Do crowdsourced Q&A sites deliver any value?

The theory behind free Q&A sites is appealing: ask a question to the masses and someone out there should have the answer. Yet, I'm beginning to think that free advice really isn't so great. Here's why:

Yahoo Answers. Probably the oldest and most known of these sites, the quality of answers on this site is appalling. Maybe worse is the quality of the questions. Perusing the questions can be mildly amusing for a while, e.g., Q: "Can your baby get pregnant if you have sex while pregnant?" A: "The baby can get pregnant only if it's a female. If you suspect that your baby is pregnant, try not to have sex again. You run the risk of getting your baby's baby pregnant and that can lead to complications like an infinite loop." But actually, it's overall more just depressing. I can't imagine the site making a comeback; the people contributing seem to be so useless and the domain of answers is so vast, that smart, new participants can't possibly feel any karma by helping others as the probability that they will be helped themselves is so low.

Hunch. I've written about its weaknesses before, but in a nutshell, the challenge is that the value of the site is entirely driven by the participation of the community. Since Hunch allows you to ask questions about anything, my experience is that across the board, the Q&A engine is weak.

Aardvark. I participate in this community and answer a lot of questions (which I like to think add value), but I must admit that I have never had a question of my own satisfactorily answered on this site. Recent example: Q: "What is a good website to discover apartments for rent in Washington, DC (anything but Craigslist please)" A1: "Craigslist" A2: "Craigslist". Their model makes a lot of sense though: identify what you areas you actually know something about (e.g., cooking blogs, the south of France, decoupage) and questions will be filtered before they arrive in your inbox. Both the questioner and I are better off by not waiting on me to give an answer on something say, sports-related.

Mahalo. It's like a slightly more intellectual Yahoo Answers. They try to encourage the karma factor by awarding "points" for participation, and allowing questioners to give "tips" for good answers, but these points only buy you karate-inspired levels. To attain a black belt, for example, you need 13,000 points. Almost all activity, however is in ONE point increments (with the notable exceptions of 1) initially joining and 2) embedding the Mahalo widget on your website, each which is a one time 50 point add), so this is a ridiculous amount of dedication. I'd rather go after a real karate belt.

What would I like to see? A movement towards niche, small community Q&A sites. By definition, all crowdsourced sites depend on their community for their power and in turn, communities are most engaged when they are focused. I like the attitude of Aardvark, but it is still challenged by how diverse it seeks to be; I am getting discouraged by the number of questions I am asked that I am forced to pass on because I have nothing of value to add. Etsy forums is a good example of a dedicated community question site, but it's not quite at the level of a true decision engine.


Gilt Groupe and its clever e-commerce pull

Lately I've noticed a resurgence of new e-commerce destinations practicing clever tactics to once again make online shopping fun, since the amusement of eBay has made way for the practicality of Amazon. Swoopo is cashing in on the trend of integrating of gaming to other online activities (although I still believe that it is a scam); while Groupon uses daily deals that expire at midnight and become free for you if you get enough of your friends to buy (a truly addictive site). Both sites have been wildly successful lately.

Another site seeking to be your guilty pleasure: Gilt, a "by invitation only" site to gain access to very high-end luxury items at great discount. Once inside, you have the opportunity to click as fast as you can every day at noon, when a new set of items are made available. CEO Susan Lyne describes it as "like a sample sale online" except of course, you don't have to wait in line at 6 AM or fight hoards of other shoppers to grab the last size 4. Similarly, the refined Ms. Lyne is clear that "it's not just because it's discounted that it's fun; rather, there is a competitive aspect (like the early eBay) only you get instant gratification." The best items do sell out quickly, so you should arrive prepared, say knowing what parts of the Oscar de la Renta herringbone collection you want to hit first:

So how to gain an invitation to this elite private shopping network? Go to website. Request invitation. Receive invitation the next day. Register. Or you can go to Yelp and see the type of clientele who is "obsessed", "addicted", and "in love" with this website, many of whom claim to hold access to a coveted invitation.

This site is a smart addition to the e-commerce scene. Rival Ruelala was recently purchased for $350M, while prime competitor Vente Privee is expecting to do $750M in sales this year. Gilt Groupe, meanwhile, grew four fold this year as is expecting to do $500M in sales next year, up from $200M this year and less than $100M the year prior. The site is pretty and fun and does a good job of feeling rich which is a nice change from the cheap feeling of eBay or Zappos.


The API that strengthens an already vibrant e-commerce community by letting artists embrace their inner developer

The dedicated buyer and seller communities on Etsy, from the active discussion boards to the Community Council to the "hearting" of products, are behind the site's explosive growth. Nearly 250,000 new members are joining monthly. Now the developer community is joining the mix, taking advantage of the Etsy API to build new applications on Etsy's platform.

Perusing the featured developers who are part of the project Etsy dubs "Handmade Code", it's interesting to note that most all of them are also sellers themselves and their applications (with the exception of the iPhone app) are all free. I doubt that most other sites that provide APIs see their own users morph into developers.

The photographer Red Row Studio who sells prints "mainly inspired by outdoor life in and around Lothian, Scotland where I live", for example, developed one of the coolest Etsy app that I've seen. His Craft Weasel's Tag Finder helps sellers choose the most effective tags for their listings. As tags are how items are both initially categorized (Etsy uses a very detailed categorization scheme) and how they are searched, choosing effective tags is paramount for a seller looking to highlight his product among the 1,931,988 that were listed in October 2009 alone.

As a knitter, you can tag your products in a variety of ways, such as "wool" and "scarf", but taking a look at Tag Finder's tag cloud can help you choose to add, say "organic" to gain more page views and also maybe sell it at a higher price.

Another favorite app of mine is ColorMatch by 26 Olive Street, a shop "obsessed with anything vintage". ColorMatch is "designed to allow anyone to easily upload an inspiration jpeg and have the hues analyzed into a paint palette used for searching items on Etsy by color." So if you just bought a beautiful organic creme wool scarf, you can easily find a matching set of legwarmers.

The Etsy API is yet another way that the p2p community site continues to shake up the e-commerce model.

My favorite websites for self discovery; still looking for the integration

I love recommendation engines. My 2009 purchase history was notable in that I *nearly* managed to do all of my Christmas shopping online and that a large number of sites got to "know me" extremely well over the year, becoming near friends in their accuracy of what I would surely like to purchase. My favorites:

Pandora's Music Genome Project causes me to discover and purchase more music than traditional radio or MTV videos ever could. I have 39 fairly well-refined stations, about half of which were born from the initial artists that I chose.

Etsy's "handpicked items" while not at all reflective of my past purchases or browsing habits, still send me down a path of discovery of new artists that could amuse me for hours and nearly always ends in a purchase.

Amazon's "Recommendations for You" is always my first stop for new books to purchase. makes me understand crazy facts about my own music collection, such as the fact that my most played song of all time is one that was introduced to me 3 months ago (too much "repeat" clearly) and that my music tastes have evolved considerably in the past few years (with some embarrasing legacy artists still in my most played).

iTunes's Genius Recommendations make me buy almost as much music as Pandora, mainly because of the convenience.

Bluefly's recommendations on designer handbags lead me effectively from one that is not quite right to the perfect bag that I am more likely to buy.

Facebook's network effects let me type in the name "Greg G" for example and in the top few hits I will see the Greg whose last name I forgot, but who I was looking for.

Mint's My Financial Summary and pie charts make me far more self-aware of little expenses (ATM fees) and large ones (vast fortunes spent at Whole Foods).

Bandsintown scans my Pandora tastes to find the best upcoming concerts in the area for me.

My6Sense I'm just beginning to experience, but I am impressed so far at how it filters content to determine what is most valuable to me.

Now I have sites that know me inside and out in so many domains: music, crafts, books, designer bags, friends, concerts, financial transactions, blogs. I'm still looking for a good recommendation site for restaurants (don't say Urban Spoon; it's too random and while I love Yelp to check out restaurants, it doesn't recommend well). So far the best substitute is Tyler Cowen's Ethnic Dining Guide, especially because we share the same favorite Korean restaurant (Seoul Gool Dae Gee (Honey Pig Restaurant)). 

But most of all, I lament that I can't take my well-refined music preferences honed on Pandora over to Amazon to recommend cross-domain purchases. What additional factors could my eventual universal ID recognize that would make the connection between my recent purchases of the Horse Feathers collection on iTunes; Jeff in Venice, Death in Varanisi on Amazon; a handmade alligator skin wallet on Etsy; and a designer leather hobo on Bluefly?

I'm looking at you, MyType.


A potential new regulator for p2p lending companies

The new House financial reform bill has been described as a positive development for the p2p lending community and welcomed by industry leaders such as Prosper CEO Chris Larsen. The reason is the move of transfer of regulatory authority from the SEC to a new entity, the Consumer Financial Protection Agency (CFPA). Getting out of the clutches of the SEC probably is good news; so many nascent p2p marketplaces that initially seemed so promising, from Yadyap to People Capital  to Zopa, have either stalled or shuttered US operations in face of overwhelming regulatory requirements. Even those that survived – Prosper, Lending Club, and Pertuity Direct — were set back considerably at the time.

Yet, I’m concerned about a new entity receiving such broad sweeping power in the name of consumers and what it means for the p2p community. The Consumer Product Safety Commission, for example, has not looked with particularly friendly eyes upon the “innovation” of direct selling of handmade children’s items (rather than relying on mass production in China) and threatens to significantly curtail the operations of small sellers on Etsy. It is a sad day when the interest of big business overrides the best interests of the consumers in the name of protecting them.

Here’s to hoping that the CFPA, if it is in fact created (still a great uncertainty), will recognize the benefit of alternative credit models to consumers, rather than restricting access in fear of innovation and newness and of course, the lack of a massive lobbying effort to speak for the consumers who can now access loans at reasonable rates and the lenders who can make sound investments.


Wikipedia founder Jimmy Wales joins Hunch, but the decision-making engine still falls short 

Hunch, the decision-making help site, scored a major publicity coup this week as Jimmy Wales, founder of Wikipedia, joined its Board of Advisors. I was an early beta user and initial fan of the site, impressed that my exploration of the question, "What credit card is best for you" led me 5 sub-questions later directly to my credit card of choice. Other questions were not quite so useful, but as the site is built by the community, it seemed reasonable that it would be weak in its early days.

Six months later, Hunch users have added considerable depth to the site, contributing 50,000 decision outcomes to help other guide other users of the site. Hunch combines this user feedback with machine learning tools to help you explore a wide range of questions from whether or not you should visit Russia to which military service you should join.

Wales described his reason for joining Hunch:

I’ve always been intrigued by the potential intersection of community-based, user-generated web platforms and algorithmic, machine-based ones. Wikipedia and Wikia have proven to do a pretty darn good job with the former. Search engines clearly do a great job with the latter. But until recently I hadn’t seen a great example of how the two approaches could come together, co-exist and truly complement each other to form something greater than the sum of the parts – which I believe is the future of the web. (Allow me to call it now: this is what we are going to come to call Web 3.0.)

This "intersection" has actually been well established by PayPal and Palantir, as we learned at Tap the Collective. And while I like the idea of applying it to decision engines, unfortunately Hunch still falls really flat. I just explored the site for the first time in months and the answers were just as random as during the beta period. The top "hunches" for what I should get my dad for Christmas were a shower radio and a margarita mix set. It said that 99% I should visit Russia. I put literally zero value on these suggestions.

As far as mechanisms to leverage the community to help you make decisions, I far prefer the model of Aardvark, which reaches out to your network to help you drive to very specific answers. Last month I got a chat from a guy in California asking me if I had an insights into a confusing part of The Angel's Game, a book that I had just finished days earlier and loved. We ended up corresponding several times. Now that's an amazing way to get a personalized response.


Web capitalism doesn't need a bailout

Slightly self-promotional, yes, and the title is a bit inflammatory, but my Ignite DC talk was just posted to It is a rapid-fire 5 minute coverage of some of my favorite topics: p2p e-commerce (e.g., Etsy), crowdsourcing, social lending, and prediction markets, all powerful technology-driven platforms that advance free markets.


My $1,000 Lending Club p2p lending portfolio

Since the closing of Pertuity Direct, I made my first move back into the domestic p2p lending market this weekend, opening a Lending Club account with a friend. Our goal is to earn a healthy and stable return of around 10% with minimum monitoring required and full transparency of the status of our investments at all times.

My approach was first to use LendingMatch, their automated tool, to give me a decent, diversified base portfolio. [On a design note, the user interface of LendingMatch is extraordinary; it ranks up there with Etsy as among the most fun and intuitive browsing and selecting tools]

I selected three filters:

  1. $1,000 total investment
  2. Target return (after accounting for expected default and the service fee) of 11%
  3. No delinquencies in previous 2 years

There were certain other filters that I wanted to choose—notes that were both approved by the Lending Club credit team and where the individuals had their income verified—but they too restricted the portfolio, bringing me down to only a handful of notes, so I let them go.

This search gave me 32 notes to compare. I went through them individually to eliminate certain notes that failed in certain less scientific ways:

  1. Inability to spell (especially in the case of the two word loan title, e.g. “Debt Consoalidaton”)
  2. Bad business ideas (e.g., fixing up and flipping houses in a depressed housing market)
  3. Failure to adequately answer questions asked by other lenders

At this point, my portfolio was a bit more aggressive than expected. Lending Club rates their notes from A (less risky) to G (more risky) and I had no A or B loans and an excessive number of F and G loans. I filled in with more A and B loans, filtering for verified income, which obviously brought my expected return down a bit, but I was more comfortable with the final result, summarized here:


The historical default for this blend is about 3.5%, plus the fee of about 0.7%, so my final expected rate of return is between 10 and 11%. My plan is to continue to expand this portfolio to $5,000. I was actually prepared to invest all that at once, but there are simply not enough notes on the site to create my desired portfolio at that scale. Rob at Lending Club indicated to me last month that the company is focusing on attracting additional borrowers. Now I fully understand why a sufficient number of borrowers is so crucial to taking p2p lending mainstream; while it remains hard to invest a significant amount of money, Lending Club’s reach is limited.

The company’s customer service remains stellar. When I experienced a technical issue, I Twitter DMed @RobGarciaSJ, their Senior Product Strategist, who wrote back nearly immediately.  A colleague who is also looking at opening an account shared with me several e-mail exchanges he had with one of their VPs, all answered in great detail within a few hours. Through those emails I learned that Lending Club is allowing accounts to be opened on behalf of dependents. My colleague is looking for a way for his kids’ savings accounts to earn more than 0.5% interest and thinks Lending Club may be a good option.

I’m looking forward to expanding my Lending Club portfolio as the company grows and tracking how it is going here. With expectations of a 10% return, warnings of “if it sounds too good to be true, it is” ring in my ears, but I remain optimistic that p2p lending is simply offering a simpler, better investment opportunity. It’s one I’m willing to bet on.


Finally! A US mobile payment system

I've been longing for a while to use my cell phone instead of my credit card to, say, make small micro-payments or pay back my friends for lunch. Seemed crazy for such a useful service to exist ubiquitously in Africa, but be practically non-existent in the United States.

So I am thrilled to see Twitter's Jack Dorsey and others launch Square, a mobile payment company that is "focused on bringing immediacy, transparency, and approachability to the world of payments."

As credit card terms become more and more unmanageable for merchants -- to the point where I'm seeing more smaller stores either refuse to accept them or post minimum purchases -- this is a great relief. I am glad for the convenience, but for merchants, it is a great cost savings.

Paying at outdoor markets, small coffee shops, even eventually friends could be revolutionized by this service. It's one of the best examples that I've seen in a while of technology opening up free markets.

Flickr credit: Jerrold


Microfinance for entrepreneurs with Angels in Action

A friend points me to Angels in Action, an "ecosystem" and community for entrepreneurs and amateur investors. The idea seems simple enough: investors buy in at a minimum of $1/month and that money gets circulated to entrepreneurs who are part of the community. There is also an Angel Academy where investors get to network and resources for entrepreneurs to connect to funders, artists, and fellow nascent businessmen.
The concept is one that I like: a microfinance community for entrepreneurs and a mechanism for amateur investors to share in a new idea's success. Unfortunately, the promise of the site goes downhill fast. It begins here with AiA's "Social Compact":

  1. Angels in Action is a social network of individuals with one common purpose: the long-term benefit of humanity and the planet.
  2. Angels in Action is an inclusive community of people who seek to extend generosity and create sustainability.
  3. Angels in Action reserves the right to restrict access to our network of affiliates, service groups, financing resources, and sources.
  4. Angels in Action restricts access to pornographers, social and financial predators, gambling and gaming institutions, and any organization or person that seeks to bring injury or harm to others or the network as a whole.
  5. Angels in Action's mission is to gather resources from a broad pool of Patron and Sponsor groups, and to lend to Angel Recipient Entrepreneurs.
  6. Angels in Action forwards over 60% of the net proceeds within our system to Entrepreneurs.
  7. Angels in Action establishes contracts and distribution agreements with like-minded companies and individuals to market, sell, and distribute their product sets via our social network.
  8. Angels in Action is the micro-finance division of Angel Acquisition Corp, a Nevada Corporation that is fully licensed to do business in the state of California. Angel AC is a publicly traded company, trading under the symbol: AGEL.OB
  9. Angels in Action accounts for and reports on all of its financial transactions on a quarterly and annual basis.
  10. Angels in Action is based upon the simple premise of ONE TO MANY, MANY TO ONE.
  11. Angel AC has retained the services of Randall Gruber & Associates, PCAOB as its external, independent audit firm.
  12. Angel AC has retained the firm of Paulina Lippets as its general counsel.
  13. For full terms & conditions, refer to our "Use Doctrine" that can be found on our web site.

Leaving aside the grand pronouncement of #1, I am most troubled by #6: for a microfinance community, why are only 60% of the funds going to entrepreneurs? Why isn't the number 100%? The site is not all transparent in explaining how your money gets distributed or what the repayment plan is. And a 40% overhead cost seems unacceptable.

Digging through the site deeper, things get more strange. The "Angel Academy" section for the angels is merely a series of bizarre videos on "secrets of the self-made millionaire" by Brian Tracy, a self-help author/guru/motivational speaker. Then the "AiA Store" section only sells books of the Through Gates of Fire series, here described on Amazon:

Dr. Flash Bastion is the cutting edge of Christianity. He is the poster-child of Christian success. Dr. Bastion is the senior pastor of the largest evangelical church in the world. The Harmony Heights Community Church is the epicenter of the Christian Faith. Dr. Bastion leads his congregation for twenty years. His congregation goes from "glory to glory," until . . .Through Gates of Fire: Wingless Flight is a story of paradise found, paradise lived, and paradise lost. Volume I: Wingless Flight introduces the character who imprints grace upon others. Have you ever wondered what happens when those who dispense grace become emptied of their giving energies? In Through Gates of Fire: Wingless Flight, author Steve Bonenberger leads the reader through the journey of faith found and faith misplaced and faith restored.

This all makes me question whether the company is even for real. Yet they proclaim Microsoft is their sponsor, and they are tweeting. Seems like the door is wide open for someone else to execute this idea much better.


More alternative funding options for entrepreneurs is trying to fix a problem: the $40B gap between the total funds aspiring entrepreneurs require and the total seed funding currently available to them. By tapping into the social networks of the entrepreneurs, the hope is that additional funders can be found.

This is essentially a crowdfunding platform. Their pitch is that if your business requires $40,000 then you just need to convince 40 friends to lend $40, each of whom in turn just needs to convince 40 of their friends to lend $40. The first step is certainly plausible (Kickstarter is a great example); while I'm less convinced of the feasibility of the second step, this network approach may help you bring new people into the fold. The site allows you to put together a private network of potential donors who have access to your business plan and other supporting documents to make the case for why they should lend to you (anywhere from $40 to $10,000). It also can set up webinars for you to make your pitch to the crowd.

Probably the greatest benefit is that it takes care of the dirty work of formalizing the loan process between you and your friends and family members. It also probably saves time -- you can invite everyone to view your information in a single e-mail -- but while this impersonal approach may score you $40 from your aunt, I doubt that it would land any major loans. And then you need to rely on the second ring of your social network, where the ties are considerably weaker. Maybe you have a brilliant business plan that your dad's colleague is willing to get behind, but then why would he loan to you on this site rather than say, make an investment?

Which leads to the major point which is that this idea is fun and a good way to raise from your friends and family in a more efficient way, but start ups are extremely risky and I would bet that someone with means would rather invest than make a traditional loan. 40billion makes no comment anywhere on the site about the terms of their loans, but they do make it clear that they do not facilitate equity investments.

The bigger gap to me is the inability of amateur investors to invest in, not loan to, startups. When someone figures out how to legally facilitate micro-investments, that will be a game-changer.


Democratizing finance with p2p lending and microfinance

A savvy, young real estate investor of mine asked me recently about p2p lending:

"What is this peer-to-peer lending about? Is it true that anyone can lend to strangers on a website without anyone who actually knows anything about investing helping them? They must be getting screwed. Investing is hard. Not everyone should be doing it themselves.”

It's a similar argument to that made by many critics of microfinance recently: that the poor aren't knowledgeable enough to make use of access to financial services wisely. As with naive p2p lenders who far from earning a return, may end up holding useless paper of defaulted loans, naive microfinance borrowers  may end up far from improving their lives in the worse shape of over-indebtedness.

These concerns certainly are valid. Not everyone is a savvy lender with knowledge of investing principles and not everyone is a born entrepreneur or businessmen who can reasonably project future income based on new debt. But there are some common principles that both p2p lending companies and microfinance institutions can (and often do) embrace to alleviate these concerns and make them both accessible and fair.

  • Simplicity. P2P lending is remarkably straightforward: You (the lender) select the return you want and the risk you can accept, choose borrowers that fit that profile, and agree to lend them money. You then collect a proportion of their monthly interest. This is a process that most people can understand without credentials as a finance genius and creator of synthetic CDOs. And because more people can understand it, more people can reasonably be expected to enter the market and make rational decisions. I’m a believer in not investing what you don’t understand, but a smart person can get p2p lending.
  • Transparency. As a P2P lender, your money changes passes from you through one middleman (the lending institution) to the borrower. There are no mysterious detours. You won't be told that your loans will be repackaged into something newer and better that you no longer recognize. To the unsavvy investor, this is paramount -- I can track where my money is at all times. In microfinance, the transparency comes with clear terms and rates. Adjustable rates and balloon payments don’t exist in the legitimate microfinance world. First time borrowers can enter into these agreements with full knowledge of what their repayment commitment will be throughout the course of their loan.
  • Quality. When markets are open and quality is poor, disaster awaits. Unsophisticated, early investors on Prosper lended money to very high risk borrowers and were soon burned. P2P lending companies learned quickly from this mess that they needed to focus on finding quality borrowers. In fact, Lending Club now claims that among their biggest challenges is finding enough good borrowers, not lenders. Similarly, many microfinance institutions have embraced a certification/rating mechanism to signal high quality partner institutions that embrace client protection. This is a market mechanism to determine quality (like Moody's, minus the conflict of interest) of the providers and minimize negative effects on the poor borrowers.

I agree that there are risks to democratizing finance. Cutting out expert financial advisors to investors and providing access to capital to poor borrowers can lead to dangerous outcomes if the opening comes without caution. My friend worries about what will happen to amateurs making investment decisions without the help of an expert. The Wall Street Journal and others worry about what will happen to the poor who become overindebted because of newfound access to financial markets. I argue that people can generally make good decisions for themselves if the right prerequisites and protections are in place. P2P lending companies and microfinance institutions offer that chance.


Raking it in with e-commerce scam-style at Swoopo

The Economic View of the New York Times today praises the "diabolically inventive" ways of, a website with "unusual auction formats" and a website that is "mesmerizing". In Swoopo's popular format, the penny auction, a new item -- Playstation, Windows 7, DVD player, iPod, etc -- is put up for bid at the price of 1 cent. For 60 cents, you can bit up the price to 2 cents. And so on, until the scheduled end time. But this is where Swoopo parts ways with eBay's traditional auction model; here, the "scheduled end time" can be extended by 20 seconds by placing an additional 1 cent bid...indefinitely. They even offer a Bid Butler to help you achieve the winning strategy of placing a bet in the final 10 seconds. If you win, you might walk away with a new computer that retails for $1,200 with a bid of $76.58.

The trouble is that the site is far worse than a zero sum game. Each auction ends with one minor winner (the winning bidder), lots and lots of losers (the losing bidders), and one major winner ( For every winner of a $76.58 computer, there are quite a few losers who continued to chase after their sunk costs of 60 cents per 1 cent bid. Swoopo keeps all bidding fees as revenue. As Professor Thaler notes, the average revenue to Swoopo for each of its auctions is 60 times the selling price of the item. What a coup; no wonder the company has raised $10M in funding, led by August Capital, since launching in 2008.

But unlike eBay, which manages to efficiently price an item through auctions and rewarding the highest bidder (who values the item the most), Swoopo creates an entirely distorted market that preys on humans' love for games, risk, and chance and prices an item nearly arbitrarily based on the gaming of the system. It's the worst type of online market : an "entertainment shopping" destination that rips most people off while wasting lots of their time (the final "seconds" of an auction may last days) with a lottery ticket-like hope of striking it big.

It seems a bit strange to see this resurgence of the auction format, after many proclaimed it dead with the rise of Amazon and eBay's response of making  the majority of its purchases the Buy It Now format.  Keith Rabois of Slide, Paypal, and LinkedIn, argued in TechCrunch back in May that social networking sites like Facebook and YouTube killed eBay by offering pure "entertainment destinations" whereas people used to turn to eBay more for the online fun.

So a decade later, we see the entertainment/commerce combination back again, only dirtier and scammier. What progress.


Prohibiting web capitalism

Cuba's only internet cafe, where browsers are under constant watchThe United States may not be the most forward-leaning in terms of broadband penetration, but perhaps I should be less critical. Here's a sad fact: only 13% of Cubans have access to the internet.

And after recently blocking Skype, the government is now restricting access further, blocking the popular Craigslist-like classified site Revolico.

In Cuba the internet is controlled by the state monopoly ETECSA, a joint venture between the Cuban government and Telecom Italia. Their reasoning for blocking Skype was simply commercial: to reduce competition for long distance phone calls.

The reason to block Revolico is less clear. I've argued passionately before why web capitalism is important to driving growth, community, creativity, and other goods here and at my Ignite talks here and here. For a society that is supposed to be opening up and that the Obama administration is making overtures toward, this blocking of a basic e-commerce destination is an ominous sign.


Investing in People, or the personal IPO

This guy has done what I've been hoping to see for a while: he's invested in a person, no strings attached, just based on a belief that she will do amazing things and wanting to share in the success:

Imagine you are in your early twenties, out of college several years and your best friend, who recently came into an inheritance of $300K cash told you they could think of no better way to invest the money than to invest it in you.  Not the company you started, not as a loan, but invest it in YOU, as if you were a startup.  In return your friend said all they wanted was 3% of your gross income for the rest of your life.  Do you think you would take it?

Now what if your friend said that they didn’t care what you did with the money or how much you made each year.  If you wanted to sit on a beach in Nicaragua learning to surf, go work in the Peace Corps, stay at home and do your art projects, whatever you want it would be fine, just as long as you made sure to always pay the 3% of whatever you make (as little as that may be).

And finally, what if your friend said you could buy out of your obligation at any point for $6 million in cash.  Then would you take the deal?

I've been intrigued by this concept ever since I learned about my former classmate, Randy Newsom, and his selling of shares of his future income as a professional baseball player. Randy is now in law school, the baseball dream over, and I don't know if the shares that he sold (4% of his future value) are now valid that he has chosen an alternative career, but what a smart way to raise a quick $50,000 as a minor league prospect.

[Alas, my attempt to buy the domain i.po failed. Poland is .pl not .po unfortunately]