Crowdfunding works in a variety of ways but is difficult to set up legally. A research project for the Open Society Institute couldn’t come up with a way for it to work.

Charles describes himself as a ‘corrupted social scientist’. His talk was designed to cover how to finance ventures. There are four conventional ways: venture capital, angel investors, family loans and loan finance.

Loan finance is under used. There’s a fixation on venture capital (VC) in the tech world. VC is problematic. Venture capitalists insist on preference stock, different from ordinary stock. They usually want extra rights and extra protections, they’re taking a risk yes, but anyone else investing in your business do to, for example friends and family. Why should venture capitalist’s be different?

Venture capitalists will lure you with high valuations for your business. But they completely screw with your corporate governance and articles. For Trampoline their articles became 12 times longer once venture capitalists became involved. You also suddenly have to hire lawyers, of course there are bills associated. Venture capitalists also use stealth control.

There are all kinds of agendas that are connected with VC fund life-cycles. You’re tied into the life-cycle of the VC fund. He’s not saying venture capitalists are bad, but there’s not enough discussion of their drawbacks. The recession and what’s happened over the last couple of years has had affects that some people think means VC funding won’t exist in the same format in five years time. They’re investing in fewer and larger deals. They’re focussing on seed and post-breakeven businesses. This leaves a large swathe of businesses not covered by VC.

What is crowdfunding?

The name comes by applying the concept of ‘crowdsourcing’ to that of money. It’s based around using the internet to build a much larger group of private investors. It’s a shift to a much more transparent form of investment (normal VC is very secretive). With crowdfunding everything goes into the public domain.

The concept of crowdfunding came from the early years of the 90s. The first wave started with the music industry. Sellaband.com and BandStocks.com are examples of crowdfunding. An artist puts themselves on the site and fans get a share of the proceeds if they make money. This works well in the film and music sectors where fan bases already exist.

The second wave (of which KickStarter.com in New York is one) was in the non-profit world.

The third wave was based on journalism. Conventional journalism was in decline. Spot.us is a site where journalists pitch ideas.

Trampoline started with VC funding and raised $6m in 2007. They realised it wasn’t a good time to bring in VC funding so they looked for alternative ways to do it. They spoke to their solicitors about crowdfunding, but lawyers don’t like innovation. The legal sector is based on precedent, their solicitors simply said crowdfunding is illegal.

Instead, they found a lawyer who wasn’t dismissive. Francis Irvine does work with the Open Rights Group, he likes innovation. After two months of scratching their heads, they found a legal way to do crowdfunding. They set themselves a £1m target to raise within a year. They’re doing it in a few tranches, they’ve closed their first and the second will close in the Spring.

This method of funding is not mainstream yet, but it will be. However it’s not for the faint hearted.

Benefits

They’re not victims to the VC fund life-cycle. They have a much bigger pool of influential people (investors) that will make them successful (Trampoline is only just seeing the benefits of this). Some would think having so many investors/voices would be a nightmare? However, arguing with investors is good, it challenges your ideas.

It’s not widely known, but the UK Government runs an Enterprise Investment Scheme which is unbelievably good. Wealthy people get 20% written off their tax bill and are covered for 60% of ther investment if the company goes bust.

The FSA is a nightmare though. If you get it wrong you are personally liable (not the company). It’s not easy to get started, you need to work your networks hard, do due diligence and speak to a lot of people. The Trampoline website has a few case studies. However you won’t find any content inviting people to invest on their site, they have to stay within the law.

Questions

Q. There seems to be a bias towards rich people. In the FSA regulations, if you’re seeking investment you can’t advertise it to the world (this protects the grannys). The FSA says you need to be a high-net-worth individual or a sophisticated investor to do it, but Charles how do you do it?

A. It’s illegal with a private company to incite people to invest. However, journalists can say anything they want. Journalists are your friends. You still need a website, but Trampoline’s is full of case studies. There are still exclusions: high-net-worth means £300,000 in net assets not including their main residence. You can tell these people or someone who works in the finance industry (a ‘sophisticated’ investor) that you’re looking for investment. But even if you tell them, you still can’t give them a business plan. You have to set up a labyrinthine system to get them to the next step towards investment. Sellaband and BandStocks are not selling equity, trampoline are the first to do this.

Q. What type of person are we talking about as an investor? Who invests in you?

A. There are two categories. Either 3rd or 4th levels down in their network or friends (friends of friends). Also, people who’ve read about them in TechCrunch or some other publication, they’re often semi professional tech investors.

We traditionally assume that PLCs float their shares on the stock exchange, really they can give their shares to anyone, Charles is looking at ways to reverse engineer a public company to be crowdfunded.

The article ‘World Wide Delusion‘ brought forward my thinking about wider society’s understanding and resulting use of the internet. As society uses and understands more about the possible applications of the net, we move through the stages of 1. Awareness; 2. Utilisation (web 2.0); 3. Control (the future). I believe the development of the web is teetering on the edge of this last stage. Web geeks and the tools they once used for impromptu liberation are now being used for control in ever more diverse applications by government and big business, who crucially have the financial and legal power to back it up.

Oprah Winfrey and Stephen Fry‘s use of twitter exemplify celebrity endorsement and raising awareness of new technologies in the mainstream. Ignoring their status, they are simply individuals utilising the liberating aspects of web 2.0 to microblog their lives. However, the innocent liberation is coming to an end. As these technologies are popularised, governments around the world are more inclined to watch and censor our activities in a fashion that’s been most publicly performed by China. Where once we were protected by the anonymity of the web and trust in our government’s digital ignorance, we’re now facing a future where the web loses a lot of the impartiality that we once took for granted.

Across the world ISPs are being made responsible for the content that exists on their network. In New Zealand the so-called ‘Guilt Upon Accusation‘ law allows ISPs to disconnect individuals who are perceived to have violated copyright laws. The law allows this without any evidence or the scrutiny of a court. In the EU ISPs are newly required to track connections made through the net: i.e. net phone calls, the destination of emails (but not the content) and telephone calls. In the UK, business and government have recently cooperated to end the piracy of music on the internet. ISPs are given the option to voluntarily regulate their networks or face legislation.

Content is now also being censored. The ‘Great Firewall of China‘ is the obvious example, but similarly in the UK content is being filtered on our behalf by the Internet Watch Foundation (IWF). One high profile example of this included the blocking of a Wikipedia article that featured an image of a semi-naked child. In a country that prides itself on freedom of artistic expression, a debate about the image as a valid piece of art allowed the decision to be overturned. However, the worrying aspect of this example is that the decision was made without consultation or a published set of criteria. A sort of digital Guantanamo.

In fact Guantanamo Bay, although being decommissioned, is an example of the game-changing decisions that authorities are prepared to make on our behalf. Using fear of criminality such as terrorism, governments are legitimising increased levels of tracking on and offline. ID cards and a Police road camera network are just two instances where networked technology is being used to hold information on the individual. Each time you use your car, your journey will be recorded and kept for up to two years. Since most of my real world actions leave digital footprints i.e. Oyster card travel or mobile phone use, I can in theory be tracked. But that information is usually separately stored and subject to warrant to gain access. This era of control relies on centralised databases with instant access by the state.

The major issue surrounding each of these control mechanisms is that they come without regulation. Political agendas are bleeding onto the web and into our digital systems and I, as an individual, do not feel consulted on whether I agree. I believe if politics and law are allowed to encroach on our digital lives then democracy needs to follow. The control and collection of information cannot be left to unelected bodies without recourse. Governments must take back control, or at least understand the social and political climate of suspicion that they are allowing us to drift into. In the same way that the green agenda has been pushed to the fore, I look forward to a future election where digital control policies are a major point of debate.

The more information governments (or their agents) collect on the individual, the more power we give them. Without a digital democracy we must trust that this power is used wisely and with restraint. In the UK, I’m not convinced that our government will use my information for anything other than its own purposes. I’m concerned that these systems are so divorced from the political process that I have no way to affect their use.

Update 7 June 2009: “UK ‘must log’ phone and web use“.

Eureka! (Sort of). This week the fluoride story broke in the UK, something that could change the way I live for a long time to come. I couldn’t help but see the similarities between these two issues and this prompted the following post (two birds, one stone) – stay with me here…

Contentious

1. Proposal One. Add a tiny meta tag into your code in order to tell IE what iteration of the rendering engine you’d like to use. This is not because you’re doing anything wrong, in fact if you’re reading about it you’re more likely to be a standards aware web developer. It’s catering for the nonconformist (not conforming to accepted rules or standards*). Microsoft has to deal with a lot of fault calls when it updates its browser and would like a cheaper easier option that covers everyone and reduces the size of its headache.
2. Proposal Two. Let the government add a tiny amount of fluoride into your main water supply to help prevent tooth decay. This is not because you’re doing anything wrong, in fact if you’re reading about it you’re more likely to be an individual who’s aware of their dental health. It’s catering for the unaware, those who glug fizzy drinks and forget to brush. British health services have to deal with a lot of the after effects from years of tooth decay. They would like a cheaper and easier option that covers everyone and reduces the size of their headache.

Whether or not you agree with either of these proposals seems less bound with the facts of the situation (or their portrayal) and more reliant on your philosophy of life. Should the conscientious, the responsible make sacrifices to cater for the rest? Should I make small sacrifices with my (as I believe) health or code, to allow for those that can’t look after their own?

The arguments in favour of both are quite compelling. Put simply, implementing these fundamental changes means that in one fell swoop the majority of problems disappear. Web developers no longer need to worry so much about their sites ‘breaking’ in future versions of IE, similarly parents no longer need to worry whether their children are brushing their teeth properly. We’re all now protected due to this change in our environment. Also, it keeps the managers happy. Numerous posts hint to problems (again, see Zeldman’s article) faced by the IE team when trying to justify their apparent divergence from the development path of previous versions of the product (all thanks to ‘web standards’). Given Microsoft’s position in the market and the flak the company seems to get when it releases updates, the ‘standards’ argument is supposedly wearing thin with the management. Similarly, the NHS has limited resources and not enough dentists.

Fluoridation is a small addition to the structure of your daily life, if the experts are to be believed it won’t lead to conditions that compromise your health (although some disagree). In fact, if you compare the cost of fluoridation to the bill incurred correcting dental decay, it’ll be better for society in the long term (I guess). It will get us out of the current situation where dentists and GPs waste time and money trying to fix what should have been prevented in the first place. It will free up resources to improve public health in other areas.

Meta tags really are tiny pieces of code that there’s no point getting upset over. The burden incurred implementing this new tag in future sites should be minimal. If we can help Microsoft produce a better browser by relenting to their proposal, then surely that’ll produce a better web for all.

So where’s the problem?

I’m happy that plans are being made and people less fortunate than myself (I currently have no fillings and the time/patience to code properly) are on the verge of being helped. But, when these large organisations make such plans seemingly in my best interests, they sometimes (arrogantly) miss the point in the implementation. Standing behind bloggers such as Jeremy Keith and hopefully adding to the calls, I think both of these proposals need to be opt-in.

In the case of fluoride, it can be provided in salt as has happened in other countries; with the meta tag, let people find out about it only when their sites break (at least that way they’ll understand there’s a problem). Doing it any other way would cheapen life for all (which is funny because these descisions will have come from the economics originally). At least now dentists and Microsoft technical support will have an easy answer, but let people explicitly agree to be included.

Another option is to medicate the Microsoft offices water supply – instead of fluoride put aspirin in their water, that’ll cure their collective headache in the mean time.   ;)

* However, I don’t want to get sucked into a debate about how to define what ‘rules and standards’ means. Molly’s already doing a good job.

• If it didn’t make sense the title is a reference to a quote from Harold Wilson, it seemed fitting given Opera’s move against Microsoft. Something that’s provoked a passionate reaction from the likes of Eric Meyer and Andy Clarke, both very aware of the ramifications this is already having on the politics of the web community. Update 17 December 2007: Yesterday Andy posted a follow-up to his suggestion to reform the CSS Working Group, I think due to the incisive response he received. Molly Holzschlag comments and I think she’s in a good position to do so.
• Speaking of politics, this week the BBC Internet Blog posted an article by Jonathan Drori about the difficulties attached to implementing CMS technology across the corporation. He even mentions “fiefdoms” which I think many web managers across the public sector will identify with.
• Totally unrelated and on a happier note, Phil pointed out that the Beta version of Google Maps Mobile can now locate a mobile phone “with or without GPS”. Shame it’s (strangely) not supported on my phone.
• And finally, back in October I watched a presentation over at Mac Learning about the new accessibility features in Mac Leopard. With the recently released answers to questions posted during the session, I was pleased to find my question was included. I asked whether element navigation (what’s this?) is available in browsers other than Safari 3. Unfortunately (and I suppose unsurprisingly) the answer is no. However, I guess the fact that Safari 3 now implements long overdue features such as tabs may be some consolation for this.

What is element navigation? It may not be clear what feature I’m talking about so read on for a brief description. In Leopard using Apple VoiceOver and Safari 3, the user can jump through the page to elements of the same type e.g. all the Headings by type (H1, H2 etc), or links (both picture and text links). I suppose this is useful, I’ve been aware that this has been implemented in other screen readers for some time. Note: Apparently VoiceOver is not a screen reader in that it does not read the screen, it responds to direct programme output. Very clever, *smiles*.

This week I’ve found myself reading Read/WriteWeb more and more. If you’ve not seen it, they produce thought provoking articles on all sorts including some that analyse the past and offer an academic look at the possible future of the web. In the last few days I’ve been contemplating their posts on “Visualizing Social Software Best Practices: Three Approaches” and “Social Graph & Beyond: Tim Berners-Lee’s Graph is The Next Level“. These posts led me to Tim Berners-Lee’s “Giant Global Graph” and Google’s ‘light-hearted’ “Social Design Best Practices“. I found these good for getting to grips with possibilities for the web’s future direction. What’s interesting is that it all seems to tie together the thought as Tim quotes:

It’s not the documents, it is the things they are about which are important

Anecdotally, blue flavor alluded to this last week after recapping on FOWD with the statement ‘content is still king.’. Well actually Tim abstracts this even further by stating it’s what the content is about that’s important, but both follow similar lines by stating the importance of ‘situation-appropriate’ web access (another quote from Tim’s post).

So after digesting all of that freely available info, who needs to go to conferences like @mediaAjax? We’ll actually I do and I was quite sociable at the after conference gathering, although I didn’t have the moola to attend the event.

• “New intelligence chief reveals all on website“, 16 November 2007
  The most senior British intelligence official, appointed yesterday to oversee MI5, MI6 and GCHQ, has a website revealing his home address, phone numbers and private photographs of himself, family and friends.
• “Foreign Office web security failed Data Protection Act, says info office“, 13 November 2007
  The Foreign Office has promised to keep data safer in future, after its website exposed the details of those seeking visas for entry into the UK. An investigation by the Information Commissioner’s Office (ICO) found a breach of the Data Protection Act.
• “Lost CD may put pension holders in peril“, 5 November 2007
  Thousands of customers of UK insurer Standard Life have been left at risk of fraud after their personal details were lost by HM Revenue & Customs (HMRC).
• “DWP loses £2.5bn to fraud and errors“, 26 July 2007
  Department of Work and Pensions. About £2.5bn was lost to fraud and error in benefit payments over the last year …The report identifies limited IT integration as one reason for the high level of error.
• “DoH’s latest d’oh!“, 26 April 2007
  Department of Health (DoH) has apologised for its latest IT blunder – publishing private details of applicants for junior doctor posts on an unsecured website.

Now… anyone for an ID card?

Update 26 November 2007: The total turned out to be “records for 25 million individuals and 7.25 million families”.

Update 20 December 2007: DH found guilty on MTAS data protection breach – “The Information Commissioner requires the DH to sign a formal undertaking to comply with the principles of the Data Protection Act.” Weren’t they already required to do so by law? Will yet another document make any difference?

To start, you may be surprised that every university doesn’t have a CMS already, this fact alone should provide some evidence of the wrangling that occurs when just trying to get such a project off the ground.

I totally agree with Patrick, a CMS should not represent loss of control. In fact, it offers freedom from mundane web editing for the downtrodden Web Provider (university speak for ‘person who edits web pages’). However I think discussing implementation of institutional content management systems by purely referring to how it changes the web doesn’t cover the whole story. Staff changes have to be considered too.

Traditionally the role of web provider within the institution could often be seen as that of hobbyist. The role would generally fall either to someone with good content or good technical knowledge (although people with both sets of knowledge did exist, I think they were in the minority). When the legislation changed in 2001, with the introduction of SENDA (Special Educational Needs and Disability Act), institutions across the country moved to introduce stronger regulation to their content production. Codes of practice were tightened, in-house training courses became a requirement; the age of the ‘hobbyist’ was coming to an end.

Welcome to the age of content management. On the face of it, content management represents a well-balanced system, it separates all of the aspects of web publishing, giving control to the various experts. The marketing department gets an overall control of branding, computer services gets control of the code output and the faculty gets control of the content. Just as it should be. However, by removing the coding function of the web provider role, the institution must guard against losing the pockets of excellent practice that have developed and (more importantly) losing good will amongst staff.

Downgrading a job by removing the technical aspect can have an effect on the job classification (and potentially pay scale) of an unexpectedly large percentage of employees. It is especially true in the divisional university that change on this scale is the only catalyst to finding out the true size and appearance of the web provider community.

Also, the web stirs up passionate arguments because it represents a window of communication, an identity, for even the smallest research project. Compromise (or dictatorship from marketing/computer services) must arise for change to progress when seeking to fundamentally alter the method groups within the institution use to present themselves on the web.

It has always been difficult for me to marry up the world of institutional web publishing and the world of web evangelist. I take both seriously. Although of course there is some overlap in their objectives, the evangelist’s main aim defaults to ensuring standards whilst the institution’s main aims are content, content, content – with a quick turnaround (as Patrick states). Good content management strikes a balance between both of these requirements. Therefore for the purposes of timeliness and compliance with the law, some form of content management is in the future of every university.

Implementing a content management system in an organisation as diverse as a university can be a detailed job. No matter what status quo you find in many parts of the institution, you’ll always find one section where content collection, storage or publishing requirements are vastly different to the rest. For example, the computing school wants to protect its ability to impress their tech savvy audience with tailored functionality and (b)leading edge features; the management school must meet the expectations of an audience ranging from post A-Level to business executive; central services such as finance all require tailored electronic systems (often with a web interface) that allow them to communicate with stakeholders. To each of these sections the CMS represents potential loss of control and change to business processes within the office. To some that’s scary stuff.

I don’t pretend to have the answers, all I can say is that I know this situation requires big helpings of change (and expectation) management. This is because in my experience one of the best ways to upset a group of people is to be perceived to be ‘taking away’ their website. I also know, to truly meet the business requirements of this kind of institution requires a good team of researchers and implementers. Generally the definition, understanding and solving of the issues that arise can only be achieved with the collaboration of experts, even if one of these experts is a lowly web provider.

• Does what happens in the Facebook stay in the Facebook?

A quick google also brought this up:

• Big Brothers, Big Facebook: Your Orwellian Community (found here Digg.com: Facebook CIA Ties)
  
• The Facebook.com: Big Brother with a smile

If you dig around there’s enough information there to keep the conspiracy theorists going for a while. Someone makes the valid point – who’s going to be interested in the music you listen to? However we upload more info than that, cross reference it and suddenly we can be profiled on more personal (and important) stuff like political leanings. Again, I don’t care… as long as it’s not used against me *gulp*.

More immediately – my own fear is that we’ll look back in only a couple of years time and wonder where our privacy went. For more on that see: UK Identity Card Scheme, Feature Creep and my personal favourite – Opposition Campaigns. There we go, political leaning, put *that* on your database.