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UNION SQUARE VENTURES
SESSIONS EVENT:
HACKING PHILANTHROPY
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September 25, 2007
11:30 a.m.
Columbia University
Italian Academy
1161 Amsterdam Avenue
New York, New York
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A P P E A R A N C E S:
BRAD BURNHAM
SCOTT HEIFERMAN
CHARLES BEST
LESLIE CRUTCHIELD
GRAHAM HILL
JOHN JOHNSON
MEGAN CASEY
AMI DAR
JONATHAN SOROS
SAUL GRIFFITH
TOM REIS
CRAIG NEWMARK
BRIAN TRELSTAD
SEBASTIAN TRAEGER
TOM COHEN
SUSHMITA GHOSH
FRED WILSON
ANIL DASH
TOM WATSON
KEN GROUF
CASANDRA RYAN
JONAH PERETTI
BOB YOUNG
DAVID GALIEL
JEFFREY WALKER
DICK COSTOLO
RAY CHAMBERS
JEFF WEINER
PETER SEMMELHACK
PREMAL SHAH
JAMIE DAVES
VICKI SAUNDERS
PHIL CUTTER
ALBERT WENGER
MARTY KEARNS
JASON KNIGHT
TERRY KELLOG
VICTORIA VRANA
JAY GODSALL
JASEN PAEZ
ANDREW PARKER
ANDREW RASIEJ
MERRILL BROWN
JOHN GOLDSTEIN
SCOTT ANDERSON
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A P P E A R A N C E S (CONT.):
MARVIN VARSAVSKY
MICAH SIFREY
ROBERT M. LEVINE,
Court Reporter
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MR. BURNHAM: It is going to be
important to be able to have everybody kind
of quiet down because we're not going to use
mics. And we want to make sure that
everybody can be heard. So it's also going
to be important for people for speak up.
So, I suppose I should introduce
myself. I'm Brad Burnham. I'm one of the
partners at Union Square Ventures. Thank you
all for coming. This is the third of these
sessions, events that we've done. We did one
at Pier Productions, which I think you'll
find is related to the conversations we had
today. We did one on technology and public
policy which again is related to the
conversation we had today.
Today we want to talk about, the
title of this session today is Hacking
Philanthropy, which we have Jeff who
introduced me to the term. There is an
asterisk next to hacking for those of you who
aren't from the tech community. It's meant
as a term of respect. It's something that is
great to talk about. Of being a very
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insightful way of solving a very difficult
problem with great efficiency. And that's
the way we want to talk about technology
philanthropy today.
The first and the most important,
this is a conversation. There are no
presentations. Nobody is going to make a
speech or sit on a panel. Every one of you
is, I hope, going to contribute to the
conversation. And what we've done in the
past is we've had these conversations.
We've put the conversations up on
the Web as a transcript. And Robert over
here is transcribing. In order for him to be
able to deal with this, I know he's probably
going to be tearing his hair out because
there's a large number of people, he's trying
to get everybody's name. We would like the
transcription to reflect everyone's
contributions as accurately as possible.
Again, speak clearly and a little bit slowly.
If we can all give the speaker the courtesy
of trying to remain quiet so we can pick that
up, that would be great.
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So because we're going to put the
transcript on the Web, please don't break any
corporate stories. This is not meant to be,
you know, it will not be secret. So make
your contribution with the understanding that
it will go up on the Web.
So, how is this day going to be
organized. First of all, when we put
together this conversation we wanted to talk
about, you know, what we understood to be
happening in the world of technology and how
it might have an impact on social action and
philanthropy.
And we know that there's a lot of
great work going on in the area of politics.
And you know, Scott, the founder of Meetup
came to light early on in the Dean campaign
and runs The Personal Democracy Forum. And
there's a great conversation already going on
out there about the relationship between
technology and politics. And so we wanted to
focus, instead, on just the relationship, the
opportunity with technology and specifically
with Web technologies and philanthropy. And
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what we think of as positive social action.
There are a couple of reasons for
that. It's the fact that that conversation
which haven't heard as loudly, but also
because we're capitalists. We're venture
capitalists, but we're capitalists. We
believe in markets. And we believe that
there's an opportunity within markets to do
something really creative in the philanthropy
space.
As a starting point, what I'd
like to do is have everybody quickly go
around, introduce themselves. We did put up
bios on the Web. Not all of those bios were
complete. We just put up what we could find.
So I'm sure that there's more to tell for
most of you. Like to do it is as quickly as
we can because just think about the number of
people around the table. A minute each.
Because we're going to be halfway to lunch or
most of the way to lunch. So I'd like to try
to just keep it very brief.
After we do the intros, we have
structured the day with a conversation
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initially about the nature of lightweight Web
services. What they are. How they work.
What engine drives them. Where the
efficiencies come from. And, again, we're
coming from the dot-com side. That's our
experience. And the opportunity I hear today
is to think about how they might create some
value in the dot-org side.
Then we're going to break for
lunch. We have a special treat for lunch.
Maya Lin has agreed to come in and present the
latest and I guess last memorial that she's
going to work on. It's titled, "Missing."
It's a reminder that technology can have an
impact on positive social change. Art can
also have an impact on positive social
change. And she describes what she's doing.
You'll see that there's also a convergence
between art and technology in what she's
trying to do. And I think that will be fun.
After lunch we want to come back
and talk about exactly how to apply some of
the things that we're learning in Web
services to the not for profit and the
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philanthropic side, market the opportunity.
Then we want to talk a little bit
about the constraints. Not everyone in the
world has a computer. How do we solve
problems in situations where there's not an
infrastructure. How do we take advantage of
the limited infrastructure that exists. How
do we get leverage out of the limited
infrastructures.
And, finally, we want to wrap up
with kind of a brainstorming session about
what the world would look like five, ten
years out. If we believe that there's not
only a more integrated use of technology, but
also an accelerated convergence of the
dot-com and the dot-org world. And we'll, I
hope, talk a little bit about that today.
Hope that everybody will be able
to keep their cell phones off while we're
around the table. If you do need to take a
call or to step out, do that. If you need
anything from Dorsey over here, you know,
transportation, or if you'd like her to hold
your phones, receive a call for you or
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something, please just do that. Bathrooms if
you haven't already found them are all the
way downstairs. This stairway. And that's
it.
Let's go ahead and get started
with introductions. My quick introduction is
Brad Burnham. Partner, Union Square
Ventures. Early stage venture fund focused
on Web services that have the potential to
change the structure of markets.
Let's go to Scott.
MR. HEIFERMAN: All right. Hi
everyone. I'm Scott Heiferman. As he said
I'm the CEO of Meetup. I'm in Year 5 of a
20-year project. Have been involved in local
community groups everywhere about most
everything that forms the 21st Century,
multi-chapter organization that exists.
MR. BEST: Charles Best from
DonorsChoose.org which is a website where
public school teachers can be social
entrepeneurs and any citizen can be a
philanthropist. Essentially, a site, a
philanthropic eBay where teachers post
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classroom projects that need funding and
donors choose one that they want to support.
MR. HILL: Graham Hill. Most
recent project, founded Treehugger.com
which I sold a month ago to Discovery. Work
with them for a while.
MR. JOHNSON: John Johnson.
Founded EyeBeam.org, a nonprofit. An arts and
technology nonprofit. Co-founder of Bees
Feed. And just recently started a
philanthropic foundation, civic foundation
which is funding innovation in art and the
environment and social justice.
MS. CASEY: Megan Casey with
Squidoo. Basically what Blue does is we make it
easy and free for people to spread the word
about something that we care about, blogging.
It's a lighter weight structure for them to
rip on things that they care about. Things
that they want to get the word out about.
And while it's free to set up, they do earn
royalties from various ways of participation.
And we encourage them at every stop of the
way to donate to some of our partner
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nonprofits.
MR. DAR: Ami Dar. I run
Idealist.org. It's a global nonprofit. It
matches nonprofits with people all over the
world who want to work with them, volunteer
with them. We've been doing this since '91.
Note the gray they're.
MR. GRIFFITH: Saul Griffith,
technology guy. I write science education
books for children. I work in projects and
spy glasses, building the supplies on laptop
and working.
MR. REIS: Good morning. Tom
Reis. I'm the director of innovation and
design to the Kellogg Foundation. Kellogg
Foundation is one of the old mainstay large
foundations in this country that has
potential for becoming a dinosaur. And my
job is to make sure that doesn't happen.
MR. TRELSTAD: Brian Trelstad.
I'm the chief investment officer of Acumen
Fund, a social investment fund that invests
in Southeast Asia and East Africa. Was on
the founding team of a Web 2.0 called Get
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Active which does management for nonprofits.
MR. TRAEGER: Sebastian Traeger.
I'm heading up a venture called Razoo.com.
We're a social network around social good.
And our goal is to act straight and encourage
people by making our tools easy and fun and
meaningful to get people involved. So that's
what we're doing.
MR. COHEN: Tom Cohen, PTC
Advisors. I focus mainly on helping
entrepeneurs get financing for early stage
companies.
MR. WILSON: I'm Fred Wilson.
I'm Brad's partner. And really enthusiastic
about this particular subject. Because it's
been something that's near and dear to my
heart for a long time. And I think there's a
lot of good stuff happening.
MR. WATSON: Tom Watson. I'm
co-founder of Changing Our World, a
philanthropic services company. I also
publish a website called OnPhilanthropy.com
which covers philanthropy. And I work
particularly a lot in sort of the confluence
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of media technology philanthropy. And how
not for profits can adapt and adopt media and
networks, both to raise money and also to
raise friends.
MR. GROUF: I'm Ken Grouf. I'm
the co-founder of the iNew York which is an
Americore program which gives young people
between the ages of 17 and 24 a chance to do
a year of full-time community service.
Before that I spent six years as a director
at Yahoo.
MR. PERETTI: I'm Jonah Peretti.
I'm the co-founder of BuzzFeed which is the
platform for amplifying online buzz, helping
people find interesting things. And also
co-founder of the HuffingtonPost, a news and
opinion site.
MR. YOUNG: I'm Bob Young. I'm
better known as the co-founder of RedHat and
formerly CEO. After I left Red Hat I did
philanthropy for a couple of years. And I
learned everything I didn't want to know
about philanthropy. So I went back to work.
And being an Adam Smith disciple, I'm
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convinced that the businesses I'm building
will create more value than the philanthropic
project I was involved in. And I'm
interested in you guys convincing me
otherwise.
MR. GALIEL: I'm David Galiel,
executive director of Public Entertainment
Corporation or PiCorp. And we're a nonprofit
digital entertainment studio. And my goal is
to prove that fun is socially constructive
and not mutually exclusive. And that
educational and high production values are
not mutually exclusive terms. And I also
consult with federal, state, local agencies
on adopting lightweight Web applications.
MR. COSTOLO: Dick Costolo. I
was the co-founder and CEO of FeedBurner, a
media distribution platform and a former
Union Square Venture reality port.
MR. WALKER: Jeff Walker. I
started JPMorgan Partners now called CCMP
Capital. Heavily involved in nonprofits,
particularly one we started seven years ago
called Empower. It does back-office support
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and programing for nonprofits. We have 450
here in the city. And we've just gone
national for the city.
MR. CHAMBERS: With the
Amelior Foundation.
MR. WEINER: Jeff Weiner,
executive vice president of Yahoo. In that
position I oversee all of Yahoo's consumer
base products. In addition to the fact that
Yahoo is a tremendous platform to support
some of the efforts here, also have a
personal interest in helping out in improving
the education system.
And have had a great honor to be
able to work closely with Charles on some of
the DonorsChoose stuff. And a little bit
with Ray on some of the stuff impacting all
this stuff.
MR. SEMMELHACK: CEO of
Bug Labs which is a USV portfolio
company. We are building a consumer
electronics platform that will allow
virtually anybody to assemble whatever
electronic gadget they want. Kind of like
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Legos. For enabling all kinds of communities
to explore new types of devices and
applications.
MR. SHAH: I'm Premal Shah. I'm
with Kiva.org which is a relatively new
website that let's anyone with an Internet
connection and a credit card make a micro
loan to someone in the developing world. We
just crossed about 120,000 Internet lenders.
Made loans to entrepeneurs in about 40
countries. Growing quite fast. There's a
lot of risk on the platform as well.
MR. DAVES: Jaime Daves is a
partners firm in New York. Focused on the
media and entertainment scenarios. Also a
co-founder of a philanthropic forum called
Full Circle Fund which is basically the area.
It's terrific to see so many national service
alumni here. It's a transition to that.
MS. SAUNDERS: I'm Vicki Saunders
from ImpactaNation. And five weeks away from
launching another company called Sing, a for
profit, which is a shared platform for social
forces to track and aggregate the mechanics,
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skinable by any organization.
MR. CUTTER: I'm Phil Cutter.
And I apologize for the cell phone. I've
shut it off. It won't happen again.
I'm the chairman of the board of
directors of Goldhirsh Foundation. In the past
three years we've moved more into the social
entreneurship area. I'm here to learn.
MR. WENGER: Albert Wenger. I'm
an early stage investor. I've been involved
in some Web 2 which are lightweight Web
services. I'm also an investor on the board
of Etsy which is an onboard market based.
MR. KEARNS: I'm Marty Kearns.
I'm a founder of NetTreeCentric companies.
We apply network to social changes and
advocacy efforts. Our current project is
Media.org which is using mass distributed
volunteers to do research, develop a database
of media databases.
MR. KNIGHT: I'm Jason Knight,
co-founder and CEO of Wesabe which is a Union
Square portfolio company. We're a service
that helps our members make better decisions
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with their money. So they upload all of
their financial data. And then in a pier
produced manner, share where people can get
more value.
The one thing I guess I'd like to
take away from this is I'd be interested in
the thinking of the people in this room on
ways that people could spend their money and
get more value and do more social good.
That's something we'll be very interested in.
MR. KELLOG: Terry Kellog. I run
an organization called One Percent For The
Planet. It's a movement and getting more
funding into the environmental world from
companies that commit at least 1 percent of
their revenues to causes. It was co-founded
by Patagonia. And we currently have more
than 700 member companies in 25 different
countries around the world.
MS. VRANA: I'm Victoria Vrana.
I'm with Venture Philanthropy Passion. And
we bring over 50 investor families together
to invest philanthropically in great
nonprofit leaders in the D.C. region to help
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them make their organization stronger and
have a greater impact on their communities.
MR. GODSALL: I'm Jay Godsall.
We're venture capitalists. We recently
created a technology Pathogen. So my focus
is try to get pretty expensive stuff into
slums. So we're developing a social
initiative to try to figure out places that
are very rich in pathogens, but not very much
in money.
MR. PAEZ: My name is Jasen Paez.
I'm founder and CEO 4APurpose. We're a
technology media company focused on what we
see, a burgeoning zone throughout the
country; particularly young people.
We have two primary projects
we're focused on right now. One is called
Party4APurpose.com which is an effort to
create a single free platform for every
event, charity purpose of any kind anywhere
in the world.
And we're also working, we're
creators of a couple of different shows
starting to make their rounds in Hollywood to
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bring charitable lifestyles, purposeful
lifestyles, and the fun of engagement and
support which you care about to television
more aggressively.
MR. PARKER: I'm Andrew Parker.
I'm an analyst at Union Square Ventures. I
also previously worked as a developer on an
open source platform for online deliberation
commonly used for organizing social action.
MR. RASIEJ: I'm Andrew Rasiej.
I'm the founder of Mouse which is a nonprofit
I started here in Silicon Valley ten years
ago that focuses on training students to be
the network administrators in
repairing/fixing their computers in inner
schools. Now in a hundred schools in New
York. About to expand to 300. We're also in
eight states and 20 countries around the
world. 95 percent of the kids in our program
graduate and go to college.
I'm also the founder of Personal
Democracy. Follow politics and technology
and a pending website called Tech President
which focuses on how presidential candidates
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are using the Web and how the Web is using
them.
And, lastly, I'm the senior
technology advisor for the Sunlight
Foundation which is a foundation started two
years ago in Washington that's focused on
putting massive amounts of government data
online so that Americans can parse it, to
mash it, smash it, and keep their, hold their
members of Congress accountable.
MR. BROWN: I'm Merrill Brown.
I'm a digital media executive and now
consultant. I was the founder of NBC.com.
Today I run an initiative on the future of
journalism funded by the Carnegie-Knight
Foundation involving Columbia, Berkeley, USC,
Harvard, Northwestern.
And I'm chairman of the board of
a company called Now Public which wants to be
the largest aggregator in the world.
And I'm an advisor to Agave, a
company run by two entrepeneurs who want to
use the Web to help empower people to
contribute to social causes.
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MR. GOLDSTEIN: My name is John
Goldstein. I'm with Google.org. And I'm on
the investment side. (John's opinions are not the opinions of Google.org)
MR. ANDERSON: I'm Scott
Anderson. I'm the newly appointed VP of
global involvement for Ashoka. And for 15
years I did strategic at the Nature
Conservancy. And I also write the Green
Skeptic website.
MR. BURNHAM: We skipped you,
your introduction.
MS. CRUTCHFIELD: I'm so glad to
meet Scott, my new colleague. I'm Leslie
Crutchfield. And we're here wearing a couple
of different hats. I'm the managing director
of a global academy for social
entrepeneurship. It's a new program where we
elect global great entrepeneurship, such as
Mohammed Unis for scaled impact to great
international levels and holding them up as
incons for the people.
I also consult with Phil Cutter
of the foundation, helping them to build up
their social entrepeneurship portfolio.
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And I think the reason I'm here
is my good friend Brian Trelstad is helping
me write a book that's coming out next month.
It's called Forces For Good. The six
practices of my impact nonprofits helped to
develop the methodology which is great for
nonprofits to help us understand how to have
maximum impact through the social sector.
And I'm curious to learn here about how those
social sector leaders and philanthropies can
have impact, do their work.
MR. BURNHAM: Well, thank you all
for coming. We are, I am at least awed and
intimidated by this group. We've spent a lot
of time at Ventures thinking about leverage
in a very positive sense, technology leverage
in the commercial world. And we really look
forward to thinking about how it might apply
to the nonprofit world.
To start the conversation today
what I think I'd like to do is try and get a
sense of what the nature of leverage is on
the Web. And in the invitation that we sent
out, I pointed to an example of Craigslist.
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I do think that Craig will join at one point.
So he'll have a chance to rebutt this. But
Craigslist is a phenomenal institution.
They are in 450 markets in 150 countries.
They're the seventh largest site in the
English language on the Web. They have
something -- and I'll get these numbers
wrong -- Craig will correct them. 20 million
uniques. 18 million posts every month. And
they run this business with 24 people.
So Craig at one point published
an employee per. I don't know whether it's
unique user, Jeff, or there was. And he
compared all of the major important
terminals. And Craigslist was so far and
away off in their own world.
And maybe I'll just turn to Scott
because you're also very involved in creating
a highly leveraged business. And ask you to
comment on how that works.
MR. HEIFERMAN: Well, the
keyword, I think. Thank you for putting me
on platform. Keyword that we use at Meetup
to describe what we're doing which we realize
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is actually about, I think what a lot of the
discussion is the notion of self-organizing,
self-organizing systems.
You know, I think Craig's great
innovation was just like Pierre's great
innovation about the user rating. That he
said we didn't have the resources. We were
too lazy to want to answer everyone's
questions. We set it up so that people can
rate each other and help each other.
Craig's system was how things
were flagged. Means that the system can, you
know, solve problems. So it's not just
self-organizing.
The last thing I'll say on this
leverage point is that it's not just the
self-organizing systems on Web's buzzword
people call crowd sourcing. Meaning like,
you know, people just by doing their own
thing, solve something like flag, a bad post
on Craigslist. But what I believe is that
what's really fascinating is when people more
consciously self-organize the way they do on
Wikipedia. And the way, you know,
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self-organizing groups have always changed
the world.
You might think that it's all up
to a charismatic leader of an MLK. But, in
fact, it's the thousands of small groups
around the country that created the civil
rights movement and the women's rights
movement was about thousands of small groups.
And I don't mean to be plugging my mission
about self-organized groups. But it is an
engine paradigm. A general concept of how
leverage, how technology can leverage
self-organized systems emergence and groups
in interesting ways to make. Because, last
sentence, I promise, self-organized systems
is about decentralization. So the 20 people
sitting next to Craig's office is a highly
decentralized system. And so it's thinking
about these mechanisms that in a
noncentralized way is where the leverage
comes from.
MR. BURNHAM: I like to stay on
the dot-com.
MR. HEIFERMAN: Like the
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Internet.
MR. BURNHAM: Like to stay on the
dot-com for a while and talk about another
phenomenon. And that is open source
software. Going to give Bob a warning that
I'm coming to him. Bob was involved in the
creation of a business called Red Hat which
commercialized the efforts of some very large
number of people who created in a
self-organizing way, an operating system
which is now used to run a very large portion
of the Web. And {maybe|may be} Bob has a
better handle on some of society statistics
of what Linux actually does and how it was
created. And whether we can learn anything
from that mechanism.
MR. YOUNG: Actually, yes. It's
actually not a bad segue. Because your
comment about Craig and his 20 guys
empowering 20 million unique visitors is very
similar.
Red Hat started winning. We won
seven Info World Product Of The Year awards
in a row in server operating systems. So our
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competition was IBM. It was Sun
Microsystems. Novell Corporation. Of
course, Microsoft. All of whom were
multi-billion a year companies. And we
started winning these awards when there were
35 of us working in the tobacco fields of
North Carolina.
So it was positioned by Info
World as a David versus Goliath. This is
remarkable. Until you stopped and realized
that it was actually the reverse. We were
the Goliath. Because we had more engineers
working on our operating system than even
Microsoft could afford to employ themselves.
So it was a form of barter
economy. The engineers contributed to our
operating system because we gave away all of
our code. They gave way all of their code.
They received a benefit for building Internet
drivers. We received a benefit from that
Internet driver until we gave them back a
gigabyte worth of multi-user, multi-tasking
operating system with complete source code.
And a license to do whatever you want with
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it. So they saw us as a partner in the
development of these technologies.
Again, the Internet is the unique
innovation that enabled this to happen.
Without the Internet we couldn't have
harnessed this worldwide group of engineers.
With the Internet it simply is a question of
rethinking how software's developed and what
the incentives are to the engineers who
develop them.
MR. BURNHAM: Something that Red
Hat did that in our business we pay a lot of
attention to is they changed the structure of
the operating system market. They were able
to come after that market with a higher
quality product than could have been produced
by a commercial enterprise.
And Charles is in the process of
changing the structure of the philanthropy
business, using some of the same
infrastructure and platforms that enabled the
production of Red Hat's product or of
Scott's. Talk a little bit about that work.
MR. BEST: Sure. Well, I think
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the ideas that we push production to the
front end-user in a way that makes them feel
like they are partners with us. So that
starts with front line classroom teachers
being the ones to come up with the micro
solutions that will most help their students.
And we actually see that these
teachers come up with ideas that are far more
innovative and creative than any top-down
program would be. And we turn to those
teachers to help screen and authenticate
proposals submitted by teachers in other
regions.
We turn to the students who
benefited to describe the impact of the
project rather than having a staff person go
in and record things. I think in every area
we grab every opportunity to get the front
end-users to do the work.
And the result is our impact
reports that are far more vivid than an
expert might come up with. Micro solutions
that are better targeted and more innovative
than the top-down program.
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And then we have donors who do
the labor of choosing which ideas ought to be
brought to life and were built on Red Hat
Linux.
MR. WILSON: Fred, you know, what
was interesting to me, listening to this, it
certainly is about the technology. As Bob
says, you couldn't do it without the
technology. But it's also about a mindset
that's a fundamentally different mindset.
Instead of the command and
control mindset where an organization decides
how their services are going to be delivered.
It reminds me of the conflicts that Peter and
Jeff Walker and I were having about Bud Labs.
And the question Jeff was saying, what
devices are you going to make. And the
answer is we're not going to make any
devices. We're going to let anybody make a
device. And the same thing, we're going to
let any teacher conceive of a program. We're
going to let any group of people create a
community organization. We're going to let
anybody write an Ethernet driver. And that's
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a mindset that is fundamentally at odds with
the sort of command and control mindset that
most organizations have had for hundreds of
years.
MR. YOUNG: Except, isn't it
basically our free market model versus the
Russian, the old Soviet centralized planning
model?
MR. WILSON: But I think most
organizations, whether it be the Ford
Foundation or IBM, did not have the global
Internet at their disposal when they were
created to deliver whatever services. And so
they had to use a different approach.
MR. YOUNG: They didn't
internally. But as a society, all the IBMs
and the GEs and all of those guys put
together did, if you think about it.
MR. WILSON: So why didn't -- so
why wasn't this approach -- go back.
MR. YOUNG: Because without the
technology, what the Internet is is simply
the first time that everyone on the planet
can talk to everyone else on the planet
34
without an intermediary. And that's the
unique innovation of the Internet.
And so, suddenly, particularly
for philanthropy, you don't have to find the
guy who's already amassed all the wealth and
get him to give you money. You can with
MoveOn.org type approaches get all the
individuals themselves to fork over their
dollar each and that turns out to be more
money than Bill Gates can come up with.
MR. BURNHAM: Bob, you're
touching on something that I think is
important though. And you said that isn't
this just a market working. But there's
also, there's work done on the theory of the
firm by this guy (Coase) comes in 1937 which
described the reason why we have economic
units called companies. Because of the cost
of operating a market within those
communities is greater than the efficiency.
It's more efficient to actually have a
command and control hierarchy within the
community. And then there's a market that
links those entities together.
35
And what's interesting is what I
think is happening now, and what I think
Craigslist shows us and Meetup shows us,
that the Internet is reducing the
transactions costs of organizing markets, to
the standpoint that those communities are
much smaller and much more self-organizing
than they were in 1937.
MR. YOUNG: How do you explain
Google?
MR. BURNHAM: How do I explain
Google?
MR. YOUNG: My argument being
that Google is the guys who are becoming the
Microsoft of the Internet.
MR. BURNHAM: Okay. So why has
Google been -- so you're saying that you
think there is a natural economy of scale on
the Web, as well as the traditional economies
of scale that are more manufacturing.
MR. YOUNG: I'm just posing the
question. I don't have a good answer.
MR. HEIFERMAN: I think your
point is right on. The basic notion of a
36
free market is self-organized system. And
that tends to crate some amazing things, like
the Internet or whatever else. Like
medicines and the good things that's come out
of capitalism. And that's what's at play.
The idea of a foundation for
self-organized human activity. And, you
know, to let the interesting stuff rise up,
that is a good analogy.
MR. WEINER: Practically
speaking, one question or challenge I would
pose for the group is how we help in a sense
organize the self-organization of the people
around this table.
To go back to your point about
scale, I think when you're thinking about
scale, self-organization components that we
talked about earlier are largely based on
community connecting people. And that's one
part of what makes, in a sense, the staff,
the people around the table participate in it
go.
I think looking, spending some
time with Charles and DonorsChoose,
37
understanding that model, I think Charles
would be the first to say fulfillment is the
mechanism by which you fulfill the
match-making. It's absolutely essential.
And scaling that, having spent
time in the search industry, you guys were
just talking about Google as well.
Relevancy. And scaling the ability to make a
match. You know every time somebody goes
into a query box, whether it's on Charles'
site, whether it's eBay, if those sites are
not producing enough liquidity so people can
find something they're interested in in
donating to, they're not necessarily going to
come back to the site.
One of the questions I have, to
me, this notion of organization,
decentralized organization,
self-reorganization. They're not necessarily
mutually exclusive.
And I think massive scale
benefits, if we can start to help this along,
potentially through some open source. So
that rather than have a fragmented splintered
38
approach to this where we have various sites,
and it's amazing to see the firepower
assembled around the table today, imagine if
they were pulling in a similar direction, not
on everything, but on the stuff that helps
make this scale much faster than we could
otherwise imagine.
So imagine if there was a
commitment to an open source platform for any
kind of marketplace approach, philanthropic
efforts. So that engineers and developers
from around the world could be contributing
applications to this platform to better
connect people, to better improve the search
relevancy, to improve liquidity. I think
that would help jump-start a lot of the
things we're talking about.
MR. DAR: Two things. On the one
thing is forgotten now Craig started in '95
in San Francisco. From '95 to 2000 was one
city. Made the hockey stick of hockey
sticks. It was one city. And to me it was
really personal involvement. Came to talk to
us in 2000 about launching in New York City.
39
And I looked at this thing. And I said this
is never going to work in New York. You're
not this stupid. And my lesson from that was
never again say that something is not going
to work. But I think it's 15 years is a
really long time to experiment something and
to iron out the wrinkles of something. And
it's a lot of patience. And I think,
honestly, if you ask Craig, he wasn't
planning on being in foreign cities. He
launched the thing in San Francisco. If you
go to the site today, a new user, you still
go to San Francisco which is sort of weird.
They don't have a list of cities. You land,
first of all, in San Francisco. It's a San
Francisco site.
Second thing, I love to listen
more to people here to focus why in 2007 lots
of people, organizations, corporations are
not doing certain things. It's amazing to me
now watching the national campaigns. And
there was this incredibly exciting moment in
the summer of '03 where the campaign
basically let loose and open source his
40
capacity. A few months you had 20 kind of
bumper stickers. It was fascinating. And
today it's back to wraps again. It kills me.
I don't understand it.
To watch big corporations today
wasting millions of dollars, paying
advertising campaigns, one advertising
campaign, one advertising agency to design
their ad, when they can go to a thousand
users and offer a $10,000 award for the best
ad. Why are they still talking to
advertising agencies six years or 15 years
after MoveOn proved that you can use the 'net
to have lots of activity contributed. And
they still insist on using an old model.
So I think one of the questions
today is why it's technologies people's
mindsets. And why we, all of us sometime in
some cases insist on not using what's
available to us, right in front of our faces
in some cases.
MR. WALKER: Or how we work
together. Charles, back to your point and
Jeff was talking about. Can GE get an
41
engineer for donor contact and donor
management. So can we use Charles' model
which is a great model saying I can connect
with teachers and I can correct directly from
the teachers to the donor. And they're
getting really a very solid connection
feedback to a charity. They're involved in
it.
Can we develop an engine rather
than we're doing it ourselves or the guys in
the environment strategy doing theirs. Can
we develop one engine that we all can use.
And figure out the best, most efficient way
to deliver.
MR. KEARNS: There's two things
to pick up on that. One is from bank
lenders.
MR. BURNHAM: Explain who that
is.
MR. KEARNS: He's a genius on
network theories with comments at Yale. He
wrote a book called The Wealth Of Networks.
He wrote a paper called the theory of pure
production.
42
But there's one thing that he
says that has just been stuck in my head
since he said it. And it was that any place
where you can look for network production
where there's excess capacity built into the
basic unit that's produced.
So information, you know, there's
excess capacity, you can pass it around.
That's why there's all this network
production around information. But you can
also to do a category. You buy a car. And
most people want a car to go from point A to
point B. But they're sold with three extra
seats. So where do you need, see network
production. You see them in the slug lines
of Washington, D.C. or the carpools that just
go and pick up people.
So anywhere where there's excess
capacity built into the basic unit in the
advocacy world. It's the members. They're
in and out, just ATM machines. They're also
smart and skilled and passionate about
things. You know, so all the places are ripe
for network production because there's excess
43
capacity built into the basic note. You see
it in like CD and the search for
extraterrestrial life. People using the
excess capacity computers.
The other thing is I think around
the self-organizing. And we don't need to
pioneer that. There's a lot of
self-organizing systems that are kind of
driven by physics and by chemistry. And
there's real rules on what they need in order
to self-organize. You can't just throw a
bunch of things on the table and let them
organize. They have to have a certain amount
of energy. They have to have feedback
mechanisms which fuel the process.
And I think if you're looking for
a kind of, you know, that are the structural
guidelines on building self-organizing
philanthropy efforts, you have to look to the
wisdom of those systems and say, you know,
how do we make sure that we're placing the
infrastructure in place so that there is
positive impact. So there is trust. So you
can see, in a network view, you can see where
44
the traffic patterns are.
When you think about a network
leader versus a boss, a boss in charge of a
firm understands how to deploy resources. In
networks you have to able to see traffic
patterns. You have to be able to see trends.
And how are we daylighting those like, Donors
Choose or these other ones, saying, here's a
trend. And giving the group the ability to
self-organize.
I think the one that we're most
familiar with is just traffic patterns.
Looking at the traffic maps on the way
there's no central traffic authority that
don't come in 9:00 to 5:00 today. They just
show you a map. Traffic jam, it's red. And
everybody optimizes. Go around it. None of
that is detailed in change for advocacy
groups. And I think that's the real
challenge to us, is to think about back to
philanthropy. Back to social changes.
MR. BURNHAM: One of the things
that, Marty, you're saying requires a
platform that Jeff Weiner or Jeff Walker are
45
looking for is it's a medidata that will be
produced as people interact with that
platform. The challenge, I think, in
creating that platform. And I'm very naive
about the nonprofit side. But if I just
imagine what the challenge might be, it's
that on the for profit side getting companies
to agree to a common platform that reduces
the entry barriers to participating in a
network or maybe reducing the value of the
network effect that they've already created
because they have a critical mass in that
community, is that they are giving up a
competitive advantage.
And as much as we like to think,
and I'm again, I'm guessing here, you guys
live in this world. But my assumption is
that the people who run these organizations
which today have a traditional structure of
aggregating, you know, investors call them
donors and then distributing the proceeds of
that, are going to be very reluctant to give
up the network that they've already created
and contribute that network to a common
46
platform. Because they've worked very hard
to own that existing franchise. How would we
solve that problem.
MR. YOUNG: Typically, you don't.
Typically, you replace the existing players
as opposed to re-educating them. It's the
rare existing organization who can adapt to
the new model. You typically replace them
all.
Companies like Hewlett-Packard
who remain relevant over decades are the
exception. The typical company is Lotus or
Ashton Tate. Or, you know, anyone suspect
that's going to happen to a lot of the
philanthropic organizations that we know and
love today.
MR. WATSON: The problem is
you're not dealing with companies. You're
dealing with nonprofits that are providing in
a lot of cases social services that aren't
provided by anything else in their
communities. So it was a common interest in
increasing the philanthropic pot rather than
just replacing what we already have.
47
Philanthropy is flat in this
country. It's been flat for a long time.
It's roughly 2 percent of GDP. If this open
source movement or scheme could potentially
increase that even 2.5 percent would be a
real motive.
MR. DASH: I think to put it in
Marty's term, the excess capacity is
emotional. Like we talk about the solution
to the problem is technology. It's not an
open source AP that is missing for making
people more generous. There are open source
funds in Craigslist, yet nobody has made
another Craigslist.
I had a chance to talk with Scott
before the meeting started. And Charles
epitomizes what DonorsChoose. The emotional
component of why the service was built into
the business plan. So the reason that we
connect with donors and see what impact our
money had in the classroom is not to improve
our efficiency. Because it makes us feel
good. And I think that's the thing that
technology doesn't address. Almost none of
48
our tools say we talk about medidata. You
call it medidata. That's not medidata.
That's how I feel. And there's no way to say
that. This is the friction, right.
When I replace the old
philanthropy that I had, replace that old
institution, I'm losing an emotional
connection. And that's why we can't just
simply say this is going to be more
efficient. It's going to kill the old thing
because with that kills the desire to
contribute.
MR. BURNHAM: Let's pick up on
your point and Tom's point and say that if
something like Kiva or something like Donors
Choose reduces the distance between the donor
and the recipient makes the donor feel more
involved than a recipient, then I think it's
very likely to be going to increase the
willingness for people to contribute.
And so I think it has the
opportunity to increase the size of the pie.
And, you know, I may have an emotional
connection to an institution that I have
49
built up a lot of confidence in over the
years. But, frankly, most of the
institutions, I think there is a certain
amount of sin simply around the amount of
time and energy that those institutions must
spend gathering assets. And if, again, these
new models can reduce the overhead associated
with gathering assets and make people feel
more immediate emotional connection to the
recipients, maybe we will increase the size
of the pie.
MR. BEST: Two statistics that
lend themselves toward where we're going is,
number 1, that 70 percent of the donors at
DonorsChoose have never before contributed
to public schools. It's the first gift that
they've ever made to public education. And
that's suggestive of how it's increasing the
pie rather than cannibalizing off of other
education focused charities.
The other stick that really
interested us is that our donors are not
educationcentric people. We figured when we
surveyed our donors that they were all going
50
to say I give to DonorsChoose because I care
about public schools and teachers and
education in this country. They had no
particular interest in education. They came
to DonorsChoose because it was the one place
that they could choose a project that speaks
to them personally. See where their money
was going. Have an emotional connection for
those that they helped. And it was nothing
specific about education.
And I don't know if that's the
same with Kiva. And if the people who make
loans at Kiva aren't micro lending policy
lumps, but are people who want that
correction, I don't know.
MR. SHAH: I think 2 percent of
that GDP, only 2 percent of that flows
internationally. So Americans are pretty
philanthropic. But it's going to churches
and other organizations. So the way I view
Kiva, this is almost like kindergarten for
international philanthropy. The 12th grade
being a Peace Corps volunteer. How do I put
that kid on a Facebook. It's 20, $15. It's
51
a loan, not a donation. You can get your
money out of the system. You're connecting
with that individual.
Matt designed the lowest
friction, most sort of an addictive
compelling type experience that people are
looking for and get them hooked into that
system. And then I think you can create that
kind of Howard Dean-style broad base
community support type effort in something
that typically is overlooked by most
Americans.
So we're seeing that play out. I
think what's interesting about your point,
the existing organizations. And will they
move their model or will it be new
organizations like come in and disrupt. One
of the problems is cannibalization. So I
expect that people really dig loans.
There's information there
because when you get repaid you know that
philanthropy is working when you don't get
repaid. Something didn't go right. Then you
understand. And that's what people crave,
52
feedback. There's feedback in loans. And
for a typical organization financing, raising
donations to move to a loan model you're
going to cannibalize their donations that are
coming to your site.
So I think it's a very tricky
time to actually give away something like 100
percent margin profit of a donation in order
to go to a very low market product like a
loan and facilitate that. And I think that's
why a lot of folks in the micro finance
industry are struggling with this. Do we
partner with Kiva on or do we just contend it
doesn't exist and just treat, try to keep
intensify our fund-raising efforts elsewhere.
MR. BURNHAM: What's amazing
about that conversation is how familiar it is
to me. We like being venture capital
investors going up against established
enterprises because it's difficult for them
to cannibalize their existing revenue
streams. And they often can't do it that way
until they establish something. I'm not sure
that's a bad thing. Capitalization has
53
created a lot of innovation. And I think it
will hopefully create philanthropy.
Let me get to Victoria.
MS. VRANA: You mentioned
information. And while I agree in the end
emotion is at the core of philanthropy, we're
seeing more and more donors who care about
data and information and results and
performance. And I still see a huge gap even
with some of the innovations of the nonprofit
and philanthropic sector of where you can get
good data. If you're talking about a
marketplace, how do you compare to locally.
15 percent overhead.
When you look at Charity
Navigators, that gets you a good rating. In
our perspective that doesn't necessarily make
you a good nonprofit. That might be a
terrible nonprofit, depending on what you're
doing and what kind of services you're
providing. So I'm still looking for the
place where users, end-users from nonprofits
can comment on their services. Where donors,
where there's more transparency and openess.
54
And I think back to the question
of about mindset, nonprofits and
philanthropic organizations traditionally
haven't had the need to be transparent and
open and publish their results or talking
about that. In fact, it's really
counterproductive to both sides. So I see a
potential for that really changing some of
these new models.
MR. WILSON: I think, Brad, the
Web technology, I think about almost any kind
of Web service we interact with. Google is
Ad Sense is one of my favorites. Go to
Google Ad Sense and I make an ad buy. The
thing that's so gratifying to me when I make
that ad buy, everday I can log in, gets
reports to. How many clicks I have. What
keywords are performing for which ones
aren't. I think that's a mindset across a
lot of services today. Because they're
really data-rich. And the people that create
these data services understand that. And
they understand that data is a big piece of
the value component, they gave that data back
55
for free.
Google doesn't charge you for
analytics to their ad buy. You get that for
free. I'm embarrassed to say I haven't used
DonorsChoose. But I imagine that's built
into the model. That people with can
actually get reports and see how their
dollars are generating performance. And
that's the way to go.
MR. BURNHAM: On DonorsChoose,
that is, and Charles has already mentioned
it, that the overhead of producing the
reports that we're envisioning, if you did it
the traditional way where you had a
hierarchical organization that had to approve
the data that's being distributed back to the
donors would be completely -- it would kill,
no way could you make that cost effective.
But if you're willing to, in your
original point, Fred let go a little bit.
And not completely control the data and allow
the actors at the edge of the network to
actually contribute the data back, then, you
know, you have no incremental costs to
56
provide that. In fact, you have less
control.
MR. KEARNS: It's got to be data
that you can learn from. We can all look at
whose success rates, but unless you actually
can see which appeal has a higher open and
click through rate than another, which story
on Kiva really resonates and why, I don't
think -- I mean, you know, we can show lots
of data/information about AIDS and the impact
that AIDS has that doesn't move people off
the dime until they connect to it personally.
MR. BURNHAM: And I think that's
a really important point.
MR. GOLDSTEIN: Where is Kiva in
the latest generation. There's a difference
between trying to support donors as we think
they should make decisions and as they
actually do. Because there's a whole wave of
let's give them metrics and data and support
to them, really drive good decision-making.
So it's not necessary.
A, we think the pie will increase
if we just get people better information
57
about nonprofits than the economics will
improve. There's great idealized sense of
how it works. And I think this new
pragmatism that philanthropy is more a
consumption experience than an investor
experience, using those tools to help change
the way people really do make decisions.
So when we talk about the data to
support that, there's feedback to what really
drives responses. Not necessarily we just
need better outcomes and impact on things
that might be coming.
MR. HEIFERMAN: I think having to
play a little bit with DonorsChoose and
Kiva. It's a game. And it's fun. And fun
isn't just in data.
I personally, you know, am
annoyed by the fact that everything in our
society and culture has to be in the form of
entertainment. But the idea, but it is very
***gas like. And the reason why people sue
Facebook is because of the addictiveness.
And you spoke of an addictiveness. There's a
lot that goes into that. When you know nerds
58
like Fred who like data.
MR. WILSON: Thank you.
MR. HEIFERMAN: Or it's getting
this package you guys should all try. You
get these packages from these kids and write
you and send you a picture from their
classroom. But I think it's all about human
needs for this kind of feedback is one thing.
But there's another human need which is very
separate which is the need to believe or
belong.
And, you know, this whole idea
of, well, it's all about the donors. And
then the donors give money to those who need
it. The idea of, I would guess that many of
you are involved in something that you want
to really create a movement. A true
movement. A social movement. Whether that's
an anti-poverty movement or a green movement
or whatever it might be.
And the idea of how a true
movement happens isn't just about a bunch of
people giving some money. It's about people
changing their self identity and saying I am
59
a green advocate or I am this. And part of
that is money and part of that is a lot of
these kind of systems. But it's also about
to self-identify. You have to be involved to
some degree. And you talk about that
kindergarten to Peace Corp. What's in
between the kindergarten and the Peace Corps.
And I throw out the challenge of how does the
Internet change people's self identity to say
I am this.
And because social movements
happen when people, you know, when the
women's sufferage movement was over the
course of 70 years, men decided that women
weren't, you know, they self-identified as
not being as being supportive of the fact
that women should vote. And so I think we're
at the very baby steps.
You know, these guys right here
are like true pioneers in this whole what
they're doing. But there's so much more to
do in saying how do people self-organize,
self-identify, and say that and how I'm -- so
the last thing is limited resource. Isn't
60
just cash. The limited resource is, and
people don't just pay money to have something
be done. It's a way they can actually give
their time. Not typical volunteering.
It's saying when we see at Meet
Up we have 2,000 Meetup groups meeting up
every single day. 2,000 Meetups a day out
of the 30,000 active Meetup groups. It's
astonishing. Astonishing where you'll see
the number 1 Meetups are mom's Meetups.
And they have, you tell them here's a tool to
self-organize all the moms in your town. And
then they adopt a playground. And they make
their town better or they take on some save
Darfur action of some sort. We didn't tell
them to do it. Didn't tell them to do. No
one's asking them to do it. About how these
things make that happen is the question.
MR. WENGER: One thing I love
about this discussion is that sort of
everybody cease something slightly different.
Somebody likes the data feedback. Somebody
likes a game. Somebody likes the emotional
aspect.
61
And I think something that we can
learn about, learn from a lot of the systems
successful on the Internet on scale is they
haven't been overdetermined a priori. It
haven't been too much of a Yahoo case or too
much of a specific way of the seeing the
world composed. Delicious list, people came
up with 11 Yahoo cases. And I don't Kiva and
DonorsChoose systems where there's no
political message a priori. Where many
different types of people can find their own
way of using the system without getting a lot
of posts on them.
I think that's one of the
beauties of the incentive, is this very thin
layer, just enough to put many people
together without imposing sort of a view so
that somebody gets data because of the
emotional connection. I think that's a very
powerful thing. And I think that's also the
flip side, that's what a lot of people are a
afraid of. But if you built a system that's
not overdetermined, you have a lot of control
over what users ultimately wind up doing.
62
And I think it's strategic. That's one of
the critical observations.
MR. SHAH: One of the earlier
decisions that we wrestled with at Kiva, if
we looked at our peers online in kind of just
raising grants, you would actually see that
the website was really well designed, perhaps
overproduced. Very kind of, a lot of great
emotive photos and stories. And instead, we
went in the Delicious route. And I was a
little nervous about that. But we went with
this content on the website. Looks very
messy. It is, you know, I think about ***pen
particular, and I think that's what people
look for. And, in fact, we're trying to make
this even more integrated. So when the loan
was embezzled, when that loan was used for a
consumption purpose instead of a productive
purpose, that information should be on the
site. And I think donors or lenders actually
want to see greatness, authenticity.
They want to see things go wrong
as well. Then the information when it does
go right, we can construct. That's what a
63
lot of these models need to also deliver as
well; the bad news and when it's not working.
And not try to overly produce and package.
I mean, that's what the Internet
is about to me, is just seeing the bad and
the good. And then trusting the good when it
does come out. And being delighted by that.
With Delicious it's just been a great model
for us.
MR. BROWN: Yes. I just wanted
to jump in on a couple of things.
MR. VARSAVSKY: One is go back to
the idea of the traditional approach where
decisions are made by big institutions.
The big IBM model, my former
employer. One of the largest nonprofits in
the world. And they pride themselves on
results. But at the same time spend a lot of
its time trying to decide what the priorities
should be.
Where this comes into play for
me, about a year ago, I ran into a colleague
of mine on a project in Mongolia. And she
had the coolest project I had ever heard of.
64
She was basically wanting to put GPS's into
the hands of local villagers in Mongolia so
they can map the national parklands, sacred
sites, and other places of concern. And she
couldn't get funding for this project from
the nation.
How much does it cost? $15,000.
I said, $15,000 and you're going to put these
units into and basically have these people do
the work, get engaged, be part of this
process locally on the ground and you can't
get funding for this from a service? She
said, no, we're not a priority in the
organization. I said, well, this is a
ridiculous system.
If you can't fund a project like
this, you know, what good are the 900 other
priorities that your organization has. But
it's a big challenge. I went back to the
organization. Why can't you get funding.
$15,000? Take it out of my 401(k) or
something. Give it to me. Just make it
happen.
And I think the resistance in
65
putting -- so one step further on that is to
say, okay, what if you had an aggregation of
these projects. And rather than the
organizations deciding what the priorities
are, you put them out there and let the world
decide. What should be funded and what
should not. This is like if the model is
true. And let that happen. Well, no, we
can't do that. We're ceding control over our
priorities. And what our funding should go
to is important. So that's a challenge in
the big institutions.
I don't know how without
dismantling it or deconstructing it you free
the world to decide what should get done and
what should not.
MR. PAEZ: Thanks, Brad. I want
to start with something that Scott said about
the consumption patterns of philanthropy.
And then the questions for dot-org.
What we see is and what I was
focused on about six months ago when I
started the technology at our site is that,
and this is affected by technology, is how
66
young people perceive and are interacting
with philanthropy as a consumption, as a
consumer product. More so than this idea of
simply donating.
The lifestyle choice. And it's a
lifestyle pride applications like causes
which has 3-1/2 people on Facebook often worn
by people. And no money is given. But it's
like they're closing on the proposal. I
care. This is what I care about. This is
who I am. This is who I like to connect
with.
And you see that in data coming
that came out a year ago from Cohen Research
in Boston. The best I've seen. 89 percent
of Generation Y would reconsider purchasing
where one supports a cause they care about.
80 percent of them feel a personal
responsibility to make the world better
because they feel they're the only generation
that can do it.
And so what we see in the way
that they interact with information and then
you see that ubiquity of information driven
67
by technology, they're engaging what they
care about in new and innovative ways and
feel emotionally connected, like Kiva or
DonorsChoose with recipients that they would
never otherwise meet. But they're used to
emotionally connecting online through data
driven interaction.
So my question now to Google.org
here is what we see is enormous consumer
patterns emerging from Generation Y being
also mirrored in the media at celebrity
engagement causes, increasingly seen in the
one campaign. And other increasing cause
marketing trends. And Google.org coming out
and says, well, we can make a social impact
without being a 501(3)(c) for profit
business.
We have a lot of for profit
businesses here who are social entrepeneurs
looking to make money and make a difference.
And what I see with my charities, CEOs, Make
A Wish Foundation, Americans Charities, they
see a lot of traditional philanthropy,
traditional 501(3)(c)s being moved into more
68
market-driven, consumer-driven models
wherever applicable.
Is that something that MoveOn.org
feels as well?
MR. BURNHAM: Do you have a
question?
MR. GOLDSTEIN: Yes. I want to
separate out some of my comments personally.
I personally spent time in the early days of
the global giving for consumption of the
marketplace perspective. Really gone through
some of what I've done.
Google.org, its focus, you know,
certainly consciously made access to all the
keys on the keyboard. Whatever makes the
most sense to solve the problems is, we're
all for problems that Google.org cares about.
It's not saying that afternoon. These are
all great, important things. Structural
flexibility are not met with. I wouldn't say
there is kind of an ideology or philosophy
around some of those things you're focusing
on.
To be honest, folks on the
69
dot-com side spent a lot of time on thinking
about these and are infinitely wiser than I
am. And Google.org may not necessarily fall
in the street business. So if you think
about the climate, energy, global
development, global health, so it tends to be
focused on those sorts of particulars.
To be honest, the products and
services that Google may or may not actually
target and may address the future. So in
some ways your question is better for the
people on the dot-com side than the on the
dot-org side.
MR. GODSALL: In the end,
Google.org, what you said in the beginning,
if there's a problem, list a problem,
Solve it. We want to access the whole
keyboard.
I'd like to come back to Bob over
there. Sorry to interrupt you, Bob. But
when you said to me when any of these ideas
around philanthropy is incentive, you can
unleash a great force if you can identify
that incentive. And if you could bring us
70
back to the time when you had the idea and
you knew you had the incentive, therefore,
you knew you were bigger than most,
essentially.
MR. YOUNG: Yes.
MR. GODSALL: I'll just frame it.
I'm working with Pathogen. People talk about
viral marketing. And that's a very limited
way to look at it. Because there are many,
many ways to infect people. And you had an
infection that obviously spread very rapidly
like a big outbreak through the engineering
community. So can you come back to
incentives?
MR. YOUNG: Yes. But this kicks
into the fund question or the emotion
question. Depends who your audience is and
what their primarily looking for. If you're
in education it's going to be fun.
Who's the Latin scholar here?
Apparently there is a word derivative.
Entertainment and education comes from the
same Greek or Latin root word. So they are
technically entwined. We tend to learn the
71
things that we enjoy learning.
In technology, in Red Hat's case,
the incentive was this barter system. The
people who were doing most of the
contribution to open source were not
enthusiasts. These were not emotional
contributors. These were not entertainment
contributors. They were people who needed to
use this technology themselves. But it was
not doing what they needed to do. So they
made their contribution in order to make
their computers work. They gave away their
contribution because they're very conscious
of how much technology they were receiving
for free. So why not contribute back because
it became a self-fulfilling, a barter like
model and their incentive. And, in fact,
their bosses incentive.
The reason I actually got
involved in Red Hat, I'll tell you the story,
was I was coming out of my previous career
that crashed and burned. But that's a long,
sad story. And I was looking at this open
source thing. And I was working in the City
72
of New York's technology field. And the
engineers I was talking about were telling me
about this free software. And I'm a good
capitalist, you know, at the end of the day.
Show me the money.
And I couldn't figure out how
this thing wasn't anything but sort of an odd
idiosyncracy that was only going to survive
in a unique period of time between when the
Intel processor went from the 386 to the 486.
The big difference being a 486 could run a
real operating system. It could do
multi-tasking. it could do multi-user. The
386 couldn't. It just wasn't powerful
enough. So you suddenly had 486 processors
everywhere that could run a much more
sophisticated operating system than most DOS,
for those of you who can think back far
enough.
And so it looked like this whole
Linux thing was just sort of a blip. Until
Sun and Novell and Microsoft got their act
together and produced a decent operating
system for the 486. Because afterall, there
73
was no economic model behind discrete
software.
You talk to Richard Stahlman and
he would explain to you that was all emotion.
That this is just the right thing to do. And
being a good capitalist, I said, not a
chance.
It wasn't until I talked to a
fellow called Dr. Thomas Sterling who was
introduced to by Don Becker who wrote the
Ethernet drivers to the earlier versions of
Linux. He introduced me to his boss, Thomas
Sterling. And I asked Sterling straight out,
"Why are you letting Don Becker give away his
Ethernet drivers at Red Hat?" We were taking
his Ethernet drivers, adding them to our
operating system. And we were selling our
operating system for 150 bucks in a
shrinkwrap package.
And I say, "You're not charging
us so much as a penny for your Ethernet
drivers. Aren't we taking advantage of you?"
And Don Becker's boss, the guy who was
funding Don Becker's work on this because Don
74
thought he was doing this out of emotion is
it's the right thing to do. It was Becker
who explained it. He said, "But let me get
this right. Don admittedly writes some very
sophisticated Ethernet driver tooling. He
gives it away for free. And we might sell it
for $25,000. But in return for giving it
away I get back a multi-user, a gigabyte
worth, a multi-user, multi-tasking operating
system that I can run on as many machines as
I put my hands on and you're taking advantage
of me?" was his response.
So it was a barter. So the point
in an MLS world is who's the beneficiary and
what's their incentive?
MR. GODSALL: Work for any idea.
If you can bore down to one problem and you
can identify the incentive there's an
"ah-hah" moment. Because you have the
incentive. I think if you don't have the
incentive the problem is philanthropy stays
flat. I forgot who mentioned it. But it's 2
percent, right? So a shift in mindset, as
you said, Fred. But when you let go, you
75
have to have this great force out there, has
to have some incentive to give back to you.
MS. GHOSH: Except if, maybe, I'm
sorry, if you're a social entrepeneur, your
incentive is to change the world. So this
makes it actually quite interesting that if
your Ethernet driver, the next Ethernet
driver that you're talking about as a social
entrepeneur. And the real incentive is
really to have impact in your particular
field or the area that you've chosen.
Then you actually have built-in
incentive to share your idea. Not always.
Because you have other people competing and
all of that. And now the same competition
thing does exist in the social sector, as
much as we think it sort of shouldn't. Just
speaking from the Ashoka experience. At
Ashoka we've seen the identity creation that
Scott was talking about of the social
entrepeneur that was there. But then where
we are right now is we figure that all the
knowledge that's come from this network and
community of social entrepeneurs worldwide is
76
really a magnet, individual magnet,
collectively, a magnet.
When you begin to start thinking
through, well, how are all of these pieces,
how do these pieces act together, add up for
each after each one of the fields that we're
looking at. And once you set up that magnet,
then you say this isn't the ultimate wisdom.
Basically anyone around the world can who
wishes to self-identify as Changemakers, come
here and prove this. And, in fact, this is
the line thing. Crash and burn this and
improve it.
So this is the approach that
we're now trying to, trying out with
Changemakers.net where we're actually
organizing online collaborative competitions
every three months. And it's the only place
that you'll find on the Web where all the
entrants go off into some black hole after
which some judgment is made. But it's all
open. People compete. Everyone else can see
or the competitors can see. The world can
see. Everyone can improve and review. And
77
the consent of what comes in.
And the whole point is
participation is key. Not because of only
the money, because the awards are just
$5,000, which isn't really as much. The
judges are investors. So that helps. That's
sort of a practical reason for field building
investors. So there's a reason for that.
But really participation helps you improve
the idea. And puts it out there for everyone
else to come and improve your individual and
collective ideas.
MR. WILSON: John wanted to get a
thought in.
MR. JOHNSON: Just really
quickly. I think what's underlying that and
what's underlying this incentive question
that hasn't been brought up yet is this idea
of social capital. And that's really, you
know, I think we're talking about leverage
points in the Internet. That's right up in
the top 5. But, you know, I think there's a
problem in that we're bringing this kind of
binary Adam Smith perspective. You know,
78
either selfish or selfless. Selfish being a
kind of fiscal selfishness, or selfless being
absence of fiscal intent to this perspective.
And now I think we've got to chuck that.
And, you know, just understand that there's
this new spectrum.
We see, I think from all the
people that are going through the website
that's offering certain messier information,
I think that those are social capitalists in
a lot of these in Facebook. Social
capitalists looking for inefficiencies.
That's where Alpha is from social capital
perspective.
MR. BURNHAM: Right. I think
that, you know, I agree with you. And I like
debating Bob because I think, you know, I
think we're actually talking about the same
thing. But I believe that social
capitalists, as you say, or reputation is
becoming a currency that people care more
about. More liquid information is, the more
global information is, the more they care
about that currency.
79
And I think Becker cared a lot
about the reputation that he was creating,
about the quality of the code that he was
contributing. And within the community of
peers that he cared about, they respected and
understood that that was his contribution.
And one of the keys to Linux's success was
that it was apparent where that good code
came from. And I think that we're going to
see that is played up.
MR. YOUNG: But that still
doesn't excuse you from prioritizing those.
So you're right.
In Becker's case it was very
emotional, his contribution to it. And it
was reputation based. In his boss' case it
was very financially based. It was a barter
system. Having said that, if you just asked
around the Linux world, they would have all
told you it was emotionally based. This is
the right thing to do. When the reality was
it was actually primarily financially based.
And this is what we have to do as
executives in our teams is if we get these
80
wrong, if your customers say it's A -- you
know, what's the expression? The old
expression is the customer's always right.
The truth is the customer is not always
right. But he is always the customer. And
it's needs versus wants. The customer will
tell you what he wants. It may not be what
he needs. And it's your job to figure out
what your donors or your recipients or
whoever your audience is, what they actually
need. Not what we're telling you they need.
Because if you're doing your job properly you
know what they need better than they do.
MR. WILSON: Brad, I just wanted
to tell a story because I think it's related
to this.
Back about three years ago I
decided to put Google's assets on my Web log.
And I didn't do it because I wanted to make
the money from Google. I did it because I
wanted to understand how Google Ad Sense
worked as a publisher using it. So I made
the decision the day I put on there that I
was going to give all the money I got from
81
advertising to charity.
And the minute I did that, it
just changed people's perspective about the
blog. Who I was and the ads on the blog.
Because all of a sudden they said, gee,
that's actually a good idea. He's giving his
money to charity. And I've given probably
$100,000 over the past three years to charity
as a result. Not all from Google. But there
are a various number of things. Given to the
Gramene Foundation. That's where I started.
And then I've moved over time.
And the interesting thing is that
advertisers now come and bid against each
other to get display on my blog. But
charities cannot come and bid for those
dollars. And I'd love for that to happen.
And what's a tragedy is that I
actually have to pay taxes on that income and
then give it away. Because the systems that
exist on the Web today can't just flow those
dollars from advertiser to charity. And so I
have to sit in the middle and pay taxes on
it.
82
It's not that big of a deal. I
don't mind it. But this is where technology
can solve a lot of problems. And, you know,
we're already getting, we got marketplace
economies now for advertising. We don't yet
have marketplace economies for the
philanthropy world. And that I think part of
what we're thinking about here is how to make
that happen.
MR. WEINER: Just to pick up on
that. As important as we all understand
incentives to be, whether they be social or
economic, particularly in community
environments, I always go back within this
world for providing people with a way, I
think there's a lot of people who want to
make a difference in the world and they just
don't know how.
And I think one of the
fundamental things that's changing, that's
going to continue to change the ease with
which people can now help and get involved.
And that's why I go back to this notion, as
Jeff mentioned earlier, a commonly shared
83
engine or a commonly shared platform.
Because we can do that. We can
start to take even more friction out of the
system. And keep in mind, you know, I think
we're asking a lot of great questions here.
There's a lot of different constituencies.
Bob referred to it as different customers.
We've got developers and
engineers. We have the social entrepeneur.
We have the people who want to donate their
money or their time. And each one of them
brings something different. Each one of them
will be missed differently. Each one of them
finds certain objections that prevents them
from doing the things they want to do.
And I think we do have the
wherewithal now to try to address and solve
each of those challenges. But I can't forget
or I always keep coming back to this notion
of is there a mechanism to scale the efforts
in some of the people in their companies
around this table and become what you
mentioned earlier.
I think Albert suggested
84
Delicious introduced this somewhat unique
notion pertaining to social bookmarking of a
very simple lightweight app. A lot of people
come and customize their own apps. A social
bookmarking. You start to unstructure the
front end versus the back end. The front end
sounds like it's a lot more like Craigslist
which is, in your parlance, I guess, highly
authentic and gritty. That's part of, one of
the reasons for its success. But it's the
back end where I feel like some of the effort
between you and Charles and some of the other
folks around the table. If we can facilitate
the means with which engineers and developers
can start to build apps for your site and
build apps for Charles' site. And build apps
for Charles site is similar to the people who
took the Delicious code coming up with
things, as brilliant as you guys are, you
couldn't conceive of. And you just start,
offer massive scale, the rate of development.
MR. WALKER: Just a bundle.
We've done it in Empower, Microsoft,
Accenture, Dell. Because you're not putting
85
in a leverage tool, all of a sudden they see
it. We got it. I think if we set up these
engines we can go get it and everybody can
use it.
MR. BURNHAM: Folks, it is now a
quarter of 1:00. We're sort of 15 minutes
behind. And I don't know what's for lunch.
But it's hot or it was hot at 12:30. We
should probably get up there and grab lunch.
We have a lot of time this
afternoon to pick up on this question of
could we envision a way to create a platform.
and I think when we come back down let's
certainly make a point of wrapping up the
discussion on what the key drivers are, what
the emotional component is, what the
incentives are. And then launch into a
further discussion of what do we do now.
Thank you again for coming. And let's all
move upstairs.
(Whereupon, at 12:45 p.m., a
luncheon recess commenced.)
o0o
86
2 AFTERNOON SESS
3 2:15 p.m.
4 MR. BURNHAM: So let's go ahead
and get started. I think we'll have people
sit down as they grab their coffee or get
back to the room.
Just trying to think about the
summary of the conversation this morning.
That what we wanted to accomplish in the
conversation this morning we accomplished it
through agreeing. We also introduced a bunch
of other ideas to think about what the
implications of what light Web services were.
What the characteristics of those services
were.
We used Craigslist of an
example of a hyperefficient lightweight Web
service. Scott introduced the notion that it
was a self-organizing principle. We spent a
lot of time talking about incentives and new
kind of incentive that may not be directly
monetary that maybe drive some of these
social incentives. And I think we all have a
sense of what this phenomenon is about.
87
People are willing to, number 1,
ontribute some sense of their Web presence.
4 You know, some efforts on their part. Some
5 discussion about the ess economic value
6 that could be mined by others. People are
7 willing to contribute that. The Web seems to
provide a platform for that, accelerates the
degree to which people can interact in that
environment.
And, you know, there's this
emerging phenomenon that we're all trying to
figure out. Okay, now we see this behavior
happening. How do we make or create an
environment in which positive social change
is linked to that commitment that's made by
individual users acting in a network.
So, this afternoon what we wanted
to dive into is the application of those
principles in philanthropy and in social
action. And there's two obvious ways to
think about it. One is that there's if the
established infrastructure of philanthropy
and one could think about it, in my world the
model would be in the enterprise software
88
world where business has deployed software
hat improve the efficiency of those
usinesses, sometimes fundamentally changing
he way the organization worked together, but
ll within the boundaries of the
7 organization. That was the enterprise
8 software wor
9 And then we began to see models
10 emerge that were fundamentally disruptive to
the existing structure of markets. So
Google, as an example, clearly fundamentally
disrupted the advertising market. CBS in
their best year had 350 advertisers. And
Google, my guess, I don't think they
published it, has something like 850,000
advertisers. And it was they created a
fundamentally different business that has
changed the structure of that market.
So there's two things that we can
think of technology doing in the philanthropy
and social action space. One is improving
the efficiency of the existing businesses and
the other is creating brand-new businesses or
fundamentally disrupting the structure of the
89
markets.
I don't think they're mutually
xclusive. I don't want to set up a binary
pposition. But I think we need to talk
bout both of those. And I'd love to have
nybody jump in and help me out here with
ome thoughts on which of those is more
mportant, which of those is likely to have
10 happen. How they're going to happen.
11 MR. COSTOLO: I think that one of
12 the interesting things about lightweight Web
13 services and peer reviewed Web service is
people will start to end up using them for
things that you didn't anticipate. And of
course lots of times they might end up using
them for things you may not like.
So that's not particularly of a
concern in a commercial/social media company.
For example, where you might say if it's
MySpace founders, thank god they're using it
as much as they are. We only care that
they're using it for X.
But in the philanthropic world,
right, where you may have founders or people
90
invested in the development of the platform
ho are a lot or interested in, well, I want
t to be used for this, right. But people
re using it, set up al Qaeda relief funds,
ight. Much more interesting tension there.
MR. BURNHAM: Absolutely. And so
n the case of MySpace or Facebook or Craig's
ist -- hello Craig -- well, you know he's
going to get hit now. But, you know, there's
a lot of activity on that site that is, well,
consciously uncontrolled.
13 And the point, I think, Dick is
14 makins that Craigslist I think has a
15 social mission of making it possible for
16 people to collaborate, work together, and
solve problems together. But it doesn't try
and decide what problems are being solved.
And when you have a nonprofit
with a social mission, maybe they're going to
be less comfortable putting a platform up
that they can't direct.
MR. COSTOLO: It certainly goes
into the statement earlier in the day that
will probably be a new organization that
91
comes along that enables that to happen.
ook, I'm going to do this knowing that there
re going to be things that have gone on here
hat I don't like.
MS. CRUTCHFIELD: Well, as
elating the foundation for the next phase of
his discussion, I just want to share a
ittle bit from the perspective of lists for
15 years that the nonprofit and social sector
space. There's a misconception floating
around that I think we should sort of bring
all the dollars onto the table.
First of all, assumptions are
being made about how nonprofits operate what
16 they may or may not be comfortable with.
17 Lobefore the open source was highlighted
18 on the Internet, nonprofits have been
19 successfully using open source strategies
from the beginning. In fact, in the book
that I've written, one of the key success
factors of the highest performing nonprofits
is precisely this notion of creating an open
source way to tackle the problems that
they're trying to solve.
92
So I'll give you one example. An
xample of the groups in our book range from
abitats For Humanity to Teachers of America
o Self-Help. The Heritage Foundation's in
ur book. The Heritage Foundation is
ctually a great, powerful think tank and
dvocacy institution. They are precisely
uccessful. That while they have one site in
Washington, D.C., from the very beginning
they said we want to win the war of ideas.
And whether you believe on the right or the
left of the political spectrum, they've
helped win that battle.
Anytime a policy thinking said
we'll train you, give you our donor list,
help you set up. Because they drew the
circle so big that they wanted to further the
19 movement. They thought everybody who had a
20 ece of that vision, they wanted to enable
21 success. They set up a state of the art
22 recording studio in their offices. Any shock
jock, any pundit that could come in with a
message can. And they have a quarter of a
million dollar budget for training them to do
93
so. They gave in a way and they enable
everybody in the movement to succeed.
What's interesting, you don't
live in D.C.. I don't even know if anybody
n this room can name the CEO of the Heritage
oundation. We know Ralph Reed. You know
he Christian Coalition. Still, the Heritage
oundation's been there for 30 years. You
don't know his name. Incredibly powerful.
He leads from behind. It's all about
enabling others. So I just use that as
examples. Every nonprofit that's been highly
successful has used this sort of approach;
they give it away.
Exploratorium is another great
example. The first hands-on science and
technology movement center. They
revolutionize what we were talking about,
museums today, over lunch. Said a museum
shouldn't be just a dusty place with rare
22 facts, artifacts you can look at, never
23 touch. You need to experience it based on
24 the worldwide hands-on science museum.
25 Nobody has ever heard of Exploratory if you
94
haven't been to northern California.
Probably everybody in this room has at least
been in touch there. They expect, 10 percent
of their budget helping every other science
museum copy their model and spread it. Never
asking for branding affiliation and never
asking for any kind of quid pro quo. So they
ede it. But it's not visible on the balance
sheet. It's not visible in other ways. So
is this is how. And I'm not saying every
nonprofit, by the way, does it this way. But
the best, according to our research in our
book, do it. So business world is in the
nonprofit world.
I think where the challenge lies
for us, now we're talking about the Internet,
the difference that makes in terms of being
able to scale solutions. Not every social
problem has an Internet application. But I
think that a big challenge that we as a
social sector face is how do we spread these
ideas, these solutions. And part of it is
scaling up our organization. And this is
25 where we get into the challenge of the la
95
of accessing capital or efficient capital
markets. If you're a for profit company you
can go to venture capital. You can go to the
public markets. You get big money quick.
Kiva is a good example. Meeting
with him before this, he needs several
million dollars do scale up to meet some of
his challenges. He's going hand to hand
grant to grant. The foundation that I
represent can do some. But there's not a
place where entrepeneurs can go with a great
idea for the social sector and get relatively
big money quickly for that investment.
So one of the challenges for this
group is how to do we market like that. Not
just by issues. DonorsChoose have an
education space at a specific project, but at
a larger level. We need to try to solve this
type of capital market challenge for the
social sector so that really great ideas can
get to scale. And right now we don't have
that.
MR. DAR: We're in the same
sector. Idealist is, we're not profit. So we
96
see nonprofits all over the world, thousands
of them. I think, honestly, from my
perspective, the groups that you pointed to
are exceptions that make the rule. Which is
that most nonprofits are, in fact, viciously
and highly competitive. And when I say
"viciously," I choose the word carefully
because they're competitive in a sort of
passive-aggressive way that can drive you
crazy.
And the for profit sector, the
rhetoric is extremely clear. We know Google.
We know Yahoo. We know exactly what they
have in common. We know where they compete.
They know where they compete. And the fact
that they're competitors and acknowledge
that. In fact, collaborate on certain
things. The government quickly collaborates
on that. Whereas, most nonprofits don't even
acknowledge that they compete. And
therefore, in fact, they find it hard to
collaborate.
This weird paradox. By not
acknowledging we're competitors, we, in fact,
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can't collaborate. Where sometimes
acknowledging, in fact, you compete, you can,
in fact, collaborate in many cases. These
are honestly, sort of exceptions, I think are
great. But most nonprofits aren't that way.
MS. CRUTCHFIELD: They are
exceptional because of their performance
based upon our studies. And not every
nonprofit has adopted that, those strategies.
And it is very difficult. And it's the ones
that are able to draw the circle big enough
where they don't seem like competitors, but
as conduits to the larger cause.
Jim Collins writes about the
level 5 leader. But the company's mission is
above ego. Great nonprofits put the cause
ahead of even their organization. So if it's
about climate change and changing the
directory, then you'll do anything to effect
that change with the level where the right,
RDC, you'll work with Green Peace, as long as
you're trying to get to that end. It's sort
of a mindset. And I think it's probably
true.
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I don't know that much about the
founder of Linux or Wikipedia. But I think
what they care about most, like any
entrepeneur, is the idea and the innovation,
and changing the world. And it's not about
the money. And you see those people on the
for profit and the nonprofit side. It's just
legal status. I think that's what we're
trying to get at.
MR. BURNHAM: There's a direct
trough between leverage and control, really.
And if you need to control you're not going
to have the same effect. And we see it in
politics. I'm not a historian. But I
understand that one of the things that left
us with the legacy that we now live with in
the political structure that we have is that
George Washington was willing to say, no, I
won't run for another term because it's the
institution that counts. And that's what's
going to create the legacy. Not me running
for another term.
Contrast that with Putin or with
other folks. I think Nelson Mandela did the
99
same thing. No, I need to step away because
otherwise the institution will become me.
And I can't be the institution. And I think
the same is true of some organizations. But
I don't know if we can come up with a
definition of what we mean or a simpler, more
precise definition of what we mean by open
source institution. Has something to do with
that. But it certainly isn't the software
definition. That doesn't make any sense in
this context. You're not now. But it is
related to openess. And it's related to the
mission as being, you know, to contribute a
whole that's larger than the institution.
But one of the areas that this is
going to show up is in data. And Jeff was
going to talk a little bit about this at some
point today. But if there were a platform
through which people could collaborate just
to think about what an open market would look
like for open source institutions to, you
know, to increase the liquidity of capital to
those institutions, increase the leverage of
the ideas coming out of those institutions.
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The currency would be data. And it would be
us, you know, the idea of somehow thinking
about what open data is.
MR. WEINER: What kind of data?
I'll give you an example. Charles can speak
to it much better than I. But he has access
to Comstat so one of the things that he
really got me excited about when I was first
learning about DonorsChoose is by virtue of
the system. He can track, for example, in
New York City where there are certain demands
for certain kind of textbooks. And all of a
sudden you see in the Bronx there's a demand
for history books. And teachers keep
uploading these projects; we need history
books. Well, guess what, there's probably an
issue with history book distribution in the
Bronx. And you start to apply the same level
of insider structure from Premal's platform.
And then you start to enable economists to
plug into this in a sense, make sense of it.
You start to distribute white papers. You
can only kind of imagine the kind of value
added.
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You mention data that as part of
the mechanism, as part of this open source of
correspondence. We have not touched on
business models today, explicitly. We spent
a lot of time talking about technology. And
one of the things that Charles and I talked
quite a bit, a lot is sustainability. How do
we make sure you're not constantly on the
road having to raise money.
And I understand that one of the
things you started to consider is interest.
I don't know if that's going to happen in
your models. That's really interesting. No
pun intended, by the way. That's really
interesting because it creates a certain kind
of sustainability.
And Charles, you should maybe
tell the story, the anecdote about Crate and
Barrel. And after Charles tells you the
story, imagine there are ways to start to
focus on the nexus between the ROI and RROI
where for-profit companies leveraging kinds
of engines that Charles and Premal were
operating would potentially share the
102
economic returns to some extent; not all of
them. But beginning to give back some of
those economic returns to make these business
models more -- Charles, you want to talk
about Crate and Barrel?
MR. BEST: A couple of companies.
Crate and Barrel has given donor gifts to
their customers so that their customers can
become philanthropists. So they track and
they use an outside research firm to isolate
the impact on purchase intent and customer
loyalty towards Crate and Barrel generated
by/directly attributable to the distribution
of this gift of giving. The giving out of
these DonorsChoose gifts.
When Crate and Barrel saw the
increase in purchase intent that they had
created for Crate and Barrel by giving out
DonorsChoose gift certificates they
dedicated 3-1/2 percent of their advertising
budget, pulled it out of their foundation,
put it within their advertising budget and
giving 100,000 gift certificates. Because
they actually see it's not about helping
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kids, it's about increasing customer loyalty
more effectively than through other more
traditional advertising is mechanisms.
MR. YOUNG: Charles, can you give
us 30 seconds as to how DonorsChoose is
doing?
MR. BEST: Maybe people in Donors
Choose should do that.
MR. YOUNG: Three and a half of
Crate and Barrel's number is a big number.
That's not your only donor.
How big is DonorsChoose at this
point?
MR. BEST: We're growing
exponentially. I think Kiva's growth curve
is even steeper. 127,000 public school
teachers have posted projects. We just
opened our sites to all the schools in the
country just a couple of weeks ago. So we'll
see that grow more rapidly.
MR. WENGER: I'd love to know, as
part of that, are you constrained as to how
fast you can grow the DonorsChoose by lack
of function for the operation itself? Or I
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think that was Leslie's point.
MR. BEST: It's really
interesting. Because I think that Donors
Choose and Kiva have different constraints.
We're both attempting to achieve relative
sort of more equilibrium between supply and
demand. Which for DonorsChoose is a
classroom demand and donor supply. Our
constraint is a little bit more donor supply
than teacher demand. Donations and donors
have been doubling year over year. Teachers'
participation is on a an even steeper curve.
I think that that's the inverse of what's
happening at Kiva.
MR. SHAH: Yes. So we have, it's
a nascent marketplace where actually some of
it is due to media buys. So we're actually
today capping the amount people can earn at
$25.
It's surprising, the capital on
the site because of the absorption capacity.
Every day 60, $70,000 of business is in
foreign countries. But we're only 20 months
old. We can only scale in limited means
105
right now with the NGO community. Just not
keeping up with the Internet community's
demand to actually fund small businesses in
the developing world.
So right now we have a broken
marketplace where content isn't expiring.
Which then doesn't allow NGOs to really
compete, to post up great content or compete
on social return.
And so we need to clear the woods
right now and get that, hit that equilibrium
point. We're still a couple of years off,
depending on the rate of scale.
MR. WEINER: Of your model, both
of your models reach a point of
sustainability. You can project out once you
raise that upfront money. That's what's
unusual about your model, is that they become
self-sustaining.
MR. SHAH: What's become really
interesting, and I think we learned this from
the DonorsChoose, when you check out there's
an optional 15 percent donation you make to
DonorsChoose. And we follow that. And what
106
was really interesting is roughly 70, 80
percent of our lenders are contributing 10
percent onto the loan.
I used to work at PayPal, eBay.
Our take's actually greater than eBay's or
PayPal's. Which is really interesting.
Because I think it's because by being a
nonprofit we're fundamentally more profitable
in some ways.
If we were Ticket Master in an
acquired field, people would actually know.
There's about a 3 percent fee. Again, it's
really interesting. Something else that's
nonprofit based. Crate and Barrel realized
that it moves the needle in terms of royalty
acquisition. There's people want to fund
these things. So it can be quite profitable
and self-sufficient in a short amount of time
if you ask the right way.
MR. WEINER: It goes back to the
point Anil mentioned earlier. We were
talking quite a bit about technology. And
you reminded everyone that, yes, the
technology is important. But it's the
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emotional connection that fuels both of these
models and why you get people raving about
them and every for profit. As your customer
base starts becoming your market base and
sharing it through word of mouth. And the
connection through the fulfillment, once you
get connected, and Scott mentioned the
package he received after he did the Donors
Choose donation.
You people were recently featured
on Oprah. And I think the profile opened up.
It was a woman on tape. She experienced,
Kiva. She described being addicted. And
it's that emotional resonance you get when
you connect.
For all the time of technology,
no, all the time of the self-sustaining
business models, at the end of the day the
secret is in North America genetic it needs
models. And the need for that and the
resonance because of the way the model works.
MS. CRUTCHFIELD: You have to
create the experience. That's what all
nonprofits struggle to do, which is, let's
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say you're serving battered women or you're
trying to help youth. How do you create an
experience around that. And some of the more
successful nonprofits find ways to make it
real. This is kind of the taking it offline
for a second. It's not necessarily Internet
based.
A great example, the New York
founder is here. So City has a youth corps
that pays young people. Like a domestic
Peace Corps. Normally, like maybe a 600, 500
corps members per site. City makes the
experience much broader by hosting service
on. So that tens of thousands of people
around the country can do a service project
for one day. And it's a sticky relationship
building this experience where they have more
donors, more volunteers, more awareness.
And I think the challenge for
nonprofits is, okay, how do you take that one
step further. Not everything is going to be
an Internet transactional exchange the way
DonorsChoose or Kiva is. It's about money
in the end. Lending or giving money. It
109
doesn't solve every nonprofit's problem,
basically. But it happens in the Internet.
And that scaling, I keep coming
back to this question. Whether challenge of,
you know, you mentioned the core profit
sector, the cycle. You have destructive
innovators come in and they displace a giant,
right. So if you look at the top 25 of the
Fortune 500 today, probably about a third of
those companies are relatively new. They've
probably been founded since 1965. You have
your Googles and your nonprofits up there
with your IBMs and your GEs. If you look at
the top 25 of the nonprofit sector, there'll
be 400 lists.
What percentage of those
nonprofits do you think in this room were
founded in the last 20 years, any guesses?
A VOICE: Two.
MS. CRUTCHFIELD: Ten. Any other
guesses? Less than 1 percent.
Habitat For Humanity is the only
one founded since the civil rights movement
to get to the top of our list of Fortune 500.
110
That's not necessarily the measure of success
for the nonprofit center. But there's this
barrier to growth on that level. We don't
have creative construction. We have a
hundred years of it. Salvation Army,
Goodwill, American Red Cross at the top of
our list. Because they stay there with
billion dollar budgets. And we have Kiva.
MR. WATSON: That's because of a
little thing called the tax code. There is
no business building for nonprofits. There's
no exit strategies taken of these places in
the for-profit world DonorsChoose, Kiva may
use in talking about putting themselves
together. Or Google might be talking about
buying them. That doesn't happen except in
very, very, very rare instances not for
profit.
MS. CRUTCHFIELD: You don't have
the mergers and acquisitions.
MR. BURNHAM: I think that misses
the point. Google, yes, there was an exit
strategy for the original investors very
well. But Google came. And Leslie's core
111
point is that Google is a very large and
powerful institution in this country. Didn't
exist in 1996 I think. I think they were
formed in '97. So the point is that even
though the emergence of that won't happen in
this world unless -- I actually think that
part of what we're talking about here is the
opportunity for the Web to change that. And
to disintermediate the current infrastructure
there and enable these start-ups to thrive.
And I think that it is important
to be thinking about business models for
these nonprofits. And I'd love to sort of
come back to Craigslist for a second
because we were talking about the disruption.
Craig doesn't like to talk about
the amount of media that has shifted from a
traditional classified industry to Craig's
List. But it's a very large number. And the
reason that media has shifted is that there
was an inherent inefficiency in the way
newspapers collected ads on the phone,
keyboarded them in, printed them, distributed
them. Killed a lot of trees.
112
All we were really doing was
putting a buyer and seller together. And
Craig figured out that he could do that much
more efficiently. However, the radical
efficiency of Craigslist depends on the
contributions of users. And the users are
not going to contribute to something that is
rapacious, morally repugnant, or uninvolved
in, involved in things that they don't want
their brand, their own individual personal
brand to be associated with.
So there's a kind of convergence
happening. Because you can't keep up with
the efficiency of something like Craigslist
with a traditional model. So if you depend
on user-generated contributions, you have to
have a brand that involves those users and
envelopes them to brand themselves. And if
do you that you're going to have to go from a
for profit or not for profit. Give them
something to believe and something to hang on
to.
And I think with Wikipedia,
organizing the world's information, making it
113
accessible. I think Craigslist's building
community. There are things that these
brands stand for that people are willing to
do. And I think the for-profit organizations
are going to have to incorporate that and the
not-for-profit organizations are going to
have to incorporate that.
Sebastian is doing something,
working on the project directly.
MR. TRAEGER: I guess I'll just
give our perspective on kind of the space and
what we're trying to do to solve it.
In terms of talking about what
are the fundamental drivers of kind of the
philanthropic space and how do you kind of
think through how to bring about, basically
to get that 2 percent number and try to
increase it in terms of giving.
We always just come back to the
best driver, without a doubt, is the users.
The fact that people don't really care that
much. And don't see giving and serving as
part of their everyday lives. So, for us, I
think the technology is really important.
114
And of course you can create technology that
does amazing things. And we're trying to do
that. But that's just a small piece of it.
So, for us, we try to think all
the time about what can we do to change
people's world view. Change the way they
think about what's in it for them. And
that's probably the biggest thing we spend
our time thinking about. What is it that's
going to give that, see, the more they're
invested in giving and serving, the more
their lives change. I think pressures of
life are relieved. The more satisfaction,
the more meaning they get. We spend time, a
lot of time thinking about that.
From a practical level of how we
do that, I mean, I love what Kiva and Donors
Choose are doing. I think one challenge with
those models, there's two challenges that I
see that we're trying to address.
The first, of course, is that
it's still kind of a Web 1.0 approach to
marketing, in a sense that they're
specifically, very specifically saying we
115
care about schools or we care about the
developing world. They're not saying, you,
as a user, tell us your passion and we're
going to do everything we can to link you
with something that's meaningful for you. So
that's one thing we're trying to do.
Whatever your passion is we're going to find
something for you because we'd much rather
have you be passionate about something than
just sort of sitting on the sidelines.
I think the second thing we try
to do is think of on the data side. So for
focus, we really approach the data side and
the transaction side. And realize that if we
build a site that was only fundamentally
about giving, the challenge in the
philanthropic and I think the challenge
around sharing data is there's not much of
it. There's not that much giving going on in
terms of, I mean, how often do people give.
Once a month. It's not that high transaction
volume.
So we're trying to increase the
transaction level so that we can try to start
116
to get intelligence on people. To build
algorithms so we can build how meaningful is
what you're doing. How much you perceive is
making a difference. And what are the things
you're doing. So you're trying to define
what it means to be involved in the sector.
MR. BURNHAM: These are
transactions factors. And you're an
information market.
MR. TRAEGER: We want to be a
factor. It's giving. Serving is attending.
It's just serving that's encapsulated in that
idea. We want to trap, quantify, equalify.
We want to extract useful information from it
and roll it up.
And I think a third thing we're
trying to do, and this is partially the
benefit of the position I'm in. Very
significant financial backing. So I have a
little more freedom than others. We're
trying to model what it means to just give
stuff away in the sense of we're very happy
to promote any and all comers to us and
champion the causes of other people.
117
So we're not trying to ourselves
own an idea and promote an agenda. We're
trying to be, in essence, kind of a
superstore of all these great ideas and again
just create that marketplace for any ideas.
And really spotting the people who are doing
a great job, rather than ourselves owning
things. And really just live at the very,
very top of the funnel.
So we just want to be a giant
marketing organization of getting a world
view and ideas and people motivated in
action. And then plugging them into all the
great things that are happening. Whether
that be directly with a beneficiary or an
organization or anything else. So it's kind
of our perspective on a lot of this.
MR. HILL: Editorial, et al. If
it's from al Qaeda, a group they come through
or are you sort of setting parameters?
MR. TRAEGER: We do have a
community manager that's kind of an
assignment. All the sort of dirtiness of
message boards and communities. And he's got
118
some parameters. Fortunately, we're not
popular enough that we've had the big issues
we've had to deal with yet. But we are
trying to think through what that looks likes
and how that would work. So we hope to
definitely create some parameters. And we
have them. They're all in user guidelines.
MR. GODSALL: I'm trying to see a
split in one way as opposed to financial
markets and information architects, are we
trying to increase the charity, the fact
we're giving something away, or are we trying
to in my mind it would be keeping pace of the
problems with the world we're trying to
create.
We use the Web to create
something disruptive and new that can
increase our ability to solve problems.
Because in a community, if you have one
problem, you can get a multiple bunch of
things.
I think I've forgotten your name.
Is it John? At Google, you're saying you
want to access all on the keyboard, right?
119
So, in my mind, if we increase, let's say we
increase giving in America to 4 percent. But
we don't actually solve the problem in
America or around the world. Personally,
that would be a waste of my time. I mean, I
came from Canada. I'd like to talk about
disruption actually. I've come a long way to
talk about efficiency in my mind. But the
problems of the world are changing and
becoming more complex. And what the Web's
done is enabled a bunch of individuals to
organize themselves for their own interests.
I think in the philanthropic
phase, probably I'm starting to think now
it's more around solving a problem that for
profit may involve or may not involve. How
quick can profit, nonprofit start to
collaborate.
MR. BURNHAM: Let's talk about
structure. I think that we should do that.
I think that DonorsChoose and Kiva are
examples that are fundamentally disruptive
and not improving efficiency. They are
potentially creating disruption that will
120
change the list of the top philanthropies
over time. But Kiva, as an example, has, I
think, a very difficult problem. We might be
able to think through with them. Their
constraint is the distribution, not the
collection. They opened up. And they've
realized that we can increase from 4 percent
to something more. Because if you make it
more immediate, then you can draw people in.
But how do you distribute that
money? So they can't quite completely get
away from the efficiency problem, of the
distribution of that money unless we can come
up with the way to peer produce rankings or
bettings or finding a way to distribute the
money.
MR. GODSALL: We know it's not
because there aren't problems out there.
It's not because you don't have entrepeneurs,
you have ideas. You go to the Kiva site and
I'm actually pissed off that you've lowered
me down 25 bucks. I'm competitive with
people. It's a bit of a game for me. But,
you know, the problems are there. You know
121
there are people there who want to solve
those problems. And you know the flows,
money's flowing in. There's a clog in the
middle. And to me there's where you start to
play with the disruption.
MR. SHAH: We have a growth risk.
so we could let our NGOs, the existing 70
NGOs. We haven't vetted all of them fully.
We haven't randomly sampled, audited. That
takes time and money. And from where we
started from, to actually get that done. So
we've actually limited them to how much they
can post each month. But we can raise those
limits to say buyer beware. Craigslist,
Internet community. The problem is that
there's an information problem right now.
So, I mean, I'd love to hear
either privately or in this forum ways that
we can break that constraint of letting our
lenders make more informed choices. So this
NGO is less vetted. This entrepeneur might
not repay us. And how we get that
information flow from the developing world.
We've been racking our brains. And it's
122
difficult.
MR. COSTOLO: You have, on eBay
though, you have lenders who have no rating,
right. And there are people that say no one
ever buys. Trying to buy this laptop and
this guy has a bad rating. And you can buy
from somebody who has 100 A-plus rating. I
don't know. My sense, you be fair and trade
about that. We don't know anything about
this person. Even if it's my family in
India. They're going to feel some
connection.
MR. KEARNS: Have you looked at
distributing the vetting process though. We
do media purchases. You call a reporter.
Every group needs a reporter press list.
You're doing a press release around you're
giving or education. Education reporters in
the State of New York. Those lists are
expensive. We pay big money for them. But
it's a fact. And you can have multiple
volunteers and call and confirm a fact.
You can't throw it up like
Wikipedia because then it's only the rich
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getting richer style. New York would have
5,000 checks. Some place in Arkansas
wouldn't have anything. So you need a system
that actually says this is the highest
priority thing that a volunteer can do in the
next 10 minutes. And then someone calls.
And it has to be information, you
know, like the wisdom of crowds or the whole
idea of the jelly bean in the jar. What kind
of questions you ask. It can't be
subjective. But your analysis, if you have
all this interest in people who want to
invest and get capped at the 5 bucks, maybe
you can say we'll let you invest up to 35
bucks and make two investments to others.
And you give them this data.
So the problem is we're not
turning in measuring this social capital that
the movements have into things other than
money. You know. We're still aggregating
money to solve what are less problems created
by multinational money corporations. In the
exploitation of this whole system, kind of
insufficiently disruptive. What if there are
124
organizations where you don't want my money?
You want me to change my behavior, right?
You haven't thought about that kind of
description.
MR. GALIEL: Can I make a
interruptive statement? All morning the
discussion has been conducted within the
frame of a market discussion. And markets
exist in a condition of scarcity. One of the
things that I think are being missed is the
real revolution of the Craigslist and the
Meetups.
And at Wusabes and the Bug Labs,
I'm going to connect those in a moment, is
the elimination of a condition of scarcity.
So maybe, and I'll explain what I mean in a
moment, but maybe the fundamental shift we
need to make in philanthropy is to stop
worrying about how to make the small donors'
dollars more efficient, but to eliminate the
scarcity in donations.
So, for me, the elimination of
inefficiencies in classified ads that Craig's
List accomplished is only part of the story.
125
The other part of the story is that there's
no scarcity. There's no limit to the number
of ads that you can't put on. There's no
necessity for Craig to worry about how
efficient my ad for my model train is on Meet
Ups.com. There's no scarcity of Meetups.
There's no limit to the number of Meetups
you can create. So you don't have to worry
about whether the Meetup is efficient and is
cleaning up a park, or just a bunch of people
getting together to talk about sports.
With Wusabe, the insight was
let's eliminate the scarcity of financial
advice. So now there's no scarcity of
financial advice. You don't have to worry
about how efficient each person's built of
financial advice is. There's a reputation
market there that takes care of that. The
insight that Bug lacks is that there's an
artificial scarcity in the challenge of ideas
out into the marketplace. Let's open it up
and eliminate that scarcity.
Maybe the approach to using these
technologies to disrupt philanthropy is not
126
to figure out how to increase efficiences and
how to find the incentives. Maybe it's to
liberate the outpouring. Whenever there's a
Katrina, I worked with artists around the
country to try and organize them and create
registries so that when the next Katrina
happens there's someplace for federal relief
organizations to go to know where these
people are. And because that didn't exist in
the past, what happened in Katrina is artists
went onto Craigslist. And they created
their own little mini-artists resource on
Craigslist, telling us, you know, the
friends where the sculptor with the heavy
objects was and where the gallery with
priceless artwork was. All of that happened
because there was no scarcity. You didn't
have to worry about whether there was enough
bandwidth for them to be able to put their
notice on Craigslist.
So it just occurs to me that
rather than worrying about how efficient each
dollar is, what if we eliminated, what if we
opened the floodgates. What if we gave
127
people an opportunity to be generous. I
believe that you can't explain all of human
activity in terms of markets and firms. You
know, there's nobody competing right now over
the marketplace for air because there's no
scarcity of air. On a colony on Mars there
will probably be a marketplace for air.
There's no marketplace right now.
I don'thave to economize. I don't have two
daughters. I don't have to cut my love for
one by 7 percent so I can allocate another 7
percent to the other. These kind of thoughts
don't come into our conversation. Yet, we've
grown up in a culture that says there's a
scarcity of funds.
Philanthropic works have to be
channeled through capitalist enterprise.
Capitalist enterprise is agnostic to social
value focused on profit. Therefore, there
will always be a scarcity of funds available.
What if we bypass the system
entirely?
MR. BURNHAM: You need something
more concrete there.
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First of all, I disagree with you
on the notion that there is no scarcity. I
think scarcity shifts. I think there are
places the love of your children, I think
information is a nonrival good. You can have
it. I can have it.
Actually, the bid source on
Craigslist still has to find a home. But
they're so inexpensive relative to the cost
of a home. Apparently, there is no scarcity.
But I think, and I think, frankly, when you
get to the problem of how do you vett the
people that are asking for loans in Kiva,
there's a problem of time, you know. And how
you deal with that. And I don't think, and
people, if you're talking, asking to give
money and/or time, there's scarcity of both
money and/or time on the input side.
You're not talking about a
situation where there is no scarcity. What
you are talking about is the information has
these characteristics. Marty's talked about
the characteristics. It is a nonrival good.
You can create these information markets very
129
efficiently. We can use information markets
to increase the awareness of the opportunity
to give. You're still going to be giving out
of a limited pool of capital because nobody
has unlimited resources.
So what is the specific proposal
to eliminate scarcity on the input side? I
don't see that.
MR. GALIEL: If that was the
proposal, we wouldn't be all sitting around
the table. What I'm suggesting is a
proposal, an approach to look at how we can
create the effective tap into the fact that
the transaction costs of information
approached zero. And tap into the fact that
on the Internet we have, basically, an
effectively unlimited space. And see how we
can use that to, rather than battle, to
increase efficiencies. Bypass the whole
problem altogether.
This idea of eBay. What if there
was an eBay geared towards social causes?
Would you care, as Dick suggested, that
there's, you know, an inefficient donor out
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there? The problems get solved. 10 percent
of our resources or 20 percent of our
resources or 1 percent of our resources.
What matters, actually what happens out there
at the end point.
Two things, I think, in a sense.
Not to argue. I think you're both right. Of
course there's scarcity. India alone have
700,000 villages. Each of whom in the whole
world of scarcity in any cases. How do you
begin to address it. Of course you have
scarcity.
On the other hand, you have the
example that goes with what you said. This
amazing thing happens to a city when it gets
the Olympics. We've all seen this in our
lifetimes. The city gets the Olympics and
suddenly it finds within itself all these
resources. Amazing when you go to JFK now
you cross the bridge and it's an amazing
thought what would have happened to the city
if New York had received the 2012 Olympics.
They would be fixing all this stuff now. Why
would they be fixing. Because we got the
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Olympics. We have an excuse to go and find
the resources that is, in fact, there. That
I think is true for every community in the
world. Every community in the world. Every
single community. Every prison. Every
village has more in resources. The question
is what's the combination of technology and
emotion that can let us pool that stuff out
as if we all had the Olympics this year
coming up. What will get us, in fact, go and
do this and find much more than what we
thought we had.
You have scarcity. But I think
you also have much more abundance than we
think at any given moment. The question is
what will make us, in fact, open up and give
and do.
MR. WEINER: I want to stick with
your Olympics analogy, which I think is it.
One key is the incentive is civic pride. But
there's human economic returns when you host
the Olympics. And it comes back to the
attendance you talked about a little earlier.
And I think without the right homogenization
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between those two things, the Olympics would
be a little hard to.
MR. GRIFFITH: I think every
Olympics ever has run at a loss.
MR. WEINER: The city hosting the
Olympics usually sees a lot of economic gains
by virtue of an influx of tourism.
MR. DAR: You can add any example
you want. When Cincinnati and Cleveland
wanted Airports in the '20s, a bunch of guys
in Columbus got together and said, oh, no, we
have to have an airport too. And they found
those resources. People's emotions can cause
civic pride. The pride of competition can be
huge. What will make, what makes someone
give away a significant chunk of their money?
There is scarcity.
There's also huge abundance. So
what goes on that makes people in large
groups actually say, okay, now it's time.
We're going to go and change something, do
something. Not for gain. But makes us feel
collectively good. I think abundance is a
really important issue too. Because so many
133
of the problems, you look at diabetes, you
look at deforestation. These are all
problems of abundance. We have too much.
And the behaviors we need to change.
MR. BURNHAM: I want to make sure
we have Vicki here. She's had her hand up
and then Jamie as well.
MS. SAUNDERS: Trying to go
backwards about the stuff I want to talk
about. But the people we were working with
mentioned before we built a platform. But
essentially we were really trying to be the
project widget.
People go see the Al Gore movie
"An Inconvenient Truth." It's finished. The
next day go to Laura David's website, click
on a button, and join a virtual march. For
me it's kind of like President Bush after
9/11. There's all this energy. What are you
doing with that energy? So we've printed the
ability for people to self-organize in a
community.
A gentleman in 4H is one of our
first clients. And they're an interesting
134
group for me. Because they have 135
websites. They've been around for 100 years.
2 million active young people and 6,000 idle
volunteers in a head office. And has 50,000
E-mails. No way of communicating out to the
network. But what they're doing definitely
is phenomenal.
So the thing that he's so
satisfied, every one of the young people has
a project book where they track on paper what
they do in a year. And it's the business
point. And he thinks finally we have a space
on the Web with the tools that people are
already using to track what's happening. And
I'm going to know across the country what the
impact is. And state by state will start to
see what people are doing. And to me it's
sort of the efficiency thing. But it's also
a disruptive piece because he wants to grow
his numbers to 7 million people. And the
only way I can do that is not through the
traditional trends he has right now. But
actually having people self-organize and
sharing the tools that already exist in these
135
little binders in Idaho, whatever. Bring
that together to the Web. So there's sort of
an incentive. We have the revenue model for
that. And 50 percent of our revenue we
shared back with the organizations. And it's
not insubstantial. And I think there are
lots of other interesting revenue models in
the space that these things are happening to.
And when I think of social
action, for me, it's not just about dollars
and donations and writing a check. I think
that there's a huge value for people
self-organizing that I think that we need.
So I think there's something in that that's
going to be quite interesting.
MR. BURNHAM: There's something
that we touched on this morning. And there's
something very important that we don't want
to lose track of the difference between
having that book on paper and having that
book online. If you have the book online, a
lot of emergent behavior becomes accessible.
On paper, it's never there. You can begin,
it's not just possible for the president to
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see that thing more efficiently. But it's
also possible to begin to see clusters of
people with common interests. And all that
stuff can emerge and can be managed
organically and emergently that you can't do.
So the feedback of the data, the net data
interaction with the content becomes a very
powerful driver.
Jaime wanted to speak.
MR. DAVES: I have a problem with
the thinking group a few ways. Started when
we were at current, something based on
user-generated content. We were thinking
about is there a way to link it to
user-generated action. To be a consumer
behavior, product purchase, organization to
raise money. Some type of social action.
And that was in the context of a firm.
More recently I thought about the
context is there a self-organizing way
outside of a context of a single entity or
company that wraps up all of the existing
content that's out there around that could be
video or audio or printing where there's a
137
self-organizing way that people can share it
with somebody else. Saying this is something
that inspired me. Organize themselves into
some type of community and then connect that
to some type of action.
We've mentioned before, you said
you've had most of your spikes have been when
there's a relationship to traditional media.
You went on Oprah. There's a spike. That
relationship is still there. Those forms of
media have a unique storytelling power to
that motivate people to action. And there's
a lot of it out there.
So building that tie. Both you
do it within the context of a single company
or you can or wrap everything around. That
seems to be a problem there would be a great
utility in solving.
The final connection to that, as
I would say, if there is also a way then of
connecting that to shift the perverse
incentives of commercial media where so much
of the news and information that we consume
that drives our politics, our attitudes about
138
things and how we organize to do something.
If it can also then have the ability to
change somewhat of the incentive system and
create a new kind of feedback mechanism where
it's not large corporate advertisers who are
controlling, dominating most of what happens
in our news and information kind of
environment.
But then there's another kind of
feedback loop where there's individuals
saying show us more of that. In fact, we're
not organizing and taking action in such a
way that you can monetize in a new and
interesting way. Seems to be a large
problem. That if you combine those two
things would not only stimulate more action
where people being inspired will really be
using that content, but also to address one
of these disruptive sort of things that I'd
like to see happen. Which is changing the
underlying structure of how we're using
information right now that's driving much of
our debate and action in this country.
MR. GODSALL: The thing is --
139
MR. DAVES: Is anybody working on
that, by the way?
MR. BURNHAM: Let Craig come in.
Craig is particularly sensitive to the way we
received information because classifieds was
as key profit model for the newspaper
industry and by showing that there's a more
efficient way to do it. That profit model
has begun to look pretty shaky. So Craig is
very interested in how local meet is going to
work, who is working on that.
MR. NEWMARK: There's a handful
of people; more than I can think of. My
efforts in this regard, again, it's just me,
not Craigslist. And I'm just screwing
around, relying on people who know more than
than me who suggest that. That's like Jeff
Jarvis is working on a few things, including
his work with Day Life which he's got me
into.
There's a brief for New
Assignment.net. The folks at Sunlight
Foundation, which I'm more on the tool side,
I guess. Although just announced your
140
marketwatch. There's a lot of people doing
that kind of stuff. Too many to mention
right now. And so far, I guess with the
exception maybe of -- is it Dig? All the
successes are pretty limited. And now that I
think about it, Dig's kind of limited. It's
still mostly tech and early adaptor
community.
In terms of the bigger problem as
it pertains to the last philanthropy and
nonprofits, the issue is buzz and how do you
get the word out. And that's a problem,
again, I'm talking to people about with,
screwing around with. But all these, I don't
know if anyone has answers. And for sure
you're not going to get them. They're a
nerd. Because for me to be commenting on
this is a crime against nature.
Although, I do want to endorse
the wrist, strong program for wrist injury.
If there's anyone that's familiar, I have to
give them the wristband.
MR. GRIFFITH: There's a couple
of things I'm uncomfortable with in the
141
conversation so far. One is there seems to
be an assumption that just take all out the
little people that donate directly to the
recipient. The world would be perfect. That
implies the recipient knows what the problems
are and how to solve themselves and implies
anyone with a mouth can really solve that
problem. I'm not sure that that's really
true. Maybe in some cases with $25, but I'm
not sure it always is.
I don't think the demographics of
philanthropy are being represented in the
conversation we're having here. We're
talking about lots of people giving small
pieces of money. But it's 240,000 25 dollar
donations that equal $100 million investment
or something. So I'm sure we're talking
about seeking a philanthropy. Shouldn't we
be talking about the very large fat piece of
the Bell curve. And how to hack that and
expand it more useful or use it more
effectively?
MR. KELLOG: Is it the fat part
of the Bell curve? That's maybe a
142
fascinating question. Because what that
looks like, because I think that direct
interaction is what has not existed to date.
And I feel like that's what this technology
enabled. That may be the disruptive piece.
And, Brad, when you started the
conversation after lunch, you said, well,
there's the destructive piece and there's
also the efficiency piece.
Tomorrow I'm going to meet with
the Rockefeller philanthropy advisors. If
we're talking direct here, they're on the
other end of the spectrum. Major donor
investment. Guess what, they're not having
trouble staying in business. They're doing
better than ever. Adding staff at a
tremendous rate.
But I'm sure this conversation
will be very interesting to them as well in
terms of how can they access information
better and do their work better. So all
along that spectrum there's going to be
interesting developments.
MR. HEIFERMAN: Hack content.
143
MR. GODSALL: Can I --
MR. HEIFERMAN: Seriously, I'm a
little lost in this conversation. There's so
many interesting things being said. But I'm
kind of a little bit lost.
I propose we throw out a problem,
whether it's Jeff's idea about, you know,
platform, or for whatever that was, or I just
feel that like we can use some. It would be
fun to kind of solve a problem and use all
the people around the table.
MR. BURNHAM: I want to come to
Jeff's idea. But let's try and solve Kemal's
problem for a second. And we had a little
bit of conversation about it and the problem
on the distribution side. And if I
understand it correctly, the problem is that
the way micro lending works today is there
are institutions in the Third World that
distribute funds. They need to have some
form of accreditation. They have stern
scaling issues. You are not actually
distributing funds directly to the
recipients. You're distributing funds to the
144
institution. The institutions are using you
to publicize the opportunities. So you are
essentially a, you know, a fund of funds
really for the micro lending institutions out
there in the world. And that's your scale
problem.
So is in order to fix that
problem you'd need to have better insight,
better information about what's going on
within those institutions. Two-thirds,
three-quarters of these institutions have
computers.
MR. SHAH: It's about 10,000 of
those institutions and there's certainly
long-tail. The top 500, they have audits.
There's a lot of transparency around them.
They probably have a CFO/internal auditors
that look like a bank. And then the other
9,500. As this is growing at probably 20
percent a year. The number of micro lending
institutions growing very fast.
A small church group and a pastor
starts lending the congregation. And
formalized this. They haven't done any kind
145
of accreditation, any kind of auditors.
They're in the middle of Senegal, in rural
Senegal. Now the chief is inviting them to
host content on the website.
I don't know if that's a
fraudster or if that's someone who truly is,
you know, making a difference and is going to
faithfully distribute that loan from Des
Moines, Iowa.
MR. BURNHAM: What is the
technology infrastructure that that pastor
has? Do they have a cell phone? Do have a
computer?
MR. SHAH: They have a computer.
MR. BURNHAM: Do they have
Internet access?
MR. SHAH: They have Internet
access. It's not the greatest connection.
But that's how that's been uploaded. Almost
an eBay style. Just uploaded content. Find
Step Lizard. And in 240 countries is we're
managing that.
MR. NEWMARK: Kemal, what problem
are you trying to solve? I'm lost.
146
MR. SHAH: The problem is that
Kiva at 20 months old, the Internet traffic
has outstripped the amount of content that's
being posted from the developing world.
MR. NEWMARK: What is the amount
of content the lending institutions or the
people who actually need the money?
MR. SHAH: The lending
institutions are posting up entrepeneurs in
their community. Businesses on the lending
institutions, they're posting up a business
proposal on Kiva. They're doing that at, you
know, now at a tune of 60 to $70,000 a day.
But that is not -- we list it as
cap that we have on our Internet lenders --
that would not be sufficient to satiate the
amount of capital that Internet lenders want
to supply.
MS. CRUTCHFIELD: It might be
worthwhile, just take us back one level from
your intermediary. It starts with an
individual seamstress living in Gambia who
lives on a farm who lives nowhere near a
bank, ATM, or cell phone. The pastor in her
147
church, probably run by a Catholic
missionary, might have access to the Internet
for three hours a day if he uses the one
generator in town specifically for that
purpose just to run the computer.
So there is no infrastructure
where these people are. The seamstress gets
a loan of $10,000. She might be able to buy
more fabric to make more wraps to sell. So
the conditions, to interrupt you, going to be
really rude, but the challenge is we rely on
these intermediaries, all of us that work in
the developing world. Because getting
anything, a dollar to the entrepeneurs who
are trying to pull themselves out of poverty
is not easy where there's no bank, ATMs,
computers or cell phones for 95 percent of
them. But you have to deal with the
intermediaries. I just wanted to be peel it
back one more.
MR. HEIFERMAN: The pastor also
makes an enemy. And the lending organization
that he's sort of a fund of.
MR. SHAH: So an example of a
148
lending intermediary that micro finances an
institution is a pastor.
Another example is the green
bank, all the way at the other end of the
spectrum. It looks like a bank now. And so
the problem that Kiva has is some green bank
like lending institutions which is T1 lines
practically, and they're very sophisticated.
And we trust that they have audits and
there's integrity there. And we're letting
them post a lot of content, a lot of on
businesses from their community right away,
without having them go through lots of
audits.
The smaller guys, that long-tail
of micro finance institutions, the other
9,500. They're capital start-ups. And they
know that there's a need there. But we don't
know which ones are legitimate and which ones
aren't legitimate.
MR. NEWMARK: Kemal, are you
saying you're having trouble vetting the
little guys?
MR. SHAH: Yes.
149
MR. NEWMARK: Is that the problem
or is there another similar problem or two?
MR. SHAH: Well, we're not
vetting them fast enough to keep up with the
Internet community's demand.
MR. NEWMARK: And I think you
were also saying that there was a problem
with the content they provide. They're not
keeping it current?
MR. SHAH: Oh, no. The only
problem with the content is is that content
real.
MR. NEWMARK: So you're worried
about vetting and fraud. And you're looking
for a solution for that?
MR. WENGER: Keeping in mind --
MR. NEWMARK: That's very
well-known. That's been in the press for a
while.
MR. BURNHAM: So, Craig, describe
how -- I saw you sitting there doing customer
support while we were talking.
MR. NEWMARK: Me?
MR. BURNHAM: Yes.
150
MR. NEWMARK: That might be rude
because I can multi-task.
MR. BURNHAM: How does it work on
Craigslist?
How do you manage the site?
MR. NEWMARK: In our case, one
thing that we've learned over these years,
well, over 12 years is that people are
generally trustworthy and pretty good. And
there are bad guys out there. There's not
many. They always give a bigger impression
when they are.
One of America's most trusted
newsmen said you hear more about the
extremists and stuff because modern analysts
have stuff to do. That was Jon Stewart.
So we trust people put up ads and
they go up there. And then other people, if
they think they're wrong, for whatever
reason, they flag them. And if enough
people, you know, enough people also flag
them, then they're removed automatically.
So this is kind of a voting
system; a crude form of democracy. If you
151
think about it for a moment, you'll see that
it is flawed. But is much like, in some
respects, Wikipedia's flawed. Although, I've
been seeing just recently that Winston
Churchill commented on this when he said that
democracy is a lousy form of government, but
it's just that the others are worse. He's
not commenting much these days.
So the deal is that I do see you
have an analogous problem, that is, of
disinformation. And where Brad may be going
is that in some cases I'd like to be able to
say that you just have to trust people. But
you're dealing with people's money. And
that's not good enough in that context. The
cost is too high in donor terms and in your
reputation terms.
MR. BURNHAM: And the traditional
community would say I have this bond of trust
with my donor that I have to honor. And
therefore, I have to do an enormous amount of
work to make sure that that's, you know, that
this is a vetted opportunity and that that's
where we're starting.
152
The eBay world or the Craig's
List world is you're kind of on your own.
And there's the possibility that you'll get
burnt. But eventually the system will
correct itself.
And one of the questions is how
do we cross the chasm from the traditional
world to having donors sort of saying I'm
willing to accept 10 percent fraud, 20
percent fraud?
MR. COSTOLO: It's not
necessarily the case that, you know,
someone's giving $30 instead of $25 to Kiva
would say I'm mad that that 10 percent of it
goes to fraud. It might be I knew what I was
getting into because it was clear on the site
that these hundred organizations weren't
accredited yet.
MR. WILSON: There's not a micro
lending site. There's a lending site on the
Internet called Prosper. I like to call it
Pilfer. Because the reality is that most of
those loans are never going to get repaid.
And I don't know how Prosper's going to stay
153
in business. But you look at the default
rates on that site and you look at the credit
quality of the people who are borrowing on
that site, I don't know why anybody is
lending to anybody on that site. It's just
going to be a total disaster.
MR. BURNHAM: They're playing a
game.
MR. WILSON: They're playing a
game, exactly.
MR. KEARNS: Is there a back-end
insurance funder? Most people are basically
good. These sites are really key. We're
willing to accept a 10 to 20 percent loss
rate. And we'll back it on the fraud.
MR. DASH: The fraud is people
are trustworthy and people that are not,
there are organizations. There are all of
these things.
MR. KEARNS: Our banks have their
insurance up to $100,000. If your bank
defrauds then you're covered.
Is there a third party set up
there if you're going to see more and more
154
sites that are trusting the goodwill of
people and a lot of donors are trying to hack
in maybe their tap. Can you actually set up
a back-end fund that starts to put some rules
in place as to what data needs to be shown
onsite?
MR. DASH: How many people spent
$25 on the cab right here? The problem is
there's a gradation. There are people who
are kind of trustworthy, kind of not. If you
you haven't had 10 yet, cap the limit at $5
so nobody is going to be out by more than
that. Worst case is I can still buy
Starbucks coffee.
MR. BEST: One is a little like
insurance. It's on the side of the argument
that donors and Kiva should be more like
Craigslist. Throw the doors out wider on
the assumption that donors will tolerate a 10
percent chance of being defrauded.
What we do, we do a lot of work
to make sure that no project ever results in
fraud. But there are sometimes when the
teacher is not able to provide the
155
photographs and student thank you letters and
teacher letters that every donor expects. It
happens a few percent of the time.
When it happens we call the donor
or we E-mail the donor and let them know that
they're actually not going to get the
experience they expected. And it happens
rarely enough that we are able to offer every
donor, effectively, their money back in the
form of a DonorsChoose gift certificate that
they can then spend on another project of
their choice.
What's been really fascinating,
that donors are blown away when we
proactively tell them that we screwed up.
And they almost always say I can't believe
you would effectively offer me my money back.
Don't worry about it. And then they actually
go onto the site and give.
And we actually found that if you
look at donations generated by user, screwing
up and telling people we screwed up is a
higher ROI marketing program than blast
E-mailing people and soliciting them for
156
money. It's incredible. It's like you
really extrapolated it. We should screw up a
lot and tell people about it. And people are
going to re-up and give huge amounts of
money. So that's sort of an argument on one
side of it.
Then, on the other side, people
around this table are more enlightened set of
prospective donors ready to be rational and
tolerate the 10 percent chance of fraud.
And, you know, the people who saw Kiva/Donors
Choose on Oprah have their precious 30 bucks
and they will not give if they don't see that
there's serious, that there's real processing
in place to ensure the integrity of the
philanthropic marketplace that they're
entering into.
MR. BURNHAM: Let me hear from
Tom. We haven't heard from him yet.
MR. REIS: Just a couple of
things. The first one is that it's not just
$30. Some of these micro finance
institutions could be charging 240 percent
usery rates to the borrower in the village
157
that doesn't have any Internet. So that's
one thing that I would be concerned about as
a donor. We are a donor to Kiva. We
invested $300,000 in Kiva. And I got a phone
call from Kiva saying we just got ripped off
for $250,000. So let's make sure that the
stakes are real here folks. It's not $25.
There are people when this money starts to
move, they're up to over a million bucks a
month. And it could easily be 2 to 3 to $4
million a month.
My knowledge of the developing
world is where there's money, as Willie
Sutton said, where the banks are is why you
rob banks because that's where the money is.
I believe in human nature too. But this is
going to be -- we have to look at the stakes
here. And don't use 25 or $30 as the unit.
So, in discussions now with Kiva,
we're saying, look, if we need auditing of
these micro finance institutions an outfit
like Kemal is interested in the long term.
We love Gramene, but we also like the
pastors. And we want them to be able to do
158
their grassroots work. We need some
auditing. And we don't quite -- I'd love to
hack this and say is there a way to audit
this using the wisdom of the crowd and the
Internet, et cetera. And I think there might
be. But there's also a way to do it in terms
of just hiring a bunch of goddamn auditors
and sending them out there and getting them
done.
For example, what do you need?
Well, maybe we need 2 million to do that. So
let's give the 2 million. Find the
Rockefellers, the Fords and the Kelloggs.
Give them 2 million. Send a bunch of bodies
out. Do it the old-fashioned industrial way.
And figure out there's 5 million more we
know. Can you start to work with. And we
just solved the cap problem for another two
or three years. That old solution isn't such
a bad solution.
MR. DASH: I'm not disagreeing
with that because I think I've become the
posterboy for the $25 doesn't matter
initiative, which is not how I feel.
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MR. COSTOLO: It's also being
knocked up across the street.
MR. DASH: Throw your $25 here.
I think it's a sliding scale. If you want a
gold star that says you can put a quarter
million dollars in, absolutely you should be
audited. Absolutely there should be a status
there.
What I'm saying, there should
also be the opportunity, this doesn't have a
gold star yet, but you're allowed to donate a
small amount. So there should be a way to
earn up. So that somebody that has no track
record, hadn't been reached by this army of
auditors. Yet because they're only going to
be able to do X number over a period of time,
can earn their reputation.
MR. BURNHAM: How can that
happen?
MR. KEARNS: Why a division of
abundance ad money. You have people, you
have Kiva call anywhere in the world for a
penny a minute. Is there a pastor who like,
hey, there's $1,000 quequed up ready to go
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out at most. You got to vett this first.
And people saying I want to help. But maybe
I don't have an additional 150 or 100 bucks
to lend. But I would be willing to interview
somebody. Language skills and in X country.
And I can help you interpret this. I don't
see why to cap our vision and immediately go
back to the old world of modeling around
everything else in the supply chain.
The logistics, the marketing.
Who's writing the stories, who's taking the
photos. You know, hey, we have a school
where there's no photo. You've got a mailing
list in that zip code. Somebody go to the
school and take a photo. Not that hard. You
want to participate. How are you taking the
need that the network has to serve itself and
forcing it back out on the network?
The same thing that Craigslist
does. We don't know this stuff. Put it back
out to the network. You guys figure it out.
The challenge for us to hack this is to use
connected culture as a platform.
MR. HILL: The big challenge is
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it's not a connective process. Crowd
sourcing would be great. But most of these
places, they're only generating interest.
MR. GODSALL: They are connected
by a telephone number.
MR. KEARNS: 2 billion cell
phones.
MR. GODSALL: Locally they have a
reputation. No matter where you go you have
a reputation. You have a personal brand.
And the vetting process is already there
locally. And you can get a cell phone. If
you want to get somebody money and I don't
know how to get you any money unless you got
some and you need some, they would figure out
how to get you.
MR. BURNHAM: How did you vote?
Let me try something with Tom for
a second. He's willing to put 2 million
bucks with his buddies to actually do an old
world style. But how could we convince Tom
that there was real leverage in that. So
once he's done it there wouldn't be another 2
million bucks to do another 500. How can you
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take the 2 million he gives you now and use
it as a seed to get more than that?
One way to think about it would
be if you could get that pastor on a Kiva
server. And so what you need is you need the
audit trail. You need to be able to see the
players play out. And you need to be able to
do it in decentralized automated way that
begins to flag automatically.
So if one of the things, maybe
it's Tom. Maybe it's somebody else comes up
and says we're going to pay for the auditors,
but we're also going to pay for the server
infrastructure in the U.S. so that the
accounting systems can be hosted locally in
the U.S., not having somebody go out and
actually dig into some arcane system that
they don't know anything about.
But it's a standardized platform
accounting system in the U.S. that's across,
this pastor wants $1,000 to give a hundred
bucks at a time. They have to account for it
here. And then now you can see behavior
across all 10,000 of these pastors. And if
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one of them starts to go like this or if it
turns out there's another relationship over
here, then you start to see the fraud without
having to see it prospectively. You can see
it retrospectively.
And beginning to then selectively
send out that auditor to go look at that
particular situation.
MR. GALIEL: Key to that is to
share that. Because the way the industry
works, the way the cell phone industry cuts
down on fraud is because they share what they
learn. They share their fraud information.
The way then advertisers cut down on fraud is
because they share their information. We
need to share that information.
It's wonderful if we solve the
problem for Kiva. But if Kiva doesn't share
what it learns about that fraudulent pastor
with everyone else in the interconnected
world, may eventually come across the same
community, then we've lost the value. That's
where the information becomes available.
MR. BURNHAM: Let me bring
164
Jonathan in.
MR. SOROS: I wanted to ask a
quick question first. How are the loans
priced?
MR. SHAH: The micro finance
institutions charge an interest rate. And
that varies based on their context. And the
one thing that Kiva does around that is that
we ensure that it's essentially cheaper than
the alternatives in the market. Or so it
should be a lending. They keep the interest
income. They pass back the principal to
Kiva. And then Kiva software passing back to
all the Internet lenders.
MR. SOROS: And the Internet
lenders get tied to a specific business, a
specific loan they selected loans.
MR. SHAH: That's true.
MR. SOROS: I just want to make a
comment, and Tom, others in the room that
this is obviously a problem generic to micro
finance is not just to Kiva.
And the other wing of financing
that's been trying to get done is the
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securitization markets. And it's the same
problem for securitization. How do you get
sufficient size? And I think it was, I think
it was a pool of Gramene loans in Bangladesh
that was the first securities about 18 months
ago. Bangladeshi currency. So I throw that
comment out there.
The second comment is, as with
all securitization, you have the information
problem. So it's imperative to the mortgage
market. So you've got to set standards.
And the U.S. mortgage market
which we've all heard so much about in the
last six weeks is larger than the treasury
market. It is the principle bond market in
this country. Well, when I go and buy a
mortgage-backed security I don't care, I'm
just buying a pool of assets. Those assets
are pooled because there's information
standardization and lending standard and all
the rest. Of course, even in that market,
that process breaks as we've all seen because
there's fraud and information asymmetries.
I think it's worthwhile to think
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about this problem in that context. And to
ask whether if you solved those, if you
solved that problem, whether Kiva's going to
be the other end of that solution for this
marketplace, or whether you'll have the
marketplace for micro finance securitization,
which I would argue might be a lot more
efficient in the long-term. Because as a
lender if I'm going to lend you $25, I'd
rather lend into a pool of these assets where
I'm more likely to get my $25 back.
MR. SHAH: The problem for Kiva
is that you know who that is.
MR. SOROS: Raise it as a
questioner because there may be an affinity
relationship to the lender that gives me more
of an interest to leding $25 to Kiva to this
seamstress in Nigeria than to buying into a
pool of similar lines because at this time it
lacks a personal. It may be that Kiva will
still be part of that solution. But, if not,
then you're still faced with Kiva's still
focused on a slightly different problem.
Which is how you get access to the people who
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don't standardize effectively.
The subprime. The subprime is
micro finance market, right. How do you
provide capital to the nonconforming loan,
the people who can't get into the system.
MR. HEIFERMAN: I'd like to throw
out a question, which is, what do we envision
this woman that Leslie described. How will
she participate at all in the technology
that's emerging right now in the undeveloped
world which is people being more connected,
social networks, that sort of thing.
And the reason why I ask is this:
Mohammed Yunis, the Gramene Bank, one of the
phenomenon in the Gramene Bank is that when
you lend to a group you lend to a group of 25
women, the payback rate of all these
individual loans of the people in that group
is phenomenally high because there's a
natural social dynamic goes on within the
group. The peer pressure. Just, you know,
you don't want to -- you understand what I'm
saying?
MS. CRUTCHFIELD: You have to
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know that if you lend to one of the group,
then if you don't repay it, the next woman
doesn't get a chance to get a loan. So
there's a consequence, social network.
There's a consequence.
MR. HEIFERMAN: So what I'm
asking is that is that that stuff happens in
natural human groupings regardless of
technology. But, you know, if you fantasize
that these people of course are poor, if they
were in a Facebook like situation that solved
some of what's going on here beyond just the
micro lending questions. But just in general
more connected plan. It solves a lot of
these different kinds of issues.
And so I sort of approach some of
these questions from the perspective of
saying, okay, we're not going to micromanage.
We're not going to master design a master
plan like, you know, instead of master
planning the answers to these questions, how
do you get the platform and the network and
the technology in the hands. And let that
sort, let that phenomenon happen as a result
169
of connectivity. So, I envision, when there
is a $5 iPhone that is five times better than
today's iPhone, and that is inevitable, now I
don't know how the economics will work to
actually 5 bucks. But that's the actual cost
of it. And that is in the hands of this
woman she described somehow. And you know
things will happen in any event. What needs
to happen to make that kind of access in
place.
MR. DAR: 12 things are. One
quick. Level 1 is 3 billion cell phones
already. Very quickly. You get off
technology. You meet the problem with this
woman, can't read and write, technology will
not solve the problem. She can sit in front
of a computer or cell phone, she can't read,
she can't write.
MR. WEINER: There's a potential
solution. So it's a little early to be
talking about it. But I want to throw it out
there because it kind of meets the needs of
your question, the challenge we're going to
talk about anyway.
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I think the answer is decidedly
low tech. A hub-spoke model where you have
to get people on the ground plugging back
into the platforms you were talking about
earlier. I think these two things work
hand-in-hand. Imagine a Peace Corps for
social institution. Call it Venture Corps.
And you go out, you create a program similar
to Teacher America, by way of example. You
go to undergrad programs. Go to the best
business schools, any business school for
that matter. And open up this program. And
say we're going to train you for the next two
years micro financing in cost-based markets
in socially responsible investing. And you
deploy this corps in inner cities, in the
villages, and you give them technology. They
are literate and they are technical literate.
And the difference between
Charle's model and Kiva, is Charles is doing
with Teachers In America who have access to
the technology and can use the technology.
But the villages in your forum can't. So you
create spokes so that these people can plug
171
in. So you have people volunteering, getting
trained, understanding some of the stuff that
you were just talking about in terms of basic
important tenets.
Imagine if they start bundling
packages together. And Scott, that meets
your needs too. Because once that is
facilitated, the peer pressure can start to
take place.
MR. HEIFERMAN: That's 2 billion
people living on $2 a day.
MR. WEINER: You don't have to
start with $2 today. There's a bridge. You
don't have to wait for technology to develop
all the way in price. All of a sudden you'd
be amazed how much a difference we can make
by deploying a few thousand people around the
world and leveraging the platform. You can't
do one without the other. I think that's the
key.
I think what's amazing about the
opportunity for them here today in hacking
philanthropy is the ability to leverage and
scale and create efficiencies. By the way,
172
we're talking about disruption of efficiency
is disruption.
MR. GODSALL: If it's on the
scale. That woman in Senegal can't get
access to the computer is wrong. You create
the incentive, they can find a way to the
computer. If you create the incentive they
can access the technology.
MR. WEINER: We can actually
facilitate it. The incentive is going to be
that villager, knowing if they come in,
imagine a physical center built in one of
these villages as in America that is staffed
by a Venture Corps member and puts up a sign
and says, come in, bring me your ideas, bring
me your projects.
MR. GODSALL: Isn't that
centralized in a way?
MR. WEINER: It's a spoke model.
MR. GODSALL: True. Having a
spoke model implies just the reality in
certain places, mean and nasty. If you
choose a certain partner and I'm of a certain
background I can't get into that place.
173
Coming back to David's point a
few minutes ago about scarcity and money.
When time is scarcity and you have a urgent
problem that's when you get to test the
communities out. If they know each other,
they know who to trust.
Take the Rwanda wars out there.
If you're Tutsi you can't go to the Aquasai.
What is Aquasai? It is worth nothing
monetarily during the war, but now when money
is raining down on Rwanda the Aquasai have a
certain brand to them. So what we're talking
about is how do you say scarcity is in time
in an outbreak in debt. And there's no real
incentive for these people. But they're
somehow hopeful. Like the Hotel Rwanda
movie, on a massive Hollywood scale. But
there are little people like that. There are
social networks that exist.
To me, the efficiency would be
how do you tap the existing social network
using these tools. And the tools are not
just the Web. Cell phone networks in Africa
are more efficient than the Web. And they
174
can tap you into that social network. So
once you're in the loop I think you can
actually vett very efficiently. But we don't
know unless you take a crack at it. And
there's sort of the leap, I don't say of
faith.
I mean, that's pretty shocking
what you've saying now, Tom, about the amount
of money that looks like it could be wasted.
But I think there's something missing. And
that is that on the large scale there are
communities that I would trust that exist.
And you can tap those. Then you can vett
more efficiently than you're doing now. So
it really seems that there's demand and tons
of money. And they're clogged in the middle
in those communities.
MR. SHAH: Then my challenge is
I'm excited about that, is we still have to
go back to that $25 lender in Des Moines,
Iowa. And that's my 25 bucks. And if I hear
about fraud that scares me.
So now we know. Let's take for
granted that we're going to do this auditing
175
program and we're going to spend the right
amount of money and do that. That's going to
happen at a certain rate. What we want to
figure out is what's the breakthrough to
what's the model where we're taking more
risks perhaps. But it's much more open
source. That we're letting go of it on the
auditing. And we're just going to let them
post up and try to develop reputations.
I would love to do that if we
can. Let this person in Des Moines, Iowa, if
they get screwed, if they get defrauded, then
there's a refund, just likes Charles has.
MR. GODSALL: That's one way to
look at it.
MR. SHAH: Low amounts of
reserves to the risky experimental stuff.
MR. GODSALL: Local communities
would punish that person a great deal. The
bank would tap into. There are local ways to
punish people when they break that.
MR. KEARNS: Jay, there's also,
the networks have caring capacities. And
social networks are no different. That's why
176
you know people when they win the lottery and
they buy their friend the boat, then their
friend instead says I didn't really want the
boat. I didn't know where to put the boat.
I'd rather pay off my credit card bill than
end up isolated.
If the power grid is this the
caring passion, you throw too much power to
it, you blow up the transformers. If the
water grid can hold the certain amount of
pressure, put too much in it, it will crack.
These social networks have a certain caring
capacity that we have to respect. Because
you can drive revenue into a school and bust
up a school. Or you can drive revenue into a
social group and bust up a social group.
I think one of the ways to think
about being very deliberate and mechanical
and how are you building the capacity of this
network of lenders is to look at what makes a
network function. What are the kind of key
components that enable a network to be
healthy, to find people that enable network
leaders to see where things go.
177
Actually, there was a good bit of
literature there around what makes a network
function. Social ties, communications, grid,
common story, common language. There's
resources and clarity of purpose. Five key
things. You know, you can look, I bet that
matches somewhat up with the book, in some
ways, a successful distributed nonprofit
create networks that have that social
interaction. And, you know, communication.
But when I think of what has the
Internet done, it's just laid this incredibly
powerful communication grid. It's created
for good or bad much more of a money culture.
Given a common story, common language to
participate with each other. Given us a
scale to maintain social ties across
distances that we never could before.
Like Kiva tapped into. So I
would be surprised if you see some
correspondence going back and forth between
donors and people at a greater distances.
And, you know, I think the whole thing about
hacking philanthropy is how do you look at
178
those components in the context that you're
trying to create and just build a network
capacity so that people, so that that network
can function.
And you assume that everybody
who's in that network is good, and, you know,
certainly trust the insurance back into a
social trust.
MR. WENGER: Well, I have a
closely related question for the people who
know more about that. And it relates to the
suggestion. Are there people already in
those locations that are, whether
missionaries, gateworkers, et cetera, that
are currently not really plugged into these
systems?
And what would it take to plug
them in so that if somebody posted on Kiva,
you could easily identify, well, there's
somebody, you know, 50 miles over in a
village with an aid worker. And that aid
worker can now, say, go over there, take a
picture, and send that back.
So it's sort of trying to combine
179
the idea that you need local presence that
has access to computer that knows how to use
the computer. In the sense that maybe there
are people on the ground. And I just don't
know whether that's a fallacy that there are
people on the ground or not.
MS. CRUTCHFIELD: There's sort of
a delay with the construction of the
technology to the extent that there's not
people, just issues. Not roads and there's
not electricity. And there's not all of the
things that you would participate in a
computerized network we take for granted
here. So I think that's part of it. And I
don't have a sense of the decades or years
before that's going to be extended.
You did touch on the cell phone
thing. I kind of keep going back on like
Tom's old model, as you guys were talking.
I think Jay has the finger on
something which is the social network. Leave
the Internet out of it for a second because
it's not a good situation. But the social
network's there and the reputation. And
180
people now are either proud or maybe first
with all media technology. I keep thinking
about a local plant. Or let's go. There are
ways to go collect information and then you
share it in a book that everybody uses and
travels to different areas. And it's worked.
Like Wikipedia. Eventually, that cafe gets
out of the book.
So Victoria's nodding. But do we
need something like that. Again, it goes
back to Kiva. Kiva takes its time to vett.
Then it is sharing the whole micro finance
world. That then kind of helps raise the
tide of everyone while we wait for the
infrastructure to come.
MS. VRANA: I keep thinking about
the lack of platform in the way that Leslie's
talking about. Because I think the challenge
Kiva has, we have a/challenge in the national
capital region. In the D.C. Metro region.
It's wired. We have nonprofits working four
blocks from the White House in areas of great
poverty. For them to get their information
online in any way that anybody could see
181
about what they're doing with poor kids and
families, there is no platform for the client
to talk about whether their programs are good
for donors to talk about, whether their
programs are good for anybody to really share
consistent information that you could compare
about these nonprofits.
We're out there. We started
looking at 4,000 organizations six, seven
years ago. We gave $32 million to 12 of
those organizations. It took us 18 months
per organization to wholly vett. And that's
all the way. Are they great leaders. They
have a good program for sending the lawyers
and auditors in. That's way too expensive
for most organizations to ever do or a
demonstration process. We're trying to prove
some things.
But we were talking the other day
because we're going to go another round of
lending about the nonprofits. Here are
really the back source for us to tell us
who's doing the best work out there. They're
not going to tell us. We've talked to them.
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They're not going to say a word. You need an
anonymous distributed kind of platform where
people could talk about the tiny programs
from a lender to a youth development
organization consistent across the sector.
Again, as I was saying this
morning, one of the big standards in the
industry is a 5 percent overhead. That's a
terrible, terrible standard for whether a
nonprofit is doing good work or not. And I
would say the $25 lender donor in Des Moines
is not very comfortable with fraud.
When you look at what happens,
when people donate for Katrina, Red Cross, a
little bit of scandal, a little bit of my
exact dollar didn't go for its intent.
People are outraged by that right away. Huge
scandal there. There isn't a lot of room for
that. And the only way that sector is going
to change in the way nonprofit to change
dynamic with the donors where donors are
demanding that kind of transparency of
information. And there's a platform for
people to share in an honest, best way that
183
such a volume scale that it has legitimacy.
It has the crowd. Otherwise, you're never
going to get that. Somebody's got to build
that up. Few people want to fund it.
MR. BURNHAM: There are two kind
of platforms. There's the platforms that are
sort of defined. And there are the platforms
that emerge. And I think coming from my
sense as an investor on the dot-com side,
when I see in presentation somebody who says
I'm going to create this platform, and it's
going to have all of these buyers on it and
all of these sellers on it. Once I have
everybody in the world on both sides, I'm
going to be rich. And we don't spend a lot
of time with those guys.
But if we see somebody who says
sometime, and Delicious is a really
interesting example of this when they came in
and said we're actually scratching our own
personal itch, we want to remember where
things are on the Web. So I created this
thing just to help me remember. And then I
showed it to a few people. And they started
184
using it to help them remember. And then, as
they all began to scratch their own personal
itch, they created a collective value by
accident that all of a sudden created this
very interesting social value. That gets us
very excited because we think that that has
its own legs.
So the question is what is the
equivalent in this situation. What is the
emergent platform that doesn't have to be
defined, doesn't have to have everybody sign
up for before it has any value. But will
sort of creep up on and all of a sudden look
up and say, oh, my god, there's a place where
we can really vett reputation. All we have
to do is do a search against the name and we
can vett the reputation.
MR. VARSAVSKY: I want to say
something that I heard. One is some people
tried to do these platforms. Like now I'm at
the conference. I'm here in New York. And
they try to come up with a platform like
that. And they try to make everybody make a
place. And they try to audit. I'm saying
185
they don't do a very good job, but they do
it.
Second thing I want to say, in my
foundation we worked with the Adina
Foundation in Latin America, Chile. And the
Adina Foundation did a lot of vetting as to
who had the best platforms for certain kind
of conditions. And they concluded,
surprisingly, that while the best platform
was in the hands of the Jesuits, and I'm
Jewish, and I ended up working with the
Jesuits on this project.
So it's not a religious thing at
all. I'm not religious myself either. But
nevermind. They are. They have a vow of
celibacy. And they don't have a vote
against. And they educated 900,000 students
in Latin America. And I think the transition
will be something. That schools are where
their growth starts. And the Jesuits have
been good since I don't know when, since the
1600s. They're extremely well organized.
And there's a lot of people with Jesuits who
are putting these platforms together.
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MR. WILSON: Brad, I think the
one thing that we've learned is that you
build a product. And that product if it gets
heat can become a platform. So what I would
suggest is that DonorsChoose and Kiva should
think about being more than applications;
specific philanthropic services and become
platforms.
Kiva, that's a wonderful problem.
They have way more demand than they can
service. So open up an API. And let other
people build applications on top of that
platform to plug into that demand you've
created. That might have nothing to do with
micro lending. You know, create, you know,
an API on DonorsChoose for people to come in
and create other philanthropic services that
have nothing to do with public schools and
turn these products you built into platforms.
And I think that that's the way it's going to
happen. And if it's not you, it will be
somebody else.
MR. HEIFERMAN: People don't
understand the nature of platforms the way
187
you do. Why don't you spell that out even
more. Give an example.
MR. WILSON: So, you know, I'm
trying to think of a good example to use in
this instance.
MR. BURNHAM: Let's talk about
one. Let's use Googles APIs.
MR. COSTOLO: I'd be delighted.
MR. BURNHAM: Dick's going to
have to be a little bit careful about this.
Google solved a very narrow problem. And
that narrow problem was improved Web search.
And they used actually a social mechanism.
And people don't think clearly about that.
But the social mechanism is page/rank which
is a human derived algorithm, not a machine
derived algorithm. And that gave better
results. And it was only incrementally
better result. And as a result of having
incrementally better result, they aggregated
traffic very, very quickly. And then the
traffic specifically began to refine the
search algorithm. So they benefited from
that effect. And they've become the dot-com
188
provider of search traffic or the aggregator
of search traffic.
But what that allows you to do is
aggregate intention data from all of the
users. And the API that they published is an
API against the intention data associated
with their ad engine. And they have a great
deal of control over that API. But it's not
directly related to the search problem. It's
directly related to the economic model behind
the search problem. And they can open that
API or close. API stands for application
programming interface. And in the case of
Google it's really a data exchange, not a
programatic platform on which people write
code. But it's a data exchange.
And that I think there is an
opportunity for Kiva to take the information
that they have about excess capacity in
lending and allow somebody and publish that
as an API in such a way that people could
write an application. Facebook didn't write
it. They published their social draft
essentially and allowed people who wanted to
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layer on an application. In this case it's
the set of relationships that are defined
again as data relationship, not a code
relationship. They defined a certain data
relationship. And people have come in and
written applications on top of that.
MR. WILSON: I think Facebook is
a better example than Google. Because I
think that more of the people who are
building applications on top of Facebook. It
can care less about the social graph. What
they want access to is the 30, 40, 150
million people a month coming to Facebook
spending an average of 15, 20, 30 minutes
there. That's the platform.
We can talk about the API and all
that. And I think that's important. Because
you can necessarily have a platform without
an API. But you cannot have a platform
unless you have lots of people coming to the
platform to begin with.
And when someone comes to Donors
Choose, which I'm going to go sometime in the
next week and go sponsor, you know, a
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teacher, I'm going to then come back, right.
And I'm going to see how that went.
And if David could have access to
my attention to fund one of his projects that
he talked about, that's nothing to do
necessarily with public schools/teaching, but
I may find that a very convenient place now
that I've really got a relationship with
DonorsChoose that I look. I might want to
satisfy other philanthropic needs on that
same platform. I don't want to have 10
philanthropic programs I want to interface
with. I only need one.
MR. BURNHAM: Charles, I want to
ask did you consciously choose a generic name
that could go beyond --
MR. BEST: I was a senior in
college. I was choosing between being a
teacher and being a police officer. So I did
choose the name generically. And, in fact,
it was police officers who were the first to
come to our site asking if they could post
projects for their children in their
precincts. And an awful long story how that
191
went. And the some of the other inquiries
have gone.
I think really quick on your
point is about folks plugging into what
happened and using it for their purposes.
One of the interesting things for the
companies that don't have DonorsChooses to
their customers. For their customers to go
back a project they want to support. They
want to see the preferences of their
customers in which projects they've selected
to spend their gift certificates on.
So Crate and Barrel was able to,
actually saw that their midwestern customers
had far more geographic loyalty, community
loyalty than did New York and Los Angeles
customers. Because the midwesterners whom
they gave DonorsChoose gift certificates to
spent their gift certificates on their own
communities in much higher proportions than
New Yorkers, Los Angelenos. More detail than
that, we're scratching the surface.
MR. WEINER: This is the platform
we discussed this morning. Rather than use
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analogies, we can get very specific. Start
to craft next steps. We've already started
to think about the stat, even the hub-spoke
model where you get people on the street to
plug into the platform, oversimplify it.
The back-end, front-end. From
the back-end, Fred, I think you started to
allude to a few of these things. Essentially
you guys are in the business. This
marketplace needs searchable technology. So
from a back financed perspective. You need
to control projects from any of the verticals
represented here or around the Web. You need
to be able to properly index that stuff. You
need to have a matching algorithm so when
somebody comes in, types in a query, they get
matched. They can even be based on
collaborative filtering intentions, what have
you.
But put the search aside. And
what we start to think about with regard to
donors choosing a frequency, we're actually
working on at Yahoo where we may be
collaborating, I'm sure where you started to
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do this is connecting people. And right now
the people are checking around projects as
opposed to connecting one another.
Fred, to your point. Everyone
knows this. Someone's somebody connects with
a classroom. Why not have an opportunity to
go back and forth with the classroom with the
teacher. Why not be able to connect the
teacher. Why not be able to connect the
classrooms with one another.
MR. WILSON: If you take and I
take the same classroom we should be able to
collaborate with each other. Now we're
collaborating as buddies together. Let's
sing cum-by-ya and hold hands. That's what
should happen.
MR. WEINER: There's a graphic
capability. People don't care about social
graphs from that term. From the back-end
ability platform, back-end social graph. So
we can do the type of stuff you're talking
about. That's the back-end.
The front end these guys should
be able to build any kind of vertical
194
YourSpace they want. They shouldn't have to
conform to some uniform standards in terms of
user interface.
One of the things I think that
everyone recognizes, that without economics
is missed, was people do want to take pride
in the work that they do when they're doing
not for profit. So I think it's incredibly
important that people have the opportunity to
represent themselves.
So whether it's Kiva, whether
it's DonorsChoose, whether it's others, you
should be able to plus in whatever front-end
you like on this thing. Then from a
fulfillment perspective, we kind of were just
talking about this, I'm absolutely convinced
from people on the street for the Kiva model,
I think even in the United States we've got
inner cities, we have people. You suggested
Washington D.C.. Wouldn't it be great to
plug the people in the platform. For those
interested please, feel free to contact me
about the Venture Corps concept. I think
it's an interesting idea. And I think it's
195
got legs.
Last thing is the date piece.
You plug this stuff into ComStat. It's not
just about plugging into data to figure out
what the close rate. It's talking about
funding. You have insights based on this net
data. You can start to see certain
activities taking place in the world. And
all the insights that come from there. And
the ability to start allocating more funds to
solve those needs. And you start to plug the
layer of people around the world who are
trained to try to leverage this platform to
go into villages, to go into inner cities and
to plug back into this technology.
You enable any vertical, like the
ones we've been discussing here, plug into
this back-end. And they all of a sudden
become that much more powerful. You enable
any engineer or developer around the world
based on open source to go and start building
applications that none of these verticals can
build on their own. We start to offer a
philanthropic system to the world.
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MR. PARKER: A form has been
created that hadn't had an application first.
MR. WEINER: These guys have got
it. They're just not big enough. it's the
question I was going to have for some of our
open source friends. And now this stuff's
been done before. So can you reverse. Can
you kind of move backwards or free some codes
from their sites. Build something separate.
Make it extensible and modular and scalable
enough. And, by the way, good enough.
You can't force people onto this
platform. The ultimate analysts. It makes
everything better. It makes it better. All
the things we've talked about today that have
been successful over time. Didn't force
anybody's hand to write it, added value.
So, what you want to be able to
do is donors go back to Kiva guys, check it
out. This is something worth using. And to
the extent it is, maybe they start to build
on that going forward.
MR. PARKER: I'd love to see that
single user value for the first people on
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that system is. For Kiva what are the
problems that it solves for Kiva that they
currently have. That would thus alleviate
like jumping over to your -- because, you
know, the first few users might not see why
your system's going to be better from doing
it on your own.
MR. WEINER: It's not my system.
It's our system. It's just a little instant
thing. It needs to be built by. That's
what's amazing about people around this
table. These are the people, if they commit
to something like this, it would start to
happen.
MR. WILSON: I think the thing
that the geeks should say to people who
wouldn't represent themselves that way is
that I don't think that this is something
that needs to get built by any single
organization.
I think it just needs to happen.
And I think some of the things that would be
really great, for example, is any marketplace
kind of system that has philanthropic
198
projects in it as a database should publish
those projects in an RSS feed and let this
easily suck them out. That should be a
requirement. So that if Kiva wanted to
showcase DonorsChoose projects or Donor
Chooses wanted to showcase Kiva projects it
would be simple as pulling an RS feed and it
will get done. Little things like that has
such a huge impact on the Web. It's just
amazing.
Maybe Dick can add some color on
this. People who have published things in
RSS feeds have seen just unbelievable amounts
of activity around that. And the people who
have not published there, who have published
their content in proprietary contents made it
impossible to get to have just seen their
audiences dwindle and go away.
MR. BURNHAM: Before you go
there, tell us what RSS is and what is --
MR. COSTOLO: RSS, we'll pick one
of the acronyms, stands for really simple
syndication. It's just a means of
subscribing to a data feed that that's
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something or someone is publishing in a way
that they have, the publisher has no idea who
you are or where you are. And you are
getting the data on a cell phone or APs or a
whatever at regular intervals. And you check
it whenever you want.
And you see what's been added to
it since you last checked it. So the
interesting thing about that, I think really
the reason that Facebook is you could argue
having the success its having, is that you
get this, you're in and always on
environment.
If you're in a cold fusion
environment where you put one unit of energy
in each, added myself to Facebook and
befriended these four people, or I've
subscribed to this feed and it just can't,
everytime you go back in there you get more
and more information on it. And that's the
thing you traditionally haven't seen with
philanthropy, right.
Scott Anderson was mentioning,
Nature Conservancy earlier. We used to give
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to Nature Conservancy. And then there would
be the next time you would go and give. And
there's, you know, where you get a brochure
once in a while. What you want is that the
networks feedback. And Jeff was just talking
about that's right there in the data that
here's what's happening. Here are all the
other people that have contributed to this
school since you last contributed. You don't
even particularly have to be doing anything
over the course of the month.
And so that's what you see with
feeds. That's what feeds enable. They can
be plugged into any social network so they
get to people where they're already behaving
or they're already living. You don't have to
change their behavior to get them to come and
visit you.
MR. DASH: Social accommodation
is where serendipity happens. The unexpected
delights. Right now in philanthropy work,
the few charities that keep a relationship
with do it in a way that feels like more
overhead, more snailmail, wasting money.
201
Instead of the delight. This is what
happened. And this triggered this other
event. This triggered this other success.
And all the platforms, all the social
software that succeeds that, that building
cumulative effect that more and more is
happening.
MR. DAVES: To Fred's point, one
way of encouraging the adoption of that is to
educate the funders of all these groups to
have a certain set of principles/requirements
that they have for their funding decisions
that they're making.
That's one tangible effect that
people selectively can do in educating
funders. Because all the practices, there's
a real learning curve that every foundation
right now is going through as they're
evaluating each of these groups. All of them
are being asked to sort of help the
nonprofits that are involved across the chasm
of technology. And they're all doing it in a
very, very different way. That might be one
leverage point where you can push the funding
202
site, the side.
Second part, we have a lot of
this with the broadband and everything that
happens. We're relying on the industry to
give us information to check up on. A number
of things in the Sunlight Foundation and
other people are working on, where you can
use a similar process where there are
projects like this going on.
Hey, I don't have access or my
price point is here. And I don't have access
to this. So there's a second policy or
legislative public policy thing to do this.
You can then, again, take these
encouragements, information systems to be
made accessible in a way that the nonprofit
institutions for those organizations can then
match up again. These might be two
individual leverage points to go after.
MR. KEARNS: There's no
synchronizing effect built into the movement.
You have all these 400 old institutions. And
there's kind of like they miss, they miss
their synchronizing effect. You know, the
203
idea, like a fax. The more faxes that were
sold, the more value the fax machine became.
MR. COSTOLO: Right, right.
MR. KEARNS: What we're really
talking about, both in philanthropy and the
groups and the donors, if another kind of
DonorsChoose competitor comes on inside,
that's a good thing. But logistically it's a
bad thing. It doesn't actually get us to the
World Bank involvement.
There's no synchronizing effect
going on there for the donors, for the
projects. And I think, you know, the
challenge to hack philanthropy going forward
is how do you wire that synchronizing effect
into foundations, donors, groups, and issue
areas and activists, you know.
If there's one more group that
comes online, does that actually help the
River Group or hurt it. How many states
signed up for all the causes that you care
about. You don't. You're overwhelmed with
it. I'm sure the donors have the same thing
from the grantee. Some new donor pops up
204
somewhere I don't know about. How does that
happen. There's all these kind of things
that fail that are because there's no one
kind of building that level infrastructure.
It's all the individuals.
MR. BURNHAM: In a way you're
talking about the difference between
traditional media and search. In traditional
media world each incremental media outlet
just added to the noise and added the work
associated with filtering through, filtering
through it. But search turns it on its head.
So now my, not only can I ask for
what I'm looking for, but by distributing my
intention data and my attention data to
search, I'm improving the quality of the
search. And I'm now creating the opportunity
for people to reach a need. And there must
be some way that we can flip that model in
this marketplace certainly.
MR. HEIFERMAN: Networks. Before
there was a Internet, computers were pretty
cool. You could write on them. And you
could play games. And the computers were
205
nice. But then when you networked the
computers, then it got really interesting.
The concept of groups, all kinds of different
groups. The kind of groups you're talking
about. The local group. All kinds of
groups, you know.
When you network, Meetup has
been building something for a long time that
we've been very quiet launching. Never
talked about it at all. But what it is based
on, the idea that when networking the groups,
really powerful things can happen that we
don't know. Who the hell knows what will
happen.
That when Al Gore does a movie,
does his movie and says now, you know,
donate, as Vicki says, now go write your
Congressman. Change your light bulbs and
whatever. The idea that there isn't that
actionable to have that self-organized
network of self-organized groups is something
that we're working on. An extremely
lightweight platform basis. Happy to talk
about to give you a sneak preview of soon.
206
But putting aside what we're
doing, for those that are like following this
conversation, which I'm partly able to,
really think about that notion of how, you
know, that analogy of a bunch of computers
and network them together and great things
happen. You get a bunch of groups, network
them together, amazing things could happen.
MR. WILSON: I think we should
have Tom talk for a minute about some of the
stuff that he's seen happening on Facebook.
He's written a bunch about this. And I think
you have some interesting insights into how
platforms like Meetup and Facebook are going
to revolutionize the way people engage with
their own personal philanthropy.
MR. WATSON: I think it was said
earlier by Jason. That there's a big
generational question here. And I think that
the net native generation, the people who are
starting to come along figure about
philanthropy, there's going to be a demand
for this kind of information and personal
tie-in to their causes and to their
207
charitable work. And I think that you can
see it, a little bit of it. A tiny spec,
really, of what it might be with what's going
on in terms of Facebook.
Because there, and in some other
places as well, young people are starting to
get into philanthropy. And it doesn't
involve a lot of money at all. It involves a
lot of people. They really are aware of
their causes, like fashion, or like what
their favorite bands, or like their favorite
books or favorite movies. And I think it's a
transformational moment.
MR. HEIFERMAN: Is it as fleeting
as that?
MR. WATSON: It is pretty
fleeting. It's fleeting, but it's big.
MR. DASH: It's very superficial.
But it has to be because there's nothing else
you can do with it.
MR. WATSON: I agree. It's very
superficial. But I think it's our
responsibility. There's a fair amount of
gray area in this room. It's our
208
responsibility for those out working in
philanthropy. See if we can set the table
for this group. Because I think that is in
some ways going to be the legacy. That's
going to be one of the transformational
moments. When this generation comes along
entirely used to being masters of the media,
masters of their personal space. Masters of
technology without a second thought about
online versus off. That this idea of sort of
thanking philanthropy or creating networks is
going to be sort of second nature.
And I think you're exactly right.
It is very, it's exceedingly shallow right
now. Indeed, I think a lot of these people,
you know, when they're sort of in high school
and college they may take on a cause. Darfur
is a perfect example of a cause where sort of
millions of college kids got involved online.
Whether they take that with them into their
professional lives, a huge open question.
MR. WILSON: Are they making a
difference by putting a badge on their
Facebook page that says they're --
209
MR. WATSON: I do think so.
MR. WILSON: What are they doing
other than raising awareness?
MR. WATSON: That's it. That's
all they're doing.
MR. WILSON: We're all aware of
Darfur. How does that change what's going on
there, what's happening on the ground?
That's the question.
MR. WATSON: Darfur is a
particularly difficult question because it
involves a government.
MR. PAEZ: I would certainly
argue a strong qualification to the point
that you made that it's superficial, the
engagement. I think it's more, I mean,
employers will say the exact same thing about
the attitudes of Generation Y in
not-for-profit cases, just as this generation
is particularly affected by communication
technology and the Internet and the way they
consume information.
Just a quick question. How many
people in this room are actually Generation
210
Y? 28 years old.
MR. WILSON: Under 28 years old.
MR. PAEZ: Is anyone under 28
years old? I was, quite frankly, shocked
that we didn't have more. There are 79
million people in this generation. The
children of the largest generation in
American history. The baby boomers. And
these are two of the generations that are
going to affect how philanthropy in the
United States, and as a result, across the
world, baby boomers as they're retiring with
more money and more life, decades more life
than they ever expected they'd have. More
time on their hands. And a passion to do
something for their children, who, themselves
want to make a difference, who are
simultaneously engaging causes as a concept
more broadly, while still embracing
skepticism of the nonprofit institutions that
spend that money.
So you have this where they want
to make a difference. They socialize around
these causes. They connect with people
211
around these issues. But they don't trust
the establishment, how money goes. And they
don't have much money. So when you talk
about what good is somebody really doing when
they put "Save Darfur Now" on their profile,
but nobody's really demonstrating. I don't
know. We had somebody worked closely to
Agabe. Last I heard 3.5 million people
raised some $100,000.
MR. WATSON: Right. The average
donation's tiny.
MR. PAEZ: The vast majority of
people don't use it. Don't donate. Are not
going to pass part of the larger step they're
taking in thinking about these issues in a
consumer standpoint. That's why I would
argue that the future of philanthropy, in
particularly, Generation Y, happened in the
for profit world, happened in their consumer
choices.
Now, where philanthropy, the
point is GDP has been stagnant. Corporate
giving which rose 18 and a half percent with
most recent data because they're finding
212
brand value in identifying core consumer
values and then attacking them proactively
and uniting them. So I see that that's an
opportunity to vastly scale philanthropic
giving. Philanthropic engagements through
nontraditional means.
MR. WATSON: I totally agree. I
just want to add one more point. I don't
want to hog the time. And Fred's question
again was a good one. How much money. It's
still small. And I've heard Charles say
this. And I was wondering if it's true for
Kiva also. And I've heard Charles speak
about that.
That there's another dividend to
DonorsChoose. And there might be to Kiva.
And that's the attention that it brings, in
DonorsChooses' case, thus far, to public
schools. And there are people who may not,
in fact, make the donation. But if they've
been involved in DonorsChoose, or, you know
what, if they've been in a classroom that has
benefited from that charitable act, from that
philanthropic act, what's the impact on that
213
on charity, philanthropy, and that whole
model, you know, going forward. I think it's
an open question.
MR. PAEZ: Part of the greatest
impact of that, I think, ultimately, is not
just they've derived some personal pleasure,
if you will, from that connection. That
personal connection with that, the classroom
they helped. The person who received their
donation. But it's also part of their own
networks. And that they themselves become
branded amongst their friends, communities in
a way that really affects their lives.
So you can trust human nature
only so far as you can throw it, if that
makes any sense. People are out for
themselves and always will be for a certain
extent no matter how charitable a country we
become, how rich or globalized we are. But
if you tie it into somebody's own sense of
identity amongst their life every single day,
the ramifications can be extraordinary in a
way that we just don't yet understand because
we're only beginning.
214
MR. TRAEGER: Comment and
question.
MS. VRANA: I think the trends
you're talking about, Tom is saying
philanthropy isn't ready for this. And I
would say the nonprofit isn't ready for this
either. Whether you're talking about online
giving or corporate partnerships or lifestyle
giving, it's nowhere on their radar screen.
It's like that.
I have a personal charity of
choice that I've always supported, and I
started a chapter as a teen. I interned.
The organization I support they sent me
postal mail. And I'm not Generation Y. I
don't read my mail. I don't write checks. I
can't find my checkbook. I get online.
They're a big organization. They have a
budget. They're an international
organization. And they know what E-mail
means to solicitations.
And the sector's really behind
this in a way that I think there's going to
be a transition time that goes back to Kiva's
215
problem, where some of the demands and some
of the mechanisms might get generated by the
generations and the new platforms that you
all are thinking about. But they're still
going to be the end nonprofit service side
that is going to need some help. As someone
was here from Empower earlier. That helps
nonprofits Yahoo technology and helps them
about this. There needs to be a back-end on
that side of the house. There's a huge gap
here.
MR. DASH: Aren't these the
organizations that are going to get disrupted
once they refuse to give snailmail. We look
in the business world where they have great
intentions a lot of companies and they can't
make the leap of working the way people work
now, living the way people live now. I don't
want them to.
MS. VRANA: On the advocacy side
I can see that. On the Green Peace side. I
work in human service, human development.
Work prominently programs working with
poverty. You're not going to interrupt
216
those. They have the trust in the community.
He can't <KRAUT> front alignment under <ER>
pertained Social Service doing the hard work
that Tom said this morning that government
isn't paying for. And this nonprofit sector
is supporting that whole bit of work for us.
So just to have a voice for them --
MR. TRAEGER: A comment and a
question and another comment. Jeff likes to
talk up about the platform idea. We're
investing a lot of money trying to do exactly
that. Don't have the expertise you do.
On comment on all this, I guess,
I think that what I'm concerned about,
because, you know, our company is really
focused on the 18 to 34-year-old demographic.
So we're seeing kind of all the trendiness
and giving and serving and I want. The badge
on my Facebook page and all of this.
And it actually kind of concerns
me because I think the danger is that the
Kivas, the DonorsChooses, the causes on
Facebook, et cetera, are definitely
scratching the edge of this generation. But
217
in the same way that sort of child
sponsorships scratched the itch of the
previous generation, right. Everyone does
child sponsorship because it works. There's
pictures of kids who are hurting in the
developig world, write checks. Everybody
does it. Everybody adopts on sponsorships.
I think they are definitely going
to adopt all these technologies. Copy what
DonorsChoose and Kiva. And you guys are
definitely lightyears ahead of everyone else.
But people are going to follow.
What I'm kind of worried about,
and this kind of leads into the question, I
feel like we're really talking about kind of
the cost side of the equation. How do we
increase efficieny. How do we do things.
How do we build a better mousetrap.
What I'm really concerned about,
how do we engage the 18 to 34-year
demographic so they care about this. They
don't just buy a product because it's their
way of kind of satiating their conscience
because they feel it. And they want to give
218
and get involved and change the lives of
other people.
Because without sacrifice,
without hurting a little bit themselves,
really, nothing's really going to change.
And that's, I think, fundamental to the whole
philanthropic phase. You have to realize if
you want to serve somebody in need, it hurts.
It requires sacrifice. You have to want to
do it, to make a difference.
So that's kind of the question I
would like to talk about a little bit. We
don't totally have to go there. How do we
try to motivate, give them that moment
instead of serving the sort of this help and
difficulty.
Actually say I want to be the guy
who kind of stands in the gap and tries to
make a difference. That's where I think the
huge opportunity is. If we can kind of
figure that out. And if technology is part
of it, great. But that's kind of how you
unleash solving problems.
MR. GROUF: One answer I think to
219
that is empowering them. We've seen in,
let's say, ten years ago, five years to go,
the call to action online was the
philanthropic model. You had Tsunami Relief,
9/11. People gave because there was a reason
at that particular moment.
Now, I recently did a study. We
sent out an E-mail with a call to action for
fund-raising. People gave immediately. We
also sent out an E-mail where we created a
community. We created content and
information for them to come back. More
people gave; less money though. But over
time what we've done is built a relationship
with these people. They're coming back.
They're talking to each other. And they want
to be part of a group. And that's why
Facebook is successful because you're giving
them an opportunity to create this network.
If we just have a call to action,
people will give, but they won't get
involved. So we donated the information.
And I think, you know, for lack of a better
word, we used to say content is key. But it
220
really is. Jaime was saying earlier.
MR. DAVES: That's the problem I
was posing. You just said Tsunami and 9/11.
These were big events that touched people,
got inside. And then caused people to want
to respond. Now, the things that they had to
opt into to respond, that happened to be, in
many cases, large bureaucratic inefficient
organizations that did not give them any
sense of touch. Couldn't self-organize
around it.
The problem I'm spending a lot of
time thinking about, can't crack, but a lot
of the solution is here. How do you connect
the power of those kind of mass or micromedia
experiences with self organization that then
connects them to community action in a
feedback loop allows them to repeat and do a
bit more. And the aggregation services of
Dick and others I think are part of the
solution. But then none of them are tied to
the kind of action that you can then link the
type of content that you see on CNN. To Kiva
where you can watch Oprah show, share it with
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your friends. Here's a set of things you can
do. I'm opting in. And let's do it
together, to participate in that. I think
that's a really interesting, a really
interesting problem to try to solve.
MR. BURNHAM: You seem like
you're talking about two separate situations.
One is the event based, the 9/11, the
Tsunami. And the other is the relationship
that you want to create over time.
MR. KEARNS: I actually think
that they're closer together. That people
don't want to. We're capped at 2 percent.
We've been at 2 percent because the joiners
have joined and they're done with it. And
then there's this whole other generation that
I've had enough. I'd like to date a lot.
I'm not a marriage kind of guy.
And our models of how we engage
them doesn't have to be long-term $20 renewal
for life. For a large segment of the
population, there's 100 million people on dot
not call lists. Enough. All of our models
keep us swimming.
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Retention, retention, retention.
That actually becomes a barrier for entry for
people. You see a good petition. It goes
across your desk. I hate this. But I'm not
getting on their spam list. So you don't
join. You don't actually engage because you
know there's a barrier to exit. You're
implicitly pushing on that group even though
you don't know what it is yet.
MR. BURNHAM: I wanted to stay on
that point; the notion there's a trust
element there. The relationship you're
creating by participating in that list that I
think that in some ways is some of the
entrepeneur applications, like Facebook, have
kind of given you more control. Because
that's a partial old media/new media
phenomenon where you're giving them an E-mail
address, snailmail address and they are now
taking advantage of that address.
If you have a profile and a place
online, I think you have a little bit more
control of that. Maybe that's it.
MR. KEARNS: Or maybe it's that
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we need better ways to figure out ways how to
take advantage, ad hoc fashionable things of
the day.
MR. DASH: That's the
philanthropic side of what Marty said. It's
too lightweight. With the gesture I added
this cause and I care about this, there's no
bar. There's something that says did you
give money. Did you give time. Did you stop
drinking water in plastic bottles. What did
you do. All I did was click on a link.
MR. PAEZ: Technically. But
still in the underlying desire for people to
integrate this with their life, that's the
opportunity.
MR. DASH: Absolutely. I'm not
beating up Facebook. It's a short leap from
gifts to falls.
MR. WATSON: It's only part of a
match up to a larger problem.
MR. DASH: I'm not picking on the
implication. There's this potential where
people have this potential for already
sending gifts to each other. And amazing to
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what people will spend a dollar on to send
virtual flowers. And then the philanthropic
side is I have a cause I care enough for to
have it part of my identity. Yet none of us
have made it one click from there to send a
dollar to that cause.
MR. BURNHAM: Scott.
MR. HEIFERMAN: Quick one. From
an Op-Ed earlier I hope you expand on that,
give the $25 to kindergarten and then high
school or 12th grade is joining the Peace
Corps. The question of the engagement cycle
and the idea of how people graduate up that
ladder and I don't think that we can ever,
you know, we don't want a society full of
people going to the Peace Corps.
The question is that middle
ground or Jeff's Venture Corps. I think that
this, the sweet spot, one of those challenges
I think is how do you bring people two,
three, four rungs up that ladder. The
technology. There's a lot to invent and
there's a lot of innovations to be done in
how to move them up that chain.
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MR. WILSON: Scott, you know, I
heard a line a couple of weeks ago that I
really liked which is some guy was at a
nonprofit event and he said, I want to thank
people for all the money they contributed.
But I really want to thank the people who
contributed their time. But that's actually
the more precious resource. And I think this
is what Sebastian was saying. How do you get
people to contribute the time. It's easy to
make a $25 donation. But it's not so easy to
contribute your time.
I've given a lot of my time to
various causes. And even though they are
enormous time sucks and sometimes I really
regret getting sucked in, I also get a much
bigger return on that investment than I've
ever gotten on a financial investment. That
payoff is so large when you really contribute
your time to a worthwhile cause. And I think
that's really the issue. How do we get
people to do more than contribute money.
If we're going to hack
philanthropy, solving, the giving money is
226
the easy problem. How do we get people to
give of their time. That's what I think is
interesting about Meetup. You're already
involving that. Maybe not in a totally
philanthropic way. Just getting a couple of
moms coming in. I don't mean to disparage
what you're doing. But you are solving a
giving of time in Meetup, more than it is a
giving of money.
MR. BURNHAM: Related to what
Jason was saying earlier, I believe that
there's a possibility, at least as I talk to
the Generation Y. Is that what you are --
MR. PAEZ: Yes.
MR. BURNHAM: They are cynical
about the institutions, the 400 institutions.
And they want to have, they have this
conviction that they ought to be able.
There's some right that they have the
opportunity for direct action. And it comes
from something about their experience online,
the immediacy of that experience. But I
think they're looking to actually participate
and not just give money.
227
And so, you know, we need to find
a way to capture that willingness to invest
time, as well as probably early on in their
careers, more important than their ability or
willingness to invest money.
MR. WEINER: Think of it almost
like a human base peer network. Marty, you
were talking earlier, really like
efficiencies. Where inefficiencies are. We
can start filling those holes. Time is a
scarce resource. Some people don't know what
to do with their time.
What Kiva and DonorsChoose have
done have allow people to give them their
money, not necessarily solved the time
component. I'm reminded by Scott. And Brad
to your point, Meetup may start to solve for
that probably a different kind of application
or a different kind of site that combines
some of the best of your three areas. I
think the challenge is in vetting and
qualifying the time that's being donated.
The money is the money. Whether
or not somebody is worthy of exposing to kids
228
or exposing to your locality, that's a whole
different issue. That's a very challenging
thing to solve for. But if we can figure it
out, talk about adding value. I mean, I've
never read any white paper on it. But
imagine idle cycles that all of humanity
generates. That's what's peer is all about.
It's tank it.
MR. BURNHAM: Excess economic
capacity.
MR. DASH: The time involvement
issues solve problems. The gamers have this
figured out. People are leveling up to 60,
70 on Craft. Spending hours and hours a week
spending as much time playing this game as
they do at work. And the reason they're
investing that time is there's a lot of ways
to keep score. It can be money. That's one
way that I'm going to get to it. It could be
a number of other people that get to add that
cost. Like there's that -- how viral am I.
How efficient am I in getting the message
out. It can be status. It can be a million
different measures. But there's a hundred
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different ways to play these games. There's
a hundred different ways to level up. And
when I get to whatever the highest level is,
70, or whatever point it is. I got there on
my own terms. I invested a hell of a lot of
time. And the reward is purely so. I paid
for the privilege of doing that. I paid
whatever it is, $20 a month to play the game.
As it turns out, the $20 a month is only the
entry fee. What I'm trying to do is win the
game or honor or credibility.
MR. BURNHAM: Those are all
social values.
MR. DASH: They're saying the
same thing. We want to have $20 a month from
all these people. We want them to be playing
the game and leveling up.
MR. PAEZ: Actually, I'm going to
try. And taking this idea of hacking
philanthropy, take this one level higher
here.
I think the technology side
you're talking about can be identifying
inefficiencies and whether the inefficiencies
230
reputation help us allocate money more
effectively and avoid inefficient
organizations that are too centralized. Or
tell me how to identify a new way to connect
people. Whether it's Kiva or DonorsChoose.
There's also an acute media
component as James started to mention. And
how to get people to spend time. How do you
effect value to society. And then combining
the efficiency of technological
implementation with real media effort is
understanding that broadcast and the new
media itself have huge impacts on these
things.
I think the merger of the two of
those is where things start to get really
exciting. For example, I'm working on a
project now with Craig a little bit involved
in this, where we're actually going to be in
front of the networks in three weeks pitching
a show with celebrities and causes where all
the challenges are designed to be sort of
premised like challenges. But every
challenge is register 5,000 people to vote.
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Get 1,000 people to plant trees. Create a
passion show for charity inspired by going
green.
So if all engage the celebrity
sponsors when they're taking these
challenges, they're fighting and battling in
these games on behalf of the causes that
they're involved in. And what I've created
here is something that if you scale it and
make dramatic and interesting, and can really
be broadcast, is hugely reputable.
And it's not about money. And
it's about how you spend your time. Party
for a purpose. It's about choosing the bar
where 25 cents of every Margarita goes to
Katrina victims. Or choosing the music
concert where the artist is giving $1 to a
cause or giving out Lance Armstrong
bracelets. Or somehow incorporating what you
care about into your daily activities
socialwise. And that's sort of the key, I
believe.
MR. DASH: The point here is you
have to feel pain.
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MR. PAEZ: You don't have to feel
pain. Not as part of your life.
MR. DASH: I don't think you're
making enough change if you don't. The fact
that you're going out still drinking
Margaritas is a constraint.
MR. COSTOLO: You can feel pain
by going out drinking Margaritas.
MR. HEIFERMAN: It could be like
a gateway drug. The question is what is
further down that ladder from the I put on my
Facebook and I've had a few Margaritas,
what's in between that and doing what's
Jeff's proposing an joining in the Peace
Corps.
MR. BURNHAM: Guys, we have
actually blasted right through the break.
It's now a quarter of 5:00. And I think
we've covered a lot of really interesting
ground.
What I would like to do right now
is start again at my left. That's you,
Scott. And go all the way around the table
quickly with just a parting thought at this
233
time. It will take about 15 minutes to get
around the table. Something that came out of
it. Something we need to take forward.
Something that's worth working on. And
something that you like to see someone follow
up on. If there's any thoughts about it. So
Scott's got a big list here. He has to give
us what's on the top of his mind. This is
not a homework assignment.
MR. HEIFERMAN: It's what I've
said. I'm really intrigued by this stages of
engagement.
MR. BURNHAM: How do we work our
way into it. It's not a Big Bang solution.
How do we incrementally engage people at
greater and greater level.
MR. HEIFERMAN: Yes. Megan works
for Sevco. And Sevco talks about permission
marketing. When you go to a Nashville or you
go to Live Earth, or you make a DonorsChoose
donation or Kiva donation or loan, those are
great like, you know, gateway drugs to
something. And the concept when you join a
Facebook group, it's a dipshit little like
234
group that doesn't actually do anything. We
have hardly cracked the code on what it means
to really make sustainable groups to have
continuity that actually do something, that
actually form the 21st Century chapter
organization.
It kills me that people go on the
immigration March. And then what happens
after the day after the March. What happens
when the music stops at Live Earth. Craig
wrote this. I'm sorry. I'm talking too
much. What are those steps to engage people.
MR. BEST: After that I think
maybe a first grade or second grade step is
for DonorsChoose our plan to convert donors
into civic actors. So we're already
beginning to spec'ing out a new thank you
page at the end of the donation process.
Will not simply say thank you for funding
that classroom, Larry, in Harlem. But will
say thanks for funding that classroom, Larry.
We know from your donation history where you
live and what kind of stuff you like. So
here are a set of online petitions you can
235
sign, click here, and you can tell your
elected representative about the classroom
needs that you've just uncovered in the
process of funding this project.
And so sort of using the data
from one's donation to provide them with
civic action options that are personal to
them as part and parcel of the giving
experience, as maybe first grade for the
DonorsChoose.
MS. CRUTCHFIELD: I go away
thinking about the question about the social
sector and the disruptions that happen in the
private sector. How do we refrain, how we
rate and evaluate nonprofits. So I've got
some ideas here in my book. I have six key
factors that point to what really works in
social change. And we want to make wiring it
out and have other nonprofits have an open
source forum where they're ranking and rating
each other on the scale.
It's not about how big their
budget is. Not about how little they spend
on overheard. Which means they basically
236
don't have computers, technology or anything.
But reframe the way that we evaluate the
success of nonprofits. But instead of having
that be a centralized repayment, nonprofits
themselves, and let them on a peer base get
better information. So that might be my next
thing.
MR. HILL: I just want to comment
on this idea for Kiva. Sort of loosing it up
and having more broad. And I think it would
be actually, the press is so important in a
time when there's so many options for your
brand and really important to not go that
route.
People want to trust that you
find at this time hard to give money to
homeless because you don't know where that
money is going. So the beautiful thing,
you've gotten rid of a distraction. People
like connecting to things and experiences.
And really naturally done really beautifully.
So I think that trust is really important.
So I really suggest you try to minimize fraud
at all possibilities.
237
MR. JOHNSON: Now, one of the
reasons we're banging our heads against the
wall trying to figure out how to help people
help themselves move up the ladder is that
we're thinking we're still, maybe I'm
reiterating a little bit here, we're still
thinking in terms of selfish versus selfless
or we're still thinking in terms of pain,
when really all these experiences are
transactions. And the reason someone is
experiencing some pain making sacrifice,
because they're getting something much
greater in that transaction. I think that's
the thing we have got to think about in order
to help. And it's different for different
groups. But to move people up the ladder,
that's what I'm really interested in.
MS. CASEY: I'm interested in a
bit of what Graham was saying in that from
what I've heard all day long and what we all
know is true, that philanthropy is a very low
trust type of thing. Money changes hands.
There's people who don't actually see the
deposits in front of them. No matter how
238
much we try to. There are occasions where
they ask for a voice. Don't want to give
them a loud voice to say their own things.
There's an interesting part in
sort of meting out trust and earning trust.
I think identity is a huge key. We sort of
skipped around identity all day. People say
it's not about reputation systems. It's
about trying to figure out who you're going
to find, go to. Track them down. What sort
of data they're going to track.
But identity is something that I
think is actually the destruction of
anonymity online. And no anonymity is
something that gets in the way of a lot of
philanthropy. Because it's something where
people will give a bogus gift or will post a
bogus type of problem.
Or in my case, I try, I'll say
this really quickly. We came up with. It's
easy to talk about. Here's a platform. Sure
it's free. It's open source. It's a
no-brainer. You guys have to do it. And
Victoria points a lot of these nonprofits not
239
only even trust that they're so behind
everyone in this room. So you go to them
with a free lunch and they look at you like
you have four heads.
So what we tried to do is give
them a platform that was totally free for
them to go to say to their volunteers and say
for the first time ever, we don't want you to
dig into your pocket. For the first time we
really don't want to you give us $15 or a
penny or $1,000. We want you to give us five
minutes and site up this page about your
dollar.
I worked with the ASPCA on this.
And I was the only one out of 99 that we
tried that actually did the work. It's a
political thing. They have very fascinating
trust base through localizing a bunch of
little style groups. If one person fails,
every other one calls them out on it. The
way the ASPCA works everybody can talk about
their dog. Took them five minutes for the
first time they make a page. That will earn
them a couple of dimes every month. They
240
don't have to do anything more. Their
attention deficit is gone. And their trust
keeps earning for them for ten days. This is
something we were trying to sell no one
wanted to hear.
But the only thing that we are
working on that I keep coming up with that it
is about reputation systems and it is about
identity. And the fact that people are
wearing badges on their arms for, yes, I
support one, and, yes, I support Darfur is
that it is a Generation Y type of thing where
Facebook is about the identity. Social
networks is about the identity. And it's
about creating an identity trust rank system
where people can say I support X, Y and Z.
And it's not just a switch thing where I
supported it.
It's like a co-comment type of
thing where you track blogs across the entire
Internet and say here's where Megan Casey's
posted on every single blog. What if there
were a universal? This is my takeaway. What
if there's a universal philanthropy overlay
241
where it says, you know what, Megan was a
tree-hugger and posted this. Megan went to
Kiva and gave $25, as much to DonorsChoose.
And said I'm going to buy two computers for
this school in Louisiana. And you can start
to track my philanthropic giving, my
philanthropic invoice. Everything that I've
done throughout the entire Web.
All it takes is a few people in
this room to sign up and say, yes, I'm
interested in that sorted of co-comment plan.
And it's to what Fred was saying, it becomes
a lot more about not just giving dollars, but
it's about reputation.
MR. DAR: I'm impressed by
everything I heard today because it validates
the main issue that I think is it about.
Which is that one way of sharing the shares a
pretty good balance in the world today
between good intentions and people's ability
to act on them. That's how I would centering
everything that brought up today. People
want to do. They want to help. They want to
get involved. And it's not easy. There's
242
all these obstacles how to do that. And the
thing is that's always been true. Wanted to
help each other and couldn't. Today in
history that's a nut that we can actually
crack. We can actually solve that problem in
a big way, to a big extent. You never solve
it completely.
But just, let's say when you want
to buy something, you have the mind to buy
it. Items easy to buy. You want if you have
the mind to buy it it should always be easy
to make a difference if you have the time and
inclination to buy anything. My sense is in
the next five, 10 years we're going to solve
that collectively. All of us and other
people.
MR. SOROS: A substantial turn,
and the Kiva discussion back to questions to
have efficiency and levels of gateway.
What's essentially a problem with
information. And so I guess similar to the
problem that Leslie was talking about, Brad
commented earlier that search turn used on
its head. But it still hasn't solved the
243
question of editorial content. An underlying
issue in the discussion where is the
editorial content. You're providing an
editorial comment through your auditing. And
that I think remains a fundamental question;
the disaggregation of editorial content. And
I'm not convinced that the solution lies in
the wisdom in groups in this instance.
I'm not convinced that a lot of
people in Facebook who happened to like Green
Peace makes Green Peace a better
organization. There's something to be said
for a very specific and targeted analysis.
Kiva alone can do or other groups that make
up the 400 list of 400 large philanthropies
in Brad built over time.
The other comment quickly. I
think the Kiva discussion really highlights
the problem of where technology ends. And
that the idea of hacking philanthropy line of
technology to solve problems of 2 billion
that live under a dollar a day really has
severe limitations. If you concentrate your
efforts on expanding philanthropy beyond the
244
techs, what do you do about the people off
the ledge and not there?
MR. GRIFFITH: Quick comment. I
think the thingg that's going to make me
think most today is actually the description
of the problem is combination of technology
and emotion is a good way to describe it.
And the Olympic theme would probably be the
best act of philanthropy because they
provided employment and infrastructure in the
long term.
But then getting further off
topic, I forgot what our homework assignment
was. But had another proposal. There is no
Internet sales tax as yet. Perhaps there's
an opportunity for a first strike before the
Republicans do it to actually make the
Internet sales tax whatever percent, lead to
some nonprofit and then use whichever method
you want to redistribute that. Perhaps
that's for Generation Y. A tax where you
actually have some influence.
MR. REIS: So, first of all, let
me just say thanks to everybody. I really
245
appreciate the sort of passion and
earnestness. And it's a good battery
recharge for me.
My observation is I've got an
observation, a remaining question. So once
again we talked about hacking philanthropy
and how Web 2.0 can contribute. And I think
that observations certainly can contribute in
terms of scaling and facilitating growth and
facilitating scale. And sort of bringing
efficiency and effectiveness closer together.
And that's apparent to me.
But the world I come out of my
mindset is I've been going for years 24/7 on
the practice of philanthropy. The practice
of giving both from the individual donor
perspective and this institutional
perspective. Doers and givers. So
foundations and nonprofits. And if there's
anything I've learned in that 20 years is
that all the good we're doing. We're kind of
running on two cylinders instead of six. So
a big challenge is the quality of giving
also. It's not just about how much
246
engagement and how much money. But it's also
about the quality of it. And we're doing a
lot of good.
But there's, I think, the
remaining question for me that I go away with
is what can Web 2.0 do in a disruptive way
for that quality of giving. And I think,
guess the most feasible, just sort of just
glimmer of an answer for me is that I think
about affinities. Affinity groups or
networks.
And that for me, one of things
those things do are they breed wisdom and
accountability and transparency. And I'm a
white beard. And I cut my teeth on Vietnam
and the civil rights. And one of the things
I found out as a sort of upper middle class
white kid in Minnesota, when I got into those
marches was, I got accountable to a lot of
other people that this a lot of different
experiences. So that that sort of deepened
my appreciation about what works and any
groups can do. And so the giving we're doing
right now, while good, if you go with me for
247
a minute, can be so much better. What can
those networks, what can the social
networking do to improve that giving.
Example, seven times more giving.
So for New Orleans, Katrina seven times more
than the Tsunami. And let me assure you,
there was a lot more people affected by
Tsunami. Now, a sophisticated giver wouldn't
think about that. And maybe that pattern
might have been different. So nothing
against Katrina and New Orleans. But what
about those Indonesian people in Sumatra
that could have used a little more resource.
So this quality of giving stuff,
that still is a big challenge for me, a big
challenge for us, I believe. And what can
Web 2 in this sort of power of social
networking do to improve. It's not the 2
percent should be 4 percent. But it's the 2
percent running at 2 percent that still bugs
me.
MR. NEWMARK: In the interests of
time and Brad's sanity, I'll just point out
that this is really a tie.
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MR. BURNHAM: Tie?
MR. NEWMARK: It's time. Thank
you. Next.
MR. SIFREY: Micah Sifrey. I
also want to say thank for you doing this.
I'm just going to be really quick. I'm a big
skeptic as to whether we can do much to
change human nature. But I do think access
information can affect behavior. And rather
than these two really big questions, I have
two issues I'd like people to scratch.
One is I want to be able when I
search to find out which environmental group
I should give to out of the 40 that exist
that send me mail which Ones are the most
effective, which ones are the most worthy of
my scarce dollars. The same goes for any
other potential group that somebody's going
to give money to. Why don't we have that
information handy.
The only place that I know of
that's beginning to pool that and there are
probably some others that folks here may know
of is a group called Volunteers For Change,
249
which in addition to giving groups the
ability to list volunteer opportunities,
gives volunteers the ability to rate the
experience.
So you begin to see which groups
are actually responsive to volunteers. Which
ones waste their time. Which ones use their
time more effectively. And I don't know for
the life of me why we don't have more of this
kind of information.
The other is, I'd be happy to
work with people on it, the other is call it
RSSA, really simple social action. I'd like
a feed that appears next to a story that I'm
reading when I am reading about something
outrageous that pops up and says here's some
groups that are working on this. Check them
out. Is somebody making that?
MR. DAR: Yes.
MR. SIFREY: Great. Because
again a lot of people act on impulse. It's
never going to be perfect. It's never going
to be as painful as Sebastian would like. I
think an organized religion is the only force
250
that maybe makes people sacrifice. Well,
maybe not. It's impulses. Let's see those
impulses and turn them into action.
And obviously it's at the point
where people are looking for delivery,
information that you need to deliver it. So
those are my itches.
MR. TRAEGER: Before my comments,
quick clarification. My point in saying
sacrifice, there's a joy in that sacrifice.
That's what we want people to know. Actually
giving and serving. Your life will be
fulfilled.
Brad, thank you for over lunch.
Trying sort of getting above the clouds for
the day. Hearing what everything is about.
Thank for you organizing. Everybody else
participating.
Simple takeaway. I'm kind of
interested in the hub-spoke model how do we
connect online and offline in a new very
meaningful way. I think there's a lot of
power in that.
MR. WILSON: I'm interested in
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what would some of these big legacy
philanthropic organizations like the Red
Cross and some of these other names that were
listed in the top five or 10 start to plug
into these emerging Web based platforms like
Kiva and DonorsChoose and Meetup and
Sebastian's project and David's project and
anybody else in the room in a really
meaningful way that gives them the leverage
that these businesses have and they don't.
And when that happens I think we'll be on our
way.
MR. DASH: I think if
philanthropy has plateaued it's because of
the culture of giving hasn't changed as
society's changed. Couple of people have
touched on how identity is a real big driver
for philanthropy now. It seems to me that we
have a potential to make a platform, a
system, a game, whatever you want to call it,
where the scorekeeping that's all these ways
of keeping track of how much I give in money,
how much I give in time, how many people I've
reached.
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And there can be this outcome
where we've seen rock stars become
philanthropists. We've never seen
philanthropists become rock stars.
By giving I should be able to
make a name for myself, my reputation and
identity. I think that's only going to
happen through collaboration through social
media technology the Web 2.0 world and the
philanthropic world.
MR. WATSON: I'd like to thank
the guys for putting this on. I think this
itself is an act of philanthropy. And I
would like to see the conversation continue
because I think this group can potentially
come together on a few different things.
Secondly, it's my view that
philanthropy will be hacked. It's not a
matter of if. It's happening right now.
There are kids in these dorm rooms right here
probably who are coming up with stuff. And
we should all be on the lookout for it.
The whole Facebook philanthropic
thing. The Facebook causes things has kind
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of been beat up on a little bit here. Not
unfairly, because it hasn't raised a lot of
money. But I think it's opened a door a
little bit. It's opened the door a crack.
And I think people will use that as maybe one
little portion of bringing causes to more and
more young people.
MR. GROUF: I too want to thank
Brad. Thank you for arguing.
MR. BURNHAM: Done.
MR. GROUF: No, it's very
important for us to come together. One of
you things, I think Vicki has brought this
out, we need to teach, provide access to
resources to teach nonprofits to how to deal
with this technology and how to understand
the value of community. And unleash the
potential of their donors, of their
participants, like Leslie had said. When you
really tap into your participants, they can
take your organization to the next level.
And that's what Communities Online has been
able to do. I think enough of us need to
understand that.
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I am interested in what do we
with Generation Y after they graduate from
college and they started going into the real
world. How do we keep them engaged. Are
they on Facebook. Do they stay on Facebook.
Those types of mechanisms can help. But I
have seen some statistics that show that the
donations actually drop after they leave the
college campus. For some Generation Y. And
that scares me. How do you continue to keep
them engaged online.
I am interested in the Venture
Corps idea. Jeff, I'd like to talk more
about that.
MS. RYAN: hanks for shlepping me
here. I haven't been able to contribute to.
Coming from a small NGO, new NGO with a huge
program and not engaging the community in
traditional ways, using mostly net, we are
going to rely normally on platforms such as
surveys, on social network insights, and that
sort of thing. And your organizations are
providing us an opportunity to reach out to
people, to engage people.
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And then I think being all the
responsibility of the NGO nonprofit on our
part to continue to engage students or other
communities. There may be people in and out
as fashionable. But there's always going to
be a core group that's going to be interested
and working together and networking together
is the way to really move forward on that.
So thanks.
A VOICE: I used to work as a
school teacher. And now I work online. And
when I was a school teacher I was in front of
a small group of students every day. and I
didn't think much about leverage.
MR. PERETTI: I basically spent a
lot of time with a small group of people.
And now that I work on the Internet, I think
a lot about how do you make sites scales,
make viral. Makes things spread. And I
think in this corporation I think this idea
of leverage, is interesting, fun to use
lightweight for applications of philanthropy.
But I also think that those kind of systems
are very difficult to control. Some things
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become viral. Might not extract and get big.
Other times don't. Sometimes people have
these reverse motivations. Sometimes people
are attracted to the most sensational one.
Not because of the biggest impact. Also
progressive in taxation. Good foreign
policy. Building out infrastructure. And
all of these things that are actually low
leverage. Unfortunately, with taxation huge
amounts of money can mean that something
that's low leverage like teaching people to
read and sitting with people in classrooms
and doing basic infrastructure. Things like
that that are very expensive and low leverage
initially can still be done. Because so much
money that can be used that way. It's
figuring out where are the places where the
philanthropic viral lightweight things can
thrive. And what are the things where you
need things like government and
infrastructure, et cetera.
MR. BURNHAM: Bob, let me just
interrupt. We've got to get out of here.
We've got a new group at 6 o'clock. And we
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have to break. I want to actually ask people
to shift to one sentence summaries. And I
really apologize. It kills me that we're not
going to get the final thoughts from
everybody here. But we will put the
transcript up online. And we will have an
ability to comment.
Love to have you guys continue to
engage, try to figure out how to do that
seamlessly. But one sentence all the way
around.
MR. YOUNG: One, my one sentence.
Leslie, what's the name of your book?
MS. CRUTCHFIELD: Forces For
Good.
MR. YOUNG: October 28th.
MS. CRUTCHFIELD: October 28th,
www.forcesforgood.net.
MR. YOUNG: Your thesis is you
guys will be successful. You think broadly
about what you're doing is the key lesson
here. I think you guys are all going to be
wildly successful. Just keep at it. You're
really smart. I'm very impressed.
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MR. GALIEL: I guess my takeaway
is again, is that the key to hacking
philanthropy is not pain, but pleasure. And
so we need to use network effects and peer
production and lightweight Web services to
make it easier for people to make a
difference. Because I believe it's
evoluntionarily built into us to be
altruistic. And if we increase that, that
evidence what we see in crises is that people
donate when they see that it makes a
difference. Let's make it more transparent,
more obvious. Let's take Kiva's model and
let people see how their $25 makes a
difference.
MR. COSTOLO: My sentence is to
just that. Social good has to become part of
the social media landscape so you can see
what's going on in social good around you.
Just like you can see where people --
MR. WEINER: I think Donors
Choose and Kiva is fundamentally changing the
way we are capable of giving and showing
what's possible. I think with the right
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level of coordination between sites like
that, we can scale those efforts in ways that
people previously couldn't have imagined.
And I'm very much looking forward to helping
in any way I can, along with some of the
other people around this table.
MR. SHAH: I want to thank
everybody. People are still choosing Donors
Choose and Kiva models. I can say that the
Kiva model is still very experimental. It's
not a given it will work. I think there's a
tragedy in common. Seeing a lot of
enthusiasm everywhere. What I'm asking you
help me procreate this so 15 years from now
if the Kiva model is proven we can leverage
it in another context. Things that worked
and that didn't work. Let's build this case
study and let's resource it.
MR. DAVES: Very interested in
the idea of a content connecting to social
action and self-organizing communities which
is also the interest in extending this
conversation to parts of points of leverage
like influencing donor communities. Give
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them best practices. Align their
contributions that way. And, finally, would
love to continue this. Not just in the
context of planning, but politics and
government. And also the sustainable
economy, purchasing decisions, and other
things, other tool box NGOs.
MR. BURNHAM: Getting extra hard
to hear. One word. We really have to. By
the way, we have cocktails upstairs and
obviously continuing. Actually, if we could
do that. If everybody could stay with us and
give us sort of a final breaking thoughts
upstairs, I really appreciate that. So thank
you panel for coming. Go upstairs.
(Whereupon, at 5:15 p.m., the
meeting adjourned.)
o0o