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Yossi Vardi (Israel trip Flickr set) I visited Israel for the second time ever after my first trip in 2003. Both of my trips were thanks to invitations from Yossi Vardi. Yossi is one of the most unique people... Joi http://joi.ito.com

A few months ago, McKinsey & Co. asked me to write an article for their online magazine What Matters. The edited article, "Creative Commons: Enabling the next level of innovation" was just posted to their site. Following is the unedited... Joi http://joi.ito.com

A few months ago, McKinsey & Co. asked me to write an article for their online magazine What Matters. The edited article, "Creative Commons: Enabling the next level of innovation" was just posted to their site.

Following is the unedited original version.

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The explosion of innovation around the Internet is driven by an ecosystem of people who work in an open network defined by open standards. However, the technical ability to connect in an increasingly seamless way has begun to highlight friction and failure in the system caused by the complicated copyright system that was originally designed to "protect" innovation. Just as open network protocols created an interoperable and frictionless network, open metadata and legal standards can solve many of the issues caused by copyright and dramatically reduce the friction and cost that it currently represents.

Before Ethernet and RJ45 connectors became the standard, we connected computers together using a variety of different network technologies and connectors. It was usually physically impossible to connect computers from different companies together. Many of us will remember having Appletalk cables on our Macintoshes, which didn't connect to the network cables on our PCs. While Ethernet wasn't the "smartest" protocol around, because of its simplicity and the lack of proprietary patents encumbering its use, it became widely adopted as a standard way to connect computers together.

Before TCP/IP was developed, even if the computers were able to be connected together physically and electronically, the computers couldn't really talk to each other without proprietary networking software. There were the networking protocols from computer and operating system vendors like Appletalk and Microsoft's own networking protocol. You could also buy networking equipment and software from vendors such as Banyan and Novell.

I remember very clearly when I first heard about TCP/IP and I downloaded the free implementations for both my Mac and my PC and for the first time, was able to communicate between the computers and more importantly with all of the computers in the rest of the world using TCP/IP. TCP/IP enabled the creation of the Internet and ended an era of proprietary networks both locally and as services such as The Source, CompuServe and AOL in their original forms.

Then Tim Berners Lee and the World Wide Web came along. Again, I remember clearly many people arguing that we didn't need the World Wide Web since we could already log into any computer on the Internet, download papers, find the citations and track down and easily download the references. Many people did not recognize, initially, the value that the interoperability and the simplicity that the World Wide Web enabled in creating documents on the Internet.

As we know in hindsight, each of these open standards created an explosion of innovation. Ethernet enabled companies such as Cisco, 3Com and others to emerge and compete in an area that used to be dominated by huge vendors who built super-expensive networking systems designed by telephone companies to specifications hammered out over years in Inter-Governmental standards bodies.

Similarly, TCP/IP allowed independent companies, the first ISPs to compete at providing network services to companies and individuals, breaking, often for the first time, monopolies that the telephone companies were granted by government. This introduced competition driving down the cost of moving bits around and also enabled a whole ecosystem of software components, many free and open source. Author David Weinberger would later describe this system as "small pieces loosely joined." This new network created out of small objects developed by small teams using open standards and protocols was a completely new model.

In the past, organizations under the UN such as CCITT that later became the ITU worked together with governments, telephone companies and their huge research organizations to create enormously complicated standards anticipating every possible problem and building in features for the various constituents represented at in the meetings. After years of deliberation, these standards would be agreed upon and the telephone companies would contract massive projects taking years and millions of dollars to huge vendors who would develop the systems. There was no room for small pieces, small players or participation by any person or organization that wasn't well trained, organized, funded and authorized.

The Internet changed all of that. The Internet Engineering Task Force (IETF) had the credo, "rough consensus, running code". Anyone could participate in the discussion and in fact, much of the discussion occurred online allowing just about anyone to contribute as long as what they were saying or the code they were writing made sense. The agile method of developing standards allowed very small teams and individuals to participate both in the standards process and the development of useful tools and components of the network.

It took only several years from the days when "unauthorized devices" couldn't be connected to the Internet to when just about everything important that we were using to talk to each other was written by small teams on top of lightweight standards and protocols, mainly HTML and HTTP, on top of TCP/IP.

The Web and the ability for users to "view source" and copy each other's code created an explosion of innovation, content and business models such as eBay, Amazon and Wikipedia.

If you try to imagine what it would have been like to create Google before we had this stack of open standards, you would probably have had to pay millions of dollars to create the software on a proprietary operating system. It would have required a huge team of people taking many years. Since it was a "search engine" it most likely would have been given to the phone company to design and run. If we were using X.25, the CCITT equivalent of the Internet, we would be charged and would be charging each person for each packet of information that they sent and received from us in a network where each network operator had a bilateral agreement with each other network operator.

This total project probably would have taken a decade and cost a billion dollars and would probably not even have worked properly.

In fact, the total cost of actually building and launching the first Google server was probably only thousands of dollars using standard PC components, mostly open source software as the base and connecting to the Stanford University network which immediately made the service available, at no additional cost, to everyone else on the Internet.

The open standards and the small pieces loosely joined had created an ecosystem of components and networks that dramatically lowered the cost of development, collaboration and delivery. This allowed people to innovate, launch, fail, connect, mashup and remix in such an efficient way and at such low cost, that the center of innovation moved from the research laboratories of the giant companies to the startup and venture capital scene in Silicon Valley.

Of course, there were startups and venture capitalists before the Internet, but the influence and scale of this new engine of innovation was unprecedented.

The Internet continues to disintermediate and disrupt sector after sector by lowering friction and enabling interoperability. We find businesses and whole industries having to change their models and compete with a whole new set of players ranging from individuals to companies to non-profit organizations. In most cases, this has created lower prices, more access and more choice for the users. The new industries outscale in size and global reach businesses of the past.

The Internet has enabled us to technically connect and collaborate. But just as network software engineers were required to open communications between online users, we now need lawyers to sort out the copyright and content regulations between us so that we - businesses and individuals - can share, collaborate and build legally.

Before the Internet, if two large companies wanted to collaborate on a project or one company wanted to license a work from another company for their territory, the deal makers would often meet in a posh hotel in Cannes sipping champagne to negotiate a price. After several rounds of golf and a few cigars, the executives would agree on the price and "my people will talk to your people" to nail down the details. Finally, the lawyers would be flown in to negotiate the contract. Often these deals were multi-million dollar deals, legal fees costing hundreds of thousands of dollars over the lifetime of the collaboration. However, the value and the cost of the actual transaction was so high that the legal fees were just absorbed into the cost.

Today, the Internet enables a professor in Croatia to collaborate on courseware with a professor in Japan. However, if they are going to legally share data and copyrighted material, they need to clear the licensing systems of both universities, calling upon their mutual legal departments. Most likely, they would need to bring in outside experts to translate the legal documents and finally they would negotiate some sort of contract for the collaboration. The legal fees between these two professors would drastically exceed the technical cost and probably the value of the project, effectively making such a transaction prohibitively expensive, dooming this collaboration to failure.

Imagine an amateur filmmaker creating content to upload to their website as they try to clear the rights of music that they've gathered from across the Internet. Or imagine someone who wants to give a television broadcaster the right to use, with attribution, a photograph that they had posted on their blog. In most cases, the legal fees would exceed the value of the transaction and the sharing would fail, either because the parties would ignore the law, or opt not to share because the legal cost of doing so was prohibitive.

Creative Commons, the non-profit organization for which I am the Chief Executive Officer, is the "TCP/IP of collaboration and content layer." Creative Commons aims to solve these problems with a series of licenses, technical specifications and tools that allow creators to mark their works with the permissions that they wish to grant, free of charge. People using Creative Commons licenses decide whether they would like to allow commercial reuse or restrict reuse to only non-commercial purposes. They decide whether they would like to allow derivative use and modification of their creation. And they decide whether these modified works must be shared back to the rest of the world using the same free license or not.

Creative Commons also provides tools for users to dedicate their works to the public domain. For some scientific data or educational resources the public domain provides the maximum flexibility and value.

You can choose one of the Creative Commons licenses yourself or use the CC0 public domain dedication tool. Service providers like Google, Yahoo and Microsoft support Creative Commons, providing tools to technically mark your works with easily understood icons and standardized metadata. Standardized metadata means other users can easily find and use available creative works, making tasks such as attribution and citation easy and automatic.

Users of Creative Commons licenses such as The White House, MIT, Wikipedia, Flickr, Al-Jazeera and many others have generated over 250 million works published under Creative Commons licenses and do not need to hire a lawyer each time they want to share because each of these works uses a standard license. People building on these works also do not need to ask permission each time they want to share and collaborate because the necessary permissions have already been granted.

This lowering of friction and ability to interoperate creates an opportunity for completely new types of collaborations as well as the ability for previously excluded sectors of society to participate.

Projects such as Open CourseWare and the open educational resources (OER) movement allow students and educators to share and build upon each others works dramatically increasing transparency and diversity while decreasing the overall cost of collaboration and delivery for online learning.

Scientists and researchers all over the world are increasingly sharing data outside of the traditional academic and corporate silos enabling more participants and collaboration at an unprecedented scale.

Previously, because of the technical difficulties and costs, many of these barriers were not visible and in many cases were necessary in order to build business models to allow the high cost sharing that was necessary before the Internet.

Now, many of the systems put in place to protect businesses sharing information are becoming barriers to more widespread sharing as the Internet technically enables a whole new layer of collaboration and innovation. Even copyright itself can be a barrier to collaboration.

TCP/IP and the Web are successful because they are open standards shepherded by non-profit organizations which are custodians of a bottom-up process taking inputs from and creating consensus from a wide variety of stakeholders. Similarly, Creative Commons is a non-profit organization with thousands of volunteers in over 80 countries working to develop standards for content sharing and to help organizations adopt these standards.

Having 100 Internets or 100 World Wide Webs governed by incompatible "standards" would suffocate the network effects that we enjoy on our one interoperable Web. Having a single set of copyright licenses and a single metadata format is key to creating the network effect of interoperability at the collaboration/legal layer.

Just as some networks still use X.25 and some electronic publishing systems do not use the Web and HTML, there will always be some cases where the standardized licenses that Creative Commons provides do not make sense. However, Creative Commons has become the defacto standard for the Internet and the ecosystem of sharing and is best viewed as much a standards organization as anything else.

In the early days, those of us who were proponents of TCP/IP had to argue with regulators, lawyers and technologists who for a variety of reasons did not support TCP/IP. Creative Commons still has critics who have not yet understood and do not feel the benefit of the network effects and collaboration that Creative Commons enables.

Just as we have seen with each new layer of the Internet stack, I believe that Creative Commons will soon become, in hindsight, an obvious thing and that all of the yet to be imagined innovations will have a dramatically positive effect on business, society and the environment.

We just started our Creative Commons fall fund raising campaign. I first want to thank everyone who has supported and continue to support Creative Commons. Thanks especially to those who have been sending money even just the last few days.... Joi http://joi.ito.com

Just arrived in Japan after a visit to Chicago, Dubai and Singpore - three major hub cities. It was interesting to contrast them. Obviously, Chicago isn't a hub in the same way as Dubai and Singapore are hubs, but there... Joi http://joi.ito.com

We just started our Creative Commons fall fund raising campaign. I first want to thank everyone who has supported and continue to support Creative Commons. Thanks especially to those who have been sending money even just the last few days.

In this difficult economy, support from individuals has become exceedingly essential in our ambitious goal of establishing CC as a global standard and a household name. As a small nonprofit, we feel the pressure of limited resources and a strained economy. Our staff's workload is at capacity, so now I turn to you to help us bring CC to places we could never reach on our own. I hope you can join us in the challenge today to make an investment in Creative Commons - an investment of your time, your resources, and your content:

http://support.creativecommons.org

Our community has been behind our success from the start. We have hundreds of volunteers around the world (myself included) - legal experts, educators, artists - who have worked to port, translate, and propagate CC licenses in 52 jurisdictions and counting. When you support CC, you give meaning to the work of those dedicated volunteers, and the hundreds of thousands of people who have benefited from the sharing CC facilitates. When you license your content under CC licenses and spread the word about CC to friends and family, you become part of this growing network. Together, we will continue to lay the groundwork for an open and accessible Internet.

This year, we have set a goal to raise $500,000 USD from our community during our annual fundraising campaign. Your support, however big or small, will help us sustain our core operations and keep our legal tools free for everyone to use. It will enable us to continue to level the digital playing field and harness the power of the Internet to be a force for good.

We have already begun to see that force take shape. There now exist over a quarter of a billion CC licensed works and CC licenses have become integral components of organizations and industries worldwide, from Wikipedia to the United States government, from scientific journals to major universities. There is currently a huge class of shared cultural works that would not otherwise exist if not for CC. These works belong to you, to me, to all of us. I'm asking you to ensure a bright future for this developing and crucial community-driven culture.

Whatever value you find in the rich and vibrant culture of collaboration, innovation, creation, and participation that CC strives to facilitate, I urge you to visit http://support.creativecommons.org to learn how you can help and give a gift today.

Also, if you have a blog and would be willing to put a button to on it to spread the word, that would be awesome. https://support.creativecommons.org/spread

One of the groups in the Royal Film Commission Online Media workshop worked on a video of the workshop itself. There will be a more lengthy and hopefully Arabic subtitled version of the workshop going online after some editing by... Joi http://joi.ito.com

Some participants in the RFC Online Media Creativity Workshop I've been in Jordan since Sunday and enjoying myself a great deal. I arrived just in time to participate in the last day of the World Economic Forum on the... Joi http://joi.ito.com

From Upside/downside graphs From Upside/downside graphs Over the years, Reid Hoffman and I have talked a lot about venture investing and the things that make people successful in startups. Reid likes to doodle a little graph on paper napkins about... Joi http://joi.ito.com

Muneaki Masuda Muneaki Masuda, the CEO of CCC Co., Ltd. recently invited me to join his board and I officially joined yesterday. I've known Mr. Masuda for about a decade having been in various study groups and working groups... Joi http://joi.ito.com

From Upside/downside graphs From Upside/downside graphs

Over the years, Reid Hoffman and I have talked a lot about venture investing and the things that make people successful in startups. Reid likes to doodle a little graph on paper napkins about downside vs. upside focus and I thought I'd expand that a bit and share.

Normal sales oriented companies and organizations have sales that grows month on month if the organization is doing well. While there is a tremendous amount of energy spent on increasing sales, typically sales are capped by some reasonable growth rate over time.

On the other hand, the downside of a company is nearly unlimited. Projects can cost nearly an infinite amount of money if mismanaged and there are a myriad of risks that can cost an operating company tons of money.

The larger and more established the company, the more the organization, as a whole seems to be focused on mitigating risk and minimizing costs as a way to increase earnings and protect itself.

Venture investing, on the other hand, is typically a fund or an individual with relatively limited downside. The most that you're going to lose is the money you've invested and your time.

The upside in venture investing, however, is hugely leveraged. If you're in a good deal, you can make hundreds and thousands times your money with very little incremental cost. The key is to make sure you're in the right deals and that those companies that will potentially knock the ball out of the park get all of the help and support that they need to maximize their chance of success.

In fact, most successful investors spend the majority of their time working on their successful portfolio companies and very little time on the companies that are doing poorly.

In many cases, the companies that are doing poorly need the most help and the intuition is to focus on protecting our investments. Many investors spend all of their time helping their poorly performing companies.

I think that the training from traditional businesses causes people to focus on minimizing the downside instead of single-mindedly focusing on the upside. However, in a venture investment, the MOST you will lose is the money you have invested. Getting 1 million of the 5 million that you invested back from a liquidation is not nearly as important as making sure you're in the next big hit and that the investments that have potential achieve their potential and find their acquirers and partners.

This also influences the way people negotiate contracts. A few percentage points or deal points here and there can damage, slow down or destroy relationships and businesses. Trying to get every last percentage point out of a transaction with a startup is fighting over something that's worth zero if the company isn't successful. It's much more likely to increase your chance of making money if you're helpful and supportive than if you've pushed the entrepreneur against the wall and taken every last percentage point out of the deal that you can from them.

It's stupid to be a sucker and it's not prudent to be sloppy, but squeezing entrepreneurs unnecessarily for that extra nickel isn't worth it when the probability of upside is what you're trying to increase and having more rights in a failure is really not going to make you rich.

I think that all good investors understand this focus on upside vs. downside and I struggle with partners, co-investors and entrepreneurs who seem to live in a downside minimization model. Downside minimization may save you money here and there, but over the long run, will never really provide the kind of returns that an upside oriented model will.

I spend a lot of time on conference calls and am constantly traveling internationally. I've been messing around with various configurations for my personal phone setup. I received requests on Twitter to share the details of setup and why I... Joi http://joi.ito.com

I've been wondering what the proper notation for my comments when retweeting was. I'd been using either:RT @foo blah blah (me: foobar)orRT @foo blah blah | foobar The first seems to be excessive in terms of characters and the second... Joi http://joi.ito.com

When I visited Chicago last, John Bracken and Brian Fitzpatrick aka Fitz from Google organized a very interesting meeting with people from The MacArthur Foundation, Google and various communities including some folks involved in government. During the meeting, I talked... Joi http://joi.ito.com

When I visited Chicago last, John Bracken and Brian Fitzpatrick aka Fitz from Google organized a very interesting meeting with people from The MacArthur Foundation, Google and various communities including some folks involved in government.

During the meeting, I talked a lot about my thoughts on innovation in the context of newer software development practices and frameworks like agile development and Ruby on Rails. As Reid Hoffman often says, if you're not embarrassed by your the first release of your product, you've released too late." The release early, release often ethos of linux combined with the amount of actual "real work" you can do in one week with Ruby on Rails and other languages and frameworks totally changes the game for early stage consumer Internet investing.

Generally speaking, it's probably cheaper and faster and more effective to make a prototype than to make presentation deck. It's also probably easier to test something on real users than to do lots of marketing and guessing. My recommendation to just about anyone with an idea is to just build the thing, iterate until you have some user traction, then pitch angel investors based on that traction. This is very much in line with the old IETF motto of "rough consensus, running code."

In agile development, you concentrate on doing short iterations with input from your users constantly feeding back into the next iterations.

The "opposite" of agile development is a long process of deciding what to do, anticipating the problems, writing an RFP, work with a contractor until the project is completed, debug it, and then maintain the thing.

The problem is, in the real world, things change and by the time you're done, you're often pretty far off the mark and usually the first version isn't right anyway - so you end up making something 2 years late and a hundred features off target. With agile development, you test, evolve and stay in tune with your users and let them guide you. You can also test and refactor more easily because each "story" or feature is smaller, tested and easy to isolate and remove/change. (Or should be.)

It was very interesting to me that the government folks perked up when we got into this discussion. I remembered a comment by someone at an conference (sorry, I can't remember who said this). The idea was that in big software and in government policy, it was easier to add features (lobby for things to be added into a law) than to remove features. Everyone has their favorite feature that needs to be added. There was very little incentive to remove features and complexity once it was in the law or the code. You end up with things like Windows, some modern cell phones and many of our government policies, turning into bloatware that's huge, too compliated for normal people to understand which doesn't really even do well what it was originally intended to do. I think that keeping units small, proper test suites (accountability at the object level), and agile development can help mitigate some of the causes of bloatware that loses touch with why it exists in the first place and ends up sucking almost all management energy into process.

Also, the idea of floating government policy and iterating rather than taking ALL of the inputs before starting some humongous project also probably makes sense if you have the right kind of structure and discipline. I think there are a lot of things that agile developers have figured out that make sense to look at when thinking about policy and other work.

1 - Extreme programming. Work in pairs on the same screen so that you're checking each other and you're learning each other's productivity and other tricks. Swap partners every iteration. This is a very good knowledge sharing technique.

2 - Test suites. Assume everything will fail. Test what happens when what you have built fails and how it affects the other objects around it. Make sure you will always know when something fails and why. Build system to be robust against human, network, financial, computer failure of the object and build backup systems. Test suites also help you figure out what breaks when you make changes to the system and helps you later when you want to change, remove or refactor stuff.

3 - Small. Keep the teams small, break big problems into small problems. Break the small problems into "stories" or short tasks that a very small group of people can do.

4 - No proposals, specs, RFP's. Use a tracking system like Pivotal Tracker for tracking the tasks, but don't do huge project sheets or try to decide everything before you get started. It's more important for each of the small groups to share their local context and that each small part works correctly and doesn't screw up the stuff around it.

It may seem counter-intuitive, but I think that having a lot of small groups focused on being robust and agile and relatively independent makes it easier for the higher level decisions to be made and retain focus on the mission. Micromanaging is huge and inefficient. Each small group provides inputs to the system and feedback from the "users". Unbundled and small groups makes the whole system much more flexible and "agile" and changes can be made quickly without breaking things and allows focus on context instead of structure.

A lot of my thinking in this area has come from watching Jay Dvivedi and his team at Shinsei Bank and also working a a little with the Pivotal Labs folks. Having written this rambling blog post, I'd still like to say that I'm still rather new to the whole world of agile development, but I think there are a large number of practices that are being developed that can be applied to many other fields including but not limited to government policy development.

When I wrote my post about Dubai bashing, I was responding mostly to email and twitters from friends who had read the New York Times article and others asking me, "Are you alright in Dubai? I hear there are cockroaches... Joi http://joi.ito.com

Very important vote happening for the free culture community. Please vote "yes" if you're qualified. Cross-posted from the Creative Commons Blog: A community vote is now underway, hopefully one of the final steps in the process the migration of Wikipedia... Joi http://joi.ito.com

I highly recommend any company or organization that works with user generated content to send someone to this bootcamp by the best in the field at this stuff. For lawyers and non-lawyers alike! EFF Bootcamp Does your company have to... Joi http://joi.ito.com