Brad Hargreaves | Building Things

I hear a lot of business ideas. The uninitiated may think that there’s a great diversity in thought here, and I’m constantly being exposed to new concepts. To some extent, this is true — I meet more smart people than I’ve ever met before, for instance. But I’m also exposed to a lot of the same business concepts over and over again.

Some — like group buying or fashion e-com — are simply trendy, and winners will emerge.

But some ideas have been brought to me for years, repeatedly, as new entrepreneurs encounter the same problems and come up with similar solutions. Yet none have succeeded. Those industries are graveyards, where many have entered and none have come out alive — yet.

This doesn’t mean these businesses can’t work. How many people stumbled around the idea of building a social network before Facebook blew it out of the park? But I thought I’d share a few examples of “graveyard” businesses I’ve encountered regularly. I’m sure there are more, and I’d love to see some in the comments.

Social/Management Tools for Conference Attendees. “Idea guys” love conferences, and conferences love idea guys. In my completely unscientific experience, one thing most idea guys have in common is a huge slate of conferences they travel around attending. This is a logistical challenge, but it is fairly unique to the type of person who goes to five or more conferences per year. A fairly small market that tends to attract novice entrepreneurs.

A Portal for College Students. Like the previous concept, this one meets the need of a lot of potential “idea” entrepreneurs — in this case, socially active college students — but few others. Growing a product college-by-college is extremely problematic due to the dramatic differences between colleges and the relatively small market in each college, problems I came to know well at GoCrossCampus. CollegeOnly probably has a better model, which can’t really be described as a “portal” as much as a network or set of tools.

Cash Tournaments on Console Games. Surprisingly few people realize that chance games (such as the games played in casinos) and skill games (such as pretty much everything else) are covered by a totally different set of rules, and it is completely legal to let users bet on their performance in skill-based contests. This seems like a gold mine to many entrepreneurs. Unfortunately, this business is fraught with non-legal issues. Skill balancing is a near-impossible challenge, and it is critical for gaining new players — if a user’s first experience with your product is being badly beaten at Madden and losing $10, you’ve probably lost that user forever.

I do like what some companies here are doing, especially Playhem. Would love to see someone get this right.

Honest Hetero “Hookup” Tools: Of all the businesses on this list, I have the least hope for these. Honest heterosexual hookup apps suffer from all the problems of a double-sided marketplace — one side is a lot easier to convince to join than others. If you make the app “honest” — that is, you report an accurate assessment of the market’s characteristics — you are unlikely to succeed. Here’s a rule of thumb: If you see a man on a hookup service, he’s real. If you see a woman, she’s fake. “Hookup” apps that make money follow the (dishonest) FriendFinder model — get the men to pay, fudge the women.

Anything in the Music Industry: A bit of hyperbole here, but not much.

I’ve been thinking a lot this week about the geography of finance – specifically, the changing geographical landscape of venture capital and how it plays into broader trends in startup financing.  Within each of the three major centers of American innovation (Bay Area, Boston, NYC) we are seeing a major secular shift in financial venture infrastructure from traditional hotbeds (Sand Hill Road, Route 280, Midtown East) to hipper, cheaper, more entrepreneur-friendly neighborhoods (SoMa, Cambridge, Flatiron).

This is happening for a number of reasons, but foremost among them is the increasing competition for early-stage deals, specifically in the consumer internet space.  These companies are often run by young, scrappy entrepreneurs that put big value on a venture firm’s alignment with the entrepreneur’s aesthetics, principles and business philosophy. True alignment is difficult to convey when the firm is cloistered in offices worthy of corporate law or private equity on 53^rd and Lex.  But for some reason – despite all the investor interest in NYC – no one has taken this trend to its logical conclusion:  to establish a mainline VC firm in Brooklyn.

So here’s my proposal to anyone who wants to create the next big early stage venture brand in New York:  found Bushwick Venture Partners. Find a warehouse five stops deep on the L train and rent the top floor.  Recruit a couple scrappy young associates.  Give your portfolio companies free office space – it’s not like your rent will be a big line item, after all.  Throw parties and startup events.   Within six months, your firm will have one of the sexiest VC brands in the city.

Worried that views of Newtown creek won’t appeal to your CEOs?  Bullshit.  Some of the most talented engineers and designers in the world live in Brooklyn and would love to work on a hot company in their backyard.  Good NYC consumer internet CEOs know this.  It’s why DUMBO and Williamsburg are two of the fastest-growing startup neighborhoods on the east coast.

The best part about this is that Bushwick Venture Partners won’t have to work hard to build a cool, aspirational brand. Geography does the work for you.  And it’s a signal to CEOs everywhere that your firm values your portfolio companies’ access to top engineering talent over a need to show a shiny midtown office to LPs.

You can read more of my thoughts on this and other things in this week’s Interesting Meeting of the Week.

As a counterpoint, Matthew Brimer referred to this as “gentrification gone haywire”.  Fair enough.

I’ve struggled with the right way to use Letter.ly for a while. I don’t want to move Startup Adventures onto Letter.ly. The social value I get out of my blog exceeds the social + monetary value I would get from a comparable newsletter. Still, I’ve always been a fan of the exclusive / high-quality content network that Letter.ly is creating.

So I decided to do something different with it. I present: The Most Interesting Meeting of the Week. Every weekend, I pick out the single most interesting meeting I had over the previous week and write about it. For this service, I am charging $1.91 per month ($0.48 per interesting meeting!).

Obviously, I won’t disclose confidential information, and if a meeting is so filled with confidential information that it would be pointless to feature, I’d pick the second-best. Still, there’s a lot of value here. One of the most common questions I hear — especially from investors — is seeking information on the most interesting things in the tech/startup community happening right now. Typically, this is deal-related, although my writings won’t be exclusively focused there.

This is a social experiment. My end goal is not to make $0.91 per month. Rather, I’m very interested in social capital hacks, a topic I’ve written on before. Interesting Meeting of the Week (IMOW) is adding some simple game elements to my professional life. Every weekend, someone I have met with over the past week will get the title of “Interesting”, which will be communicated to all my newsletter subscribers. Whether this turns out to be a desirable title or not — and further, whether this changes the dynamics and quality of my meeting requests — is the experiment. Should be fun. Sign up here and see how it goes.

I’ve been stewing over this post for a while. It gets a little bit closer to being written every time I meet with an “idea guy” who is looking to find a hacker to build his or her (but typically his) dream site. Interestingly, a lot of these guys spend a decent amount of their spare time at an analogous task: picking up women.

I’ve always wondered why they don’t see the natural parallels. For some reason, the principles that apply to meeting women are a lot easier for people to intuitively grasp than the same principles applied to meeting developers. Unfortunately, most of these guys happen to live in NYC, where there are way more available women than available technical cofounders. But the same ideas apply:

Go into their world. If you’re looking for single women, you probably need to venture outside of sports bars. Go to a more female-friendly club or volunteer for a cause. Go anywhere single women congregate. Similarly, I meet way too many “business guys” who only hang out with people like themselves — other business guys — and stick around events and meetups that are dominated by folks who think pointers are the handheld lasers you use to give Powerpoint presentations. If you want to meet the technical co-founder of your dreams, you need to find the places they hang out — technology-specific meetups and user groups, Hackers and Founders, et cetera.

Understand their motivations. Or alternatively, “Don’t assume their motivations are the same as yours.” In the dating scene, this is obvious — not everyone wants the same thing from the evening’s encounter. And as many of us know, variations in motivation and interests can lead to some pretty awkward situations. Similarly, developers often have very different motivations than non-technical entrepreneurs. First of all, many (most) developers aren’t entrepreneurs. Given that entrepreneurship can be a bizarre and irrational pathology, this can make for a pretty big delta in motivations, perspectives and interests. Money, for instance, may or may not be a big motivator to an engineer — in fact, I’d say a plurality of engineers I’ve met would say that making a lot of money would be “nice, but definitely not necessary.”

This is a generalization, and above everything it’s important to understand the motivations and interests of the individuals you’re talking to, not the generalized category “developer”.

Show your value. Unemployed, balding 40-somethings have a much harder time picking up women than rich, balding 40-somethings. Truly smart, well-connected business co-founders aren’t easy to find. Be that person and demonstrate it early and often.

Speak their language. The number of “idea guys” who don’t even attempt to understand the basics of web development is hugely frustrating, both to me and most startup developers. Even if you can’t code, take some time and learn the basics. But don’t take learning the basics to mean that you actually know anything about making high-level development decisions — it just shows that you care. And like women in bars, technical co-founders appreciate it when you care.

Don’t try to fuck on the first date. Pretty self-explanatory. Get to know someone first, then seek a deeper relationship.

We need more hackers building startups and fewer writing black boxes for hedge funds, so I’m being honest when I say I hope more non-technical folks can use the skills they have to recruit talented developers into the startup world.

Most of the truly miserable people you meet in life aren’t stupid or unambitious, traits we’ve been taught to associate with an unhappy life. Rather, the unhappiest people I know are also some of the smartest and hardest-working. But they’re also martyrs, a dangerous and under-appreciated workplace pathology.

Approximately every tenth highly intelligent person I meet is a martyr. Martyrs have an addiction to making themselves miserable for the sake of others. It’s not necessary for this misery to be for anyone’s benefit — it simply needs to be understood by the martyr that they are performing a sacrifice at the feet of another person or group.

Paul Graham’s How to Lose Time and Money makes a great corollary point — specifically, that driven people rarely waste time by sitting on the couch watching TV, but by doing useless work. I’d like to take that a step further. A number of smart people are Martyrs, who draw their willpower from Sisyphean quests, enjoying difficult and painful situations for the sake of the pain endured. Their equivalent of praise is the feeling of deep guilt they can inspire in others.

Martyrdom is chronic and can impact someone’s strategic decisions. I’ve seen martyrs join organizations doomed to fail simply to have a steady stream of martyr-ready situations. Playing the martyr role is addictive, and situations in which a martryr can work extreme hours, take the blame for far-reaching problems, and prostrate themselves at the feet of bosses are their crack cocaine.

Martyrs paralyze organizations. I’ve written about the huge influence guilt has on communication, but it deserves restating. The guilt that martyrs inspire among their peers and superiors destroy organizational structure and productivity. When a colleague is going to fall on any sword within eyesight, there’s a natural disincentive within a team to hide the swords — that is, to cover up the issues and problems that arise in any organization. Martyrs inspire guilt, and guilt is a terrible emotion to inspire in a group. Guilt saps enthusiasm, sweeps problems under the rug and eliminates any willingness to take risks.

Everyone avoids the dull, the lazy and the untrustworthy. By their very definition, martyrs are none of these things — yet they should be avoided to the same degree. Martyrdom is at best saddening and at worst contagious and destructive.

I have heard more smart people speak about a bubble in the startup community over the past three months than I have at any period in the past five years. And they’re probably right, at least on the level of many individual deals — valuations are out of proportion with exits and a colossal amount of seed capital has flooded the market in the past year.

But so what? I have to disagree with those who claim that this imbalance is going to lead any slowdown in startup activity over the next decade. In fact, I’m extremely upbeat on the future of startup growth and innovation, even in the face of mediocre returns for investors. Here’s why:

1) The developed world’s unemployment rate will not decrease in the short to intermediate term. This will lead to a lot more failure — and probably a higher total percentage of failure as less qualified people start companies — but will generate much more innovation overall.

2) Seed-stage investors are looking beyond the returns. I don’t believe that seed investment returns will be great for the next five years. But many of the new generation of seed investors view their financings as philanthropy as much as investment — and that’s great for entrepreneurs and “traditional” venture capitalists, for whom more startups funded at the seed level means more companies to fund at the Series A and B level.

3) The canon of entrepreneurship is being written now. Until recently, literature on startups was a bizarre alchemy of self-help, business voodoo and bullshit. But with people like Steve Blank, Jason Fried, Eric Ries, and many others crafting a methodology for startups backed with real data and quantitative analysis, the process of creating companies is far more accessible to newcomers from other industries.

4) Costs are decreasing, specifically storage and overseas labor. This has been written about extensively, so I won’t elaborate. But it’s worth repeating, as it opens startup opportunities to new people.

Who are the big winners out of all this, other than the entrepreneurs who create great ventures? Companies that can make a scalable business of supporting and encouraging innovation. Rackspace, Betaworks, startup-oriented law firms, analytics businesses and others all stand to create and sustain lucrative startup-oriented businesses. And that’s a great thing, since it means we’ll see even more people helping entrepreneurs — reinforcing the cycle of startup growth and innovation.

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We are in the middle of one of the largest and fastest macro shifts in world economic history — the development of a social capital infrastructure analogous to the financial infrastructure built over the past five hundred years. Led by the growth of social networks, the value we are building in our personal relationships is becoming more and more comparable to “true” currency. In fact, social capital is coming closer to fully adopting the three core characteristics of money:

Medium of Exchange: It is far easier to reach all of my friends today than it was ten or even five years ago. More importantly, this communication has clear, quantifiable value that I can exchange for other goods. This has never been the case without insane transaction cost in the past.

Store of Value: I can now much more efficiently build, store and display my social capital. Twitter followers do not deteriorate as quickly in value without maintenance as real-life friends.

Unit of Account: The units of social capital have become far more standardized and concrete. Ten years ago it was meaningless to say you have “300 friends”. Today, the Friend (or the LinkedIn connection or the Twitter follower) is a far more meaningful unit of account.

I had the pleasure of joining Emily Hickey and Michael Yavonditte of Hashable for a demo of their product last week. In brief, Hashable turns the transactions of the social capital economy — introductions, breakfasts, lunches, coffees, beers, et cetera — into a game. I get points when I make an introduction or log a meeting in their system, for instance.

Given its check-in and gaming features, It’s tempting to refer to Hashable as “Foursquare for people”. But I think that’s missing the bigger opportunity — a Mint.com for social capital. Social capital isn’t a game any more than my bank account is a game. Sure, it has some game-like elements — it goes up and down in accordance with how well I “play” the game of life — but ultimately it has its most significant meaning outside of the context of any game framework we put around it. And that is where the real world-changing products will be made.

The next generation of successful social products will acknowledge that our social capital is a currency. They will provide tools to enhance our social capital’s functionality as a store of value, a medium of exchange and a unit of account. They will replicate the deep feature set at our hands to deal with money — banking, tracking, exchanging, investing, et cetera — for our connections and relationships. Over the past five years, social networks and the decreasing cost of bandwidth and storage have lowered the transaction costs of social capital exchanges by orders of magnitude. Now, the race is on to provide the best tools and infrastructure around this new currency.

Putting everything in the context of a game is a good way to get quick user traction among a competitive tech community. But social capital isn’t a game, and the biggest companies in the space five years from now will have grown by providing fundamentally useful functionality that helps everyone earn, save, exchange and optimize social capital.

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Special thanks to Sam Lessin for helping shape my thoughts on this stuff. If you don’t subscribe to his letter.ly, you are missing some of the most thought-provoking writing in tech today.

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There’s an old adage in the game design field that good games are easy to learn, yet difficult to master. That is, a game should be simple enough for even the most uninitiated user to understand yet challenging enough for a master to spend years working to hone their skills. Chess is one oft-cited example.

Cities operate by similar principles. Great cities are easy for visitors to navigate yet take years if not decades for residents to fully explore and understand. Cities can be too simple, like so many in middle America that bore their smartest residents into submission (or departure). And cities can be too complex for newcomers — New York, for instance.

This is why Adopt a Hacker is a great idea. New York is possibly the most fascinating city on earth to master — but it’s also one of the most difficult places for a newcomer to learn, especially when it comes to meeting new people. Adopt a Hacker NYC lowers the bar to get great hackers engaged in the city by lowering the learning curve. By pairing visiting developers up with veteran NYC residents, it adds a tutorial to an otherwise dense game.

Most B2B entrepreneurs have a general sense of the ROI they would get by selling to any particular client. Sell your product to the government, for instance, and be prepared for years of investment and dedication before seeing any money. But once you’re in, your company has a client that is willing to pay very well for your work. If you were to sell to smaller organizations, you could likely get away with much shorter sales cycles — but there is a significantly tinier pot of money on the other end.

So there’s a direct relationship between the amount of money a client can spend and their difficulty in spending it. But it’s certainly not a perfect relationship, and I’ve seen the imperfections trap many entrepreneurs — including me. In fact, the relationship probably looks something like this:

When selling software or services, being below the line of best fit is critically important to keep yourself sane and your margins high. Go too far above the line and it’s unlikely that you can even make the business work — the cost of selling each unit will overwhelm the available revenue.

I learned much of this the hard way. My first company, GoCrossCampus, promoted campus-wide games through student governments. Another company I was involved in sold software to technology transfer offices within universities. For both of these businesses, the amount of bureaucratic red tape involved in the purchasing process was way out of proportion to the amount of money our clients were able to spend. University bureaucracies are notoriously budget-constrained, and student governments can rarely spend more than a few hundred bucks on any particular purchase.

While there are often fewer competitors in these difficult markets, I would caution any entrepreneurs against reading too much into the competitive landscape. Often, highly frictional organizations will stick with fundamentally inferior products (e.g., mainframe systems) rather than switching to any new solution — yours or your competitor’s. If there isn’t any competition because all the other firms have entered or left, that isn’t a good thing. In other words: when you see a graveyard, don’t play there.

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As more and more people look to the startup community to save our nation and our economy, it is only reasonable for things to get way more political. As more former bankers and teachers and rodeo clowns start companies, we’re witnessing the emergence of entrepreneurs as a political bloc.

But we are influenced by a different set of issues than the average partisan — H1B visa reform, patent reform, regulatory streamlining, et cetera — some of which haven’t yet been divided along partisan lines. In fact, it’s extremely difficult to assign the “entrepreneur’s agenda” to a traditional right-left spectrum. But this makes it even more interesting to attempt to arrive at some conclusions about the unique political beliefs of entrepreneurs.

However, some challenges. First, it’s notoriously hard to generalize anything about an entire industry. You can say that auto dealers and doctors tend to be conservative while teachers and scientists tend to be liberal, but technology-focused entrepreneurs are an even more diverse bunch. I’ve met founders who are die-hard socialists and others whose neo-conservative beliefs would make Glenn Beck blush. Second, politics is something that many founders simply don’t discuss in public. It’s tends to have a pretty poor risk-reward ratio.

However, I’ve seen a couple broad, fairly common threads among the political beliefs of startup founders, investors and early employees. I summarize them as “Libertarian Populism”, combining two political philosophies rarely seen together in the wild:

Libertarianism: A strong belief in individual freedom of thought and action. See the broad-based support for patent reform, creative commons licenses, regulatory reform (often de-regulation) and immigration reform.

Populism: The belief in the struggle of the people versus the “elites”, commonly represented by large corporations, specifically Wall Street. This tends to be particularly strong in developer-centric communities like Hacker News — most of the articles I’ve written that have hung on the front page for a while have had a strong populist streak.

But it’s more than just the independent adoption of these beliefs. Rather, libertarianism and populism are combined into a desire for freedom from all institutions, with little distinction between government and large corporations. After all, government and larger companies are both things that can (and do) harm small businesses. In many cases, government and big companies seemingly collaborate to attack startups: modern US patent policy, for instance, gives a massive advantage to enterprises with hoards of cash and lawyers.

Many entrepreneurs — especially the more common, cash-flow-focused entrepreneurs creating lifestyle businesses — consider their actions to be a declaration of independence of sorts from institutionalized corporate America and 9 to 5 drudgery. Yet the government’s rules tend to be written with the assumption that all companies are big companies, and the resulting administrative headache creates an antagonistic relationship between entrepreneurs and governments. Add to that the fact that big corporations — say, a health care provider — have similarly unfriendly rules, and the entirety of mainstream American institutions are thrown into the same bucket. Thus, libertarian populism.

This all has interesting implications. For instance, I’ve lately seen entrepreneurial populism leveraged to attack VCs. Take Chris Dixon, for instance, who has done a remarkable job leveraging his audience’s populist streak to paint VCs as the “other”. In reality, Chris is probably wealthier than most VCs — but he doesn’t have to answer to LPs, who are easy to lump into the government/corporate mob (and often justifiably so).

As our nation’s expectations of the startup community grows, expect the politicization of entrepreneurs to only deepen.

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Every office building in New York City grows by a few percent per year. Each stuffy pre-war tower, art-deco complex and shiny corporate center. They’re all growing, like those Kafkaesque SimTower projects that added a few lone offices to the roof each quarter when the rent came in.

Except they’re not actually growing — just adding more space on paper. All office buildings in New York City add a few percent per year to their official square footage, often in lieu of raising rent. So if you are a startup paying $30 per square foot for 1,000 square feet of office space and need to renew your lease, it is more likely that your landlord will claim that your office has grown — perhaps to 1,050 square feet — than attempt to raise your rent.

This is simply the way the commercial real estate world works, and it’s second nature to people in the business. All buildings grow every year — it’s called “loss factor“. But to someone who isn’t familiar with commercial real estate, the concept is completely absurd and unethical.

What makes it seem particularly wrong? Well, square footage isn’t just some abstract number. It’s a real measurement of area. Burger King can claim that a new line of burgers is “50% tastier” regardless of reality, but they would step over the line if they claimed that these same burgers had 50% less fat unless that were actually true. “Tastiness” is a subjective, abstract concept. “Fat” is not.

Somehow, over the course of the development of the commercial real estate industry, square footage has converted from a concrete unit to an abstract unit in the minds of people in the industry. But to the rest of us, square footage remains a concrete measure of area. When I hear 400 square feet, I think of a room that is 20×20 or 40×10 or perhaps even 4×100. When someone in commercial real estate hears 400 square feet, he or she thinks of a space they can lease for $12,000 per year at $30 per square foot. It doesn’t matter how big the space actually is.

Now that we’re here, I don’t see things getting any better — the Nash equilibrium of the situation is for each player to continue increasing the “size” of their spaces by a few percent per year. If one landlord bucks the trend, they’ll need to correspondingly raise their rent per square foot to stay competitive with other landlords. But if everyone else is smudging the size of their buildings, why should you stop? It just means that anyone who wants office space in New York City has to figure out this bizarre system — or get screwed.

So how does this kind of thing start? First, it’s important to recognize how commercial real estate is leased. A commercial space shares a nasty problem with an airline seat: a product that is not a commodity yet is bought and sold as one. In most searches that brokers perform, they are given a price cap by their clients — say, $35 per square foot. If a space falls above that cap, it simply isn’t shown to the client. Thus, a landlord (like an airline) is heavily incentivized to keep their price as low as possible to get visibility in front of lots of potential tenants. The other shoe can drop once the tenant is in the door. This is all analogous to bag check fees, ticketing fees and the other unpleasantries of 21st century air travel.

Therefore, landlords will try to throw as much as possible into the square footage to lower the all-important “cost per square foot”. Initially, the included items were somewhat reasonable — shared bathrooms, hallways and HVAC. In fact, that’s how loss factor is still explained by most brokers. But then someone decided to include not only hallways, but the elevators. Another landlord responded by including not only the elevators, but the lobby and delivery bay. Pretty soon, it got so complicated that square footage became an utterly abstract, meaningless number in the minds of anyone involved in the industry. The square foot was no longer a concrete measure of area.

I don’t think most people in commercial real estate are unethical. Rather, the industry has adopted unethical practices due to a combination of individually innocuous factors: the characteristics of pricing, selection and demand. The airline industry is also clearly trending in this direction, as is higher education. Once an industry is at the bottom of an ethical slope, it is ripe for disruption by young companies that can sell through an honest, straightforward process.

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There is a certain watershed moment in the evolution of most consumer web entrepreneurs. In this moment, entrepreneurs recognize that they do not understand the way most people think about and interact with the internet. They recognize that if you are going to market to “Normals“, you have to leave your intuition of user behavior on the web behind.

People who are successful at marketing and serving content to Normals recognize that most internet users can’t distinguish between platform and app, content and ad, “good” content and “bad” content. Normals need a different level of clarity than savvier users, and if something isn’t immediately apparent, they’ll leave. Normals type URLs into Google, Microsoft Word or their email search bar. Each Normal is unique, and there are many different categories of Normals, but they all interact with the web in different ways than us (“early adopters”, “techies”, “bleeding edge”, etc), ways that may or may not be predictable to even the most seasoned designers and entrepreneurs.

Take journalism, for instance.

Old-line journalists regularly equate newspapers with journalism and blogs with something lesser and dirtier. In truth, there are a significant number of blogs that do far better journalism than newspapers have ever done. But there are many, many more that are simply content factories that benefit from a deep understanding of Google’s ranking algorithm that smaller (and journalistically superior) players don’t have. Demand Media, for instance, built a massive business by understanding that Normals have difficulty distinguishing quality, well-researched content from content that was generated by an Indian freelancer paid half a penny per word.

So what does any of this have to do with food? Well, the core problem with American food production in the early 20th century was informational: normal people didn’t have sufficient knowledge of their food’s origins and quality and were thus unable to distinguish between “good” food (e.g., meat processed in a clean environment) and “bad” food (e.g., meat processed in filthy sweatshop-slaughterhouses). In an economic environment in which buyers cannot distinguish between high quality and low quality products, all producers will move to solely creating low-quality products. High-quality producers will simply be priced out of the market.

Today’s content production industry is in the midst of that phase shift. As the vast majority of consumers cannot distinguish between good and bad content, mass-produced low-quality content is slowly pushing high-quality, journalistic online content deeper and deeper into niches.

Created in 1906, the FDA set out to solve this informational asymmetry in the food production industry by introducing basic hygiene standards coupled with labeling, inspections and reporting. This is analogous to what Google claims to be doing today for content — decreasing our informational asymmetries around content by calculating the “authority” of various content sources and offering content to users accordingly.

But I don’t think Google is doing a particularly good job. Google’s inability to effectively determine and communicate the value of content is, after all, why Demand Media and its kin can exist as businesses. It is why searches for high-value keywords (“online degrees“, for instance) return a bunch of affiliate honeypots and garbage content size wholly focused on acquiring users via SEO. And if you’ve ever ranked well for a particular search term, you know well that those are low-value users as opposed to users acquired via other channels. Web search has become a dramatically inferior way to discover anything online.

But unlike the FDA, Google is not a government agency. It’s a private company with private competitors. Competitors that may — no, will — eventually unseat Google as the king of search.

So who is going to write The Jungle of content?