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Moving Day at Electric Minds
The offices were empty. There were no chairs. There were no desks. There wasn't even a table for the foccacia sandwich lunch spread provided by the PR agency. Nothing on the walls...save a big orange nylon banner which read "Wide Load. Community On Board: www.minds.com." The sign was to be attached to the van driving the Electric Minds servers from San Francisco to their new home at Durand Communications in Santa Barbara.
I'm not sure what I expected exactly, but it was a strange press conference. Attendance was sparse -- a few friends of Howard Rheingold's, a few online journalists, a couple curious hangers on, and a bunch of representatives from Durand wearing newly pressed yellow golf shirts with the Electric Minds and Durand logos joined at the hip. They handed out the obligatory press kits and t-shirts, but when we all gathered in a small room for the "announcements," Casey Hughes, Durand's COO and apparent ringleader, asked us to sit on the floor. In a circle.
It seemed to be the "bottom up" thing to do.
Until a few weeks ago, Durand Communications was just another startup trying to make a go of it building tools for end users to create virtual communities. Their service, CommunityWare, which is less than a month old in its current incarnation, enables individuals to create their own threaded discussion groups, chat rooms, email lists and (yes) web sites. Instant community -- at $3 a month, with the first 60 days free. It's a nice proposition, actually, especially for small groups of people that need access to this technology yet don't have the skills or resources to host their own web server.
But with the acquisition of Electric Minds, Durand takes center stage in a growing debate over whether there is actually money to be made by providing services to let people discuss, argue and pontificate about whatever they damn well please. Electric Minds obviously couldn't make it work on their own, for reasons I outlined a few weeks ago in these pages: too little advertising, not enough strategic partnering (the IBM deal was just too late), and a deadly allergy to anything approaching the subscription model that seems to work for The Well.
With CommunityWare, they've built a nice, if somewhat bland, planned neighborhood -- complete with all the standard digital amenities. But their business model -- which rests on premium subscription fees, targeted advertising, and slices of electronic transactions -- depends upon people actually working and living in that new neighborhood. It's no secret that Durand's acquisition of Electric Minds was not for the servers or the nice logos, but for a ready-made community for the new neighborhood. 72,000 registered members. 6,000 active participants. A governing body of around 500. 50 content hosts.
Casey Hughes, Durand's COO, could barely contain his excitement at the prospects of having all those members "on board." Hughes seems to have embraced the Kevin Kelly mantra of "bottom up" and "chaorganic" with a religious fervor, and he's clearly excited by the notion of having all of those minds "self organizing" into "communities of interest." After all, in the friction free future, you won't be conducting commerce with all those corporate monoliths, instead, you'll be trading digital product with your immediate, like-minded community. And Durand, with the electronic commerce infrastructure to support transactions within a community, wants a slice of every transaction.
Whether the self-organizing community of Electric Minders will buy into all this store-bought wisdom is yet to be seen. To me, the short term integration plans seemed a bit fuzzy... What will happen with the topic hosts? "We're not sure yet." Is there a process in place to handle development suggestions from the Minds governing body? "We'll deal with those requests just like we deal with our own development items." Will the Minds site continue to use the Well Engaged conferencing system? "We'll see after thirty days how things are going." (While the tool does not necessarily make the community, it certainly influences it. Just as picospan has influenced whole slews of Well users, the Well Engaged conferencing system has been just transparent enough to reinforce that it's the conversation that's the star of the show here, not the technology.)
If the community, and its new landlords, have one thing going for it, it's the involvement of Rheingold. "I want to see them succeed in what they're doing. I want to see the community thrive," said Rheingold yesterday. "It's kind of like sourdough bread. You need some of that starter from the old batch in order to bake a new one."
The details of the financial arrangement weren't disclosed, probably to thwart writers like myself from instantly calculating a "per registered user" cost to Durand. But in an off the cuff remark, Rheingold hinted at the fact that Durand probably struck a pretty good deal. "None of the stockholders of the company are receiving any cash -- all of the cash goes to our creditors," said Rheingold. "We have essentially kept this business alive six weeks to two months longer than we should have because of the possibility that we'd be able to pay our creditors."
After those two months of dealing with creditors and acquisition candidates, Rheingold seemed visibly relieved that he was no longer responsible for the bottom line. "The business model is obviously not my bag," he half-joked. "I'm glad I'm not the guy that has to answer questions of how they're going to make money. But to me, the fact that the business failed is not as important as the fact that the community will survive."
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