And we share some of her concerns. A few weeks ago, we wrote that “the money in the start-up economy today is like the water in a hose whose faucet was just turned off,” with investors in venture funds at one end of the hose, and startups at the other. Last September, we argued that what was really scary about the lack of public offerings or even accretive acquisitions was that nobody was scared.

But in some ways we are more hopeful now than Sarah. The 50% drop that Sarah takes as the starting point for her argument that venture capitalists are “falling off a cliff” is worrisome for startups looking for good valuations, but not necessarily worrisome for venture capitalists. The drop in dollars invested reflects a few trends that Sarah doesn’t account for:

1. Most startups this winter suffered a major dip in revenues as businesses and consumers stopped spending, and ad rates plummeted through the floor. As an entrepreneur, the last thing you want to do while your P&L is getting trashed is raise money. Every CEO I know who was considering raising a round put it off unless there was no way to avoid it. The only companies that were raising capital were the ones who had no choice.
2. Valuations were much lower, so dollars invested were lower too. But no venture capitalist objects to getting a good price. You don’t judge a trip to the grocery by what you spent, but by what you got. So a better measure of the VC industry would be the number of deals done, and the amount of equity purchased.

And this is where Sarah’s essay didn’t ring true, at least for me. The VCs I know are as interested as ever in deal flow, and eager for a big hit. They still have plenty of capital to deploy, and happily anticipate fire-sale valuations. (Update: Bernard Lunn at Read-Write-Web has the same observations based on first-hand interviews with VCs and entrepreneurs.)

The reason I write this is not to defend venture capitalists: there may well be too many venture firms, with bloated fund sizes driven by management fees rather than returns. But just as it was crazy for venture funds to measure themselves by the dollar volume of their funds rather than the amount of money they could really put to work, so now it’s crazy for Sarah to judge the venture industry by the dollar volume of its investments.

In fact, rather than seeing this decline as the problem in venture capital, I think it’s the solution. Less money more selectively invested into high-quality companies will lead to better returns.

So where are all the high-quality companies? That’s the real question behind Sarah’s essay. When she says there is “no obvious high-growth sector of the tech economy,” what she is really saying is not simply that there are too many venture capitalists but there’s nothing left for them to invest in.

Reading all the media coverage this week about Ashton Kutcher and Oprah Winfrey on Twitter, it would be easy to believe we’re at the end of our days. But last I checked, the global economy collapsed because we didn’t have the right information about what financial assets were worth. Doctors still have no way to know what treatments a patient received before showing up in their office, and the human genome has become too complicated for the current generation of computers to track. In our corner of the world, real estate is still pretty screwed up too. Business as usual won’t solve these problems. Startups armed with new technologies will.

The challenge will be focusing our time, energy and money on these important problems, which so far the Web 2.0 movement hasn’t always cared about as much as kicking the crap out of one moribund industry, newspapers, over and over again.

We talk about the dot-com era as our greatest folly in Silicon Valley. But at least back then, startups tried to do something big: criss-crossing the country with Internet fiber, putting a computer on every office desk and in every house, changing how consumer bought almost everything and how businesses manufactured almost everything, too.

If we get back to the big stuff, the world will be a lot better, and VCs will do just fine.

(Photo credit: Bikeracer on Flickr)

But, as is usually the case with posts like this, we disagree. Simply saying that we have to love all Google’s policies and products or leave its index ignores the dominant position Google has in shaping how people consume just about everything on the Internet.

The great responsibility that comes with that falls not just on Google but on all of us in technology who make it easier to distribute for free content that others depend on selling to make a living.

This is not to say that Google is to blame for having a business that profits from having as much content as possible be free on the Internet; most other technologies do the same, and the consumer benefits too, at least for now.

The problem is bigger than Google. The problem is the “beautiful rant” itself — a pervasive  belief that the newspapers, musicians, film-makers and story-tellers who create all this wonderful stuff on the Internet can only do so on our terms, which is to say  zero, nada, free.

I guess the writers and artists could go build their own search engine, their own music-sharing and video-sharing technologies, but wouldn’t we rather they keep writing “30 Rock,” reporting from Darfur and recording sappy love songs?

If we all become distributors because nobody pays creators, won’t the whole Internet become a pirate’s junkyard of free stuff?

Other bubbles have left behind an excess of infrastructure that would later come in handy: railroad tracks, telegraph lines, Internet fiber. What will we have to show for this one? Some have suggested little more than a string of weedy Gulf-Coast ghost towns.

It’s hard to accept that that’s it. For all that we’re going through, we have to believe that we’ll come out changed in some important way, hopefully for the better.

So here on the Redfin blog, we’re publishing a series of posts on how different parts of the world we see flying by are different than the ones we had before: the Internet, the startup economy, the media and the real estate industry. Today we start with the changes that we have already begun to see on the Internet.

The Return of Software
It will come as no surprise that we are glad to see startups consider business models beyond free ad-supported sites. In July last year, we had complained that free software had become “Silicon Valley’s new religion,” an “adolescent anarchism” codified into a broad ideology that couldn’t apply to every sort of online business, particularly those that don’t reach a huge audience. Now 37Signals has joined the charge.

The reason for this is the pressure on startups to generate meaningful revenues now, even at a modest scale. It was easy once to raise money on the idea that your business would work at Yahoo’s scale, particularly if your goal was to get bought by Yahoo.

Google encouraged this behavior, by rewarding sites with more traffic that presented information in a generic way its indexing robots could understand, free of charge, rather than in the context of an application or for a fee. But now that fewer companies are buying and venture capitalists are wary of footing the bill, startups have turned to the most direct way to get money: from their users.

The iPhone App Store: Proof That Consumers Will Pay for Software
Consumers are ready to buy, buying software fast-food style on the iPhone, and shelling out for premium subscriptions on sites like Picnik and Animoto. And e-commerce businesses are enjoying a new vogue too. Three venture capitalists have approached an e-commerce company we know of in the past week, even though it isn’t raising any money now. Already, one entrepreneur in our building has recently shifted from a pure ad-driven model, and at least two others we know are planning to as well.

Commerce is How Software Makes Things Better
This is good news for the economy. Direct commerce is the simplest way for the web to do what technology is supposed to do: make something cheaper and better, usually by cutting out a middle man, not by creating a new one. Even though transactional businesses scale more slowly than media sites, they generate more revenue per website visitor — based on our experience in online real estate, by a factor of at least three to one.

Media Sites Become Web Applications
And it’s good news for software too. There’s a reason it’s hard to build great ad-supported software. For most ad-driven websites, the goal isn’t necessarily to engage an audience in the completion of any particular task so much as to redirect it toward a purchase on an advertiser’s site.

This is why, to take just one example from our world of online real estate, many ad-driven sites only show one photo of a home for sale, where we show 15. We want you to stay on Redfin until you buy the home. The media sites have to let you visit their advertiser’s site for more info.

MySpace and Facebook: Media Site vs. Web Application
This difference in approach is why MySpace can be a bit of a disaster zone for users but makes plenty of ad money, whereas Facebook is a powerful “social utility” that can’t get top-dollar for its ads. MySpace as a media site is just one page after another, like the New York Times as written by your teenager, on drugs. In Facebook, the pages are components of an application, working together so well that you never want to leave, even if it’s to visit an advertiser’s site . It’s no accident that MySpace is based in the media capital of the world, Hollywood, while Facebook is in the software capital of the world, Silicon Valley.

I’ve often wondered why Facebook doesn’t just charge people to stay on its site, since that’s clearly the intent of their web development, and it’s clearly what their users want to do too. A Flickr-style fee for storing additional photos or messages could perhaps generate more than $1 billion in revenue, in a way far less intrusive to its users than Facebook’s past ad-related blunders. Maybe that will happen soon, too.

This is not to say that you can’t build beautiful ad-driven sites, or that you can’t make money from those sites. The web is by far the world’s most powerful advertising medium. But it’s much more than that, too.

But what do you think? When this Great Recession has done its worst, what will the Internet will look like? Will the revenue pressure on web startups make it more mercenary, and less fun? Or will it just make it better? It’s hard not to believe that  a little less media and a few more web applications will make the Internet richer, and better.

• Decreased the cost of bringing a new market to profits by 4x.
• Increased transactions 23% when transaction volumes in many markets were down 50%.
• Increased home tours performed 342%, mostly near the end of 2008; our pipeline is strong.
• Increased customer satisfaction 27% (is Redfin the only brokerage that measures Net Promoter Score?)
• Got 12 new 5-star reviews on Yelp, in Seattle, San Francisco and Irvine.
• Published a study showing Redfin buyers negotiate a larger discount off list price, by $3,594.
• Increased revenues 41% when prices declined in major markets by 18%.
• ­Increased total visits 4x.
• Increased the number of visitors from Google 6x.
• Increased inventory 60%:
  • New city: Chicago
  • New sources: for-sale-by-owner and bank-owned listings
  • New types of listings: townhouses, apartment buildings, undeveloped land
• Earnings above plan by 17%
• Shipped 7 major releases, which included the following features:
  • Low-latency MLS import, synchronizing with nearly every MLS every 15 minutes
  • Open-house search
  • Search by neighborhood
  • Neighborhood pages with stats and charts
  • Google StreetView
  • Google Maps
  • Subscribe to listings by RSS
  • Download listing data to Excel
  • Agent profiles, with customer reviews
  • Safari browser support
  • Tour wizard
  • MyActiveListings: monitor traffic to your listing and where it came from
  • In-line registration
  • Similar listings
  • Notes
  • Visual redesign of site
  • Removal of Boston’s registration requirement

Tomorrow, we’ll talk about the challenges Redfin faces in 2009.  We’d love to hear what you’d like to see Redfin achieve this year.

First however, we wanted to thank you for your support. Every day, we get email messages, survey responses, online reviews, forums posts, tweets, comments, blog posts and calls from folks eager to help us. Your ideas, complaints and compliments get forwarded, debated, quoted, repeated and puzzled over. It helps us win arguments, develop new ideas, work harder, think clearly, give more. It has made it much easier to build a consumer-driven company.

2008 was a hard year for startups, harder still for real estate companies. But through it all, Redfin is still becoming the company we have always wanted it to be. We are still having fun. Thanks for helping us get this far. And happy new year!

From the backseat’s darkness, the hedge fund manager wasn’t talking to anyone in particular, and didn’t seem to notice no one could understand much of what he said. The Christmas party ended late, and we were giving him a ride to his hotel.

He wasn’t sure when the economy would recover. He wasn’t sure if America would recover. “But,” he said, “it has been a good ride. All these years I’ve basically had a free call option on the American economy.”

We Are All Hedge Fund Managers
I explained to my wife, a doctor, that a call option lets you profit from a stock if it goes up, without actually owning the stock if it drops: hedge fund managers share in the fund’s gains but not its losses. I looked at her as if this was quite a trick. “But,” she said, “aren’t all of you paid in options too?”

It took a moment to realize she was right. Venture capitalists take 20% or more of their fund’s gains, but few risk much of their own money in a loss. At startups, entrepreneurs and executives don’t usually own stock, at least not any they can sell, but options to profit from the stock if the company is bought or goes public. Little if any of the money invested in a startup comes from the entrepreneur.

The hedge fund manager, the venture capitalist, the entrepreneur, the executive are, in this respect, not so different: we are paid to make money, not to avoid losing money. Heads we win alongside the investor; tails, only the investor loses. Who wouldn’t keep raising the stakes in a game like that?

The Ownership Society Becomes The Risk Society
This may be the final irony of President Bush’s efforts to create “an ownership society”: that it often resulted in an ownership-free society, where the leverage to risk others’ assets was more powerful than owning the actual asset. The triumph of leverage over credit is a big reason why markets have become so much more volatile than they once were.

But it wasn’t always this way. Remember the rage of Wall Street’s Gordon Gekko – the symbol of a different era’s greed — when he lost millions on Bluestar Airlines? He smashed his coffee table. As he explained the first time he met Bud Fox, “nothing ruins my day like losses.” Now imagine what kind of unchained creature Gekko would be in the world we have now, where the money he lost wasn’t his own?

For Michael Lewis, the former Salomon trader who profiled a real-life Gekko in his 1989 book Liar’s Poker, today’s meltdown of the financial system is primarily the result of the major banks, all investor-owned by 1999, insulating management from their losses. “No investment bank owned by its employees,” Lewis wrote last month, “would have levered itself 35 to 1.”

We could ask a similar question of startups. If we were funded and controlled by employees, how many would take the risks – or the losses – most startups take today? Who would sign up to generate revenues of $100 million in 5 years?

But that is exactly what a company raising venture capital must do. The first pre-requisite for getting venture capital is a willingness to invest it in a way that must seem reckless to traditional businesses.

One Reckless Company Ruins the Whole Barrel
And once one company in an industry is reckless, we all have to be reckless. Just look at the world in which my company, Redfin, competes. The two startups that in 2005 launched map-driven real estate websites similar to Redfin’s have raised, between them, over $75 million more than Redfin’s $20 million. Whenever I worry about the crazy risks we’ll have to take to earn back our $20 million, I think, “But those guys, now they’re crazy.” (They’re also very good).

Without the pressure from other, better-funded startups, we wouldn’t open a new market until the last one was profitable. We would spend less on research & development so we could reach break-even sooner. We wouldn’t worry about marketing at all. We’d be more likely to survive, albeit on a more modest scale.

To the Pain
But the truth is, I’m not a very modest person, and neither are the many talented people we’ve assembled at Redfin. The VCs aren’t twisting our arms to take risks; they’re letting us do what we wanted to do anyway.

You can’t assemble an army of Turks without marching it out to a huge battle; the army gets restless. I should know: for two years, the dot-com crash left my last company struggling to grow beyond $1 or $2 million in quarterly profits and still waiting to go public.

My old friend and colleague John Hogan would see me in the hallways and ask, “To the death?” “No!” I’d say, in a reference to the prolonged, mutilated existence promised to a villain in Princess Bride. “To the pain.”

What we worried about wasn’t that our company would fail, but that it would take too long to succeed.

Every Startup is a Time Bomb
A lot of startups now find themselves in the same unwilling suspension of disbelief. Every startup is a time-bomb, where all the ingredients of hope, sacrifice and brains can mix for only so long before self-destructing. The best employees are gone well before the money runs out. Redfin, which raised money three years ago, has already used up half its time.

Now that a downturn has focused everyone on survival, everyone is criticizing the unnatural haste — the artificially stimulated appetite for risk — that characterized the way we were only a few months ago. In fact, the whole idea of venture capital – of using other people’s money to build a startup with highly uncertain prospects – has now come into question.

I’ve been on that bandwagon. In a recent essay on how to survive the downturn, my main advice was to act like an owner. And yesterday, while I was putting the finishing touches on this essay, Fred Wilson published a post on spending money like an owner. It was good advice.

But it stopped short of the conclusion I thought Fred was heading for: that entrepreneurs should, as much as possible, start a company with their own money. Because no matter what you tell yourself, there is a big difference between spending money like it’s your own and actually spending your own money.

Mammals and Reptiles
I’ve worked at self-funded companies, and sat on the board of a largely self-funded company. The difference in how it feels is as vast as the gulf between reptiles and mammals: the one with an untrammeled ability to survive, the other capable of long-term thinking.  Both of the self-funded companies were bought for a price that gave the founders a nice return but neither could ever bring itself to take the risks necessary to grow into a huge, stand-alone business.

(Much of the way I am now grew from watching a company smaller than my first employer, worse than us in many ways, grow into a billion-dollar business.)

So while ownership is an important virtue, the willingness to take risks on a big idea is too. The great irony of all this is that Silicon Valley seems in this case to have understood risk better than Wall Street: a college student with a good idea and the ability to develop it has turned out to be a safer investment than many Moody’s-rated securities.

We don’t realize what a temporary historical aberration it is that there is a place and a time where people are willing to fork over millions to a penniless student. That there exists within the world’s vast plutocracy such a fragile meritocracy is still hard for me to believe.

It’s one of the only reasons I think the hedge fund manager is wrong about the economy. The party isn’t completely over. America can keep winning, but only if we’re willing to take bigger risks than the rest of the world.

There are unlikely heroes — the man who first recommended Dick Cheney to be secretary of defense or the blogger who called us out for our TechCrunch post on surviving a recession — and one or two villains too.

Redfin stats expert Mose “The Underground Man” Andre will be pleased to see another Segway reference, reinforcing his comparisons between me and the Segway-riding illusionist on Arrested Development. Thanks to John Cook and Todd Bishop for agreeing to publish the essay.

Any guesses on where the title of this post came from?

Update:  AllThingsD re-posted the essay last night.

The premise of the post isn’t that Redfin has found our way out of the woods yet, only that we’ve been in there longer than others; the housing bubble burst a year before the market did. So far, the essay is steadily climbing the del.icio.us charts.

It was originally going to be a top-10 list of tips, but Redfin’s professorial Chris Glew told me that, when interviewing for his first job at Redfin, he had surmised from my blog posts (for DIY PR,  financial modeling and startup hardships) that all of his answers should be in the form of a top-10 list.

So, I made a top-9 list instead.

Thanks to Wes, Sylvia and Marc for giving the post a going-over, and to a loyal blog reader — why can’t I find his comment? — for asking why startups are so conservative, which became the point of departure for this latest effort.

Which made me wonder how private we really are. You can hide from the Wall Street Journal but not from the hundreds of tech and real estate blogs that covered Redfin last week. One big difference between Web 1.0 and Web 2.0 is that this time, the meltdown will be blogged.

That kind of attention can lead startups to dither like publicly traded companies before making hard decisions. And it has prompted some startups to turn against blogs just for covering the news.

Connections with Other Little Companies, Everywhere
But Redfin has no complaints. Blogs brought us our first customers and our best ideas. Most important for the lonely types who tend to go off on their own to make software, blogs connected us to other little companies everywhere.

Sure, eWeek or CNET covered startups before, but it was blogs like TechCrunch and GigaOM – with their fits of idealism and jadedness, of accessibility and remoteness, of cleverness and heart, their sense of “we” and “they” — that first made us feel cool.

When Redfin announced our layoffs, we expected all that to turn against us. But there was only empathy for the company and, most important, for the people who had to leave the company.

To all the folks who blogged or commented on our setback, thanks for your even-handedness. Redfinners past and present have never needed your support more, or expected it less.

The End of Cool
The only thing that we lost in having blogs write about our troubles is our cool: the cool of startups that never struggle, that show up on all the “hot” lists, that always seem to be having a ball, that don’t have a care in the world.

That’s ok. Startups haven’t always tried to be cool. Today, the blogosphere has created its own celebrities, mixing Michael Arrington with Ashton Kutcher, MySpace with Paris Hilton.

But my first startup job was about as far from cool as you could get, a reunion of all the people at the desolate end of the high-school cafeteria. We rented U-Hauls to drive our own pop-up booth to a trade-show. At big client meetings, we wore debate-tournament-era suits.

Even starting a company that went public was never really cool in the way it’s usually portrayed: it meant walking through rivers of my friends’ blood, and working on silly little things all night, and caring too much, and becoming a jerk and becoming humble again, and it meant joy that arrives without your noticing it, and love and above all things — not a flash of brilliance or a dramatic strategic decision — endurance.

And that is the one trait that characterizes Redfin, endurance. This was a business run out of an apartment, by people working for free. We created a real service when it was fashionable to be all virtual. We have changed the game rather than play the game. And now we offer a service so valuable to so many people – and so much better than what they have come to expect — that I believe we will always endure.

The Only True Currency
It seems like the blogs — which are typically written by compulsive people late at night in their bedrooms, for reasons they can barely explain — are best equipped to understand what we are going through: setbacks and endurance, passion and hardship, being cool and not being cool, working for love and scrapping for money.

As Lester Bangs explains in “Almost Famous,” the “only true currency in this bankrupt world is what you share with someone else when you’re uncool.” This impulse is what drives blogs and startups alike. That bloggers have reached out to us now, when we have never felt less cool, is the truest currency there could be between us.

(Photocredit: Philipp Klinger on Flickr)

Unlike other startups, our industry’s recession started a year ago, when home prices first plunged.

Since then, we’ve fought like starving animals, and with some success: while industry-wide transaction volumes dropped 33%, we grew revenues by nearly 50%. Traffic grew more than 300%.

Even a month ago, we were raising 2009 revenue projections. All our markets, now including Chicago, contributed profits.

But the past few weeks have seen a major reversal. As the stock market wiped out prospective down-payments, tours and offers dropped 30%. Transactions that were done came undone. October will still be pretty good, then we’re headed for a big dip.

Hence the layoff. Layoffs are painful for any company, but especially for a startup and especially, I think, for Redfin.

The Layoff & Redfin’s Values
That’s because Redfin folks have always been believers. We earn our salaries from 9 to 5 but everyone leaving today gave a lot more than that.

The company has always had a sense of mission – to change the real estate game in consumers favor, yes, but also to be an open, humane place to work. It may seem now like we are a business that cares only about profits.

We aren’t. The whole company has been dedicated to the idea that money is how businesses work, but not why.

We want to make money, yes — and not just a little — and we absolutely have to avoid running out of it, but we haven’t given up on our larger ambitions: to build a new kind of company for employees and consumers alike.

To Those Leaving
Even under great financial pressure, we have treated departing colleagues as generously as we could: less than we would have liked, but as much as we could possibly afford.

To those who left, I can only say thank you for all that you’ve done for Redfin, and I’m sorry. It wasn’t your fault that you had to leave, and we will do what we can to help you take your next step. We’ll miss you, and we wish you the best of luck.

What Next for Redfin?
And now, we have to answer the question the rest of Redfin is asking: is this the beginning of the end? No, I don’t think so.

We are one of the few startups to offer:

1. an essential service
2. directly to paying clients
3. that yields multi-million dollar revenues.

A real business used to be unfashionable, but now it’s indispensable.

The Best Website
The sky may be falling in financial markets but our competitive dynamics haven’t changed. We can become the #1 real estate search site because our data is better than the media sites’ and we think our engineers are better than other brokers’. We’re willing to share more data with the consumer than either one of them.

An Essential Service
Our value proposition isn’t entertainment; it’s to make a fundamental service better and cheaper. We offer an alternative to traditional brokers that customers want, and not in some namby-pamby nice-to-have way. Our market, even if it shrinks to half its recent size, would be $30 billion per year.

A Large Market…
That means we have plenty of room to grow. But we won’t grow without taking big chunks of market-share, which also means we’ll have to keep tinkering with our offering so it appeals to the mass market. We’ve been planning a change to our service for months, which we’ll launch in November.

But We Have to Change
Change is painful, but necessary. Late in Charles Darwin’s life, when he was busy rejecting the application of his principles to social policy, he explained that “it is not the strongest of the species that survives, nor the most intelligent… it is the one that is the most adaptable to change.”

It’s tempting to write Redfin off now precisely because we are adapting to the market. At my last startup, we adapted quickly, laying people off early in the dot-com bust. Many wrote us off. But in 2002 we completed one of only two high-tech public offerings that year.

Redfin’s whole business will struggle and fight and may yet fail. But the only way it is possible for us to succeed – and, even today, I believe we will – is if we adapt.

But then Redfin’s Rob McGarty sent me a video of all our old friends, the congressmen from the Housing and Finance Subcommittee. These are the people who lined up to challenge Redfin’s testimony that self-regulation mostly fails to prevent blackballing, and that old MLS rules limit  access to the information consumers need to negotiate a better home price.

The new video shows that there were Democrats too who insisted that nothing was wrong with Fannie Mae or Freddie Mac, using the exact same rhetoric they used to insist that nothing was wrong with the real estate industry.

As before, Artur Davis and Maxine Waters led the charge, with Davis notable for an intelligence bordering on cruelty, and Waters for incandescent outrage and an occasional twinkle of self-mocking hooded behind her tinted glasses. Both are Democrats, heavily funded by real estate interests.

The video is the worst kind of partisan hack job, but what it reminded me of was a non-partisan truth: that both Democrats and Republicans are equal parts corruption and genuine conviction. When I came back from Congress, all the people who saw Democrats as good and Republicans as bad, or vice-versa, just seemed to be living in their own ideological world.

It’s impossible for a congressman to live in that world. A few months after our testimony, when the committee chairman was headed to prison on fraud charges, he left a late-night voice-mail thanking us for our testimony. By November, the whole committee staff was unemployed, their phones answered by strangers, because the Democrats had taken over Congress. It was hard at that moment to blame Davis and Waters for putting self-preservation first (though I do).

I thought about the two of them when reading Sunday about the retirement of Republican Congressman Tom Davis, a centrist who became convinced that both parties would rather embarrass one another than get anything done; judging by the number of party-line votes, Congress is more partisan now than it has been in a century.

And so are we. Any newspaper’s most e-mailed articles aren’t, like the Tom Davis swan song, about partisanship, they are partisanship, arguing that John McCain is half-senile or Barack Obama is un-American. Ellie Fields noted yesterday that opinion-and-rumor blogs have sprouted up just like the scandal-sheets popular 100 years ago, and Facebook makes matters worse by ensuring we never read anything that hasn’t been recommended by people like us.

But do we really believe that 49% or 51% of Americans have got it completely wrong? What has been best about America is that we aren’t subject to age-old grudges based on differences in religion, class or politics, or mythologized histories of victimization. We are still a new, open place. After years of partisan rancor, the two candidates for president are both promising to work with the other side. It is why Obama beat Clinton, and McCain beat Romney. And it’s why I’m hopeful about this election — even if my guy doesn’t win.