Broadstuff Blog

Apple has released a new social network around music, called Ping! This post is not to bury it, nor even to praise it, but to understand why they have launched Yet Another Social Netwok, especially into the crowded space of Music and the resounding cries of "where is Last.fm now" et al....

Giga Om says that Ping! is The Future of Social Commerce:

My belief has only been affirmed by growth in the amount of data available. With 12 million songs and 250,000 apps, the best way for Apple to enhance the iTunes store – aka its shopping experience — is through the use of social. Back in 2007, I argued that social networking was merely a feature that had to be embedded into applications to enhance their value. Apple has done a great job of that, but it’s also gone one step further, not only by adding a social networking layer to iTunes, but by meshing it with its commerce engine, the iTunes Store. And it’s made this experience available on both the desktop and its devices.

Apple received much of this social capability with the acquisition of Lala, an online music service, which as a standalone company used sharing of social objects to drive folks towards paid music downloads. Now Apple is only closing the loop by further sharing what users bought. I wouldn’t be least bit surprised if sales of music on the iTunes store rocket upwards, thanks to social discovery.
Our review of Lala strategy is over here by the way

From MySpace onwards "Social" music has failed to deliver the goods, for a whole host of reasons but primarily its not a big enough "Social Object" to capture enough attention for a full gown sustainable Social Net. Music is a subset of why and how we interact with people, not a reason (in fact, based on some of my friends' musical tastes its probably a reason to drop people....).

Now, GigaOm is sounding Ping's praises from the rafters, but whether they were paid to do it or not, I ain't buying it as the Future of Social Commerce. My hypothesis is that "Social" and "Commerce" are uneasy bedfellows at best.

But Apple are no fools, they will know all this. In fact, I would hypothesize that Apple does not need this to be a sustainable social network. All it needs is for a sufficiently large crew of volunteers to add sufficient folksonomic aggregation data around iTunes to ramp up its purchasing attractiveness some more.

No, the real play here is harnessing this to the iTunes store - this is all about selling more songs, not about being sociable. It's about getting a Folksonomy going - Folks do the heavy lifting (recommendations etc), Apple gets the economic benefit (aka the loot in extre spending). I await with eager anticipation the use of kickbacks to "influential" super-users.

Think Social Recommendation Engine, not Social Network.

And of course, getting some more behavioural data about YOU never hurts in the Social Network game...

There has been quite a bitter fight going on for the last 8 years or so (ever since Broadband reared its head) for the ownership of the Device That Lets (Comms and) Entertainment Into Your Home. Various Set Top Boxes (cable, satellite) held sway but over the 'noughties have had to duke it out with increasingly powerful multifunctional routers, IPTV boxes, 'net connected games machines, New New STB's like Boxee and of course MyPCTV (my PC controlling the TV set) which has held sway in Chez Broadstuff for some 4 years now, especially since BBC's iPlayer came into use.

Next up is the new Apple TV - or more accurately, the Apple Set Top Box That Controls the TV. It is definitely smaller and more stylish the Old Set Top Boxes (no doubt there will now be a rush to be thin, small and black among other STB makers).

But, while the chatterati all ooooh their way to their Applegasms, it is time for us more sanguine types to look at the overall value chain and ask "what has changed". The old Apple TV was a download and play (iTunes) model, the new one has streaming deals with TV stations and no memory at all. There is no new technology at play here, nothing in the value chain that doesn't exist already, no new "gee whiz" device - what is interesting is that Apple has done a complete shift of value chain model, from download to stream (because that is what most people like).

The really fascinating bit of this picture however, is if you go up one step in the system diagram. Apple now has a plethora of screens and devices that all interact with each other and with an end to end delivery value chain, from content via aggregation to user device. They don't own the distribution piece, but they have made deals with Moble Telcos that no one believed possible beforehand. I await similar with TV Co's (they have already pushed streaming prices down from $2.99 to $0.99). Appls pricing is now coming in at $99, a lot cheaper than most other STB's that don't come attached to large bundles of bloatvid.

And that is where it gets interesting. The big prize has always been to control the Home Multi-media Controller, and this Apple TV device - plus the apparent ubiquitous rollout of a new IOS4 operating system across all their devices - is another move in the Apple play to surround and then own that piece of turf.

By the way, I am no Aple fanboi, but I have been using the Apple Value Chain diagram in consulting to clients since iTunes came out, and what amazes me is that no other big player has replicated it as they have stormed moble music, mobile telephony/smartphones, the mobile web, tablest and starting now, Quad Play in the home.

Incidentally, I believe this is a more robust strategy than Google TV, as SAI notes:

Specifically, Google wants to turn your TV into a computer. Apple says people specifically don't want computers on their TV. Who will win?

Apple made it clear today that it's trying to complement the gadgets that are already in your living room and hooked up to your TV. Apple TV is an add-on -- it's basically there to provide a few extra streaming features, in addition to your cable box and videogame console.

This is not even a question by 2010, so I think Google strikes out at first base - we set up usage experiments with the MyPCTV concept in 2006/7, its clear that the TV is not a computer, but is part of a complex "4 screen" (TV, PC, Tablet, Mobile) end user world.

But more than that, the real thing Apple has going for it is that end to end value delivery system which Google hasn't replicated - not in Mobile (albeit they are putting a lot of effort in belatedly with Android), and not in Video.

Oh, and they own the end device - s. Never forget that...............

This does not of course mean they will win - but what they are positionng themselves to do is cream off a lot of early adopters, take massive market share early on with high margins products, make it expensive to roll them back.

The New York Times on Location based services:

Venture capitalists have poured $115 million into location start-ups since last year, according to the National Venture Capital Association, and companies like Starbucks and Gap have offered special deals to users of such services who visited their stores.

But for all the attention and money these apps and Web sites are getting, adoption has so far been largely confined to pockets of young, technically adept urbanites. Just 4 percent of Americans have tried location-based services, and 1 percent use them weekly, according to Forrester Research. Eighty percent of those who have tried them are men, and 70 percent are between 19 and 35.
The Fist Generation services (Loopt, Dopplr etc) have by and lerge failed to gain traction. So far what has worked with 2nd generation location based services is game based rewards (eg becoming mayor of a place) but these rewards are ultimately about bribery (eg becoming mayor gets you a free offer). Shopkick plays for the endgame by giving you money off coupons when you shop at a certain shop - it's the online equivalent of newspaper coupon clipouts.

But never fear, the CEO of Loopt claims that people born after 1981 (ie below 30) have lower privacy requirements, and thus a larger demographic will emerge year by year:

“The magic age is people born after 1981," said Sam Altman in a New York Times article. “That’s the cut-off for us where we see a big change in privacy settings and user acceptance.”
So, two contradictory views - the NYT arging that the market is limited, the CEO of Loopt arguing that the only way is up. I have another explanation for the people after 1981 being less privacy aware, and this is simply that they are young and have less to lose - as the NYT notes:

Stephanie Angelucci, who is 30 and lives in North Beach, Md., updates her MySpace page with photos of her babies, news about her health and testaments to her love of sailing. But she won’t use location apps.

“I don’t like broadcasting where we are or when my husband’s gone, just for safety reasons,” she said. And privacy concerns aside, she doesn’t see the need: “We go to playtime, the park and the grocery store. My life isn’t exciting enough to broadcast where I am and what I do.”
In other words, perhaps at (about) 30 people start to have responsibilities, and for various reasons become far less interested in displaying their location.

Interesting hypothesis from Elias Bizannes about an emerging seed Investment bubble - he did the maths on Y Combinator:

Y Combinator for example has funded 206 companies to date. At an average $10k in capital as well as $600 in travel costs (applicant companies can get up to $600 in reimbursement costs), they've put at least $2m in seed capital and assuming 10-20% of companies get accepted (an assumption by us), then reimbursed travel costs are between $450-900k. (Note: this is extremely conservative to the point of unrealistic, as companies receives $10k per person so the cost is actually closer to double or $4m in seed investment -- but we're doing this to prove a point.)

And what's the return? According to Christiansen, of the 206 companies invested in Y Combinator there has been $89,008,000 in exist value generated. Y Combinator claims the average stake in each company is 6-7%, so the group made $5,340,480 on a 6% return. But we think the companies that actually exited would have been able to negotiate a lower rate, as well as the fact Y Combinator would have got diluted by some of the companies that took additional funding. If we use 4%, then the return is $3,560, 320.

After five years, that's a gross profit of between anywhere between 500k (assuming 900k travel costs, and 4% return) to $3m (assuming 450k travel costs and 6% return). That means on a conservative back-of-envelope guess, the operational side of Y-Combinator gets about $600k a year, which is what a fund manager would make.
I am looking at this article for 2 reasons, viz:

- I haven't done the maths he has, but judging by the number of articles (and people I have met recently) that are popping up around the "seed investor" ecosystem it makes me think of "Incubators 2.0" (remember them, they bombed in the Dotcom boom), and it just smells like there is a bubble coming.

- Elias links to a most amazing spreadsheet by Jed Christiansen, logging the progress of all thebetter known seed funds, that will be fascinating to keep track of.
Also, there is considerable turmoil in VC-land as its economics change, and one can see that one strategy a lot of newer companies are using is to charge into the "funding gap" where Angels (and VCs) have traditionally feared to tread. And, as Fred Wilson recently pointed out, the issue is not te $Xm investment that is key for the funder, its the 2-3 times $Xm follow up investment that really allows them to take value - if the Seed Funds have kept it, that is.

The WSJ had a go at the dearth of women in Tech (by which I think they mean ICT, as in my experience there are loads of women chemists and biologists) and asked why:

Only about 11% of U.S. firms with venture-capital backing in 2009 had current or former female CEOs or female founders, according to data from Dow Jones VentureSource. The prestigious start-up incubator Y Combinator has had just 14 female founders among the 208 firms it has funded.

The “where-are-all-the-women” meme is a familiar one, and not confined to the technology world. But in start-up land, where the good idea is supposed to trump social status and everything else, the lack of women in positions of authority stands out.

Various Tech worthies stepped in, none so much as TechCrunch, who points to quite a well known problem for conference organisers:

Every damn time we have a conference we fret over how we can find women to fill speaking slots. We ask our friends and contacts for suggestions. We beg women to come and speak. Where do we end up? With about 10% of our speakers as women.

We won’t put women on stage just because they’re women – that’s not fair to the audience who’ve paid thousands of dollars each to be there. But we do spend an extraordinary amount of time finding those qualified women and asking them to speak.

And you know what? A lot of the time they say no. Because they are literally hounded to speak at every single tech event in the world because they are all trying so hard to find qualified women to speak at their conference.
Unfortunately this is one of those areas where a lot of very "sensitive" people live, so it is virtually impossible to have a rational, fact based conversation (just try and imply that the science continually implies that male and female brains are different for example. ).

Also, people tend to neglect the simple maths. I did a BSc and an MSc in Engineering, and men outnumbered women at least 10:1 in both degrees. It starts there, with the basic ratios skewed like that. It won't get better until that ratio changes.

Also - for what its worth, my own experience from managing, working with and being managed by women is that:

(i) By and large women in any role are (usually) more competent than men in the same role - having a woman boss is usually a terrific experience. But these women don't seem able to see and believe it.

(ii) Women (and I am generalising here) have a different way of learning something. They like to master X before moving on to Y. Men career wildly across the whole piece (hence the use of "career"?), covering more ground initially, but making far more errors in the process. They tend to end up in the same place over time but women are often not given that time, because.....

(iii) Women are less confident in putting themselves forward, even though they are usually at least as competent as the men. I found more than once that I had to work hard to persuade very capable women to do something, whereas far less competent men were clamouring to persuade me they could do it.

And here is the rub - when it comes to the wire, and it's your *ss on the line too, you give the task to someone who has enough confidence and enough competence.
So the question is threefold:

- How does one attract more women into the overall field to start with? Assuming men and women are entrepreneuarial to roughly the same degree, 10: 1 is not a good starting ratio!

- How does one have a rational conversation about the strengths and weaknesses of women, and what sort of opportunities play to their strong suit?

- Why are women more backward about coming forward, and how can that be overcome ?
Until these issues can be honestly addressed, there will always be a problem with women entrepreneurs in IT.

Update - Following a few Twitter exchanges, Shefaly Yogenrda has written a very thoughtful piece in response and JP Rangaswami takes an interesting viewpoint about exclusio.

Crank Handle 2.0 - did someone really grant a patent for this?

Paul Allen's company is suing all the websites with deep pockets because he has a patent on how a website is designed (see above) - NYT Digits

Microsoft co-founder Paul Allen’s Interval Licensing is suing 11 companies, including tech giants Apple and Google, alleging patent infringement. Below, a look at the patents in the lawsuit.

Browser for Use in Navigating a Body of Information, With Particular Application to Browsing Information Represented by Audiovisual Data
What It Is: Obviously, it’s a browser for use in navigating a body of information, with particular application for browsing information represented by audiovisual data. Duh.

Attention Manager for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device
What It Is: The patent describes a tool that gives people news, stock quotes, ads and other information, peripherally to their main activity. One version of the tool makes use of the “unused capacity” of the screen and specifically mentions screen savers and wallpaper as areas where information could be displayed. Another displays content even when the user is busy but does so in an unobtrusive way. There are two patents with the same title listed in the suit, and one is a continuation of the other application.

Alerting Users to Items of Current Interest
What It Is: The writers of this patent should be congratulated for coming up with a title that really does succinctly describe what the patent is for. Basically, it’s a system for sifting through information, evaluating what the user would want to see and then giving an alert when such information pops up.

This patent is the only one in the suit that all the companies are alleged to have violated.
The implications of these are fairly widespread, as these things really are going back to trying to patent crank handles (an abuse of the early days of patents in the UK, which forced early steam engine pioneers to use moon and sun gears). We've built examples of nearly of all these things over the last 5 years or so and knew nothing of Mr Allen's patents, coming up with them quite independently (along with many other people I'm sure) because - surprise, surprise - this is the only real way to do them.

I bet there are loads of people out there with circuit diagrams in powerpoint going back 15 years that look just like this, its just that - silly us - we never thought to patent anything so bloody obvious! In fact surely some of the pre internet systems would have prior art here, never mind the early push systems? As with Facebook trying to trademark English words that are 500 years old, sadly the US system all too often rewards deep pockets, not deep intelligence.

What is needed, apart from a radical shakeup of the US patenting system, is - in my opinion - in patents like these is for the next level down - how they do some of this to be patented, not this level.

Addendum - and that the plaintiffs actually be making something, not just amassing patents and handing out lawsuits

From TechCrunch:

Facebook is currently trying to register the word “Face” as a trademark. (It already owns the trademark on “Facebook”). Facebook took over the trademark application for “Face” from a company in the UK called CIS Internet Limited, which operated a site called Faceparty.com
It is also trying to patent the word "Like"

They are also going after companies with similar names like Placebook etc now, just because they have the pockets. (Whoever owns Phasebook.com, Faecebook.com and Fazebook.com - watch out!)

Maybe this is the way for Olde Media to make money again - use their cash to trademark all the popular words and then charge everybody for using them. If I recall correctly, to trademark something in the US is about $5k, so if I trademarked "and" and then charged every US media source $.001 a pop for using it, I reckon I'd be a gazillionaire by dinnertime.

Sadly, in the US they will probably get away with it, the whole US IP/Trademarking scene is (too often) essentially a "who pays, wins" game, irrespective of prior usage, legal rights or whatever.

WSJ on the Inconvenient Truth about location based services:

Will business continue to use the service? Several other pieces have to fall into place for the services to become more mainstream, said Sree Sreenivasan, a digital media professor at Columbia University. “You need customers who buy into the technology and are willing to use it, and you need businesses that are savvy enough to use it in a smart way to harness that,” he said.

...........

Can the marketplace support multiple location services? Many doubt it. “These smaller guys have to show the immediate value pretty fast so that there’s this notion, this momentum that keep people there,” Sreenivasan said
And think of Location generation 1.0 - anyone remember Loopt, Dodgeball and Dopplr?

Still, anyone who is still going when the Dotcom boom 2.0 starts is bound to cash in. Everyone sing after me - Ah, Ah, Ah, Ah Staying Alive

Grauniad remembering nothing and forgetting nothing from the DotCom boom methinks:

Facebook is now being valued at more than $33bn (£21.3bn) as investors try to secure a stake in the social networking site in anticipation of its flotation on the US stock market.

The latest data shows that shares in Facebook are changing hands for up to $76 each, more than double their value at the start of this year. While Facebook is still privately held, shareholders are able to sell the company's stock through "secondary market" trading.

By buying at these prices, some investors are calculating that Facebook is worth more than eBay or Dell, or nearly twice as much as Yahoo!.

Secondary market trading can artificially inflate the value of a private company, as the relative scarcity of its shares may encourage a buyer to overpay.
In essence the article is somewhat like a cigarette ad - warning you that this stuff can seriously damage your wealth, while nonetheless pumping up the value. But those of less tender years will have seen all this before in the DotCom boom. And here it comes again:

Forgetting Nothing - that very small amounts of illiquid shares trade at stupid prices above real value.

Remembering nothing - that very small amounts of illiquid shares trade at stupid prices above real value.

Another snippet readers may want to look at relating to this - some, ahem, "assertively entrepreneurial" companies see this as a marvellous opportunity to add value in a way that bankers call "arbitrage"

Here we go again, time to throw the pensions into the bonfire of the vanities - and the meedja is leading the charge?. But in The Old Days you got pre-flotation shares at pre-flotation prices, not at a secondary market price driven by scarcity and speculation. Another notch on the post for flat earth news it would seem perhaps? Those who cannot remember the past......

Last time round Netscape's IPO started it all off. On the strength of this, guess who we're tipping this time.

Proof that Craigslist is turning into Olde Media, with all the attendant issues - Boston Herald:

Attorney General Martha Coakley fired off a letter to Craiglist yesterday, calling on the Web site to yank its “adult services” section as state attorneys general nationwide also stepped up the pressure.

Coakey said the “harmful role” of the site’s sex ads contrasts “sharply” with its purported community-driven mission.

“The incongruity between your claimed mission and your insistence on promoting ‘adult services’ is startling,” Coakley wrote. “You cannot reasonably lay claim to a public service mission yet turn a blind eye to the link between adult services ads and illegal conduct and exploitation.”
A few short years ago, and it was local newspapers that were feeling that sort of heat.....

Worrying news from Ars Tech re Journal of Consumer Research* paper on making people hand over privacy data - we are not ratinal and and over more intimate details to (probably) riskier sites:

The researchers set up two survey web pages, one of which looked very official: it had the Carnegie Mellon University seal, and referred to a "Carnegie Mellon University Executive Council Survey on Ethical Behaviors." The other, well... Comic Sans featured heavily in the site design, and the survey page was entitled "How BAD Are U???" In a pre-test, far more people rated the official-looking page as a safer option for transmitting personal information.

When put to the test, however, the exact opposite occurred. Depending on the question, participants who used the How Bad ARE U version admitted to unethical or embarrassing activities at a rate of 1.74 to 1.98 times that of those who were given the professional version. In a separate survey, participants rated the same questions as less intrusive if they were presented in Comic Sans—even though there was no difference in the ratings of the activity's social desirability between the two survey populations. In short, an unprofessional-looking interface seemed to loosen participants up in the same manner that approaching a question indirectly did.
Also.....

[The researchers] collaborated with The New York Times to create a web survey entitled "Test your ethics," which asked participants to rate the ethicality of a set of actions. But, in the process, users were asked to indicate whether they had ever engaged in those activities, under the pretense that it might color their ratings.

Answers varied a great deal based on the perceived intrusiveness of the question, but one pattern became clear: it was possible to get more people to answer that they had engaged in a given behavior if their own behavior was approached indirectly. If participants were asked about their participation as part of the rating process, they were about 1.5 times more likely to admit an ethical misstep than if they were simply asked point blank as a separate question. This suggested that a casual approach, which puts a participant at ease, is more likely to get them to cough up personal details.
Add to that the way gaming reward functionality is increasingly used (Gaming rewarsd have been shown to be effective at getting people to divulge stuff as they rewad them for it) and you have a perfect culture for privacy raiding.

*There is no link to the paper unfortunately, so I haven't actually read it. Ars Technica is one of he more sanguine blogs however.

Both Forrester and Ars Tech try and explain why the Intel/McAfee deal is being done:

Forrester:

1. This is not just about “antimalware-on-a-chip-for-smartphones”. Another side-effect of people not understanding the deal is that they oversimplify it by reducing it to this one aspect...... this is about a wide range of embedded security features (not just AV, but data security and system integrity) on a wide range of devices.

2. Intel needs McAfee to thrive as a software business in its own right. In some areas, embedded security will be fully contained In the chip/system: such as Intel’s XD bit technology.

3. We need to look beyond Wind River as a model for how McAfee/Intel should evolve..... The wisdom of the Intel-McAfee deal and long-term success of McAfee will hinge both on future acquisitions and support of its growth as a stand-alone security business and also on Intel’s ability to combine McAfee technologies and its own in new ways.

4. Anti-trust concerns are avoidable or surmountable.

5. The price is quite reasonable. McAfee..... is at a 3.4x multiple. Compare that to other security acquisitions .... such as Websense's 2007 acquisition of Surf Control (3.8x), Check Point's 2007 acquisition of Pointsec (8.8x), or IBM's 2006 acquisition of ISS (3.2x).

Ars Tech:

Security is Job One

At the most recent Intel R&D day, Intel CTO Justin Rattner did a Q&A session with the press in which he was asked something to the effect of, "What do you spend most of your time working on these days?" Rattner didn't hesitate in answering "security."

Moving up the stack, and then off the stack

Intel's years of experience with vPro and its predecessors have no doubt confirmed to the company that providing silicon-level support for advanced security and remote management technologies is a waste of time if no systems integrator or popular software vendor implements them in some kind of consumer- or business-facing product or service.

Why they did it

In explaining its purchase of McAfee, Intel has clearly indicated that the real impact of the purchase won't really be felt in the computer market until later in the coming decade—this is a long-term, strategic buy. This statement fits with the idea that acquiring McAfee is Intel's way of bringing vPro and subsequent security efforts directly to businesses and consumers by just buying out the middle-man. The McAfee purchase gives Intel an instant foothold on countless PCs, a foothold that Intel itself would have to spend years building (if it were even possible).

I'd be happier if (i) they agreed with each other and (ii) that word "strategic" didn't keep popping up (I ciulled a lot of the text in both articles, so you can't see it but you can get the sense even from what I pasted up).

In other words I still don't think anyone really knows what is going on.

Lots of wailing this weekend that Leo Laporte's Buzz stopped buzzing and no-one noticed, and Paul Carr (he who hath renounced all Social Media save Twitter) going off about the fact that the less effort you put into what you write, the less impact it will have (also known as Hen3y's Law):

And then along came micro-blogging – and, with a finite amount of time and effort available, the blog generation turned into the Twitter (or Facebook) generation. A million blogs withered and died as their authors stopped taking the time to process their thoughts and switched instead to simply copying and pasting them into the world, 140 meaningless characters at a time. The result: a whole lot of sound and mundanity, signifying nothing.
Louis Gray, as is his wont, reminds us of Friendfeed and other Ghost Town socnets through which digital tumbleweeds roll.

To these wothies I would like to point out that one of the Gurus of Web 0.0 had it taped a long time ago - over to you, T S Eliot:

We are the hollow men
We are the stuffed men
Leaning together
Headpiece filled with straw. Alas!
Our dried voices, when
We whisper together
Are quiet and meaningless
As wind in dry grass
Or rats’ feet over broken glass
In our dry cellar

Shape without form, shade without colour,
Paralysed force, gesture without motion;

Those who have crossed
With direct eyes, to death’s other Kingdom
Remember us—if at all—not as lost
Violent souls, but only
As the hollow men
The stuffed men.
By the way, Laporte, Carr and Gray now all say that of course these Microservices were just hollow voices, quiet and meaningless as wind in dry grass - and that Blogs have always been The Right Way forward, and that this was always going to be The Endgame. Nothing like rushing to the front of a crowd already headed in a direction and yelling "follow me" eh chaps*

But, watch what they do, not what they say - when they all bail off Twitter I'll believe the New Mantra. In reality, the truth is these services all support different roles in the coommunications ecosystem, along with email, video, telephones (fixed and mobile) etc etc. There will be a need for a short message service, an IM service, an aggregation service, etc etc. What is unclear is which will win, its far too early in the development of these things. What is also clear is that (most) people like things to interwork without too much hassle, intrusion and clutter.

Which, of course, is why Buzz and Friendfeed ended. With whimpers............

*PS - Maybe my memory is fuzzy, but I do recall Carr and Gray being promoters of the shiny new microblogging thing a few years back. Anyone?

The Maths of Fooling People using Pareto's 80/20 split

Umair Haque has a theisis that if companies tried to treat their customers correctly, then that would be better than trying to fool and screw them. He notes:

Despite what many boardrooms believe, counting on your customers' ignorance isn't a great business model. It's more like russian roulette.
His basic hypothesis is that today people are both more savvy and yearn for a more genuine relationship with suppliers, and that there is far more data around so any attempt to behave un-ethically will eventually be strategic suicide. You can see more of his writings here at HBR.

I would love to agree with him, but sadly I can't - I have encapsulated my argument in the chart above, which is a high level result of my lifetime's empirical research into the behavioural economics of consumers, which says that by and large 80% of us are sheep 80% of the time.

Thus, as you can see, roughly 2/3rds of the time all consumer sheep can be fleeced all the time. In other words you can build a very sound busness by fooling people, and the (probably more costly) approach of Being Good only impacts about 20% of the market (the right hand side)

Let us hope that Umair is right, and that this number decreases due to all the information washing around, but my (again, empirical) observation is that the dis-information washing around online is growing at a far faster rate - just look at the typical Page 1 results you get on Google when you search for any consumer good these days. And there is a good resaon for that - a lot more money and time is going into dis-information these days, and the web is a cheap place for it.

I think there was a Golden Age when early bloggers etc, who were mostly the genuine, ethical sort, were the only ones really using these new media mediums, so there was a flowering of honesty. But now a quick look at any aggregator like Techmeme or on Twitter will show that PR Spin is inexorably increasing to Olde Media levels.`Greed, of course, is always with us along with death and taxes.

Sadly, that is why we have had to invent regulation and legislation in the past..............

You knew it had to come - RWW:

It won't be long before we start seeing ads in e-books, a business professor and a former book editor wrote in a Wall Street Journal editorial today.

Growing e-book sales and the opportunity for targeted advertising mean space in e-books is ripe for corporate messages. Add rapidly falling e-reader prices and the planned Google e-book store and the pressure is on for publishers and retailers to increase revenue from digital books.
Apparently the only reason there have never been Ads in books before is that the books may not sell, but now all will be wonderful:

In short, physical books can't compete with other print media for advertisers. Digital books can. With an integrated system, an advertiser or publisher can place ads across multiple titles to generate a sufficient volume. Timeliness is also possible, since digital readers require users to log in to a central system periodically.

Well, I'd hate it - but given that many people seeem perfectly happy to pay the same price for eBooks as paper books (despite no production costs) and pay £300+ for a (hard-to-) reader to read them, I suspect they wouldn't care if a few quid were knocked off for the right to put Ads all over the book.

Sometimes I wonder about the wisdom of the crowds........

Update - Terence Eden responds that we've had advertising in "real" books for ages. Check the back of any Penguin paperback. Good point, I should make it clear I am talking about the sort of intrusiveness we see on the web or TV (which is in my view what advertisers will be shooting for) rather than a few flyers for similar books/same author at the back of an eBook.

Another update - I actually suspect the ecomomics will work in such a way that magazines read on eBooks will carry Ads (as they do in Real Media) but the combination of low hit rates and a poor user experience (wrong time, wrong place) will limit Ad acceptance for books.

Intel bought McAfee fo 60% over share price today - GigaOm:

Intel CEO Paul Otellini said in a statement: “In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.” The price Intel agreed to pay for McAfee — which had revenue of $2 billion in 2009 and has gross profit margins in the 80-percent range — is a 60-percent premium to its trading price prior to the announcement.
Quite - its all about The Cloud - but McAfee? And a 60% premium - $7.7bn for the thing, in cash - at exactly the time when many newer, cheaper (and dare I say better) security software companies are popping out the woodwork? Elsewhere its been justified as a deal "about mobile" but I don't get that either for the same reason as above.

I rather liked a comment on TechCrunch:

It’s simple really. McAfee’s software slows down your computer enough that you need a faster Intel CPU. Intel now has direct influence over the main driving factor behind people purchasing new PCs…

That is about the only way this makes any sort of sense to me at the moment. To be watched.....

Declaration of Intent?

Today Facebook announced their much pre-heralded Location service, Places. The interesting thing is how they are treating competitors such as FourSquare and Gowalla - are they partnering with them or planning to eat them? TechCrunch:

Representatives from both Gowalla and Foursquare were invited to take the stage at the event to talk about how they plan to leverage Facebook’s new Places API. Both will allow you to check-in and publish the data to your Facebook feed. Your badges and pins from each of those apps will transfer over as well. As we expected, Facebook is playing nice with these guys — and they’re clearly excited to play nicely back given Facebook’s 500 million users.

Yelp and Booyah (maker of MyTown) are also launch partners for this new API. Booyah is actually making a new app called InCrowd build on the Places API. WIth Yelp, you’ll be able to transfer your check-ins both to and from Facebook as well.
Its easy to see why Facebook wants this, and the probable outcome is predictable (recall the wailing when Twitter started to eat its own ecosystem?).

Foursquare and Gowalla are cleft on the horns of a dilemma - collaborate and (maybe) get access to 500m users, but you are then on your large competitor's platfotm and at their mercy. Defect and you will probably struggle to recruit Facebook customers, unless of course users want independent alternatives (I would, as I'd prefer to keep my data split up among the dataminers, as a first line of defence). But the facebook logo - a pin through the heart of a 4 in a square - may say it all....

But they have clearly taken the Remora option - stick around to get scraps from the big fish, hope you can clamp on, and avoid being eaten.

Watch the body language of the Foursquare and Gowalla people at the announcement (its on the techCrunch link above), they looked somewhat uncomfortable as "guests" at the feast. There is no such thing as a free lunch, unless its you......

Yelp and Booyah are in a different position as they are not direct competitors.....yet.

Chris Anderson, Wired Magazine's editor, dreams up a new schtick with which to beat us every few years. First the Long Tail, then FreeConomics, the pattern is the same - lots of sturm und drang on the Wired platform, mo' PR off it, and then a book is out before the people who know it doesn't quite hang together can get a blog post in edgeways.

Anyway, with the Long Tail disproved and FreeConomics debunked and diluted to Freemium (or Paymiium, in the case of the book), there is a need for a new schtick to beat the Wired horse with. This is (possibly) that - "The Web is Dead - Long Live the Internet".. (To be fair, I understand that in the printed article* John Battelle and Tim O'Reilly give their ripostes).

[Update - the riposte is now online - styled as a Debate though i think Linkbate is more appropriate ]


Anway, the gist of the argument is that:

You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.

You’ve spent the day on the Internet — but not on the Web. And you are not alone.

Now this is really going to shock the young 'uns, but this is not so much a Brave New Thing as The Way Its Always Been:

(i) There was a time the internet existed before the Web

(ii) We have been using the Internet without the Web all this time - think email, VoIP, Adobe Air, online gameworlds etc etc.

(iii) This will continue, and in fact its not impossible to imagine that the Web is a temporary phase.
In other words the correct response to this thesis is "We know. And"?

(OK, the 'And' is that some very succesful Today Web companies will wither and some new Tomorrow App companies will prosper. But that was ever thus)

Now the reason for all this excitement is Video and Mobile Apps

Video is exciting not because it Loses a Lot of Money (or more accurately uses a lot of high quality bandwidth that no one right now pays for) but because it puts a lot of traffic on the web, and that must be a sign that all is well, right?

Mobile Apps (or Programs That Run On Your Own Device, as Apps used to be called in old money) are going to replace the Web in the way we access functionality (Better tell Google - after all, Microsoft Office is just an App, albeit quite a big one). Yes, gentle reader, the digerati of today have effectively re-branded the Olde Client/Server tradeoff debate to now be the Apps/Cloud debate.

The reason for Apps is not because Smartphones are smart, but because they are still dumb. If they were smarter, with bigger screens, and better UI like Laptops are we would use the Web much more on them. Its just that smartphones are smarter than dumbphones which could only use very small Programs That Run On Your Own Device, which are called Widgets. And the reason everyone is so excited about Smartphone Apps is because they think they will make tons of money from them. Like they thought with Widgets. Except they won't. Like they didn't with Widgets.

Now to be fair, Wired have worked out that all these new App environments are not quite as open as the Web (part of the reason they will not do as well as expected, but more on that later) but that too is hardly New news. Still, it tells you something about the Wired (Print) Edition's reader base. Not quite the Digerati as they once were, methinks?

Anyway, it will take about 12 months for the market to realise there is very little money in Smartphone Apps, so I calculate a Book by next spring should get in nicely before the Apps hype cycle rollercoasters on down

Update - as Gawker delights in pointing out, this whole thing is even sillier than at first glance:

- Irony 1: Wired released its cover story package first to the Web, on Wired.com. You won't find it in Wired's iPad edition, and it's not out in print yet. The death of the web might be the "inevitable course of capitalism," but it apparently pays better to deliver that news via a dying medium.

- Irony 2: Revenue is up at Wired's profitable website this year, despite a fairly severe reduction in staff last year. Yet Anderson, who has no control over Wired.com, writes that most Web publishers haven't been able to "reverse the hollowing-out trend of analog dollars turning into digital pennies... and by the looks of it there's no light at the end of that tunnel ." That tunnel being the one Wired, itself, is not in, apparently.

- Irony 3: At the same time, circulation — and thus revenue, almost surely — are down for Wired's iPad edition, which was approaching (and possibly even surpassing) 100,000 copies for the debut issue but has since fallen off — to less than a fourth of what it was, one source claims. However large or small the decline, it could certainly be corrected; dropping off from a big bang launch is common enough in print and online media alike.

But Wired's iPad tumble does raise the possibility that Anderson is speaking as much from his hopes as from his analysis when he writes, "We are choosing a new form of Quality of Service: custom applications that just work." The iPad team belongs to Anderson, after all (unlike, again, the web team).

- Irony 4: Isn't this the guy who wrote a book called Free and noted, "You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free versus pay online are ending?" Eh, maybe not so much; Anderson today writes, "Much as we love freedom and choice, we also love things that just work, reliably and seamlessly. And if we have to pay for what we love, well, that increasingly seems OK."
Even funnier, apparently Wired predicted the End Of the Browser in 1997 as well

There is Linkbait, and there is plain looking dumb...........

*I haven't bought the Wired print edition for years....

Must say I am enjoying the Pronouncements of Chairman Schmidt, we have been following them ever since the Repeal of Privacy:

"if you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place"

......last year. This is of course the same Google that refused to speak to CNET journalists for months after they published stuff about Schmidt - obtained from Google searches. And then there was the contretemps about a certain lady.

More recently there were the glorious pronouncements on serendipity being calculatable, and various other things.

But now, we have two more - firstly, the removal of free will with a free (albeit Ad supported) algorithm:

"We're still happy to be in search, believe me," Schmidt told the Journal. "But one idea is that more and more searches are done on your behalf without you needing to type....I actually think most people don't want Google to answer their questions. They want Google to tell them what they should be doing next."

Secondly, the best way to avoid the Googleworld of zero privacy is:

that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends' social media sites.
I haven't changed my name yet - but I have changed my router ID and WiFi net name to confuse those snooping little StreetSneaks. Next step is camo-netting and WW2 false building to confuse Google Earth....

Personally I favour legislation telling Google to cull the data after a while instead, as the EU proposes. But my favourite is:

"I don't believe society understands what happens when everything is available, knowable and recorded by everyone all the time," he says
They do actually - its called the Singularity - its when all that stuff happens, and you plug your brain into the matrix, and it knows serendipitously what you want next.

But what the Singularity lot don't realise, as they march off to their next Great Mind Meld, is that Google is planning on running it. Well, what other logical conclusion can you take from these pearls?

You heard it here first.......

Update - never mind Google, watch your Soap Powder (hat tip @socialtechno)

Piece in TechCrunch on the shifts in the startup funding markets changin from the old pecking order:

Today things are much more complicated. More funds are arguably in the top tier – guys like Accel, Andreessen and Greylock have risen. But more disruptive are the angel investors. It used to be that angels worked with venture funds, doing the very early rounds and then handing things off when a company did well.

But the last several years have seen the rise of the cheap startup. Internet startups can use open source software and new scripting languages to ship products fast and cheap. Often there’s no need to go past an angel round of funding until it’s time to decide between selling and doing a big marketing push. Either way the VCs lose, because even if they get in at that late stage the valuations are much higher and returns plummet.

An entire generation of entrepreneurs have stopped thinking about hitting up those top tier VCs as their first step in the startup process. Many now simply begin with Y Combinator, or take a small angel round. These angels are fast and nimble and they are hanging out with the entrepreneurs at events, incubators, etc. They are in the fray, while many of the old VCs remain above it all, waiting for the entrepreneurs to come to them, hat in hand.

In my view the main issue is that market re-structuring is all very interesting, but the big thing underlying this is that what is happening is that money is flooding in again, and that will lead to asset bubbles - as with the pre Crunch Private Equity markets, too much cash chasing to few opportunities pushes up the prices. To exacerbate this, it does cost less to get companies up and running (but probably more to make a market in a world full of many small companies0so the funding stages have to be changed as well.

But the one thing that caught my eye was a shift in the payback theory of the startup market - it would appear that the market is shifting to many smaller companies being sold for far lower prices, and this is impacting the traditional "1 in 10 is a home run" model:

Some venture capitalists think that this “think small” attitude is driving entrepreneurs who may otherwise build the next Google or Microsoft to create something much less interesting instead, and then everyone loses. No IPO. No 20,000 tech jobs. No new buyer out there for the startups that don’t quite make it.

And without those occasional but huge exits, the entire ecosystem can fail. Venture firms need big returns to raise new funds. Without venture money a lot of the innovation in Silicon Valley would end.
I have always felt that the "home run" model's returns fitted better with the big VC fund business model rather than the individual entrepreneur. For most entrepreneurs I would argue that - as a game theory payoff - a reasonable probability of a few million dollars exit for a few years work is a more enticing prospect than an exceedingly small probability of a vey large exit.

In other words, would you prefer to count your chickens as they hatch or wait for a very rare Black Swan to show up?

I suspect this shift in the rules of the game is because, as money flows in, the power is going to the rarer entity - the good startup.

(Update - and another TechCrunch article points out that you don't need home runs to create the new jobs - large numbers of small successes are doing most of the heavy lifting)

Incidentally, having run and/or turned around a number of Tech startups, I would point to Fred Destin's post here as the key to that succesful exit:

In startups the only real sin is running out of cash, and the cardinal sin is running out of cash UNEXPECTEDLY.
Exactly - never mind the team, market or product - they are irrelevant if the company cannot manage its cash.