'Communication doesn't mean sending a message — it means listening'

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Internet doyenne Esther Dyson, chairman of EDventure, was in Paris recently to help raise money for a non-profit organization called Bridges.org which seeks to help bridge the digital divide .She spoke to Jennifer L. Schenker, Time Atlantic's senior writer/technology about market trends.

Q: What is the fallout in Europe of the dotcom bubble bursting?
A: I think the reaction of many Old Economy companies was "good, now we can all go back to business as usual," but they can't. Like it or not, they need to deal with the Net and they need a presence on it. Just putting up a billboard isn't enough. In essence, a website is a foyer or a store, not a storefront. But many of them are like a warehouse with no prices and no one to help you--there is no sense of anybody being at home. The focus now needs to be on attention to customers, communication with customers, and giving them choice and transparency. Communication doesn't mean sending a message it means listening.

Q: What kinds of companies will use the Net effectively?
A: I don't think there's a particular sector that is guaranteed to do well. There are some strategies that clearly don't make sense, such as selling things below cost over time, but mostly it's a question of implementation. Except perhaps last year, when a lot of start-ups simply lacked a strategy, more companies fail for poor implementation than for poor strategy. It's like the restaurant business: Italian, ritzy French, all-you-can-eat, bars with free food and expensive drinks, cafeterias, franchised taco stands. ... All of these are fine strategies, and yet few of them stay in business long-term. The other thing to remember is a website is not a business. It's part of a business ... but you need the business behind the website to create some value, for which the website is then the front end. Last year, to use an American metaphor, everyone was so excited about Hamburger Helper that they forgot the hamburger.

Q: What will be the next Big Thing?
A: I think the next big issue--more than a product--will be identity/authentication, all the things around proclaiming who you are and enabling others to verify it. That's everything from digital certificates and signatures to domain names, reputation systems. In five years, most people probably won't accept mail from strangers who aren't certified as "something"--not necessarily by name, but as a Visa card holder in good standing, or a member of some business exchange, or something like that. I think it's a pity, but it's almost inevitable. The thing I will fight for, though, is that the certifying "authorities" should be many and varied and private-sector. Giving over that power to a single party--whether a government or some government stand-in--is a scary idea. We need to make sure our world is decentralized. In many ways, one of governments' biggest tasks over the next years will be antitrust, and one of the private sector's (private individuals, non-government organizations and private [nonstate] companies) will be to limit the power of governments. ...

So there will be a huge market for "identity services," ideally giving power to the user to maintain and control the use of private data. And that will conflict to some extent with reputation services, which will allow you to check someone's reputation. But a service may say, for example, that someone is a good credit risk without necessarily revealing the person's income (e.g. Geotrust). There will also be other private "governance" services, such as online mediation/arbitration (Squaretrade, Word & Bond) and simple membership agreements that enforce quality control, so you can expect a certified member of some group to meet certain standards.

Q: How long before we see a significant number of Russian or Central European companies successfully exporting their technology to the West. What things need to change to make this happen?
A: There are a few right now, and I'm proud to say I'm an investor in several of them: Netbeans and Idoox, NewspaperDirect and Cybiko (both from Russia) and Graphisoft in Hungary. Also, there's a growing market for programming services from Russia--Luxoft (part of IBS) and TerraLink (both my investments), and also Bulgaria (Rila) and other countries. But for this to become a significant trend, the companies need to become more mature commercially. That's already well along in Central Europe, a little behind east and south of there. But to me what's more exciting is the use of technology within Central and Eastern Europe to develop those countries' own economies and infrastructure. The U.S. isn't great because Bill Gates got rich, but (at least in part) because of all his customers' becoming more productive using his tools (and many others' too).

Q: Which leads to the next question: In what ways will the developing world prosper from the Internet boom?
A: The developing world has the same issues, but more so. Central and Eastern Europe have an industrial and educational infrastructure and even pretty good telecom systems by worldwide standards, but they illustrate very well the point that the issue isn't just having machines and technology--these things don't get you to a modern economy or a free society. You need to help people use technology to improve their lives.

Beyond that, the challenge is to instill what I would consider the Internet culture as well as Internet technology. That is--openness and transparency, free communications, openness to change, responsiveness to customers ... or citizens!

I'm on the board of an organization called Bridges.org. Our premise is that the best way to attack the digital divide is neither with reports about the state of the world nor with donations of PCs and service, but with actual technology projects that do something useful and provide a model for other communities. In many cases, the physical resources are there but there's a lack of what we call "real access": People have PCs but don't know how to use them effectively; government policies and regulation keep access limited to people with licenses and money; companies and individuals and nonprofits aren't aware of what they could achieve by using appropriate technology. So in South Africa, in the area near Cape Town, Bridges.org is working with a variety of local organizations, giving people technical and business advice on how to put technology to work. Most of what we're doing is hardly rocket science. For one thing, we're getting nonprofits with different missions connected to each other and sharing their resources at central points, such as MetLife's anti-AIDS campaign or Working for Water, focused on eliminating alien vegetation (which threatens the water supply and fosters fires). So when the woodcutter from WFW goes to his center to get information on which plants to chop down, he gets a handheld device where he can record his activities and make sure he's cutting down the right plants. The data he collects goes into a database that can analyze vegetation patterns and help deal with the threats. But now he can also download information about AIDS prevention, and perhaps get help from a local entrepreneur's center in starting a business selling the stuff he has chopped down as firewood and kindling. All this happens with the help of things like the Wizzy Internet Truck, which shuttles around from center to center, delivering and collecting information on a mobile server, since most of these centers don't have Internet access. People can create e-mails and data requests on the center's PCs; the truck takes those e-mails and requests back to the Bridges.org center, which does have a Net connection, sends them off, and collects the answers and responses from the day before. So you get a big spread of Net "access," even though there's a day's lag time. And you have people using the Net for purposes meaningful to them. Our founder, Teresa Peters, discovered a lot of schools where the teachers would spend a month or two teaching the computer curriculum with a donated computer; then when they were done they would lock it up in a cupboard and go on to other subjects. ... They still didn't see that the computer was something to use, rather than a school subject. In short, we're just a catalyst. We're trying to breathe life into elements that are already there--hardware that's unused, content that is not distributed, people who don't know what to do. We're bringing in content, connections between people and businesses and government, but our goal is simply to get people started and then let them continue on their own. Our next task--or actually a simultaneous one--is to let people know what we're doing, so they can take it and adapt it for their own communities. When someone develops a new business process these days, he patents it and then goes out and sells it. The market works with him, fostering the spread of the knowledge, through marketing, PR firms, salespeople, investors ... even Time Magazine! But when a village does something clever that other villages could copy, chances are no one hears about it. The Web, with its cheap communications and wide reach, is the start of a real solution to that problem.