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.

Andrew Shoben of Greyworld

It doesn’t take much for humans to creatve a narrative. Andrew shows off his work called Trace, at Hampton Court. The point was for people to go in and lose themselves, not to find the centre. Inside there are fragments of sound designed to add to the feeling.

The next project he showed is one they’ve just finished called ‘Words‘. Andrew likes his work to be known as public art, not sound art or any other name you put on it. The BBC came to his company asking for a project and Words was the result. It was designed to see how much a word weighs, e.g. Does the word’s length add to its weight? People were given a box at the installation. As they walk through the box begins to glow, as you walk around the space you realise there are lots of words. You realise in the space you can hear other peoples words (through headphones), words that they’ve left hanging in space. New meanings emerge between your own words and someone elses, they create a third meaning. This project was inspired by the lyrics of David Bowie.

Q. How do you come up with ideas?

They usually come up with them in the space where it will be displayed. The BBC are quite adventurous, but often push the boundaries into technologies that are still developing and may not be able to support the original artistic vision. This project was designed to be rock solid in current technology. It works on computer tracking through visual sensors. Technically it’s not clever, but it’s fulfilling the artistic vision fully. One guy who experienced it said it’s like walking through someone elses dream.

Eva Rucki of Troika

She focusses on the boundaries of technology and design.

One project took a portable projector that was used to display mobile phone text messages on street signs and random objects. Warner Bros. wanted to use it for a concert for the band The Streets. During the concert people didn’t understand what was going on because there were multiple projections. The projectors were trained on any surface, even members of the crowd. They found thst if you restrict people to a format, in this instance a text message, they are much more likely to respond and send texts. The blank canvas scares people.

BA ‘All The Time In The World’

They created an unconventional world clock for British Airways at Terminal 5 (Heathrow). It shows times across the world but by smaller city not the capitals. The idea is to get people travelling in their minds. They wanted to push typefaces, they used electroluminescent material. Their display is very adaptable, they wanted to give it a human touch, it can display caps, small caps, joined up etc. It’s beautiful.

BA Cloud

Individually controllable flip dots, magnetic components. The installation was to be hung in the space between escalators. They compared the space to an aircraft takeoff. It used 7km of wires inside. One of the most rewarding parts of the project: because it was art all the engineers and construction workers who put it in place were cynical, but as soon as it was switched on people started to take pictures and send them to their families, this was important since the art was connecting with people straight away.

Onedotzero

Installaton photo shoot. Was an interesting challenge. Troika’s brainstorming process can be random, it doesn’t work to just sit around a table without any ideas, people must come with them and discuss. Their idea was zoetropes. They figured out they could use different spacings between letters to bring different words into focus at different frequencies. This project is featured in the Decode exhibition.

Newtron virus

Uses the drop detector in the MacBook. Brilliant (however if you want to ‘infect’ your computer and have Snow Leopard, at time of writing you’ll still have to wait). Find out more about the Newtron virus.

Enrico Tessarin of New Treatment

He started by mostly talking about Sophia’s diary, a series on Bebo. However, New Treatment are known for an unfinished project called Block X. Cordless show is a project they started a year ago taking a new approach. Sophia’s diary needed a trailer to get funding from brands. They found Sophia was  compelling to the audience because she was average. Lots of teenagers could sympathise with her. Daily video diaries. The story was directed by the audience, she asks a dilemma on the Friday, then what the audeince wanted happened on the Monday.

Block X

Hammer (the horror people) approached him. It’s another online series. The project is still in development. Some ideas for interactivity include: Secret content to your mobile phone; lots of options for game play; augmented reality games. Advertising is really important to this guy. He wants to incorporate brand selling into a made up CCTV control room which is also part of the website interface, e.g. A room sponsored by Ikea?

How do you survive in a world where big brands no longer invest in web shows? Answer, could be a format like the Cordless show. It’s pretty much T4 for the web. Done on an extremely low budget. The show developed a reputation, 30,000 hits per month. Advertisers can’t ignore that. What the Cordless show unique is their branding and interactivity. “The peoples vote” feature on the site. Create your own profile and vote for your favourite performer. A few universities asked for a live version, this brought in money since people will pay for a live performance. After momentum built they got funding from the BBC.

In any web project the first question Enrico asks is why did you choose the web as the medium? If it’s only because you can’t find the funding elsewhere, there’s no point. It’s telling that the BBC and Channel 4 require an interactive plan for any new series or documentary.

Questions

Q. Will interactivity with film go any further than it has?

The methods of interaction are very different. Inevitably it will all converge. It only depends on how traceable human behaviour is, that’s where the money is going to be. It depends on the target audience, it’s generational. Young people don’t necessarily watch TV anymore. Cinema will stay as it is. The future is definately interactive. Now that we have computers and networks that can transmit a different film for each cinema screen, there’s potential for more tailored content. The big issue is where you draw the line between an interactive and passive experience. A big thing that’s happening is the semantic web (woohoo, someone mentioned it – this probably links in with the Words project).

Q. Does the message get lost? Are there other pressures from technology and commercial considerations?

(This question was mostly aimed at Enrico since he was adamant that a new project must be get financial backing from advertising). Block X, although highly commercially orientated, the story was very important. Enrico was keen to stress if the story doesn’t stay, he’s prepared not to make his project. Is it art or ‘advertainment’? He’s looking at real world considerations. He runs a company and has to pay wages. However, big brands try to influence content shot by shot. Even as a producer you have to swallow hard.

Q. What about the economics on the web, don’t people expect things to be free?

Bebo made the first web series called Kate Modern. However Bebo Originals has shut down because they couldn’t find advertisers to support them. (Personally I don’t think enough was said about funding models other than advertising. What about paying for the service? What about content in closed networks distribution channels such as iTunes?)

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“.

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.

• 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.

It needs some kind of grouping system. Stuart Dredge is right, personally I have ‘work friends’, ‘Uni friends’, ‘school friends’, ‘relatives’ (that particular group breaks down further), ‘long-lost friends’… the list goes on. It’s not that I want to exclude anyone, the fact is, most people will probably thank me for not wasting their time!

My Facebook2 upgrade would ideally include the following:

• I want a different private space for all of these groups.
• I want to be able to choose which groups get which content, I don’t want to repeat myself, it’s got to make my life simpler, not more complex.
• I want Facebook to make this upgraded application Macintosh-simple to use (so I don’t make stupid mistakes).

From what I’ve read, these upgrades are far easier said than done, Nels Wadycki has written a post mentioning Yahoo360‘s attempts to do just that, but with buggy consequences. Also, read the BBC‘s Rory Cellan-Jones on “Are my online friends for real?” where he uses the example of Stephen Fry getting 20+ friend requests per hour, OK he’s found a way around it, but there’s got to be a better option?

Update 17 July 07: I’ve just this minute started looking at Pownce – it does ‘sets’! I’m off to have a play… :)

• The @media 2007 podcasts have been released (for the first day anyway).
• Snook.ca posted a piece about Co.mments. Anyone who knows me will understand that anything that aids keeping track of stuff must be a good thing.
• The Simpsons Movie website is totally flash based (boo), but totally fun (yay). Still under development (all locations except Mo’s Tavern are ‘coming soon’ – a phrase I dislike) but what’s there has a good quirky feel to it. On the downside I haven’t managed to register (I guess a problem with my network connection?) and downloading the mobile screensavers seems to only be an option available to people in the US. Does this fit with anyone else’s experience?
• Rebtel.com are offering free – yes *free* – international mobile-to-mobile calls (land-line handsets must have a display). It’s a new application of VoIP and a nifty way around the problem of not having a VoIP ready gadget, required by networks such as Skype. Rebtel seems more convenient than the rest, but what’s the line quality like? I haven’t tried this service yet and my only experience of VoIP was back in 2001 while at Uni (trying to save money on phone calls home), suffice to say the line drop-outs were so numerous I gave up. I have high hopes about this tho…
• Thanks Phil for pointing this out, Photosynth & Seadragon. This kind of technology opens up a world of possibility.
• Found these at the wireless festival, really fun, Music Monster.

Beyond Ajax

In his keynote presentation, Jesse James Garrett focussed on the importance of user experience and the idea that the top web products create the best end-to-end system designed from the ‘user perspective’, not the ‘programme perspective’. Sam Felder and Peter Merholz have both written articles that seem to be based on versions of this presentation (Jesse doesn’t seem to have posted any notes so far). BTW, I enjoyed the Steve Jobs quote.

The Broken World: Solving the Browser Problem Once and For All

Molly Holzschlag firstly announced that she will no longer be speaking at general web conferences, as she blogged a few days before. It’s a shame, I like her style, it was fortunate for me that I got the chance to meet her and have a chat about energy etc – a usual drunken topic of conversation for me ;) – with her in the pub that evening. Interesting points from her presentation included an analysis of the reasons why each web browser develops so differently, she described six implementation variables:

1. Development Approach – browsers have different life-cycles, non-linear iteration has been the best technique so far.
2. Working with Standards – CSS2.1 is being used in some browsers but it’s not a recommended standard yet. W3C specifications are ambiguous, especially a problem.
3. Operating Systems and Tools. (didn’t write anything for this!)
4. Extending Browsers – example is browser bugs fixed in IE6 through use of JavaScript.
5. Proprietary Development – Past examples are Netscape’s ‘Blink’ and Microsoft’s ‘Marque’ technologies. Initially both of these took precedence over implementing CSS support.
6. Fractioning Specifications – Conversation has moved from CSS back to HTML over the last year. There is no specific sensible end to creating an evolved HTML.

Pathways to success:

• Create common baselines. Consistency between browsers.
• Clarify ambiguity – her case studies described how the W3C standards state one thing, but browser developers implement behaviour very differently.
• Transparent development cycles.
• Keep an open dialogue – currently Apple is the only major browser developer that isn’t joining the discussion.

High-Noon Shoot-Out: Design vs. Implementation

Simon Collison describes his passionate contribution to @media07 better than I ever could. Drew McLellan also gave a rousing arguement. Joe Clark live blogged the whole event (and I *mean* event).

Interface Design Juggling

Dan’s presentation. I don’t think I can add much more, I didn’t write much for this one, I guess you had to be there :)

Microformats, Building Blocks and You

Having missed last years inspirational talk by Tantek (I know this because my friend Rik came back bubbling with enthusiasm) I had to see it this year. Here’s his presentation. Tantek has a tendency to write every point on his slides, so there’s not much sense in me explaining. A few useful microformat links are Operator for Firefox and pingerati.net. If you haven’t already checked out microformats (trust me they’re useful), do so first!

When Web Accessibility is Not Your Problem

The last presentation of the day. I’m going to leave this controversial (on the face of it) presentation to my next blog post, I suspect it needs a fair amount of explanation.