Category Archives: Networks of Innovation

Cash or Connections, Valley of Death II

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On the heels of my post on the Valley of Death, Ben Horowitz of venture capital firm Andreessen Horowitz posted on Ron Conway
and his network (Ron Conway
Explained) and the value of social capital (connections) more than financial capital (cash) to help startups get off the ground.

Conway is one of the Silicon Valley's uber angels, and I have often spoken about the key role he has attributed to his own social networks when evaluating the potential of new startups. In essence, anyone can invest cash in a new venture, so if cash isn't scarce, the distinctive advantage will go to those new ventures with the best networks connecting them to other future employers, lawyers, investors, and customers. 

In investing, Conway asks: "can my network make this company successful?"

If we're truly interested in understanding and supporting the emergence of new ventures we must recognize the primacy of connections.  As the story Ben related shows, connections are key to finding cash.  In theory, cash can help you find connections, but not always with the right people or for the right reasons.

As public agencies step up their funding of small technology-based businesses, they would be wise to make sure cash isn't their only contribution.  The DOE, SBA and the variety of SBIR/STTR programs that are ramping up funding of university and laboratory research commercialization should match these cash investments with their clout in convening the broad ranging networks in which they sit.

The challenge is in replicating and scaling what Conway does.  Individually, he can manage how everyone behaves in his network (including rewarding good networking behaviors and punishing bad ones). As Ben Horowitz suggests (and I abridge here), Conway is good at this because he has:

• A ridonkulous work ethic—If Ron’s awake, he’s working…
• Pure motives—Ron does what he does, because he likes helping people succeed in business…
• Super human courage—Ron fears no man and he definitely fears no phone call…Ron’s network is always on.
• A way of doing business—This is the unspoken key to Ron’s success…he acts with extreme prejudice when it comes to the proper way to conduct oneself in a relationship.

Try to imagine putting this into a job description. As a formal job the ability to own and manage in this way goes out the window. Instead, there need to be more structural approaches to achieving the same objective. This is the challenge for all of us.

Into the Valley of Death

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Everybody is talking about how new breakthroughs—in energy and elsewhere—requires helping startups through the Valley of Death.  This is a well-intentioned but dangerous policy.

The valley of death refers to financial risks that start-ups face as they struggle to grow from small teams to going ventures. The dip of the valley refers to the debt—the negative balance sheets—that companies experience as they invest money now in hopes of making it back upon success (the accompanying figure provides a general description).

Nowhere is this valley of death more evident than in clean technology, where startups face a difficult combination of challenges. On the one hand, the challenge of teams seeking $50k to $5M or more in funding to begin translating their advanced science into industrial processes (moving thin-film solar or fuels from algae out of the lab and into commercial production) and, on the other hand, the challenge of funded startups trying to raise investments for the industrial-sized plants and equipment needed to utilize those emerging processes. Valley of Death Image If we want to bring these emerging ventures to market quickly and at a scale that impacts energy security and climate change, policy wonks and private investors alike are arguing, we must provide the financial support these entrepreneurs need to make it through the valley of death.

Now might be a good time to reconsider.

Saying that most startups perish in the valley of death is like saying that most patients die of cardiac or respiratory failure—the moment when the heart stops pumping or the lungs stops breathing. Indeed, doctors now take great care in noting not just the immediate cause of death but also the antecedent causes: patient died of [blank] due [antecedent cause] due to [antecedent cause].  Without looking past the obvious, few lessons can be learned.

Innovation policy must similarly take great care not to confuse the ultimate with the antecedent causes of failure. Running out of money is the ultimate cause of death for most all ventures. Without considering the antecedent causes, it’s also a dangerous basis for policy decisions.

In addition to financial capital, there are three other forms that at different times can be significantly more valuable: physical capital (the physical resources someone has already acquired and organized), intellectual capital (the knowledge and skills someone has acquired and organized), and social capital (someone’s social network, or access to the capital “stocks” of others).

While a startup’s balance sheet might clearly show where they stand with respect to their financial and physical capital, it does little to reveal their intellectual and social capital. And yet for companies to avoid their own untimely demise, they depend as much or more on knowledge, experience, and ability to manage their company’s fortunes—and on their social networks to discover, guide, and acquire the critical resources they will need to succeed.

Supporting the success of small companies advancing clean technologies requires more than financial or physical capital—it requires ensuring these companies have access to the best knowledge and experience, and the right social networks, as they get started.

The energy sector is extremely large, bureaucratic, and entrenched. The competitive landscape in which new companies hope to thrive is a product of regulatory policies and industrial coordination that takes place in places and ways that are difficult for entrepreneurs to see let alone access. Yet this is a large portion of the knowledge and networks that new companies must acquire if they are to survive and make a difference.

Institutions are emerging to provide new startups in clean technology with these resources. At UC Davis, for example, the Green Technology Entrepreneurship Academy, in coordination with the Graduate School of Management and with support from the Kauffman Foundation, brings scientists and engineers from across the country to explore the commercial potential of their research with instruction and mentorship from leading entrepreneurs, investors, and corporations. The emphasis is on combining entrepreneurial knowledge and networks—the critical intellectual and social capital that new ventures need before the financial capital can be put to best use.

Similarly, the Energy Efficiency Center supports promising new ventures advancing energy efficiency by providing access to their established network of university researchers, manufacturers, venture and corporate investors, electric utilities, energy service companies, and major energy customers such as the state of California and Walmart.

As the Department of Energy begins funding it’s new Energy Hubs with an eye toward commercializing new research breakthroughs, it should seriously consider how it will provide these emerging ventures with the right capital to succeed.

Indeed, the valley of death may be an apt description for other, less valiant reasons. The term came from Lord Alfred Tennyson’s famous poem, “The Charge of the Light Brigade,” describing the tragic british cavalry charge over open terrain in the Battle of Balaclava, in the Crimean War, in which 278 of 607 were killed or wounded within moments.

To those who witnessed it, the charge of the light brigade demonstrated both the courage of the British soldier and the incompetence of their command. The soldiers died because they rode directly into withering crossfire from three sides. Wrote the war correspondent William Russell:

“At 11:00 our Light Cavalry Brigade rushed to the front… The Russians opened on them with guns from the redoubts on the right, with volleys of musketry and rifles.

They swept proudly past, glittering in the morning sun in all the pride and splendor of war. We could hardly believe the evidence of our senses. Surely that handful of men were not going to charge an army in position? Alas! It was but too true — their desperate valor knew no bounds, and far indeed was it removed from its so-called better part — discretion. They advanced in two lines, quickening the pace as they closed towards the enemy. A more fearful spectacle was never witnessed than by those who, without the power to aid, beheld their heroic countrymen rushing to the arms of sudden death.”

Poor intelligence, miscommunication, and unthinking obedience on the part of their commanders were the antecedent causes of the Light Brigade’s valley of death. Companies run out of money for all sorts of reasons—including perfectly good ones: the market wasn’t ready, the technology couldn’t scale, or the economy tanked.  But some of those reasons might have been avoided.

Public financing of new ventures can prolong a company’s life, but it won’t fix poor planning, miscommunication, or blind faith. Money hides more bad decisions than it cures. To ensure companies make the transition from small venture to a sustaining business, financial capital may be the last form of capital startups need.

Public finance is an attractive tool for federal policy makers—it is easily wielded and often well-publicized. But it alone will not save clean tech entrepreneurs from riding bravely into their own valleys of death. Investing in the infrastructures that invest intellectual and social capital in these emerging ventures may be a more valuable and more critical intervention.

While we were waiting for the google of electric cars…

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While the DOE was out investing in startups like electric car manufacturers Tesla ($465M) and Fisker ($528M)—or rather guaranteeing loans, the equivalent of investing minus the equity—the regular old car companies were not sitting on their hands. In fact, while Tesla has ramped up production of its $109,000 Roadster to roughly 100 units per month, Nissan has announced its new $25,000 electric car, which will go on sale in the U.S. in December.

Continue reading →

Thinking about networks

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A great post by my brother, Steve Hargadon, describes the challenges facing anyone trying to create, or re-create, a new business: Long-handled Spoons. The story, excerpted here, goes as follows:

A Rabbi asks to see Heaven and Hell. His wish is granted and he’s taken to a room where everyone is seated at a long dinner table with delicious food in front of them.  However, everyone there is starving and emaciated.  This is because, the Rabbi discovers, while each has a long spoon strapped to his or her wrist, the spoon is so long they cannot pick up the food and actually put it in their mouths. They are utterly frustrated and bitterly unhappy. The Rabbi is told that this is Hell.

He is then taken to another room with everyone seated at an identical long table with delicious food, and each individual also has a long spoon strapped to his or her wrist.  These people, however, are well-fed, for they have learned that their spoons are perfectly designed to allow them to feed each other, which they are doing quite naturally.  They are joyous, happy, and contented.  The Rabbi is told that this is Heaven.

Steve uses it to discuss web 2.0 and the difficulties that the traditional business mindset has in wrapping itself around true collaboration. In a more obtuse way, I posted earlier about my fear that Apple saw the need to connect our digital networks, but is falling short of enabling a truly open experience because of their insistence on being the hub of a network that will, ultimately, have no hub.  Our posts seem to be two views of the same problem (what would you expect from two brothers?).

The lack of collaboration is not new but the internet has made the problem all the more obvious and acute.  While some people hold on to their proprietary offerings, collaborators are growing like weeds around them.  This is all obvious, but what I find fascinating, and what the lesson of the long spoon is getting at, brings us down from the level of technological trends, web2.0 evangelism, and social networks and into the challenge of changing the way people think and act.

How do people conceive of new ventures that are networked at their core?  Meaning new businesses that are originally designed for, and evolve around, collaboration as the primary way in which value is created and delivered.  Forget the long-tail–this is the challenge of the long spoon.

As importantly, how do people living in organizations designed to profit from proprietary products and services allow aspects of their business to experiment with and evolve into more open and collaborative business models?  Can large organizations change the way they treat suppliers, competitors, and potential partners fast enough to evolve with emerging markets?  I’ve know companies that can’t get an NDA through legal in under 6 weeks–how are they going to explore and experiment with partnering in these conditions?

Apple and the great confusion

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As we approach the beginning of the new year–measured by Apple fanatics with the January MacWorld–it’s worth reflecting on Apple’s recent past and rapidly-approaching future because it offers a glimpse into deep changes underway.
DSCN0716_01

For the past decade, Apple has served as our visionary guide to the future of personal computing coal.  Apple’s vision took shape in 2001, when Steve Jobs introduced the concept of Apple as the digital hub of our computing experience.  It was a good insight then, made brilliant by the actual products and services Apple created to seamlessly connect us with our new digital cameras, DVDs, and music.  We were at the dawn of a new digital world, and Apple made sense of (and money off) it better than anyone else.

Now, 10,000 photos and 3,500 songs later, we’re at a similarly significant inflection point. This MacWorld, Apple shows they either get the next new world or they don’t.

It all began, as Tim Bajarin wrote in Personal Computer World (Home on the digital range),

At Macworld in early 2001, Apple chief executive, Steve Jobs, used his keynote address to introduce what has become a most important concept in the world of personal computers. He unveiled a diverse set of multimedia applications such as Itunes, Imovie, Idvd and Iphoto and told thousands of the Apple faithful that the Mac would become the digital server of their homes – their creative nerve centre.

People with digital tools such as cameras, MP3 players, digital movie cameras and PDAs would use the new software to manage their digital photos, music, movies and data. Later that year, Apple even launched its Ipod MP3 player and later tied it to the Itunes online music store. This made Apple a leader in innovative use of ‘digital lifestyle’ technology.

I remember where I was that day–do you?  No matter, because everyone felt the impact of Apple’s vision and products.  The iPod was released later that year and Macintosh computer sales grew along with its success.  The digital world changed completely and the Mac (and, begrudgingly, the PC) did indeed become our hub.  But some very deep but subtle shifts have taken place since then.

The Great Confusion

While Macintosh (more accurately OS X) has served faithfully as our digital hub over the past decade, we as digital consumers have changed.  We’re the hub now.  Our digital and analog lives have continued to confuse–a term Neal Stephenson reminds wonderfully in his Baroque Cycle trilogy means also the process of mingling two previously distinct alloys.  It may be confusing for those experiencing the mingling in the moment but, ultimately, it results in a single and coherent reality.

In other words, I’m no longer outside the digital world, occasionally choosing to look in on it.  That distinction is gone. Confused.

My experience of news is confused: I read the morning papers scanning for the items I have not already seen online; when I find interesting articles, I go online to send them to someone (or myself); maybe I blog about them; and I learn as much by what others send me.

Music?  Confused again.  iTunes carries my own music collection, but Pandora’s gentle introduction of artists I like but had never heard of before has become as much a part of my Sunday morning ritual as bagels and the New York Times.  And Shazam (thank you, iPhone) allows me to engage with the music streaming around me wherever I go.

Even traditional computing activities–if you’re willing to concede that email and word-processing are now old school–are confused.  I get email on my desktop at the office and at home, on my iPhone and Blackberry, and in an emergency, on any other internet device I need thanks to googlemail and (more clumsily) mobileme. If anything, I miss old days when email was a different world.

The experience of word processing–what others once called writing–is equally confused. I abandoned MS Word for its complexity and insularity, moving to googledocs for its simplicity, availability (whether home, office, or hotel) and, increasingly, collaborative capabilities. This last distinction speaks volumes on the difference between digital and connected. MS Office documents requires constant vigilance to keep versions and edits distinct and separate. But writing is no longer solitary.  Drafts move between authors instantaneously, and between iterations via twitters, blog posts, and essays before becoming published pieces (if at all).

So many other digital and analog experiences have confused as well. Photos moved from digital archives to online and shared instantly with distant cousins. Family calendars are online and updated at the dinner table. Not to mention casual conversation, which email, texting, and social networking has confused completely with real contact–just look at any corporate meeting. You get the point.

And that means my experience of the digital world no longer comes through a single screen–whether a desktop, laptop, or phone.  It comes through more screens than I can count and, in the next few years, than I could imagine. It’s nothing new to say we’re immersed now in the digital world.

Doors in a meadow

What’s new is that there is a titanic struggle underway for control of the hub of that digital world. We’ve come so far since Apple declared themselves the hub that the idea of them as the hub–and us as a spoke connecting, through the PC, to all things digital–no longer fits.

Eight years ago Apple showed us how computer companies could embrace and enrich our digital experiences. We listened. We bought digital cameras, iPods, laptops, smart phones, Chumbies, Sonos, eeePCs, and everything else under the sun.  And, in the process of engaging with them, we evolved.

Anyone who wants to control my access to the digital world today is building a door in the middle of a meadow and telling me I need to use it. Apple’s iPhone has brought me some wonderful apps (including Pandora, Sonos, and Shazam) but it has yet to allow me access to google calendar or googledocs–despite Apple’s insistence that insular iCal and .mac are enough. That’s not a trade-off I’m willing to make.  It’s too easy to see the rest of the meadow, to see where I want to go, and to want to use the shortest path to get there.

For years before Apple anointed themselves hub in 2001, we saw the digital revolution coming.  The same is true today with the great confusion.  It’s anyone’s guess how Apple, or Google, or anyone else will make money when we want access to everything through everything. But that future’s already here, and companies that don’t recognize it are going to keep building doors we’d rather not use.

So Apple now sits with us, on the verge of the next major transition.  Are they going to announce a radical change in strategy?  I hope so, since we did well by them the last time. But that may be asking too much of a company where lightning has already struck twice.  Stay tuned.

Gotta love anomic social networks

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BusinessWeek has just added another article to the pile of observations on the increasing popularity of social network sites: “Social Networks: Execs use them too”. Anyone who knows me knows I like social networks. The current trends in social network technologies, however, are disturbing.

Namely, networking technologies are seeking to automate the acquisition and use of one’s broad-ranging social relationships in the same ways that organizations have automated the acquisition and use of the local relationships needed to get one’s work done.

There is an irony that, by providing the product–a new network tie–these technologies are bypassing the need to personally build and use your own existing social network.

In other words, instead of calling your friends to see who might know someone who knows someone who can give you an trusted opinion of someone else, you log into LinkedIn, avoid all those messy and time-consuming phone calls and immediately jump to the right “connection.” And, by doing so, you let wither all of the actual relationships you built that were based on actual, mindful, and interactive contact with others.

Here’s an analogy: between commuting, email, and television, we spend a lot of time sitting. Then we collectively head to the gym for an hour of intense standing, climbing, riding or whatever. For most of us, organizational life has taken away much of our need to actually stand or walk around (unless we’re scrambling to get a PO signed late on a Friday).

In the same way, organizational life has taken away much of our need to “network”–to actually meet new people, engage with them, form productive and reciprocal relationships, and maintain those relationships over time and distance. Instead, most people drop into pre-established organizational networks (“this person will tell you what to do; that person will do what you tell them”). We then bemoan the static nature of our social networks and go to “networking events” where for an hour, like on a stairmaster, we push ourselves to hand out business cards and make untenable lunch plans.

Our fascination with networking technologies reflects two increasingly apparent problems with organizational life. First, the loss of our own abilities to build and mantain meaningful and mutually productive relationships with others. And second, like the unrealistic body images that drive too many middle-aged men and women to the gym every night (you too can have abs of steel and two kids under 5), executives have unrealistic network images that suggest you too can have the contact list of a Hollywood producer.

In an ironic twist–our increasing emphasis on social networks may come from the decreasing nutritional content of our own social networks. To me, the whole thing smacks of anomie and, thanks to Wikipedia, I can wax learned on the subject without truly understanding what I’m saying:

The nineteenth century French pioneer sociologist Durkheim borrowed the word [anomie] from the french philosopher Jean-Marie Guyau and used it in his book Suicide (1897), outlining the causes of suicide to describe a condition or malaise in individuals, characterized by an absence or diminution of standards or values (referred to as normlessness), and an associated feeling of alienation and purposelessness. He believed that anomie is common when the surrounding society has undergone significant changes in its economic fortunes, whether for good or for worse and, more generally, when there is a significant discrepancy between the ideological theories and values commonly professed and what was actually achievable in everyday life.

Anomie essentially represents the lack of meaningful social relationships that connect individuals to their surrounding community. The term was picked up by Robert K. Merton:

Robert King Merton also adopted the idea of anomie to develop Strain Theory, defining it as the discrepancy between common social goals and the legitimate means to attain those goals. In other words, an individual suffering from anomie would strive to attain the common goals of a specific society yet would not be able to reach these goals legitimately because of the structural limitations in society. As a result the individual would exhibit deviant behavior.

Through the miracle of modern technology, we can embrace social networking software that simultaneously increases our connections and decreases their meaning and value. We are perfecting the anomic social network.

Life in the Long Tail

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Not to belabor the point, but WSJ had an interesting story about life in the “long tail” (Famous, Online) in describing several small bands and their use of the Internet to generate and tap a following without the traditional scaffolding provided by the established record labels. In my last post on this, I mentioned the risk to established producers of low-cost and lower-expectation competitors:

For established companies, selling one thing is bad business. For the guy producing an album in his bedroom, selling one thing is good business. And soon, according to the Long Tail, big companies will be competing with millions of these smaller producers, who would each be quite happy with an extremely infinitesimal piece of the pie.

Elizabeth Holmes writes about several such “amateur bands” as the duo, The Scene Aesthetic, who had “2.3 million visitors and more than 124,000 ‘friends'” on MySpace. Here are some interesting numbers describing their career…

  • Using an amateur booking agent to book a national tour

  • Promoting their tour on MySpace

  • Booking every night in July and August (at pizza parlors and teen centers)

  • Gettting up to 200 people a night

  • Making about $600/gig (plus t-shirt sales)

  • Sleeping on fan floors when they can’t afford hotel rooms

Granted, this is not living large, but then again, there’s an authenticity to it that reminds me of the Beatles’ early days in Liverpool and Hamburg. Not that The Scene Aesthetic is the next Beatles, but that such a life can be pretty good when your cash needs and aspirations are aligned.

Is this the Future?

Will big companies, like big record labels, increasingly face competition from many small firms who have low capital requirements and less aspirations for corporate expansion? Yes. But will it cause a problem? Only for those companies who refuse to acquire or in other ways partner with these smaller firms. Though even these companies will find partnering less profitable than it once was–as they’re buying proven commodities.

That’s because what the long tail provides is a fertile space for small bands, brands, and business to establish a niche and grow to the point of proving they found an unaddressed need. No corporate fat-cat will be able to pretend their house brands are better simply because they control the only access to the market.

The Scene Aesthetic is not alone–there are thousands of such bands living online, hosting their own pages, posting their own songs promoting their own gigs for little or no cost. And this long tail has its own long tail: PureVolume, a song-posting site, says of the 300,000 bands posting songs, only 2% have more than 5,000 plays.

The long tail is a work-around for the relatively inefficient filter that is BigCo’s ability to spot and acquire hot new businesses. Eventually, good bands will rise to the surface, unaided by talent scouts and undeniably desired by fans, the same way local bands like the Beatles and the Stones and so many others emerged in the late 1950s playing local clubs (before producers started replicating the formula).

AS this model increasingly applies to other markets, we may be facing a potentially great Cambrian experiment in business evolution.

McDonalds with a purpose.

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Govindappa Venkataswamy, an opthalmologist, passed away July 7th. He’s not an American icon, but could (and should) be for his entrepreneurial ways. The WSJ just began a weekly column honoring the passing of prominent business figures, and Dr. V’s passing is an especially nice way to inaugurate the column.

Dr. V Started the Aravind Eye Care System with an 11-bed clinic in 1976, and has since grew it into a five-hospital system. The Aravind system provides affordable surgery for the masses–quite literally–and now impoverished cataract patients can have their eyesight restored for about $40–and if that’s too much, for free. It also proved that there was a way to make money at the bottom of the pyramid; the free are paid out of the profits of paying patients.

What makes the Aravind system interesting to innovation is the origin of its success:

He was inspired, Aravind says, by the assembly-line model of McDonald’s founder Roy Kroc — learned during a visit to Hamburger University in Oak Brook, Ill. … “Can’t we do what McDonald’s and Burger King have done in the United States?”

Sound familiar? In 1910, when Ford’s engineers came back from studying the assembly lines of the Chicago meatpacking plants (first publicized in Upton Sinclair’s 1906 book, The Jungle), one of his chief engineers said “If they can kill pigs that way, we can build cars that way.” From food to cars to food to the operating rooms of Tamil Nadu:

The assembly-line approach is most evident in the operating room, where each surgeon works two tables, one for the patient having surgery, the other for a patient being prepped. In the OR, doctors use state-of-the-art equipment such as operating microscopes that can swivel between tables. Surgeons typically work 12-hour days, and the fastest can perform up to 100 surgeries in a day. The average is 2,000 surgeries annually per surgeon — nearly 10 times the Indian national average. Despite the crowding and speed, complication rates are vanishingly low, the system says.

What if the best ideas of modern economies were, with care, put to better use? As Dr V said, ” Intelligence and capability are not enough. There must be the joy of doing something beautiful.”

A grain of salt for the long tail…

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Guy Kawasaki offers a good counterbalance to the hype surrounding (or soon to surround) Chris Anderson’s new book, The Long Tail. The idea of the Long Tail is that, in a single market, the combined size of many niche products can be as big as from a single (or relatively few) mass-market products. Anderson’s original idea stemmed from comparing the sales of pop hits and artists to niche songs and singers on iTunes and Amazon. Of course, this was also how General Motors ate Henry Ford’s lunch in the 1920s, by introducing multiple makes and models against the mass market-driven Model T.

The threat: Big companies are caught between a rock and a hard place. On the mass market side, Walmart and others are squeezing their margins to nothing. On the other end, smaller companies are increasingly stealing away niche chunks of their more profitable, lower volume products.

The promise: Companies that master the long tail will see their revenues and share grow where those that can’t will watch theirs wither.

The grain of salt: The long tail may hold vast riches in many markets but, as Guy points out, before a company can exploit the long tail, they (and their market) must meet a serious set of requirements…read his post for these.

However, I think there is one area where the Long Tail still may hold promise for big companies: The back catalog. The hundreds, if not thousands, of SKUs that companies have maintained if only to avoid the trouble of formally killing them off. These are the countless products dating back decades which someone, somewhere still needs or wants.

It may be difficult for a company to find, contract for, or develop new products to build themselves a brand-spanking new long tail. But the ideas behind the long tail may still enable companies to find new value in their back catalogs in the same way that eBay has enabled so many of us to find new value in our attics and garages.

The trick will be finding those customers you had neglected before–the mom & pop shops, the weekend users, the 40-year old virgins, who still want whatever you first sold them 20 years ago.

Finally, and unrelated to the rest of the post, Guy utters a classic line:

“Everyone knows that the innovator’s dilemma is to find a tipping point in order to cross the chasm.”

Sums up management thinking in the 1990s.

The return of the Long Tail

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Two very nice posts take up the story of Budweiser’s “Long Tail Libations” (a perfect name, to say the least, for generating buzz these days). Chris Anderson’s post picked up on another post from the Brookstone Beer Bulletin (which in traditional blogosphere fashion is picking up on an earlier Chris Anderson post).

Anheuser-Busch has launched a new wine & spirits subsidiary, aptly naming it “Long Tail Libations” because its charter is to develop and launch many new and relatively unique (read small) brands that would not see the light of day in a company otherwise focused on a handful of national brands.

The cool idea in this string of posts is that the long tail of local beer was there before the mass market began dominating with a brands backed by major advertising. Sound familiar? The major beer brands were born in the 1950s–or reborn from previously local brands–and grew to prominence on the back of newly national advertising, distribution networks, and refrigeration.

In essence, we are now entering the long tail’s second coming. Thanks to even more sophisticated national distribution, we can live in California and drink Boston’s favorite micro-brewed beers. There is a story here that goes beyond the “Long Tail,” and involves how “what the long tail is doing to consumers” is doing to markets and the nature of products and services. That one’s for another post.

In any case, Bud’s problems are the same problems as most major brands–how can you build an organization capable of exploring the long tail, which is either where the next major brands are going to be, where all the sales growth is going to come from, where the earnings growth is going to come from, or all three?