More Awesome Than Money (27 page)

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mong galvanizing forces in human affairs, two that cannot be underestimated are (1) going broke, and (2) the appearance on the horizon of a deadline. For the Diaspora group, the convergence of the two made the month of September 2011 an all-out sprint.

Since the summer, they had been running on the fumes of the hype surrounding the project and the last dollars of the Kickstarter money. Both were dwindling.

Their battle plan was to fix up Diaspora for a new release, add 2 million users, and find $2 million. And all this had to be done by November 15, their agreed-upon date to distribute a gussied-up version of Diaspora, a beta successor to the alpha they had opened up a year earlier.

None of those aims was outlandish. While Rafi, with his Buddha-like calm, was gone, Yosem was on the case full-time, joined by the fund-raiser, Peter Schurman. Their questions worked like pincers that forced the lads to face problems that had long been avoided.

To become a business, or at least a sustainable social network worth joining, Diaspora had to show that people wanted to use it. In actual fact, they did. About 100,000 had signed up for the JoinDiaspora pod; other pods around the world hosted another 100,000 or so.

There was the famous list of 500,000 people waiting for invitations to JoinDiaspora, and reputable studies had shown that each new user in
a social network would bring along slightly more than 3 others. So that was 2 million people, more or less.

The bigger problem was getting them to stay once they had tried it out. Only a handful of those who had received the early surge of invites and signed up were still active on Diaspora, most of whom were in Europe.

Diaspora was a neighborhood of strangers. Newcomers walked the lanes of an online world where they knew hardly anyone. They had come for the ideals of the project, fundamental among them privacy, but this turned out to mean solitude. What was the point of a social network where there was no one you knew to socialize with?

This had never been a problem for Facebook: at its beginnings in 2004, it was rolled out one school at a time. The odds were strong that anyone who joined already knew other people on the site, as existing, self-contained communities in the real world were simply being replicated and resettled online. Each additional person who joined made Facebook more useful. This was known as the network effect, a power seen vividly a century earlier with the expansion of the telephone system; as phone lines reached more users, the entire system became more valuable.

Both the telephone system and Facebook were classic centralized services. Indeed, Theodore Vail, president of American Telephone and Telegraph in the early years of the twentieth century, had persuaded government officials that a monopolistic utility was the best way to connect people with the least amount of logistical friction. (He and AT&T won the day, and the phone monopoly, once it was consolidated, remained intact for most of the next eight decades.)

Suppose JoinDiaspora actually, suddenly, brought in 2 million people, Yosem suggested. Perhaps the lack of an organic community—a school, a business, a church, whatever—could be turned into an advantage. Diaspora could be positioned as a place to meet new people. Users could identify interests with hashtags, and a welcoming committee could greet the newbies. They'd help steer the lacrosse players and the Asian food groupies to the right places online.

“Having them connect with a random sample of existing users would be beneficial, and having the random sample know that a new user has joined so they can welcome the user,” he suggested.

The idea got refined. They solicited members of the hard-core supporters to serve as a welcoming committee. Quickly, a team was ready.

Yosem had also taken concrete surveys of who was using or had tried Diaspora, and what they wanted. Mostly, they were guys between eighteen and thirty-four. Mostly, they lived in Europe or the United States.

Time and again, Yosem reported, those users and others said they wanted to be able to own their own pods. He had surveyed twenty-five thousand online social network users and found that more than half were interested in a one-click installation of a personal pod, hosting their own Diaspora service, and were willing to pay at least eight dollars a month for someone else to take care of the details. “It is a good revenue generator if we can pull it off,” Yosem said.

Projecting the results of his survey and other market research, the potential market was 20 million users, $1.9 billion in annual revenue, according to the plan.

The Diaspora software would always be free. People could download it for free and set up their own pods, or they could pay Diaspora to do that. This paralleled WordPress, which provided its blogging software for free and offered hosting services at a cost. It was a pathway to doing well and doing good. Hosting was the business.

To create these privacy pods would take another year, or at least well into 2012, the group had estimated. Before then, they would build up the users on their home pod, JoinDiaspora, to 2 million by inviting the 500,000 people on the waiting list to join. Until they got going with the business, though, they had to raise money to keep themselves and their infrastructure alive. One source of funds, though an uncertain one, was people who believed in their mission and would donate. After Peter Schurman cranked up the e-mail solicitations, they'd have an idea how viable that was. Another possibility was angel investors interested in the pod business. Yosem contacted friends at Turms Advisors, a group in Singapore that found opportunities for Asian investors. The Turms people were confident, Yosem reported, that they would be able to put together a $1 million angel round without much difficulty; Asian investors did not have the same investment opportunities in Silicon Valley. Before that money would be committed, though, the Turms representatives wanted to meet the team and see how the developers worked.

They had also agreed in principle to provide fifty thousand dollars for immediate expenses. Max had a clear idea of how he was going to spend that money. He, it turned out, was the only one of the group who did.

—

Sarah Mei was not the kind of person Max wanted to hire as soon as they got money; she was precisely the person. Like so much of the bounty visited on Disapora, she seemed to have turned up out of nowhere during their first summer in San Francisco, a name they knew initially from their computer screens, and then in their daily lives when she revealed that she was working for Pivotal on the same sprawling floor. An expert in Ruby on Rails, the language that they were using to build Diaspora, she was also the mother of two young children, and she admired the idealism of the four young men.

The entire group had come to rely on her judgment and expertise. Max believed that to meet the mid-November beta release, they needed to bring Sarah on board immediately as the chief technical officer. In the materials prepared for the angel investors, Sarah would be paid essentially the same salary she was making at Pivotal, $130,000, and Max had also promised that she would receive the founder's stock that Rafi had forfeited by leaving the project. That came to a 7.5 percent stake.

This shook Yosem. Every dollar of the first investment money they had lined up would go to one person. The proposed arrangement also disturbed the Singapore investors, who wanted Yosem to explain why she was receiving such a significant equity share and salary. It was customary for people in start-ups to receive one or the other, not both.

As it happened, Diaspora had also recently retained as an adviser Fadi Bishara, a Silicon Valley matchmaker who they hoped would connect them with investors. He, too, would be getting shares of stock for his work. Ilya had met him in Atherton, California, at the Blackbox Mansion, a kind of fancy dormitory set up by Bishara and others to host hardworking young geeks who were not too fussy about bunk beds. Bishara also had been a headhunter for Silicon Valley companies.

Yosem turned to Bishara for advice on the proposed compensation for Sarah Mei. He responded that it was “absolutely too high.” Embryonic start-ups like Diaspora virtually never had the cash to pay market rate;
instead, they offered stakes in the company. “No start-up at this stage pays a market rate for anyone to join,” Bishara said.

Yosem spoke with Max about the feedback and told him that not only was their local adviser opposed to the terms, the Singapore advisers had said “no angel investor in his right mind would invest” if that one salary would consume so much of it. The whole arrangement put too much leverage in the hands of a single person.

To Max, that line of thinking was obtuse. The supply of talented software engineers could not keep up with Silicon Valley's demand for their skills. A less-settled person might be able to take a gamble on the future of Diaspora, but Sarah, the mother of two children, living in one of the most expensive cities in the United States, could not walk away from a salary. She had already given them hundreds of hours of time on weekends and at night.

“Sarah will get what I said, and if the investors don't like it, they can go screw themselves,” Max told Yosem. “I'm not going to let people who are just investment bankers and headhunters make product decisions for me. I want to get the best talent, and to get the best talent, you have to pay the best. So if that means I have to pay them the full salaries they could get elsewhere, plus stock, so be it. I'm not going to have some external person say what I can do and what I can't do with my firm.”

Yosem urged Max to build a persuasive case for the package. In more than a year and a half of comity, it was the first time Yosem had seen or heard him lose his temper.

—

The first phase of Peter Schurman's fund-raising campaign began with a declaration of victory, posted on their blog and written in fund-raiser-ese: “You're already changing the world, and don't stop!”

“We can't help but be pleased with the impact our work has had on two of the biggest developments,” he wrote. “We're proud that Google+ imitated one of our core features, aspects, with their circles. And now Facebook is at last moving in the right direction with user control over privacy, a move spurred not just by Google+, but more fundamentally by you and tens of thousands of community members, as well as hundreds of thousands of people who've lined up to try Diaspora—that is, by all of us
who've stood up to say ‘there has to be a better way.' We're making a difference already.”

Schurman also began composing e-mails to bring the waiting-list community up-to-date on the project, prior to hitting them up for donations. Haggling began. Ilya weighed in first. The young man who had spent the year hovering at the distant edges of various world uprisings did not want to advertise dissent as a capability of Diaspora. He objected to a line in the draft that said: “You can be a revolutionary, and connect with other revolutionaries, and if the government where your pod is hosted doesn't like it, you can organize your revolution on another pod somewhere else.”

Ilya said that while he wholeheartedly agreed with the sentiment personally, to look too much like upstarts “may not be helpful for the project.”

Max weighed in with a sensible concern: the messages, while directed to people on the waiting list, should not neglect their Kickstarter backers, who had already gotten invitations.

One more thing from Ilya. “Data deletion” had been a goal of the project, and one that had been mentioned in early discussions of what Diaspora would be like. In the draft, Schurman had written: “You can unplug any time, and if you do your information stays with you, not with us.”

They actually couldn't promise that, Ilya pointed out. A post on Diaspora was like e-mail: people who wrote and regretted an e-mail could delete it from their own computers and their accounts, but they had no ability to make the people on the other end—the ones who received the message—delete it. And just as in e-mail, the recipient had a copy of Diaspora posts. So that claim had to go. The subject weighed on Ilya's mind.

Yosem also wanted to show people that they had been careful with the money already donated and, as proof, proposed that they include a link to a profit-and-loss statement that would be comprehensible to anyone.

—

With their short-term goal of raising public donations, not investments, they had to show that a fence existed between what they hoped to make money off and what they planned to give away for free. The idea had been in the air for months, and Yosem and Max agreed it was time to move
ahead with it. From his research, Yosem believed that a “foundation” could exist without an official blessing from government authorities as long as donations were not tax deductible. What precisely would belong to the foundation was uncertain, as Diaspora's lawyers did not know which pieces of intellectual property would be of interest to investors.

Nevertheless, they needed to fence off in some public way the entity that was soliciting donations. On September 16, Yosem registered the domain name, DiasporaFoundation.org.

—

As soon as Peter sent out the first e-mail blast, the volume of inbound e-mails doubled to five hundred. Yosem intended to recruit volunteers to answer them, but wound up replying to virtually every one himself. Their Twitter followers jumped by more than a thousand in the first week after the e-mails went out. He arranged for Diaspora to join a “Digital Due Process” coalition formed by the Electronic Frontier Foundation to lobby for reforms to laws on the seizure of personal communications over the Internet. Among the early members were Dropbox and Apple.

A few of the incoming e-mails had to be shared with everyone in the group. “Hi,” one of these began. “My name is Joey Grassia and I work on the advertising team at Facebook.

“I would like to speak with you about some fabulous marketing opportunities between Diaspora and Facebook.”

—

On September 28, they landed a major publicity coup: National Public Radio was doing a story on anonymity on the Internet, quoting Eric Schmidt, the CEO of Google, on why Facebook had the right policy in place by requiring real names.