Andrew Smith's Blog

When I discuss some of the wilder ideas from the first wave of dotcoms with Totally Wired readers, several examples never fail to make the conversation. Pets.com paying $20 to ship $8 bags of cat litter coast-to-coast for free, is one: AllAdvantage.com’s notion of paying web surfers by the hour, with a bonus for any friends they referred, was another. In the latter case, the idea was that details of public surfing habits would be valuable enough to marketeers to offset the cost of paying geeks to stay indoors. Stupid, huh? Well, yes, but…

In the months since the book was published in hardback (just UK, I’m afraid, the US gets a paperback to coincide with the new UK edition in May), I’ve found myself developing an unexpected sympathy with those dodos of Web 1.0. Indeed, something small reminded me how far from resolving the problems they tried to tackle with such reckless brio.

A few months ago, I was asked to write a piece for the Sunday Times on an innovative project called ‘Sonic Journeys’. The essence of Sonic Journeys was to take interesting walks – or in one case, a train journey in Devon – and ask composers to soundtrack them. Downloaded for free, the soundtracks could then be played on a traveler’s ipod or phone, changing the experience in interesting ways. The one I’d been asked specifically to try was by Adrian Utley of Portishead, a musician I’ve admired since seeing his band at the Roseland Ballroom in New York back in ‘97, at Croft Castle in Herefordshire.

Among its ancient woods, Croft Castle boasts what is thought to be the oldest tree in Europe, the Quarry Oak, reckoned to have been alive when William the Conqueror invaded Britain in 1066. I loved the experience and enjoyed writing the piece, even standing about in the rain while the photographer posed me with the gnarled old Quarry Oak. Then on Sunday 18 October it hit the streets and the ether. Lovely. Except that I quickly realized something was missing, something which I should have foreseen, but hadn’t.

I started out writing for newspapers at The Guardian and still have friends there. For the past five years or so, I’ve been telling them ‘You have to stop giving this stuff away: I know what it costs to get the information on your pages, the effort to takes to interpret and present it, and if you don’t charge, you’ll have to stop doing it.’ Sure enough, the magazine journalism I grew up with and still have a romantic attachment to is all but dead in the UK, because it’s expensive and expendable. More will obviously follow, which is ok until it starts hitting the quality of news, which is patently now happening.

So when Rupert Murdoch announced a pay wall at The Times and Sunday Times, I applauded, thinking that someone had to make a stand for content and the skills which go into producing it. The ideal of unmediated information has a punishing downside in the form of unreliability and the time it takes to sift the sea of data: I love social media, but there are times when I yearn for someone to tell me what I need to see, in exchange for me getting a wodge of my time back. For this, I would pay, I thought, so surely others would too.

Then I saw what happened with the Sonic Journeys piece, as it hit the streets, but not the ether. By which I mean that the piece had no echo, it simply stopped where it was, because no one could forward or tweet it or engage with it online, unless they were one of the few behind the paywall. And I was surprised at how much I missed this – not so much the connection, but the engagement, and by how arid the experience seemed without it. The pay wall: I’m not sure I think it can work anymore.

So it turns out that we’re no nearer resolving the problems Josh Harris and his peers were trying to find all kinds of creative ways around in the late 1990s. An effort which suddenly looks to me much braver and more pioneering than it did back then. So as more time passes, I find that my respect for them grows.

Learning the weird rudiments of high finance for ‘Totally Wired’ is one of the most exciting things I’ve ever done. Now I’m trying to deepen my knowledge by taking a course in market trading – though whether I’ll ever use it remains to be seen. What I can confirm is that the more general impressions I formed while researching hold good, especially in relation to the role of the ‘retail’ – ordinary - investor over here with my new pals on the dark side.
After finishing ‘Wired’, I half-imagined that I might do a book about trying to become an investor for a year. But the more I learnt, the more I came to wonder how I could ever hope to compete with the pros, who had an inside track on data and a network of contacts with shared interests. The very notion of ‘insider trading’ came to look ridiculous. Of course insiders would nod and wink when things were about the happen. How could they not? Which begged the further question of how I could ever be anything other than a patsy in this environment? Because by the time information reached me, insiders would have taken their positions, like mantises on a twig, waiting for me to amble past munching crisps and wondering what a ‘put’ is?
So I was curious to see how my clever, honest and decent tutors could hope to transcend this problem. And no more than a couple of classes in, Eureka! – the answer. How had I been so stupid? The pro investors weren’t going to teach that. Their stern instructions were to forget about the insiders, the pros and MarketMakers who could jump a stock or commodity in a nanosecond. What they are teaching me to do is ‘target’ the dumb rump of my brother and sister retail investors, who are essentially there to provide capital for the pros. And now, of course, me. Because the fresh money has to come from somewhere, right? So why not you?

Haven’t heard from Josh in over a week – which, based on experience, could mean anything – but the highlight of my week was a Books at Breakfast session at the Hospital Club in Covent Garden. Books at Breakfast is a fantastic idea, run by the entrepreneur Richard Kilgarriff, in which attendees get breakfast, plus a fireside chat with an author and copy of his/her book (and all for twenty quid). I’ll be going to many more as an attendee, I hope.
   Mine coincided with Internet Week Europe and I was pleased to find that a lot of those present were from the London tech industries, which made the discussion intensely interesting to me. Inevitably, the question of whether there could be another tech bubble arose and responses varied from ‘No, we know too much about it now,’ to ‘We’re already in one.’ Those who’d lived through the first one tended to echo the stories told in ‘Totally Wired’ and I was interested to note how readily vets could laugh at some of the excesses they’d witnessed or experienced.
   One said, ‘It’s easy to underestimate the role of cocaine in those years’ – a sentiment with which I readily agree. Robin Williams noted that ‘A cocaine habit is God’s way of telling you that you have too much money,’ but it never did much for a person’s sense of caution, either. So no wonder it was to the 90s what LSD had been to the Sixties. A kind of bubble X-Lax.
   A propos of some of our midweek discussion, a report in today’s New York Times addresses the current App Goldrush myth, pointing out that while these things are being written in their hundreds of thousands and used everywhere, almost none of their authors make a living at it. A strange turn of events: almost no one who makes anything also makes a living at it, because the rewards are in packaging and repackaging, whether it be books or financial instruments. Will we reach a point where there’s nothing left to repackage, I wonder? 
   Which reminds me of how I roared with laughter the night an editor at a publishing party frowned, ‘Originality? Yes. That’s a problem.’
   Though of course I spent the journey home either crying or looking for something small and furry to kick…
   And never went to another publishing party.

I’ll be making these entries more regularly from now on, or else there’ll be too much to catch up on each time. Certainly, a lot has happened in the last month, particularly in relation to Josh. As some may know, the former Pseudo man been trying his hand at pro poker in Vegas - he’s a brilliant player, as you’d expect (reads people well, is near-impossible to read himself, likes living on the edge etc) - but hit a losing streak a month ago and nearly got thrown out of his far-from-salubrious digs. Worried about him, a bunch of us called the motel and paid portions of his arrears, and within a few days he was back plotting to take over the world, as though nothing had happened. I offered to write a reference he could take to club owners on the wild north end of the Strip, suggesting that he run some nights or events for them, but he has his eyes on another prize: he latest project, Net Band Command. I’ll detail this a little later, but just a few weeks after his near meltdown, there seems to be renewed interest. Back in the game? As ever, it’s hard to say. But Josh seems in good spirits again and, coincidentally or not, his poker game’s picked up, too.

So where are we? Facebook shares have dropped 50% in value since IPO May 2012. Sounds familiar from Totally Wired? Well, yes, except that Zuckerberg and co had clearly learnt the lessons of IPO frenzy 1999, and made sure that very little money was ‘left on the table’ for bankers and underwriters. In other words, Facebook got the public’s money, not their bankers - a big difference!

Basic rule: if you’re being told that a stock represents a great investment, that means insiders have known for days, weeks or months, and it’s too late for you. This is a game you won’t win.

As to Josh, well he’s trying his hand at pro poker in Vegas. I mean, why wouldn’t he? More on this next time...