Money now on Electric Minds

Electric Minds, that erudite brainchild of Howard Rheingold, is transforming itself from a one-site community to a high-powered business with a new CEO and a mission to make real money building virtual villages across the Web.

In fact, Electric Minds already has at least two customers. It will be building a community site for IBM when its Deep Blue computer takes on chess champion Garry Kasparov in May and is in discussions with Yahoo.

The idea is to build communities wherever they are needed, said Rheingold, author of the watershed book The Virtual Community. "I want to bring community to the commercial world," he said.

The idea didn't happen overnight. When Rheingold announced that he was launching Electric Minds eight months ago, the Web was a very different place.

Online communities generally were small and eclectic, and large companies were just testing out the waters of the Internet. A lot has changed since then. Although few players are making money now, many have have made huge monetary gambles, and business plans are shaping up in various forms.

And it's now clear that the original concept behind Electric Minds--to launch a singular advertising-supported site based on having high-minded discussions about technology--simply wasn't going to bring home the bacon.

"It's been a very painful year for me," Rheingold said. "I'm not naturally thrilled by trying to swim upstream in the Internet business."

At the same time Electric Minds started casting about for a new business model that would make some money, businesses began approaching the company, asking it to build them communities of their own.

It was a natural. Rheingold and the Electric Minds board went looking for a CEO who would be able to back up Rheingold's visionary sensibilities with some hard-core business sense. They brought in Wendy York-Fess, a marketing executive with a Harvard MBA and 15 years of experience working for companies such as Epsilon Data Management, Bank America, and Bechtel.

York-Fess says she is harnessing the strong brand names of Electric Minds and Rheingold, who has become something of a media superstar, to create a viable business. "We take what communities really can do and put them to work with other audiences," she said.

And Rheingold, who is more comfortable in tie-dyes than in suit and tie, is happy to hand over that part of the business.

But don't let the wardrobe fool you: Rheingold is quite aware that there is money to be made. Building an online community is about a lot of hard work and experience, and too many businesses have failed to realize that it's not just about slapping up a few bulletin boards and inviting the world to participate, he said.

"Unless you create a place of value to people that they trust and they come to then you're not going to be able to sell them anything."

In many cases businesses will have to change the way they think because community won't happen overnight, he said, and it won't happen in an atmosphere of repression or censorship.

"Community doesn't exist overnight," he said. "You can create the conditions under which one can emerge, and you can know what to do, and what not to do, to grow it. It's really more of a gardening metaphor than an architectural one."

Rheingold said business people apparently understand the complexities of creating communities enough to know that they need help doing so. Although Electric Minds has evolved from a single-site company to one that now views anyone who wants to build community as a potential customer, the original concept behind Electric Minds has never changed, he said.

"I don't think the vision changed," added Gary Rieschel with Softbank, Electric Mind's single largest investor.

"Wendy brings in the balance of, 'OK, we're going to do this for money,'" Rieschel said. "Howard is thinking, 'Now I can sell the content.'"

Rieschel said Softbank is behind the moves and feels confident the new strategy will move the company forward. For his company, the bottom line is money, by definition. For Rheingold, the bottom line is proving the point that community can happen online.

"The goal here is to show that the Web can be a social medium, that people can have intelligent conversations, that it's not just a new channel for broadcasting the same old stuff," he said. "I really want to put my money where my mouth is with this virtual community business. Is it valuable for people? If so, can we demonstrate that?"

In the end, Rheingold hopes to get some good competition.

"I would like to establish us as the top quality provider of community. And I'll be happy to have a lot of competition. It means the Web has become a social medium."