook users who live in the area. A neat new service called CleverCommute provides a real picture of traffic headaches. All this open data beats the agent telling you that every neighborhood is wonderful and every house has potential.

Agent 2.0 will have her own rich web site showing the towns she covers and the homes she has helped to sell, with links to lots of information about the area. She'll want Googlejuice. When I come looking for a home, I may search for someone to help me. That could be a remade agent, it could be a disruptive newcomer, or I could do it on my own. I'll be looking for the best service and the best deal in an open and compet.i.tive market-without anyone paying 6 percent.

Money

Google Capital The First Bank of Google

Google Capital: Money makes networks Money makes networks

I can't think of a Googlier industry than venture capital, and that stands to reason: Venture capitalists traffic in innovation, change, and risk. They watch what Google does, covet its success, and follow its investors. When I told venture capitalist Fred Wilson, a partner at Union Square Ventures in New York, that I was writing a book called What Would Google Do? What Would Google Do? he smiled and said, "We ask that all day long. That's our investment strategy." He and his partners also ask, "What would Sequoia do?" Sequoia Capital backed Google. That's Google envy. he smiled and said, "We ask that all day long. That's our investment strategy." He and his partners also ask, "What would Sequoia do?" Sequoia Capital backed Google. That's Google envy.

Wilson is the Googliest guy I know in this, the Googliest industry. He was one of the first VCs to blog. When he started, his compet.i.tors thought he was nuts. Venture capital was a secretive business. You didn't want adversaries to know what you were thinking or the trends, companies, and people you were tracking. The goal was to get there first; it's a race. But Wilson benefited from revealing his thinking publicly. It helped him hone his ideas and attracted deals-one third of his investments come from the blog and online conversation, he says. Because of his publicness, Wilson developed a reputation online and a wider network of acquaintances who could help him do his work. When I saw him, he was about to head off for a month in Europe, where he wanted to find businesses at the far reaches-Slovenia, for example. He mentioned his trip at the end of a blog post and instantly had 100 people all over Europe wanting to meet him. As he traveled, I followed his meetings via Twitter updates.

"Being public and searchable and findable," he said, "is an important piece of it-owning the first page of your Google search, getting the brand of Fred Wilson out there." When you search Google for Fred Wilson, the first result is his blog (at avc.com); the second and fourth are pages with his bio; the fifth is his Wikipedia entry; the sixth is his Tumblr blog (on a platform created by a company he invested in); the ninth is his Twitter feed (another of his investments). There are other Fred Wilsons on the page: an artist who has had PBS doc.u.mentaries made about him and a band by the same name. But according to Google, I was talking with the the Fred Wilson. Fred Wilson.

On his blog, Wilson gets to try out ideas and products using these new platforms and tools. He has driven readers crazy cluttering his blog page with too many cool new widgets. But then he invested in many of those tools. Wilson's att.i.tude about his blog and investing resembles mine about my blog and media: We learn, experiment, extend our reputations, and meet people. He uses his blog to help run his business; he found his latest a.s.sociate through a blog post. He advises other companies to hire "net natives" who understand the new world because they live in it-and there's no better place to find them than on the net. Wilson inspired many of his compet.i.tors-mostly those who invest in the web, not in other big-iron arenas such as biotech and technology infrastructure-to start blogging. Now a score of prominent VC bloggers write posts explaining to entrepreneurs how to pitch VCs and how to run companies.

This ethic of sharing carries over to the companies in Union Square's portfolio. Wilson told me that one of his investments, Clickable, a search-engine marketing company, joins discussions on other sites just to answer questions that often have nothing to do with the company. They don't necessarily promote Clickable. They share knowledge like good citizens of the gift economy. "Their trail is their brand," he said. He told me about the head of another start-up who relishes getting into conversations-even with users who are angry when his service gets overloaded-because he learns so much about what users want.

Web 2.0 platforms-open and inexpensive software and services that make it easy and cheap to start new sites, services, products, and companies-present both opportunities and challenges for investors. The law that says small is the new big can make life hard when you are accustomed to making big bets, as VCs do-because they also want big returns. Today, a lot of new companies simply don't need VCs' money and when they do, they need less. If VCs have to invest in smaller increments in more companies, it is harder for them to manage their portfolios, which increases the cost and risk of investing. Never thought you'd feel sorry for a VC, did you?

Consider Outside.in, a company started by author, journalist, and entrepreneur Steven Johnson. Outside.in organizes local blog posts and their conversations around places and topics. It makes ingenious use of Google Maps, free databases, and other open-source software. Johnson launched the service using only $60,000 from an angel investor. If he had tried to build the business even five years before, he said, it would have cost $50 million. He could not have afforded, for example, to create the mapping technology Google gave him for free. To expand and hire staff, Outside.in took investment from venture capitalists, including Wilson's fund, but that amounted to nothing near $50 million.

As investments get smaller, entrepreneurs are also getting younger. Many of web 2.0's explosive new companies-Facebook and Digg, to name two-were started by people in their 20s. "The most interesting things I've seen this month and this year are the creations of kids who barely shave," Wilson blogged. This, he argued, is no accident. "It is incredibly hard to think of new paradigms when you've grown up reading the newspaper every morning. But we have a generation coming of age right now that has never relied on newspapers, TV, and magazines for their information and entertainment. They are the net natives. They grew up in AOL chatrooms, IMing with their friends for hours after dinner, and went to school with a Facebook login. The internet is their medium and they are showing us how it needs to be used." They are helping to build what the internet is becoming, which is what Wilson wants to invest in.

That blog post irked a bunch of entrepreneurs my age (hint: my beard is gray). But Clay Shirky defended Wilson's thesis on youth, arguing, "The princ.i.p.al a.s.set a young tech entrepreneur has is that they don't know a lot of things. In almost every other circ.u.mstance, this would be a disadvantage, but not here, and not now.... When the world really has changed overnight, when wild new things are possible if you don't have any sense of how things used to be, then it is the people who got here five minutes ago who understand that new possibility, and they understand it precisely because, to them, it isn't new."

Shirky speaks for my generation when he says he knows from experience that you find music in stores, try on pants before you buy them, and get news and jobs reading newspapers. "I've had to unlearn every one of those things and a million others. This makes me a not-bad a.n.a.lyst, because I have to explain new technology to myself first-I'm too old to understand it natively. But it makes me a lousy entrepreneur."

Wilson responded to the fuss saying that he was not an ageist, only that he and his partners were seeing more and more young people with new ideas. "This is 15-to 20-year-old kids building and launching authentic web services that fill a real need in the market." As he blogged that, he linked to a web site run by my son, Jake, who was 15 at the time and had just written and sold a few Facebook applications, one of them to another venture firm. On a trip to Union Square's offices, after Wilson and his partners quizzed Jake about his net-native worldview, he advised Jake to find a technology mentor and suggested David Karp, who created the tool Tumblr (a Union Square investment). Wilson warned me that Karp had left high school to start his company. High school High school. (My wife to our son: "Don't you even think think of it!") of it!") How do investors meet entrepreneurs from a different generation? I think they need to operate in more open networks with more stakeholders at the edges. VCs are still a chokepoint of control: They raise money from investors; they pick and manage relationships with start-ups; they pay investors and keep their share. They are middlemen and Google makes detours around middlemen. As VCs are stretched thin-making more and smaller investments-it's harder for them to stay in the middle. It's also harder to find and evaluate new companies. I get a headache reading the popular blog TechCrunch, which covers new web 2.0 companies, because I can't hope to keep track of them all: mobile companies, social companies, companies dedicated just to managing blog comments. The low cost of launching and running new enterprises means they can serve niche needs in a small-is-the-new-big age. But the barrier to entry to compet.i.tors is also about a millimeter off the ground. It's harder than ever to figure out which of many compet.i.tors in a s.p.a.ce will win.

So investors need to use a wider network of trusted people to help find and then manage new companies. Taking investment capital from these trusted agents and giving them a share of the profits if their finds pay off could form a network of miniVCs backed by the bigger VC. A variant of this model is New York Angels, a group of 65 successful investors who judge early-stage companies together. Incubators take a more active role in getting companies off the ground. Holtzbrinck, a publishing conglomerate based in Germany, runs a lab that starts some companies and invests in others, then decides whether to buy them. Idealab, founded by nonstop entrepreneur Bill Gross, has launched a large number of companies as an incubator, including Overture (which became the basis for Yahoo's-and, indirectly, Google's-search-ad industry), PetSmart, Picasa (now Google's photo software), Citysearch, and the electric-car company Aptera Motors. Both incubators provide s.p.a.ce, office services, advice, and money. Then there is a series of next-generation incubators built to advise and invest in new web 2.0 enterprises. These include Y Combinator, which funds small entrepreneurs and helps them get from idea to company; Seed Camp, which runs regular compet.i.tions for start-up help in Europe; and Betaworks, which funds and advises early start-ups.

Investors still need to reach into the dorms at MIT and Stanford-or farther back into my son's high school-where ideas are hatching. I decided to teach because I was no longer able to effect enough change in a media company and figured I could do more in the cause of innovation helping students as inventors. At the City University of New York, I started a cla.s.s in entrepreneurial journalism to prove that's not an oxymoron and to teach journalists business. My students create business plans for sustainable journalistic enterprises and, thanks to a grant from the McCormick Foundation, the cla.s.s funds the best of them with seed money. Underlining Wilson's observation about age, my students do best when they think like young people. They fail when they try to think like graybeards. It is sometimes the graybeards who point this out to them. Jim Kennedy, head of strategy for the a.s.sociated Press, heard all my students' presentations and then told them he was disappointed that they had all proposed web sites. He said "web site" practically with disdain, as one would say "disco." He inspired one student, who wanted to start an online magazine for teen girls, to shift from the web to Facebook. She had to think differently.

Entrepreneurship is spreading among youth. There's a blog for young capitalists called College-Startup.com (tagline: "Get rich from your dorm room"). A 2007 Harris Interactive survey on entrepreneurship commissioned by the Ewing Marion Kauffman Foundation found that 63 percent of youths between 8 and 21 years old said they had the ability and desire to launch businesses, and 40 percent planned to do it. Thank goodness for the arrogance of youth.

Perhaps venture capitalism should start to look like a cla.s.sroom: VCs could provide not just funding but also education (which some do in their blogs). If I were a VC, I'd reach out to colleges and offer to help talented entrepreneurs, dangling seed money for those with great ideas. I might open my doors as an incubator and offer free help to great business ideas so I could invest in some of them. (We will discuss other ways to nurture innovation in colleges in the chapter, "Google U.") Or perhaps venture capital could look more like an open marketplace. When I asked mega-entrepreneur Gross how he'd make his field Googlier, he said: "I've always thought there should be a better start-up marketplace, almost like a mini stock exchange for start-ups, open only to qualified investors. But open up all the information and make it more even and transparent." The problem for founders and employees is that they can't take money off the table, as the saying goes, until a company is sold or goes public. A high-end marketplace of private start-up equity would let them sell a little stock to buy their Beemers but still keep working. Facebook did that in 2008 by enabling employees to sell stock to each other. Gross, the entrepreneur's entrepreneur, would like to start a company to build such a marketplace.

Can large companies spark entrepreneurism in their ranks? Google, of course, invests in internal innovation through its 20 percent rule. Google also buys innovation when it acquires companies. Apparently that hasn't been sufficient, for Google surprised the investment community when it started its own venture fund in 2008. When I worked in large companies, I saw how hard it was for them to invest in start-ups. Investing requires different skills. Finding start-ups comes from networking. Managing the relationship is more like teaching. And big companies need the patience to let investments grow on their own paths and timetables. Still, supporting innovation is vital in any industry and any company you can name. Rather than implementing 20 percent rules, perhaps companies can find innovators within their ranks by offering grants to entrepreneurial employees in return for equity. Perhaps universities can help. I am working to start an incubator for the news industry inside my university.

Venture capital's goal is to find talented people with good ideas and to give them the resources they need to execute those ideas. If I were a venture capitalist trying to think like Google, I'd figure out how to build a platform for entrepreneurship. I'd be as open as Fred Wilson with my ideas and hope to attract many more. I'd consider being a matchmaker more than a middleman, sometimes connecting investors and start-ups directly and trying not to get too much in the way. I'd rely on a large, distributed network of trust to help me find and manage investments, rewarding people in that network. I'd put together networks of start-ups that could help each other, whether I invested in them or not. I'd a.s.sume that just as it has gotten easier and cheaper to create content and media, it will get easier to create other kinds of companies. I'd manage abundance. All that, of course, a.s.sumes that I have an abundance of money. I don't. Oh, well.

The First Bank of Google: Markets minus middlemen Markets minus middlemen

Banking is the ultimate middleman business, pooling money and need and profiting on the connections. In small ways-as in small is the new big-the internet is already disintermediating the industry by making direct connections.

Take peer-to-peer lending. At Prosper.com, as of 2008, 750,000 members had borrowed and lent more than $150 million in amounts as small as $50, supporting anything from launching new businesses to paying off college loans to getting out from under credit card debt. It's wonderfully simple and magnificently human. You see the person and the story: "It has been my dream to open a Neapolitan Pizzeria ever since I moved to the United States 9 years ago. I decided to start small at first and open a small food cart, and expand from there.... It is time we expand our little food cart to a full-size pizzeria." I wanted to invest in that one. Another: "This loan will be used to start a part-time business doing cooking cla.s.ses for Raw Foods." What? Cooking raw food? I thought I'd pa.s.s on that. Then there was a student who wanted help to pay for her last year in college. "I work a full time job as well as go to school. I currently have a GPA of 3.9 overall. I am obtaining my degree in Accounting and Financial Management and understand the importance of paying your bills on time and maintaining a good credit score." OK, she sold me. Prosper advises users to diversify loans in case some default (it sends out the collection agency). Though the interest rates run high, this is no way to get rich or to build the new Bank of America. But it is compelling and entertaining. Prosper turns the most impersonal industry there is into a real-life reality show filled with dreams and winners and losers.

Other variations on the theme: Zopa sells certificates of deposit and gives investors a voice in lending the money. Loanio is supposed to make loans safer by involving cosigners and getting more doc.u.mentation. Virgin Money handles the details in loans among friends and family. Lending Club makes loans social via Facebook.

Microloans are better-known-and tend to go to better causes-in developing economies, where they are used to buy cattle to start a business or to send a child to school. Go to dhanaX.com to see stories in India-where only Indians may invest-or to Kiva.org, where you can grant loans as small as $25 to businesses all over the world. Kiva has made $35 million in loans-averaging $485 each-in 43 countries, and 98.1 percent have been paid back. (For comparison, 2.7 percent of prime loans in the United States were in default in the spring of 2008; subprime loans saw 16.6 percent in default.) One Kiva request: Mrs. Phally of Cambodia raises pigs at her home, making $7 a day, while her husband farms, earning $5 per day. The family is also supported by two of their children who work in the local garment factory. Mrs. Phally asked for a $1,000 loan to buy a small tractor for her husband to plow his land. Adding context, Kiva tells us it is common for Cambodians to rent out tractors to make extra income. Kiva's loans earn no interest for the lender, but local administrators charge interest. These loans change the world one entrepreneur at a time. That is an internet dividend.

To make a similar impact in the United States, a bit at a time, see DonorsChoose.org, where you can contribute to teachers' needs. See also Facebook's Causes application, where members start, join, support, and donate to causes. All these new ent.i.ties rely on small bits adding up to big impact, on direct and personal connections, on giving control of the use of resources to those who have them, and on open information.

The root of the credit crisis that spread from America around the globe in 2008 was that bad loans were hidden in packages with good loans and sold to financial markets, with no accountability down to the level of each loan and no transparency. That's not the case in these peer-to-peer loan operations. I don't mean to pretend that the social banking system could replace banks, but banks could learn a lot from it. Why not set up direct marketplaces that let me establish my own diversified portfolio in small-business loans, home mortgages, and student loans? Why not use the infrastructure the bank has, as Virgin Money and PayPal do, to facilitate our own financial transactions? Why not make banks human again? We may not see such an evolution in big, old banks-they're just too big and old. That is why we are seeing new and innovative, peer-to-peer banks and financial inst.i.tutions emerge. But there can be no question that the industry needs both more transparency and more accountability.

The internet also presents new opportunities for financial markets. Online we have new sources of information and a.n.a.lysis about companies other than the conflicted a.n.a.lysts who work for financial inst.i.tutions. Investors themselves can share knowledge, data, strategies, successes, and failures. The Motley Fool's CAPS service pools investors' knowledge to help each member of the community. I invested in Covestor, where stock investors share their verified trading history and others will be able to invest alongside them. Any investor can become his own mutual fund and a winning investor has another way to benefit from betting well.

In my entrepreneurial journalism cla.s.s, Shirky advised students working on a personal finance site to offer a branded credit card, enabling them to aggregate data from the community to let people know where they stood against peers: "Warning-you are spending 15 percent more on restaurants than people your age with your income." Learning from lots of data is a pillar of Googlethink. Banks and credit cards know more about our spending than anyone and almost as much about our buying as Amazon. That's our data as individuals and our wisdom as crowds. I wish they'd turn it over to us so we could use what we learn from it to manage our finances.

Of course, banking and financial markets are regulated for good reason-not closely enough, judging by the results of the credit crash. We need to tread with caution in these areas. But the web presents new ways to think and do business, even in the stodgy old business of handling money.

I'm surprised the web hasn't had a greater impact on the industry already. Every time I see a new retail s.p.a.ce being built in my area, I get depressed when I see a bank move in. How useless. How unfun. I'd prefer another Starbucks or a Taco Bell or maybe an old-fashioned bakery. Why are banks still in the business of building so many retail outlets out of bricks and filling them with staff? When the internet arrived, so did some online-only banks, but they never flourished and many were bought up: in the U.K., Egg was acquired by Citi, First Direct by HSBC. They didn't offer us enough incentive to change our habits. If online banks had pa.s.sed savings onto us-the internet dividend in cash-maybe we'd have been motivated to go virtual.

The cashless society will probably come to the U.S. a day after the paperless office does-that is, never. We keep hearing about people in Finland and j.a.pan buying c.o.kes and paying for parking with their mobile phones, but we haven't seen that happen in the States. Microsoft wanted to become the cash register of the web with its Pa.s.sport service, but I think no one trusted Microsoft to handle our money. Google's Checkout service has not caught on. PayPal, now owned by eBay, has become an easy way for people to exchange cash, but too few merchants use it. Maybe we need a new virtual currency all the world could share that could become the basis of new financial systems. How does Googlebucks sound? In Google we trust.

Public Welfare

St. Google's Hospital Google Mutual Insurance

St. Google's Hospital: The benefits of publicness The benefits of publicness

Too often when I find myself in a discussion about citizen journalists, some member of the press' curmudgeonly cla.s.s-thinking himself quite clever and apparently believing he just thought of this himself-will growl at me: "Why should I trust a citizen journalist? You wouldn't want a citizen surgeon, would you?" No, I wouldn't.

But I do want health care to open up to the Google age and take full advantage of the opportunities it presents to gather and share more data; to link patients with better treatment and information; to connect them with fellow patients in a community of shared experience and need; and to use the potential of collaborative tools and the open-source movement to advance medical science.

On my blog, I have violated the most sacred tenant of privacy advocates: I revealed and discussed my personal health information, writing about my bouts of atrial fibrillation (a sometimes irregular heart beat-I'm fine, thanks). I have received great benefit from opening my medical history to my readers. Fellow patients have given me support, sent me links to resources, shared their experiences about treatments I've considered, and sent me updates on companies working on new treatments. Even Google's Sergey Brin blogged that he had learned he carried a gene mutation that may indicate a propensity for Parkinson's disease.

Imagine how valuable it could be for us patients to go to a site to record our conditions and activities right before the onset of afib (the familiar name for the condition). In some people, too much food, wine, stress, or activity can trigger an attack; in others, these have no effect. Doctors have some of this data already, but only from limited samples. If millions of patients around the world shared their experiences, would we discover new triggers, new correlations, new causes, even new treatments? Don't know. But we can't know until we try, until we open up and provide the means to gather the information and a.n.a.lyze it.

PatientsLikeMe has created a platform for communities around a still-limited set of conditions, including multiple sclerosis, Parkinson's disease, depression, and post-traumatic stress disorder. I spoke with the husband of a woman who, months before, had been diagnosed with MS. He said the site has been invaluable, providing information, experience, and support. The 7,000 MS patients in the group-growing by more than 700 a month-categorize themselves by symptom and treatment and submit narratives and quant.i.tative data: We can see that 395 patients took a particular drug for fatigue; 23 stopped taking it because the side effects were too severe, 21 because it didn't seem to work, and 14 because it was too expensive. This experiential data is a goldmine to a patient trying to learn about and take greater control of her treatment. It is also valuable to the medical industry. The company explains that its operating costs are covered by "partnerships with health-care providers that use anonymized data from and permission-based access to the PatientsLikeMe community to drive treatment research and improve medical care." When we share information in a network, all its members may benefit.

To build these networks, we need to think of health as a public story and rethink certain inhibitions to publicness. We are not motivated to be open when insurers or employers can reject us due to preexisting conditions. Not that I want to push a political agenda, but universal health care would solve much of that problem. Even then, I'm not suggesting that everyone reveal all their ailments. I understand if you don't want to talk about yours. But there could be benefits if you do. Health is just one ill.u.s.tration of how the internet's ethic of publicness could have a subtle but profound impact on how we live.

In 2008, Google started a health service online (at google.com/health) where users can enter their conditions and the drugs they take as well as results of tests, such as cholesterol screening, which they may download from a limited number of health companies that have signed up so far. Patients' information is not meant to be public, though a few of us online folks have wished that we could publish our own pages openly so we could reap the benefits of medical networks. Google's purpose is to give users more information (it feeds me news stories about afib) and to put users in control of their own information, because they have too little control now.

There is a movement afoot to standardize personal health records. It is related to another movement to create systems where customers control relationships with vendors-called vendor relationship management (VRM), the mirror image of customer relationship management (CRM). VRM is being spearheaded by pioneering blogger Doc Searls, a fellow at Harvard's Berkman Center for Internet and Society. I view what he's doing, shifting control to customers, as Jarvis' First Law brought to life. Searls, who's not an M.D., turned his VRM attention to health after spending a tortuous week in the hospital with pancreat.i.tis, which he chronicled from his bed on Twitter and then on a blog. He complained about the lack of information he had, which led him and his doctors to ill-informed decisions that exacerbated his condition. "I believe the closed and proprietary nature of health care is itself a disease that needs to be cured," Searls said as he linked to another blogger, Fred Trotter, who ill.u.s.trated the problem of getting control of our own health information. "Let's imagine that I had some kind of life event that would require me to gather those records together," Trotter blogged. "To do that, I would need to call every doctor I have ever visited, and request a copy of my records." Those doctors would all want to fax him records. "Faxing over phone lines is the 'health exchange network' that we have in the United States," Trotter said. He would end up with a giant pile of doc.u.ments that is not searchable, is hugely redundant, and is not easily read. His doctor is unlikely to spend the time needed to sift through it all looking for that nugget of a clue.

Searls argues for open standards in medical information to organize data and put it under patients' control. He compares the task to the creation of the internet itself (or as I would put it, bringing Googlethink to medicine). "We cannot fix health care only at the inst.i.tutional level," he blogged. "No company and no government agency can fix health care, any more than any company or government could fix networking or computing. Those had to be fixed by hackers building solutions for everybody and not just themselves." Searls hopes to look back in his lifetime and see that health care was reformed from the bottom up thanks to the open-source infrastructure of the internet. He also hopes to see new businesses created "atop patients as platforms."

Now apply this att.i.tude-this ethic of openness, standards, and hacking-not just to medical care but also to medical research. How much of pharmaceutical work would benefit if more data were open and more of the work were open-source? We've heard the arguments: The cost of developing drugs is astounding and unless companies that create them can fully own the information and the results and recoup the expense, they won't discover the next pill that could save your life. I don't disagree; I respect their work, their business needs, and their intellectual property. Still, we need more discussion on the impact openness could have on medical research. Would the government need to sponsor more research so the results would be open? If universities, governments, and doctors shared their data in standard, open, and free databases-with patients encouraged to add their knowledge and experience-would that have a greater benefit than the current, less-transparent structure? If more research were made open, what drugs and businesses could result? Who could organize that knowledge for us? Google has opened up most human knowledge today-any that is digital and searchable-so I'm confident it could do the same with medical knowledge. Like Searls, I hope to live to see that day.

Medicine is still too much a priesthood of closed knowledge, at least as it relates to patients. In 2008, I sat with doctors from around the world at a conference lunch as they clucked, scowled, and shook their heads and shared stories of their patients going to the internet and coming back with incomplete or mistaken information. These doctors wished that their patients hadn't done their own research and that the doctors, as experts, could have kept control of access to information. Well, too late. I advised them to curate good information for their patients. What if they created resource sites? What if they blogged to keep patients informed and up-to-date-and also linked themselves with a larger community of doctors working on the same conditions? If their patients got more of the right information, would that make them better patients? A bit grudgingly, the doctors accepted the notion. I've debated my prescriptions and treatments for afib with my doctor and what I really want from him is data and information about my choices to make better decisions together. I'm no citizen cardiologist, but it is my heart.

I want more information to be made public about doctors as well. It is possible to get survival rates for hospitals performing certain procedures (though sadly, keeping these scores sometimes disincentivizes inst.i.tutions from taking hard cases). Patients rate doctors-like teachers and plumbers-at various online services, but they're not terribly helpful because I don't know anything about the people leaving comments. I'd at least like to get a list of all the conditions a doctor treats and how often so I can pick the most experienced specialist. If a Googley restaurant would tell me how many diners ordered the crab cakes, a Googley doctor should tell me how often she has treated afib. I would also be impressed if the doctor treating me had written about the condition online. I'd be doubly impressed if I saw other doctors linking to her.

The changes in medicine we've touched on all relate to information: opening it up, sharing it, organizing it, a.n.a.lyzing it, bringing the network effect to the industry and our health. That is Google's specialty.

Google Mutual Insurance: The business of cooperation The business of cooperation

As I was researching this book, I wrote on my blog that I had come up against a few industries I thought were immune from reform through Googlification. Insurance topped my list (we'll get to the others shortly).

Insurance is built on getting us to take a sucker bet-a bet even we want to lose. n.o.body wants a reason to collect collision, fire, flood, health, or certainly life insurance. Worse than Vegas, we know that insurance companies stack the deck against us; that is the foundation of their business. If we don't collect, we are losers (we've lost our money). If we do collect, we're still losers (something bad happened). If the insurance company pays out too much and goes out of business, then those of us who paid in still lose. We can't win. The industry has to suspect that we are liars, making us prove our misfortune and reluctantly giving us back the money we put in the pool. They make the economics overcomplicated so we don't know just what suckers we are and so we keep making safe bets-safe for the insurance company. Our relationship with insurance is, therefore, necessarily adversarial and built on mutual mistrust. How incurably unGoogley.

My readers disagreed. A few dozen of them left comments on my blog arguing that insurance can reform, and they showed me how. Here are excerpts from the conversation and my education. (Let this chapter be an object lesson in the power of open, collaborative thinking.) The first comment came from Seth G.o.din, author of Purple Cow, Small Is the New Big, Tribes Purple Cow, Small Is the New Big, Tribes, and other business best sellers, who scolded me: "Think bigger, Jeff!" He provided a few examples of social insurance. First: 20 Korean families pool finances and open businesses one at a time...each member of the group has a huge incentive to help each business succeed, so they can get the money when it's their turn. Imagine insurance being created in a coordinated fashion, with each member of the coop working to decrease the risk of everyone in the pool.

A commenter from France, Bertil Hatt, said the Mutuelle a.s.surance Inst.i.tuteur France (MAIF) lives by some of these principles of mutual benefit, providing insurance as well as services, such as home and child care. Premiums are higher than average, she said, but lower for the young, the poor, and students. "How can they make it?" she asked. "Thanks to an implicit contract: When you get richer, you stay with them not only for the service, but because you believe in their way." Insurance becomes a collective, though private, good.

G.o.din next talked about smart devices that might need less insurance. Cars with better brakes can cost less to insure if they keep us safer and also cost less to repair and to warranty-which, again, is a form of insurance. G.o.din took the idea a step farther and suggested that "smart products come with their own insurance because they're so much better and talk to each other."

When cars know where they are and where trouble might be, or when they integrate with each other and their drivers and the roads and the police, shouldn't insurance get better?