[CPWG] My thoughts on the PIR sale and ISOC: Lessons Being Learned

[Greg Shatan]

CPWG folks,

I wrote the following on another list and thought it might be of interest
here.  (Apologies for cross-posting.)

Best regards,

Greg

==========================
*Greg Shatan*
greg at isoc-ny.org
*President, ISOC-NY*

*"The Internet is for everyone"*


---------- Forwarded message ---------
From: Greg Shatan <greg at isoc-ny.org>
Date: Wed, Feb 19, 2020 at 7:15 PM
Subject: ISOC & the PIR Sale: Lessons Being Learned
To: ISOC Internet Policy <internetpolicy at elists.isoc.org>


I started replying to a couple of threads on this list, and ended up
mulling it over at some length (too much?) and decided it would be better
as a free-standing email.

The PIR/.ORG transaction is a watershed moment for ISOC.  What had once
seemed (at least to ISOC and its Board) to be ISOC’s chance to transform
its finances now seems to many to be a threat to ISOC’s essence, and even
its very existence.

>From the ISOC-NY perspective, this entire affair points out the paucity of
community-involved multistakeholder participation in ISOC’s critical
decision-making processes (and other processes, too).  Navigating the very
different worlds of non-profits, ICANN and billion-dollar private equity
transactions has been a huge challenge for ISOC.  This has exposed cracks
in ISOC’s processes and in its sense of self at every point where decisions
had to be weighed and made.  ISOC’s claim to be even moderately
multistakeholder in governance has been found wanting.

A fair amount of the (most visible) opposition to the sale is alarmist,
ill-informed and rife with self-dealing.  But that doesn't make the sale a
Good Thing. It also doesn’t make all of their criticisms wrong or unfounded
(even if they are overblown).

Frustratingly, this fervent opposition tends to obscure a number of the
more thoughtful and analytical critics and criticisms of the sale, coming
from a variety of different angles.  Those who are not taking a hard line
in opposing the sale are not supporters of the sale (though some of the
hardliners want to say they are or convert them to their cause).  This is
the skeptical but undecided “middle” portion of the community, trying to
think this through and avoiding rushed judgments, even if they feel a bit
queasy.

The ultimate positions of these swing groups is important, maybe even more
important than those of the entrenched opposition.  In one version of
reality, these folks would have swung toward supporting the deal, their
concerns addressed, their voices counted.  We are not in that version of
reality.  For better or worse, I think these "swing groups" are now
swinging toward opposition, or at least putting on the brakes until
significant concerns can be addressed.

The demise of the summit meeting being planned for the weekend of February
22, shows how troubled this whole steaming stew has become.  Speculating
wildly, it sounds to me like some of the hardliners pulled out (or were
never in) the meeting, because they have a plan, something up their
sleeves, perhaps even a counterattack in mind.  This left the more moderate
but concerned contingent in the lurch.  Apparently, this in turn caused one
of the deal participants to shrink the meeting to irrelevancy, perhaps
because the participants wanted to deal with the noisy hardliners, rather
than the more low-profile opponents that were left on the agenda.  This
move further alienated those in the moderate camp.

This is a negative outcome for those who want the deal to go forward, and
for all those involved in the deal regardless of outcome.

The moderates were at least fact-checking the hardliners while still
demanding facts and changes from the deal team. Potentially, at least some
of this group could have been brought around to support the sale, with some
significant safeguards and adjustments.  Without some serious support from
within this group, the deal participants, their advisors, and the few
active proponents of the deal look pretty isolated.

The traditional playbook of M&A dealmakers at this point would likely be to
“Get The Deal Done,” by any means necessary.  The Proskauer letter is
solidly within the tradition.  The traditional “Get The Deal Done” playbook
would focus efforts on those with the clear, formal power to stop the deal
(ICANN, government regulators, AGs), convincing, mollifying, co-opting
neutralizing or defeating them.  Meanwhile, the noise of the rabble would
be more or less ignored (and guess what? We’re all rabble).  The deal
participants would be limited to carefully-crafted statements and sound
bites and carefully orchestrated situations.  No matter how many words,
ultimately they would say very little.

The traditional playbook has certainly informed the buyer's decisions. It
has seemed to inform much of PIR and ISOC's thinking as well.

The traditional playbook has been a disaster at every turn. If the deal
participants keep following this playbook, there's still a possibility the
deal will get through and close, while leaving scorched earth in every
direction and a persistent stench wafting over the land. More likely every
day, taking the traditional approach will continue to harden and grow the
opposition to the deal and spawn more significant, powerful and effective
opponents and methods of killing the deal.

The private equity veterans, investment bankers and lawyers involved in the
deal have likely been very persuasive in convincing the other deal
participants to "stay the course." Sadly, these experts had little or no
idea what they were getting themselves into.  The world of investment
banks, private investment firms, Big Law, big finance and private equity
could not be more different than the world of domain names, ICANN,
non-profits, domain investors, social activists and Internet pioneers.
This is a culture clash.

As someone with experience in both worlds, it's been frustrating to watch
this slow motion train wreck.  At every major inflection point, I’ve
thought I should tell ISOC that "this is going to get worse before it gets
better."  And I hoped for the best.  At this point, the message feels like
"this is going to get worse and it may not get better.”  Unfortunately,
this is almost as much a product of the way the deal has been handled as it
is a product of the fundamentals of the deal.

To my mind, the only way this deal gets done in a satisfactory way (and
maybe if at all) is if there is a radical restructuring of the deal, of the
buyer, of the post-ISOC shape of PIR combined with an embrace of radical
transparency, the adoption of genuine accountability, and a true
multistakeholder stake and meaningful voice in PIR.

No matter what the outcome, ISOC will come through this facing some real
challenges. It is dented and scuffed. It didn't help that PIR and Ethos
have adopted a low public profile (at least in person), leaving ISOC (and
particularly Andrew Sullivan) swinging in the wind while trying to explain
and defend the transaction, including parts that have nothing to do with
ISOC.  This has been unfair to ISOC (and particularly Andrew Sullivan).

Though worse for wear, ISOC is still structurally sound. It is not a given
that ISOC will remain so as things move forward. How ISOC handles matters,
how it defines itself, how it makes decisions and how it communicates from
this moment on (both during and after the denouement of this entire
affair), will speak volumes about its long-term identity and even
viability.  ISOC needs to figure this moment out, and who it wants to be.

I, for one, want ISOC to come through this better and stronger than before,
more multistakeholder, more meaningful and more engaged.  A noisy few want
quite the opposite (and quite a number of them want something for
themselves). Many others opposing the sale know little about ISOC, and may
not have heard of it at all just a few months ago.  Most of what these
people have heard is so negative (some of it true, some slanted and some
"fake news") that ISOC is merely a cartoon villain to them.  This increases
both the difficulty and the stakes for ISOC "getting it right" from now on.

The rest of this month (and beyond) will be a true test for all involved.
Innovative, inclusive, empathic thinking will likely be rewarded.
Accepting outcomes that are not any one party’s ideal solution will be
required, if there are going to be real winners.  (Not surprisingly, this
is often the successful result of the bottom-up consensus-driven
multistakeholder process.)  If the various participants choose to battle it
out instead, it seems likely there will be no real winners – only survivors.

Greg

==========================
*Greg Shatan*
greg at isoc-ny.org
*President, ISOC-NY*

*"The Internet is for everyone"*
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