This piece kicks off our partnership with Arabic Knowledge@Wharton, in which Wamda will offer weekly content tailored to entrepreneurs that includes interviews with Wharton faculty and exclusive conversations with industry leaders.

Throughout his career, Joichi Ito has filled numerous roles entrepreneur, angel investor, blogger, and CEO of a number of companies, including Creative Commons. In September he adds a new title when he becomes director of the Massachusetts Institute of Technology's Media Lab.

Currently residing in Dubai, Ito sat down with Arabic Knowledge@Wharton to reflect on his time in the Arab world, and the role social media has played in the region's unrest. He also outlines the challenges traditional media face to become competitive in the wake of new media's growth.

An edited transcript of the conversation follows.

 

Arabic Knowledge@Wharton: You came to live in the Arab world to learn and understand its culture. What lessons are you taking away from your time here?

Joichi Ito: I am not leaving, first of all. I'm going to keep my place here. The MIT media lab is an international institution and it has to become even more international. I'm going to try to set up a regional presence here. The Middle East is going to continue to get a lot of my attention. I'm trying to learn, trying to understand the culture and also trying to make relationships here.

When I first came, I really didn't understand anything. Everything seemed like chaos. And now, I can see a little bit of order and I can usually guess who's the Egyptian and who's a Libyan and who's the Lebanese guy. So I'm starting to understand the relationships between the different Arab countries and also some of the basic things about how stuff is done here. But I still don't know that much. For me, it's a ten-year project to get to know this region better both culturally and business-wise.

Arabic Knowledge@Wharton: Have you had a chance to reflect on the current unrest in the region?

Ito: I tend to be more on the activist side. I have written about emergent democracy, and about how I think technology will change democracy. I think this time really is an important step in the future for media and the future of relationships between new media and governments. I think it's also a key period for the region, and it's interesting to see how much the Internet is playing a role. I know people who are on one side of the argument and I know people who are on the other side. I'm sure everyone knows people on both sides, so it's kind of interesting to listen to the establishment talking, as well as the students.

Arabic Knowledge@Wharton: Considering the way people have organized through social media, and some of the responses by the authorities, would you call the unrest a technological innovation?

Ito: It's a trend that's been going on for a while. Howard Dean used social media. Obama has used it. I think it was a very important application of this technology and it changed the image of the technology. It worked in many ways that we have hoped it would work, so I'm not sure I would use the word 'innovation' because I think they used it in the way that it should be used. There was some innovation going on, but it's more that people have been talking about how social media could play a strong role. This is I think the first time that it had such a strong and important impact on events. The role of media was somewhat sort of revolutionary in scale, but eventually, I would call it an innovation. 

Arabic Knowledge@Wharton: There was a media forum in Dubai recently, and Sultan Al Qassemi (a non-resident fellow at the Dubai School of Government and a frequent commentator on Arab affairs) said he wasn't sure that the social media actually played such a big role in the unrest. What's your response?

Ito: The way that the foreign media looked at the unrest was influenced a great deal by social media. If you talk to Al Jazeera, they'd tell you that they used social media a great deal. Maybe we shouldn't overstate it; a lot of the coverage was from the cameraman on the ground. Much of it was people doing things on the ground, and good old-fashioned activism. Al Jazeera probably played a bigger role. But there was definitely a lot of stuff on Twitter, a lot of information being shared. Even if it was just metaphorical, much of the rallying had to do with what was going on social media. Fundamentally, it's about people having courage, right? If the people believed it was social media giving them courage, then it was, right?

Arabic Knowledge@Wharton: In the past, a government would shut down the TV station during a revolution. Now it seems the first step is to shut down cell towers to block information. Have we entered a different phase of controlling communication?

Ito: If I'm a dictator, I still want to control TV, right? But now, there's a lot of work being done in mesh networks. (An inexpensive wireless network using a series of small radio transmitters.) Even in some rural areas, they're using mesh networks. So I think I could very easily see mesh networks being deployed very quickly once the sub-power and the Internet goes out. It will be an arms race where activists will build ad hoc infrastructure, and governments will come out with different ways to shut it down, and it will resume back and forth.

Arabic Knowledge@Wharton: What is the potential for technological innovation in the Arab region, and what needs to happen to further that growth?

Ito: There's a lot of energy and some good and raw computer science power. If you would go all the way to India, there are a lot of developers and a lot of resources. But the open source community isn't as developed, since you don't have the same level of angel funding and so on. A lot of the social entrepreneurship comes from interactions with the startup community. Whether you're successful or you're a failure, if you've done a couple of tech startups, you get a certain level of agility, you know, a 'get-this-stuff-done' kind of attitude. And I think that they're developing that in the streets, as it's really resource constrained, but we need to get things going. 

There isn't as much community discussion about best practices. In Silicon Valley, if you go Cupertino, if you go to this one place, people sit around and talk all day about agile development and uplink startups and people working on Ruby On Rails (a web development framework). I find it startling that people here are still using dot-net Microsoft… So the tools that they use in the open, or rather the lack of open source, the lack of content… I think there's a lot happening but it's still relatively at the early stage. That's why I'm actually interested in the region, because it's boring to go somewhere that's not developing.

I see a lot of potential, because the people who do come out and get excited, they are a very young population. There are a lot of bright people and there still so much to do. You also have people who are investing and coming back to the region. But the thing about mastery is, whether it's mastery of startups, mastery of angel investing, mastery of agile development, it's not easy. It takes a little while before you get really good at it. There aren't as many masters and the problem is in order to teach, you have to teach each other. So there needs to be a critical mass before the overall quality increases, essentially.

Arabic Knowledge@Wharton: So what needs to be done right now? If you do this real time, what can you do?

Ito: I don't necessarily have all the right answers but I see some of the problems. One of them is immigration. In the U.S., people are pretty committed to staying there. They become residents, so they invest not only in companies but in the region too. But in the Middle East, it's very difficult. Most places don't really give you the opportunity to become a national. It's much more opportunistic as a result and there really isn't a lot of incentive to invest in the community. If you invite a bunch of consultants who are here for two years, they may go around and give some good ideas. But they're not staying up all night trying to fix the problem. I think most of the interesting innovation comes from grassroots.

Also, you build these centers, so you have ABC city and the XYZ center, so you break it up into this hierarchy. But the media is all about connecting and putting everything together, and it's about doing things with limited resources. Much of time here, you overinvest, you overstaff, but you don't connect the people and the pieces. You find more of that in Lebanon and in Jordan where you don't have the same kind of resources, and an educated community with a little bit more history. 

There's an economist at the MIT media lab, he maps which products are contributing to the GDP as a country. And instead of using GDP per capita, he shows the products, and then maps them like ontology, and he models what sorts of complex set of attributes or skills the country needs in order to create that product. In much of the Gulf, you have oil as the main output, which increases the GDP per capita, but there aren't adjacent products. It's a very tricky thing to push innovation when you don't have the ability to take millions of textile workers and upgrade them to adjacent things. You actually have to have somebody who can build the machines and the plants, and create the product. That requires a community of people.

Arabic Knowledge@Wharton: Let's switch to innovation and the media. How have MySpace, Facebook, Twitter and YouTube become more successful doing what newspapers and other traditional media have done? Considering they have the resources and the content, how come the traditional media industry has not been able to engage the community the same way?

Ito: If you think about it from a very basic product design perspective, there's the concept of what we call 'user attraction.' You get user attraction by experimenting and pivoting and trying to get the products to a place where a lot of people are using it and telling others. So there's a lot of experimenting involved. Flicker was first a game. YouTube was a dating site. You go, try it, and then realize, "No, let's go this way. Let's go this way." Every problem you have is actually a liability because it prevents you from pivoting. Your engineers don't want throw away things like millions of lines of code, and your IP department doesn't want to not use the patent that they spent all this money developing, right?

Well, if you think about it from a newspaper's perspective, you've got this stupid printing press, which is your biggest asset on your balance sheet, and you go, "OK, well, we can't really… We've got to do this." Every asset that you have is actually a liability when it comes to flexibility or thinking about your product. You want to get rid of every single feature that's not necessary, but in a big company, it's a job, a thing, it's a process, and that's really hard. The other problem is that you've got to get costs low enough so that you can start out free and then figure out your business as you go along. So I think everything was stacked against newspapers.

What you take from breaking news is you have to start keeping up. Television still has some ability to do real-time stuff, but for newspapers it is really hard. The New York Times did a really good job in Japan providing context after day three. But at breaking news, they failed. The joke is why would you want to want to read yesterday's news on a dead tree instead of looking at it in real-time online? You do need context and I think professional journalism is really important. But too many newspapers are still focused on breaking news. Some of the newspapers pivoted towards online very quickly, they tended not to be the biggest ones, but many of them are doing well. So not every newspaper has failed.

Arabic Knowledge@Wharton: But when a number of newspapers switched online, they never got the kind of traction or numbers they needed. More people are on Facebook than on any of the local newspapers online.

Ito: It's not about just putting it online. They have to make it viral. Most of these papers won't even put their full content online. But now the important thing is to stay relevant. Focusing on a viable business model is important, but if people cannot find you, you don't exist.

Newspapers have the ability to use their content to become a huge magnet for people's attention, if they gave it away for free. They could convert that attention to some other business model, but instead they think of themselves as a file of assets they can charge access to. I ran Infoseek Japan for a while, and at first they would charge per search. It was like a US$1 per search. That made sense then. But when you think of Google, how you can search the Internet for free, but they make billions of dollars. So I think when you're in this model of, 'This article is worth US$3 a word,' that is just thinking about stuff that has assets. It's a mistake.

Arabic Knowledge@Wharton: The public, though, wants content to be free. They want the information to be free. So how do you make the switch from an industry perspective? 

Ito: Just because people don't pay you for it, there are a lot of transactions going on. They're paying to access the Internet and they're buying things that they see. They're paying for infrastructure. Even if you're sharing content in the visible world, there's still money flowing, right? As long as the general GDP or the value increases, that ecosystem should be able to figure out a way to monetize that.

If I'm love with a girl and we go out to dinner, and I buy dinner, I'm buying her flowers, and we have this romantic relationship that turns into marriage, there's a lot of commerce going on but I'm not paying her to be my wife, right?

If I pay you a dollar to be my friend, that's the most direct way of engaging in a relationship, right? But that's the content business in the old way. I'll pay you a dollar for the article, but what about saying, "O.K., you give me your stuff and I give you your stuff. We do a conference and we get excited about it. And we come up with new ideas." There's a whole bunch of stuff going on. You can sell tools and you can sell conferences. You can sell all kinds of stuff this way.

The idea that you're paying directly for the content, to be really blunt, is like the relationship between a master and a servant, where the journalist is the servant. There must be a more sophisticated way for this interaction to happen, because the journalist actually enjoys writing, and the readers enjoy reading.

I don't think anyone is saying that journalism doesn't have value. But if your job is to sell this person's services to this person, and you built your whole life around getting good at that, maybe you don't have a future. There are certain skills that don't necessarily survive, but if you look at the whole thing, the music industry or the journalism industry, there's a tremendous amount of value there and I think that the smart newspapers I think that started to try to reinvent themselves, and are getting rid of the printing presses. In Japan, it's very clinical because you have the legacy issues and you also have the people doing physical distribution. There are a lot of people that will get really upset if you stop doing that. A lot of this is about these people who can't change. It's like the unions and the American airlines.

Arabic Knowledge@Wharton: A few years ago the big thing was MySpace, now it's Facebook. How do you see this modeling transition?

Ito: I think there will be a next Facebook. There will continue to be new players with new things. The problem with the free market is that it really enables monopolies, and every single company out there is trying to become a monopoly, whether it's Microsoft, which was able to do that, to Google, which is very close to having a monopoly, and Facebook, which is also getting close. I think monopolies slow down progress, and they are a huge cost to society. But eventually, they get overthrown. Some of these companies will become short-term monopolies, and it's the role of government and others to figure out methods to prevent that a little bit. I remember when Internet Explorer destroyed Netscape. They took every developer off the browser. There's no progress on the browser for years. So Firefox came out and then the IE team came back together. If nothing else, IE 7 would not have come out without Firefox, right? The problem with monopolies is they just stop innovation.

Arabic Knowledge@Wharton: Back to the Arab region for our last question. Now that people have seen the value of using a specific kind of program to communicate, what are the next steps?

Ito: When the unrest occurred in Iran after elections (in 2009), there were a lot of Arabs writing on their blogs 'Our elections are even less free than them, and we don't do anything.' And then the youth started to wake up. Before, the youth didn't feel empowered and didn't feel like they were really going to be in charge. So they either took a more negative direction or they just became complacent.

So engage all groups, like in Jordan, they allowed the Muslim Brotherhood to join and then suddenly they start acting like statesmen. Empower the young people to have a voice, to participate and then show them they have a lot of power. It's also an opportunity to put young people in very prominent positions and take over some of these institutions. I think this will start to transform them to be more responsible as well. That's the theory. And whether you like it or not, this theory is going to be tested.

If the young people are technically enabled and they feel empowerment, and the responsibility that comes with it, which I think needs to be developed, then we can have a new generation of Arabs that are internationally connected and technically savvy. And if they have enough influence to start changing things like government policy, it's a very good thing for the region and also the rest of the world.