December 27, 2005

Earlier this month, County Supervisor Jim Beall and I sent written invitations to the leadership of every public agency in our County, including cities, school districts and special districts inviting them to designate a representative to attend the initial organizing meeting of the Santa Clara County Health Benefits Coalition, the need for which was first discussed earlier this year. The meeting will take place Friday, January 6, 2006 from 2:00 to 4:00PM in the Kirsch Environmental Studies Building at De Anza College in Cupertino. De Anza College President Dr. Brian Murphy will be the facilitator of the meeting.

Here is what Jim and I hope we can accomplish:

First, we are hoping we can get attendees to agree to take a resolution back to their public agencies for approval asap. The resolution indicates their public agencies' support and intent to participate in the Health Benefits Coalition and conveys a willingness on the part of their agency to contribute a modest sum of money, based on a sliding scale, to a coordinating local non-profit organization to be identified later the proceeds of which will be used to hire a qualified grant writer to solicit grants for a two-year Health Benefits Coalition regional pilot project. Second, we hope to get attendees to agree to a mission statement for the Health Benefits Coalition. There will also be presentations from others who are working to increase quality and lower costs connected to providing health care benefits to local public employees. We will also get information about the benefits of linking this local coalition with one currently operating at the state level.

Personally, one of my biggest initial hopes for this local coalition, if we can in fact bring it together, will be to press local health care providers to post the prices they charge for the most common medical procedures on their web sites in a common format. This approach has worked, meaning it has helped drive down or contain prices, in other areas. The reform is similar to the consumer protection laws put in place decades ago that require the operators of gas stations to post their prices in a common format that everyone can see. That law helped create price competition in the retail gasoline industry, which, up until then, was free to charge different prices to different customers, who often learned the cost only after the fuel was pumped. The same practices currently apply in the health care industry. And they will go on until and unless the consumers of those services band together to demand greater degrees of openness and transparency in the billing procedures for medical services. That is something no city or other public agency can hope to accomplish on its own. But, working together regionally, we might just be able to make it happen.

December 20, 2006

The San Jose Mercury News kindly published my op ed on Public Domain Textbooks and Community Colleges today, as follows:

The Public Policy Institute of California's recent study into the shortcomings of our state's community college system highlighted some alarming data: While most students enter community college with high hopes, just 15 percent manage to transfer to a four-year school within seven years. Put simply, there is a huge gap between the ambitions of students when they enter the system and their eventual results.

Many factors account for this dismal performance, including a lack of college-readiness, sparse resources for counseling, remedial education and tutoring, competition for space in the most desirable classes and, in some cases, unrealistic expectations. But for at least some of the students who fail or give up, money is a key issue. The rapidly escalating cost of textbooks is a case in point. The price of one required calculus textbook at Foothill Community College? $173. That's more than 25 hours of work at the minimum wage. It's hard to pull yourself up by your bootstraps if you can't afford the bootstrap.

Prices in the now-cartelized textbook industry have been rising at more than four times the inflation rate for all finished goods in recent years. Eligible students can readily obtain scholarships to pay tuition, including fee waivers. But financial aid for textbooks, which often cost far more than tuition, is much harder to come by, frequently involving an intrusive and bureaucratic application process. And when assistance is offered, there is never enough to go around.

It doesn't have to be that way. In 2004, the Foothill-De Anza Community College District board of trustees adopted the nation's first Policy on Public Domain Learning Materials. The policy ensures that administrators at Foothill College in Los Altos Hills and De Anza College in Cupertino support faculty members who want to create, cultivate, share or use free learning materials that reside in the public domain as substitutes for commercial textbooks.

In recent years, thanks largely to the generosity and vision of the William and Flora Hewlett Foundation's program in support of Open Education Resources, highly respected academic institutions such as MIT, Stanford and Carnegie Mellon have received significant funding to release high-quality learning materials, including textbook equivalents, streaming videos of lectures and even entire courses into the public domain via the Internet. With increased administrative support, community college instructors who see the benefits of this approach can more rapidly organize and augment these materials and provide them to students online, for free, or at the cost of printing if a hard copy is desired. In the process, students can save thousands of dollars on their education.

The opportunity to assist students in this way typically gets scant attention from the policy analysts who study community colleges and from many of those responsible for running them. One reason: Lower textbook costs directly help students but they don't do anything to fill the coffers of the resource-starved academic institutions themselves and, in some cases, when colleges run their own bookstores, may even hurt colleges financially. In the digital age, however, colleges and particularly community colleges are going to have to decide if they are in the education business or the dead tree business.

Our community colleges need a massive boost in state funding to catch up with the national average on a full-time per-student basis. Calls for that support are less likely to fall on deaf ears, as they have for decades, if voters know that our public higher education system is doing all it can to use available technology and resources to increase access, lower costs and improve outcomes. One of the first places we plan to start is by assisting in the creation of free online public domain textbooks for key gateway courses in math and English. The skyrocketing cost of textbooks is a roadblock to higher education that needs to fall.

December 14, 2006

To answer that question, yes, I think Yahoo! is the next AOL.

Apart from the shady bookkeeping - which AOL engaged in and Yahoo! has not - at least as far as I know, the similarities are striking. Like AOL a few years back, Yahoo! is another big name online player, hyped to the max, wildly popular at present as a key Internet gateway, but hallow at its core and ripe to be taken down or taken over, as the case may be. I don't expect Yahoo! to come tumbling down like a house of cards. Instead, the pioneering Internet firm seems more likely to continue its ignominious slide into second tier status as the trickle of more sophisticated users who have found better ways of doing things online continues to grow into a more steady exodus. What's more, when it comes to the critical e-commerce arena, I'd take bets that I am not the only longtime Internet user who has discovered that he can often locate better, less intrusive and more customer-friendly ways to buy and sell stuff online outside the Yahoo! orbit with the help of competing services, particularly Yahoo!'s arch-rival, Google.

Let's cut to the chase. Quite some time ago...

Let's cut to the chase. Quite some time ago, Yahoo! gave up its original focus on the quality of its user experience in exchange for some pretty attractive, gargantuan-sized short term profits. Many public companies stumble into this trap. It's one of the main reasons we see the rise and fall of so many companies that lean too heavily on Wall Street's securities markets for financial support and self-definition. To be sure, Yahoo! still looks pretty strong on the balance sheet. Depending on whom you believe Yahoo! remains either the number one or number two destination on the Internet. But what that balance sheet doesn't reveal is that the company has been eating its seed corn for a very long time. There may not be much left in that bag.

I say this with real sadness. After all, I wrote one of the first major profiles of Yahoo! before the company went public (please ignore the lead-in to the story, btw, which was crafted after the fact by an overly imaginative editor who thought my piece could use more color. There was no bird-do on David's tailpipe, as I recall). While I was writing that story I had a chance to spend a few hours with the founders, Jerry Yang and David Filo, when they had just about a dozen or so employees. They had just landed their first $1 million in venture capital. I was very impressed with both of them. They were ambitious and a bit naive, it seemed to me - although that may have just been part of the act. But one thing was clear: they were totally, totally focused on the user experience they were providing. Let's remember, they used to stick little sunglass graphics next to the urls of sites they thought were particularly cool. In the early days, Yahoo! was all about helping users find the best destinations online according to individual needs and interests. It was not about selling people stuff. Ironically, by becoming so transparently commercial over the years Yahoo! has eroded its current commercial prospects and utility.

Six years later, in 2002, I wrote a column about one of the first big steps Yahoo! took down this slippery slope. At the time, it turned out I got one of my facts wrong (it happens, we corrected it later) when I stated that Yahoo! was the first major search and directory company to charge web sites cash money to be considered for inclusion in their listings. Other competitors had already beaten them to that punch and the decision was not really a big change for Yahoo!, just a price increase, I was later informed. Still, moving in that direction, regardless of the timing, was a major turning point for the company. Yahoo!'s short-term earnings were helped when it started charging those fees. But the move also undermined the company's reputation as the best place to look for information online. A short-term gain for a long-term loss. Likewise, Yahoo!'s decision to let another company, the then-largely unknown Google (!), supply it with search results was totally and completely insane. It certainly didn't take rocket scientists to see this: search was at the core of what users wanted when they visited Yahoo!. Rather than develop that core competence themselves and then defend that turf Yahoo! outsourced it to a company that is now, entirely predictably, eating its lunch.

Two more recent steps down this same path come to mind: the deal Yahoo! struck with PacBell, now AT&T, which appears to be designed to make users captive customers of Yahoo! if they want DSL service, and what looks like a bias against websites that feature ads from Google in Yahoo!'s current search results.

Let's take the Yahoo! ATT-SBC deal first. I remember how I felt as a customer when SBC, from whom I purchased broadband Internet access services, tried to shove a new relationship with Yahoo! down my throat when it came time to renew my DSL contract. Of course I wanted a new Yahoo! homepage, the DSL service rep. told me, why it had all these wonderful features and services and such, why on earth would I object?

I objected because I wanted Internet access. I didn't want to be sold a new involuntary home page with my Internet access (and yes, I know it is possible to get DSL service from SBC/AT&T without using the bundled Yahoo! products, but doing so was not easy, as it should have been, and led to a lot of problems, particularly with their SMTP or email servers). It's like going to buy a hamburger (Internet service) and being told you simply must have the fries with it (Yahoo!'s "personalized homepage"), whether you want them on your plate or not. I'm sure this deal also helped boost Yahoo!'s short-term profits. Making people eat your food is a good way to sell more food. But eventually people get tired of being force fed. They look for alternatives. And, on the Internet, they can find them, particularly if they can type "G-O-O-G-L-E." In the process, Yahoo! has gone from being a company whose services people wanted to use to being a company that tries to make it hard for people to escape using those services. AOL redux.

A variation of the same problem with Yahoo!'s search results. In recent months, (and again, I am a focus group of one here folks, your mileage may vary) when looking over my web site logs I noticed that starting about two years ago, when I first put Google ads on my site, I've been getting steadily fewer referrals to my website pages from Yahoo! (I now get almost none other than from links posted on Yahoo!'s message boards by users). Meanwhile, I am still getting several hundred visits a day, on average, from Google, AOL and even MSN searches. So I wandered over to Yahoo! and input a few of the key search phrases that frequently lead Internet users to pages on my site from the other search engines. When I did that Yahoo!'s most prominent search results on those topics, by contrast, were populated mostly with web sites that feature, big surprise here, drum roll please, pages that have ads from Yahoo! Now, this may be just a sheer coincidence. On the other hand, it fits a pattern: a company doing what it thinks it should do today to keep revenues up (keep users on sites with Yahoo! ads, if at all possible), at the expense of the user's interests.

Earlier today, I read that the famous money manager, Bill Miller, who beat the S&P 500 index for fifteen years in a row, is betting on Yahoo!'s stock to help save his winning streak by almost doubling in value next year. Miller says Yahoo!'s stock will come surging back based on the strength of the firm's just released new "Panama" Internet search advertising technology. We'll have to see if Miller's optimism is justified -- or just a fanciful wish by someone who got stuck holding too much of the company's stock. Either way, though, Miller has put his finger on the place where Yahoo! will have to shine to stay in the game.

If Miller is wrong the best outcome will probably be a merger in a year or two, possibly with one of the big Internet access providers Yahoo! has been sleeping with, which would formalize the firm's role as the front and content back end of an ISP. A renewed and truly excellent user-centric focus on search could turn that around. But that would require some short term pain for some long term gains. In other words, a near-total culture shift for the company and its senior leadership.

Either way, those two young men I met ten years ago, Jerry and David, will be filthy rich for the rest of their lives. So, too for their distant descendants, and for the VC's, top executives and key employees who rode the Yahoo! prosperity wave. Good for all of them. Nonetheless, when I met Jerry and David way back then I got the feeling they wanted to be something more than just rich. Something like, say, the guys named Dave and Bill who built and ran Hewlett-Packard for all those years and who helped determine the direction of their industry for decades. At the moment, though, it sure looks like that role will be played by two guys named Larry and Sergay.