Joi Ito's Web

Joi Ito's conversation with the living web.

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Serkan Toto wrote a very thorough article about our new Open Network Labs (ONL) and you can read most of the detail there, but my team at DG together with Netprice and Kakaku.com launched a new venture accelerator last month.

The idea is to do monthly meetings where we will have guests come and speak and provide an opportunity for people with startup projects to meet. ONL will give grants up to $10,000 and provide mentoring, office space and other support in exchange for an opportunity to invest if the idea turns into a good startup investment. ONL will work close with my Singapore fund and mentor team - hopefully providing deals for the Singapore fund and possible partnerships for the startups and entrepreneurs we will be working with in Singapore and across the region.

While I won't be working day-to-day on ONL, we have a young and scrappy team of some of the next generation of Japanese entrepreneurs with the support of three of my favorite Internet companies.

I look forward to seeing what sorts of people and ideas ONL is able to attract and hope that we can launch some stuff with global reach help put Japanese startups on the map Internationally.

Ever since I was a small boy, everyone used to tell me to focus. Focus focus focus. I'm very good at being obsessive, but I'm not good at focus. Everything excites me and I end up focusing on everything.

In John Hagel, John Seely Brown and Lang Davison's new book The Power of Pull, they explain that the world is changing and that instead of stocking resources and information, controlling everything, planning everything and pushing messages and orders from the core to the edge - innovation is now happening on the edges and resources are pulled as needed instead of stocked - that the world is going from stocks to flows. There is a excerpt of the book on Techcrunch featuring yours truly.

One of the great thoughts in the book is the idea that you should set a general trajectory of where you want to go, but that you must embrace serendipity and allow your network to provide the resources necessary to turn any random events into a highly valuable one and that developing that network comes from sharing and connecting by helping others solve their problems and build things.

This reminds me a lot of Edward Hall's definition of polychronic time vs monochronic time (p-time vs m-time). In m-time, we delineate time and space into meetings and cubicles allowing organizations and institutions to scale massively. p-time is like a Arab majlis where everyone is invited at the same time and they all mill around in the waiting room of the sheikh while the sheikh has a series of meetings in the open inviting people into the meeting like a long flow of consciousness. P-time lacks scalability and order, but it is rich in context and serendipity. At some level, if you plan everything, you are very unlikely to be able to embrace serendipity or be as "lucky".

Most of my best meetings have been serendipitous and like Granovetter's strength of weak ties, it's those connections outside of your normal circle that often provide the most value, even beyond just the obvious arbitrage opportunities.

So while my life may look completely chaotic and disorganized, my previously post in retrospect, I feel like I am floating in a rich network of highly charged people and serendipitous events, not a single day going by where I don't feel like "Yay! I just did something really good!" Although the heavy travel is wearisome and the lack of stability slightly disorienting, I feel like I'm surrounded by loving, smart people and feel happier than I've ever been in my life.

Although my dream is still to achieve peace of mind and happiness in a becoming-Buddha sort of way, it feels like I'm going to get there through the some sort of Tai Chi action that involves being in a network of energy flows instead of meditating in some mountain cave.

We'll see how this "focus on everything" model works, but I'm not convinced that it doesn't. On the other hand, the standard caveats do apply: "Don't try this at home and your mileage may vary."

Update: Fabian Wolff did a German translation. Yay!

In 2000, during the heyday of the first wave of incubators, I started Neoteny. Incubators such as CMGI and ICG were trading at huge multiples to the value of their portfolios and funds such as JH Whitney were backing incubators around the world.

Having been CEO of a number of startup companies, I was looking to transition into the investment side. I had develop a broad network in Japan and felt that I was more suited for managing a portfolio of opportunities than focusing on the operations of a single business.

I had been talking to a number of funds about joining as a venture partner, but the idea of building an incubator together with the readily available funding and favorable terms lead me down the path of setting up Neoteny. At its peak, Neoteny had over 40 people, a facility, a PR team, engineering, HR consulting and R&D. It was a full service incubator and was modeled after many of the large incubators around the world.

We made a number early stage investments and formalized our incubation process. Just as the incubator went into full swing, the Internet bubble burst and incubators around the world crashed and ended up trading at huge discounts to the value of their portfolios.

Some of my investors pushed me to cut my losses and return their money. This was one of the hardest business periods in my life and one where I would swear off ever being a CEO again. (Which was true until Lawrence Lessig and the Creative Commons board convinced me to take over CEO of Creative Commons.) I had to cut the staff down to nearly nothing, shut down the facility and figure out what to do with the future of the business.

As the Japanese Internet market continued to be disappointing to me in terms of the quality of deals, in the last days of Neoteny, thanks to Justin Hall, I discovered blogging and through blogging, I started using Movable Type and decided that we should dump our Japan focus and find a blogging company to invest in in the US.

The first meeting with Ben and Mena, the developers of Movable Type was friendly, but ended with them telling us that they just weren't interested in raising money. We continued to court them, but I really wanted to have a position in this space and I met Evan Williams and the team at Blogger and found them more open to the idea of investment since they'd already taken VC money.

As fate would have it, we sent Evan and his team a term sheet to invest in Blogger the day before they got the acquisition offer from Google, which they took. Soon afterwards, Ben and Mena decided that we weren't that bad after all and took our offer to invest in Six Apart.

I felt very happy (and still feel very happy) with our investment in Six Apart. Although many investors continued to support us, we had some investors who didn't like the shift in focus away from Japan and other investors had various conflicting agendas so we returned the remainder of our money and shifted the focus of Neoteny to be support Six Apart's expansion in Japan and exist primarily as a manager of the existing portfolio and a major investor in Six Apart.

Reflecting on Neoteny, I realize now that most of the best companies that we invested in such as Six Apart didn't really use any of our incubator "services". Really scrappy entrepreneurs found their own cheap office space, figured a lot of the stuff out themselves and knew what they wanted from us. It didn't seem like they needed an incubation "process". It turns out that large corporations trying to incubate ideas internally really liked our process and a spinout of the Neoteny team continued to use the incubation process that we created as a consulting product for large Japanese companies.

In retrospect, the performance of our portfolio of the investments themselves will probably be good. If we had been a fund it would have been a success, even during a tough investment period. However, when you factor in the build-out and the shutdown of the consulting/incubation arm of the business, we'll still need a very strong exit from Six Apart to be considered successful by our investors. (Go team Six Apart!)

After winding down the core of Neoteny, I started angel investing with Reid Hoffman. With Reid I invested in Flickr, Last.fm, Technorati, The Sixty One, Kongregate, Rupture, ping.fm, Wikia, Aviary and many other companies. I returned to Digital Garage as a board member, the company I co-founded with Kaoru Hayashi which had gone public and incubated PSINet Japan, Infoseek Japan, Kakaku.com, econtext and other successful Japanese startups. Digital Garage invested in Twitter and is currently helping operate Twitter Japan.

I've been experimenting and thinking a lot about how to how startups should be incubated. Because of my trauma at Neoteny, I grew very skeptical of institutionalized incubation, feeling that there was an adverse selection which attracted entrepreneurs who wanted to be part of a club rather than scrappy entrepreneurs who were independent. I also decided that every country was very different and that in Japan, having a large operating company like Digital Garage was an important component of incubating companies because of the risk adverseness of employees and the difficulty of creating operating relationships for small companies.

Also, since the Neoteny days, because of the cloud, agile software development and the ecosystem of startups, the cost and speed of producing new Internet services has significantly declined and the markets have become more global. I think this significantly changes the value and nature of the incubation process - it makes it more feasible. Investment sizes are becoming smaller and everything is moving much faster. (More on the future of venture capital in another post.)

This year Reid Hoffman, my main angel investment partner joined Greylock and I have finally begun to get over some of my incubation and CEO phobias. I realized that it was the right time to take what I have been learning and the network that I have been creating and try to put some structure around the process that I'd been developing over the last few years.

My new theory is that incubator/accelerators probably make sense in Japan if/when they are tied together with a network of supporting operating companies. Recently, we launched the Open Network Lab which is a collaboration between my team at Digital Garage and Netprice. It's modeled after some of the more successful US startup and accelerator programs and we are considering working with similar programs to create a network, but we have tuned it for the Japanese context.

Having spent the last year or so trying to understand the market in the Middle East, I came to the conclusion that basing an incubator in the Middle East might be a bit early and I found it difficult to get my network in the US and Japan to connect directly with the network I was developing in the Middle East. After visiting Singapore a few times and running an un-conference there, I realized that Singapore made the perfect hub to bring my European, Arab, Israeli, Japanese, Chinese, Indian, and American contacts together. The Singapore government is super-supportive and receptive of immigrants unlike most Arab countries or Japan. I decided to raise a small startup fund in Singapore and have received a special deal with six other incubators from the National Research Foundation of Singapore which is providing us a significant financial incentive.

The investment focus of the fund, called Neoteny Startup Fund 1, will be Asia, Middle East and maybe even North Africa. Singapore will be the hub because it is so entrepreneur friendly but I will be creating a network of co-investors, incubators and corporate contacts across the region to try to build companies that are global from the beginning and embrace the multi-cultural mishmash that my network has become.

I'm very excited with what I think will be the beginning of a new phase in my life. I will continue to live in Dubai and I believe that creating Arab entrepreneurs and empowering startups is the most significant contribution to peace and that I can make right now in that region. I'm also interested in trying to see if I can connect to Africa where I believe there is also a tremendous amount of potential.

Only a few years ago, I wouldn't have believed that a network as broad and diverse as this could hold together or that I could rally the support of the diverse network of mentors, investors and partners that I currently have. Having said that, I wouldn't be able to maintain this network without the help of my team at Digital Garage together with Mika, James and Sean.

The initial pipeline of companies and entrepreneurs that we have been meeting has been encouraging.

I will still spend about 50% of my time in my role as CEO of Creative Commons and the remainder of my time working on the new fund in Singapore and the portfolio companies and the pipeline of new opportunities including the Open Network Lab at Digital Garage. Digital Garage will still to be my operating base in Japan. I will keep my current commitments such as my advisory role at Twitter and particularly trying to help with the Twitter activities at Digital Garage and in Japan.

I will continue to serve on the boards of the great for-profit and non-profit organization that I am currently on, but will retire from the ones where I don't think I'm able to contribute significant value.

I realize that I haven't done a good job of making my life any simpler or any easier to manage, but I really believe that I have the opportunity and the responsibility to try to make an impact right now and this current configuration feels optimal to me.

I'll follow up with more detailed posts about Singapore, ONL, the future of Creative Commons and Twitter Japan.

Update: I Made a few edits about Neoteny, my original incubator, to be a bit more accurate. Originally, I said that the investment performance was good, but that includes the value of the Six Apart stock so I changed it to "will probably be good". Also, some investors continued to support us and only a few big investors pushed us to return their money so I modified that section to reflect this.

Plan B

Round the world tickets (RTW) are by far the most economical way to travel if you actually go around the world a lot. The only thing about round the world tickets is that you can only cross each ocean once and can not leave a "region" and return to it. I had one week between my board meeting in New York for WITNESS and my talk at SXSW so it totally didn't make sense for me to fly back to Dubai and "break" the RTW ticket. I was looking for a convenient place to park myself and get some work done and I remembered that my old friend Eric Haller lived in Costa Rica and seemed to have situation of having broadband ie. able to play World of Warcraft and be immersed in a very relaxing environment.

I met Eric in 1990 when I was working on the film Indian Runner - the first movie Sean Penn directed. I was working for the executive producer, Thom Mount, and Eric was a 2nd assistant director. We were around the same age and were similarly over-worked and under-paid for the few months that we worked on location in Omaha together. We hung out a bit and kept in touch. Later Eric lived in San Francisco and started blogging where we "met up" again. After that Eric joined my World of Warcraft guild, We Know, and still serves as one of my "Guild Administrators". About three years ago Eric moved to Puerto Viejo.

I messaged Eric and told him that I was looking for a place to "park" for a week. He encouraged me to visit him in Puerto Viejo. Puerto Viejo is on the Caribbean side of Costa Rica, not the Pacific side, which is where most of the tourists go. The big town on the Caribbean side is Limon, but there are no flights to Limon from any reasonable US airport.

Eric picked me up in San Jose, Costa Rica with a driver in the middle of a crazy storm and it took us over six hours of pretty treacherous driving across Costa Rica to get to Puerto Viejo. Eric had warned me to bring a raincoat - now I knew why. The road was full of potholes that felt more like mini land-mines, but we made it in one piece.

It was late when we arrived so we had a quick bite at the local Italian place and called it a night. When I got to my hotel room, there was something about the quiet sound of the rain and the jungle animals that sort of made me nervous at first and then jerked me into another reality. I fell asleep and didn't wake up for another 10 hours. I don't think I can remember when I last slept that long.

Eric came over, told me to put my watch away and stash everything into the little safe except a photocopy of my passport and a little wad of cash. We didn't have a plan. That was the point. We wandered to the local store in our flip flops on the dirt road. The store had one kind of bottled water, one kind of hair brush, tree ripe bananas, papaya, pineapple and just about everything you'd ever need, but nothing more. We bought a bunch of fruit and headed off to his house.

As we walked down the street, Eric waved at everyone we passed and chatted with maybe one in three of the people we met. Eric being the guitarist in Puerto Viejo's favorite band, Plan B, knew just about everyone and there was always a little bit of gossip that needed to be passed on as we made our way to his house. His house was set back from the road a bit and was in an area nestled up near the jungle. "Watch out for the leaf cutter ants," he said as we stepped over an army of ants carrying neatly cut pieces of leaves down a long path. Costa Rica was one of the most bio diverse countries in the world and you could just feel it.

Eric's house had all kinds of fruits and was a mini-jungle in itself. Eric showed me the machete that he used - which was his primary and only gardening tool. The climate was perfect so he never had to water anything and ever since his compost pile was stolen - the only thing he'd ever had stolen, he just dumped his compost directly into his garden where it quickly turned into plant food. Eric had an internet connection, a beaten up old beach bike, a guitar and a cat. Once he had bats in his attic which created some valuable bat shit, but he gave that to a farmer who really needed the bat shit fertilizer more than Eric did.

We ate fruit, swatted the mosquitoes (which he said you got used to after a few days) and talked about his life in Costa Rica. Costa Rica had banned the military and invested the money saved from that into health care and education. While Costa Rica still has some of the problems that all small countries have, the people were well educated and the health care system basically worked.

The basic cost of living was so low in the idyllic and sleepy Puerto Viejo and the fresh fruit, great coffee, rice, beans, fish and chicken so bountiful that you didn't really "need" much. After listening to Eric talk about his life of no plans except his nightly musical performances I started to understand. Eric said that he had looked at the Director's Guild of America's life expectancies for assistant directors and thought about his life in Costa Rica and realized the insanity of NOT finding peace and happiness in the minimalist but totally fulfilling life of Puerto Viejo.

For several days I walked and biked around the town and the beach with Eric chatting with his local and ex-pat friends. There was a very interesting variety of people who ended up in Puerto Viejo. Some ended up opening cafes, bars, yoga schools or teaching surfing or giving massages. Everyone seemed friendly, happy and relaxed in a way that made me completely envious. Occasionally, I saw some clearly out-of-place tourists looking for "the modern comforts" or some frat boy types being rude, drunk and annoying, but for the most part, the locals tolerated them because at the end of the day, tourism is the bread and butter of the town.

I'm sure I also stuck out like a sore thumb and looked pretty much like a Japanese tourist, but with Eric's introductions, the local community made me feel at home and completely safe. Many parts of Costa Rica can be a bit sketchy, but it seemed like the local community knew just about every little detail about every little weirdness that had happened, was happening or would ever happen in the town - or at least they had a rumor about it. This community "policing" reminded me of something between my little village in Chiba, Japan and Chicago where most of the policing was handled by the community and if you weren't part of the community, you really had no idea what was going on. ;-)

smooth form

In Puerto Viejo, I had the best coffee I've ever tasted at Caribbeans, I heard some of the greatest Rasta/Calypso music from Plan B at Tex Mex and The Beach Hut, had a great time at Mango, got a great massage at Rocking J's, learned to surf from Peace on some great beaches and ate some great local food at Soda Johana and Soda Lydia.

As Eric and I took the public bus back to San Jose, I felt my brain being ripped back into the reality of the modern world like some tear in the fabric of space-time and as we had bad coffee and crappy hotel food in the hotel in San Jose the night before my departure - I already missed Puerto Viejo.

I think my trip to Puerto Viejo was the best vacation ever. But... I think it was because of Eric and his network of friends and his advice to leave "reality" behind. In fact, I don't think I opened my suitcase once after I got my flip flops, shorts and t-shirt out. If you're unable to leave your ego, money, watch, cars, attitude and stress at the door and "go native", I really don't recommend Puerto Viejo. Just as I'd hate to inflict Puerto Viejo on people who are looking for modern comforts, I'd hate even more to inflict people like that on Puerto Viejo. But if you're looking for real happiness and have time to invest in getting to know everyone and trying to fit in to the understated and quiet community that is Puerto Viejo, I'd recommend taking a few years, selling all of your shit (like Eric did) and heading over to take a look.

(My Costa Rica Flickr Set)

My sister Mimi and I are opposite in many ways. She was a straight A student and I was a solid B student. She seemed to be able to focus and get through her schoolwork easily where I struggled.

My sister ended up with her choice of any university she wanted to go to and ended up first at Harvard and then at Stanford and is now in the midst of an academic career.

I, on the other hand, was unable to get into any of my first choice universities and ended up dropping out after a few years. I was later convinced to go back to university again by a well known physicist I was working with and dropped out again after becoming disillusioned with formal education as well as my ability to pay attention and learn anything. (I also discovered the amazing community that was the Chicago nightlife scene of the late 80s.)

I think it's fair to say that the most important thing that I learned in my formal education was touch typing in junior high school and possibly the importance of camaraderie and athletics during high school wrestling.

Despite my completely dysfunctional relationship with formal learning, I've been able to learn enough to run companies, give talks and be allowed to go to some of the same conferences as my sister.

I was talking to my sister whose research focus is learning and digital media. We were discussing formal learning versus informal learning and how I probably survived because I had the privilege of having access to smart people and mentors, the support of an understanding mother, an interest driven obsessive personality and access to the Internet. I completely agree that improving formal education and lowering dropout rates is extremely important, but I wonder how many people have personalities or interests that aren't really that suited for formal education, at least in its current form.

I wonder how many people there are like me who can't engage well with formal education, but don't have the mentors or access to the Internet and end up dropping out despite having a good formal education available to them. Is there a way to support and acknowledge the importance of informal learning and allow those of us who work better in interest and self-motivated learning to do so without the social stigma and lack of support that is currently associated with dropping out of formal education?

Or... is the answer to make formal education more flexible and capable of supporting a wider spectrum of types of learning to enable people like me to "make it through the system"? Oddly, as my informal education has finally started to reach limits in certain areas, I find myself increasingly reaching out to formal education institutions for the rigor and depth that I need to explore my areas of interest.

My sister just posted her talk New Media and Its Superpowers: Learning, Post Pokemon which is highly relevant.