There’s a great entrepreneurial anecdote in today’s WSJ:

Mr. Conning, who grew up in Berkeley, California, quit his day job at Charles Schwab Corp. in 2002 and used his savings to start a Web site called Funtigo. That site let people share photos with each other for free, then asked them to pay to upgrade to a premium version to keep using the service. The site bombed, shutting down in February 2004.

Around that time several dozen Funtigo users — many who happened to be teenage girls — sent Mr. Conning plaintive emails asking him to let them keep using the service for free. Mr. Conning gathered those notes in one folder and decided to experiment. He created a new Web page at funtigo.com/switch, which led to a free site he had built called Piczo. The new site borrowed a few ideas from social networking, at the time a nascent trend. Then he wrote back to about 100 of the teenagers who had emailed him earlier, telling them they could keep using the service if they switched to Piczo.

It was Piczo’s first and only marketing push. The original batch of users quickly spread the word to friends, and friends of friends.

Today, Piczo has 10 million unique visitors a month. If you are an aspiring entrepreneur, you’ll ignore the first part of the story and draw the conclusion that “e-mailing 100 people can lead to 10 million users.” Later, you’ll discover there’s a less optimistic reading. Serving 100 people IS a great seed for a business… but which 100 people?

Ken Deutsch, who I got to know when he was running IDI, has started a new venture that aims to combine social networks and on-the-ground charity organizations to do good work in Africa. Here’s a link to Direct Change, his new venture, if you’d like to give. And here’s his note explaining the new venture and what it needs:

Three years ago, I traveled with my wife Amy to bring our adopted son home from Ethiopia. Becoming a father certainly changed
the way I view the world – and the trip to Ethiopia catalyzed my
desire to work on behalf of the millions of children who are in need.

I am now working full-time to establish Direct Change, an
organization dedicated to providing prospective donors with an
opportunity to effectively and efficiently help orphans and
vulnerable children in Africa. After many months of research and
planning, we are ready to introduce a new approach to international
charitable giving that will be launched in about 60 days.

Until three years ago, the only donation I ever made to help
children in Africa was carrying an orange box on Halloween for
UNICEF. Over the years, I followed the droughts, the food shortages
and the growing AIDS crisis. I knew that there were more than 12
million African children who had lost one or both their parents to
AIDS and millions of others at risk of dying from treatable
diseases. However, I like so many other Americans, was both
overwhelmed by the data and cynical about where my contribution would
go.

In trying to find a way to help more children, I knew that we
would have to overcome the sense that the actions that we take have
little impact. My parents reminded me “to eat all the food on your
plate there are children starving in Africa;” we are filed with good
intentions, but at a loss for what we can do that will really make a
difference.

Having worked professionally raising money for a non-profit
organization, I knew that the majority of the funds I donated to the
canvasser at my door, on the phone or through the direct mail pieces
I received would never reach their intended recipient.

I was not aware of that the fundraising cost was only half of
the problem. The cost to deliver the aid was the rest of the
problem. While corporations have long learned the advantages of
outsourcing, most of the charities that collect and deliver services
to help the poor in places like Africa carry the high expenses of US
headquarters, staff and consultants.

In speaking with people I knew within international development
organizations, I realized that they see the same problems. In fact,
by their own estimates, only $.08 – $.15 of every $1 donated in aid
ever makes it to help the intended recipients.

There is a better way to make a direct change in more children’s
lives, but I need your help to make it a reality.

Direct Change’s approach will both protect the valuable
donations from our supporters and strengthen communities in Africa.

This approach has two central components:

First, Direct Change will “outsource” the delivery of aid
through effective and efficient community organizations in Africa.
This means that we will identify programs in Africa that work – and
donors will be able to allocate funds directly to the programs they
choose to contribute to.

Second, we will reduce fundraising costs through relying on
proven online social networking technology and strategy.

While this is a new approach, the Internal Revenue Service
approved our plan on Wednesday and we are now able to take tax-
deductible contributions and move forward.

In order to “outsource” the delivery of services, while
ensuring effectiveness and accountability in the programs we choose
to fund, we created our African Partners Program. This program
utilizes the skills and experience of an expert advisory committee
that will review the programs that apply for funding through Direct
Change.

The African Partners Program will identify groups in Africa
that are already effectively providing direct assistance to orphans
and vulnerable children and can improve and expand their ability to
help these children with additional funds from Direct Change
supporters. Funding will be focused on programs that keep families
together, provide health support to HIV infected children, support
children in crisis situations, keep children in school, and provide
services for orphans and prevention.

To reduce fundraising costs, we looked to the tremendous
success that political campaigns have had in raising money online.
Successful online fundraising provides the tools to empower
supporters to reach out to their own contacts with their own
approaches and to track their own success. Rather then reinventing
the wheel, we are partnering with the people who built the tool
(ActBlue.com) that is the main mechanism behind how the Democratic
bloggers have raised millions of dollars and in doing so have
reshaped politics.

While we have received tremendous support and donations of
services (legal, technology, creative, partner recruitment and
evaluation) to launch Direct Change we need to raise at least another
$80,000 to cover our expenses and prepare to launch Direct Change and
begin funding programs.

Kiss a crumb. And vote for Chapel Hill.

A day I never thought I’d see… an Estee Lauder blogad. According to the WSJ, this is part of the beauty company’s first big push online.

Estée Lauder has advertised online for some of its brands and has long operated Web sites for its products. But the company’s launch of an online ad push for one of its best-known brands is significant in an industry that hasn’t been as aggressive as some in embracing the Web. Cosmetics makers and retailers have long believed that shoppers preferred to sample new products before buying them and needed a trained consultant at a sales counter to tell them what was best for their particular skin and concerns.

Attitudes have begun to change in the past year or so as an increasing number of consumers go online to research — and buy — cosmetics. “It used to be much easier to reach the consumer, and print ads were the standard,” says Marjorie Lau, vice president of Estée Lauder Marketing North America. “Today, consumers are more savvy, more involved and do a lot of research online.”

Joel got a phone from Sprint and the rest is misery.

Over the last six months, Sprint has been trying to get bloggers (like me) to write about their new Power Vision Network by sending us free phones and letting us download music and movies and use the phones for free.

That’s rather nice of them, but honestly, I have a really strong aversion to writing about things just because some PR person wanted me to. Basically, there’s no better way to make me not want to write about something than to ask me to write about it. I accepted the free phone because, gosh, well, it’s a free phone, but I decided that I simply wouldn’t write about it no matter how much I liked it.

As it turns out, I had the opposite problem. The phone they sent me, an LG Fusic, is really quite awful, and the service, Power Vision, is tremendously misconceived and full of dumb features that don’t work right and cost way too much. So I’m going to review the dang phone anyway…

Time management! Take on big challenges. Nelson Mandela… prison works!

Early pictures from a Budapest reunion held last weekend. .

If I were running for President as a dark-horse, I’d:
a) stump for an “energy trust fund to pay for our children’s future energy needs” in the form of a $2/gallon gas tax, with rebates for everyone making less than $80,000 a year. Higher gas prices would reduce pollution, encourage Detroit to build cars for tomorrow rather than yesterday and, by cutting consumption/imports, reduce US funding of anti-American regimes abroad. The revenues would also go to reduce the deficit, lowering interest rates and helping to bail out mortgage holders. (See plank #2.)
b) stump for protection for home buyers who will see their mortgages jump 200-300% in the coming eighteen months and be faced with foreclosure and/or tumbling ad prices.
c) make banks and credit card companies bear the burden for identity theft.

Though not fully baked, some variation on these issues would have broad middle class appeal, and grow more popular in the next two years.

Our friends Vesna and Dragan hosted Bobi Vidovic, an artist friend from Belgrade, in Chicago this summer. These are some of his
paintings.