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

[Marita Moll]

Well reasoned and written Greg. Thanks for sharing.

Marita

On 2/20/2020 12:30 AM, Greg Shatan wrote:
> 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 <mailto:greg at isoc-ny.org>
> *President, ISOC-NY*
>
> /"The Internet is for everyone"/
>
>
> ---------- Forwarded message ---------
> From: *Greg Shatan* <greg at isoc-ny.org <mailto: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 
> <mailto: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 <mailto:greg at isoc-ny.org>
> *President, ISOC-NY*
>
> /"The Internet is for everyone"/
>
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