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October 31 2011

Anthropology extracts the true nature of tech

Genevieve Bell, director of interaction and experience research at Intel Corporation, says when she approaches technology she is "less interested in thinking about the piece of technology itself and more interested in the kind of work that technology is trying to do and the larger context in which it finds itself."

In the following interview, Bell discusses her experience as a "Thinker in Residence" and how anthropology concepts can be used to make tech more consumer centric.

You were an Adelaide "Thinker in Residence" for South Australia. What does that involve?

Genevieve_BellGenevieve Bell: The South Australian government over the last seven years has invested in a program to bring preeminent thinkers from around the world to tackle the problems of the future of the state. I was the first Australian, which was very odd. But over the years, they've brought people to Australia to think about things like water security, supply chain management, juvenile justice, homelessness, urban planning, public transportation systems, and early childhood development. The government has implemented recommendations from those thinkers that have ranged from changing how they do supply chain management to introducing childhood development learning centers in schools.

My task was to help think about what was going to be the role of information and communication and entertainment technologies in the future of South Australia and, indeed, Australia more broadly. It ended up happening that this project took place against the backdrop of a much larger national debate about the role of broadband. The project had an interesting focus on looking at what the barriers to adoption and the drivers to high-speed broadband were going to be in South Australia.

In order to come up with some sort of solid recommendations in that space, I chose to do something quite unusual for this project and in this program — I went and did fieldwork. I spent about two months traveling in South Australia. I think I logged about 12,500 kilometers by the time I was done — I went through two state fleet vehicles; they'll never forgive me for that. I talked to people in about 45 different communities that ran the gamut from remote aboriginal communities to urban centers. It gave me a sense of what made South Australians tick, and it helped me find out what they care about. I also did a piece of ethnographic research with the government itself to work out how the government functions and how it thinks about things.

For me, it was really about trying to think through this question: If you were in government, what would you do — what would you need to do — to make the state a good place for broadband to happen? It wasn't just about getting households connected. It was about capacity building, both in the citizenry and in the state. I asked people to participate in our website with me — send me pictures of the technological stuff in their lives, tell me about it and I would respond to that. We also did a massive postcard drive — I knew I couldn't ask everyone to get online and talk to me, so we distributed free postcards and asked people to mail them back. We generated a whole lot of postcards as a result of that.

The report is available online for download from the SA Stories site and from the Thinker's website. The government is in the process of inducting — and has already inducted — some of the recommendations and it's debating the others. It was actually a really inspiring, exciting process. I was incredibly fortunate that one of the things that Intel lets you do after working there for seven years is to take a sabbatical. Most people, sensibly I would say in retrospect, choose to spend that as down time. I seem pathologically incapable of having downtime, so I decided I'd go to work for someone else in that period. Intel actually was very kind about letting me go and do that and giving me the space to have a different moment of intellectual work. And I did, in fact, come back to Intel very differently energized as a result of it.

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What parts of your anthropology background do you find particularly applicable to technology issues and solutions?

Genevieve Bell: As an anthropologist, one of the things that's really useful is that we're trained to think at a systems level. We're trained to think about things holistically. When it comes to me approaching technology, that means I'm less interested in thinking about the piece of technology itself and more interested in the kind of work that technology is trying to do and the larger context in which it finds itself. And for me, it's always about being able to ask this larger set of questions.

I'm really interested in getting at the critical distinction between what people say they're doing and what they're actually doing. A lot of technology development is really focused on what we think people should do or what we imagine they're doing or what they tell us they're doing. The reality is often something completely different.

What techniques do you use to get at that reality?

Genevieve Bell: The first principle is fieldwork. I'm a big believer in actually going to the places where technology is being produced and consumed, and spending time with people in their lives to get a sense of what they care about. For me, that means you have to be able to ask bigger questions about what people value. I'm really interested in seeing what life is actually like, not what we hope it looks like.

How has your team made Intel a more consumer-centric company?

Genevieve Bell: Out of sheer force of will and being stubborn. That's never a good answer, but it is, in fact, one of the answers. I think we've done it partly out of persistence and out of a vision that said we knew that what people wanted could change the way Intel made things.

Before my current job, which I've been in for about a year, I spent five years working in our consumer electronics business. Part of my role there was to transform what had been a quite traditional Intel business into something that was much more consumer centric.

Part of how we drove that kind of different thinking was literally going and spending time with people all over the world in their homes.

We made different decisions about what we built and what we didn't based on the feedback we were getting from consumers, not just customers but consumers. I'm really proud of that work because we actually transformed the way the company — and that piece of the company — thought about itself and what it was doing. When anthropology is done right in business, it can change the way a company thinks about itself and what it values. That's the stuff that endures.

Genevieve Bell discussed the intersection of technology, data, and real-world uses at Web 2.0 Summit 2011. Her full presentation is available in the following video:

This interview was edited and condensed.


September 27 2011

The Web 2 Summit Points of Control map has a new data layer

This post was originally published on John Battelle's Searchblog ("The Web 2 Summit Data Layer Is Live").

Earlier this year I posted about an idea we've come up with to create a new "data layer" on top of last year's popular "Points of Control" map. We created this map to visualize the theme of the Web 2 Summit conference, which is coming up again in a few weeks.

As you can see from the map, we've visualized eight key Internet players as cities, with each of the buildings representing storehouses of key data types. Cities are scaled by the size and engagement of their audiences, with data driven by our partner Nielsen and also company-reported sources. A detailed legend is here.

The map is still a work in progress, and there's plenty of opportunity for you to comment on it. And there's more coming — soon anyone will be able to create their own city, based on their own company, or one they think should join the map. Check it out, and stay tuned for more news.

Web 2.0 Summit, being held October 17-19 in San Francisco, will examine "The Data Frame" — focusing on the impact of data in today's networked economy.

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June 07 2011

How can we visualize the big players in the Web 2.0 data layer?

This post was originally published on John Battelle's Searchblog ("Web 2 Map: The Data Layer - Visualizing the Big Players in the Internet Economy").

As I wrote last month, I'm working with a team of folks to redesign the Web 2 Points of Control map along the lines of this year's theme: "The Data Frame." In the past few weeks I've been talking to scores of interesting people, including CEOs of data-driven start ups (TrialPay and Corda, for example), academics in the public data space, policy folks, and VCs. Along the way I've solidified my thinking about how best to visualize the "data layer" we'll be adding to the map, and I wanted to bounce it off all of you. So here, in my best narrative voice, is what I'm thinking.

First, of course, some data.

Data layer chart

On the left hand side are eight major players in the Internet Economy, along with two categories of players that are critical, but which I've lumped together — payment players such as Visa, Amex, and Mastercard, and carriers or ISP players such as Comcast, AT&T, and Verizon.

I've given each company my own "finger in the air" score for seven major data categories, which are shown across the top (I don't claim these are correct, rather, clay on the wheel for an ongoing dialog). The first six scores are in essence percentages, answering the question "What percentage of this company's holdings are in this type of data?" The seventh, which I've called Wildcard data, is a 1-10 ranking of the potency of that company's "wildcard" data that it's not currently leveraging, but might in the future. I'll get to more detail on each data category later.

Toward the far right, I've noted each company's overall global uniques (from Doubleclick, for now, save the carriers and payment guys — I've proxied their size with the reach of Google). There is also an "engagement" score (again, more on that soon). The final score is a very rough tabulation computing engagement over uniques against the sum of the data scores. There are pivots to be built from this data around each of the scores for various types of data, but I'll leave that for later. This is meant to be a relatively simple introduction to my rough thinking about the data layer. Hopefully, it'll spark some input from you.

Now, before you rip it apart, which I fully invite (especially those of you who are data quants, because I am clearly not, and I am likely mixing some apples and watermelons here), allow me to continue to narrate what I'm trying to visualize.

As you know, the map is a metaphor, showing key territories as "points of control." The companies I've highlighted in the chart all have "home territories" where they dominate a sector — Google in search, Facebook in social, Amazon and eBay in commerce, etc. What I plan to do is create a layer based on the data in the chart that, when activated, shows those companies' relative size and strength.

But how?

Web 2.0 Summit, being held October 17-19 in San Francisco, will examine "The Data Frame" — focusing on the impact of data in today's networked economy.

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Well, the best idea we've come up with so far is to show each as a small city of sorts, where the relative height of the buildings is determined by a corresponding data point. So Twitter, for example, will have a tall building in the middle of its city, representing "Interest data." Google's tallest building will be search. Facebook's will be social, and so on. And of course the cities can't be all on the same scale, hence our use of total global uniques, and total engagement. Yahoo may be nearly as big as Facebook, but it doesn't have nearly the engagement per user. So its city will be smaller, relatively, than Facebook's.

Building previewWhat is interesting about this approach is that each company's "cityscape" emerges as distinct. Microsoft's is wide but not tall — they have a lot of data in a number of areas. It will probably end up looking like a suburban office park — funnily enough, that's what Microsoft really looks like, for the most part. Amazon and eBay will have high towers of payment data, with a smattering of shorter buildings. And so on. I don't have a good visualization of this yet, but the designers I'm working with at Blend have sketched out a very rough early version just so you can get the idea (see image to the right). The structures will be more whimsical, and of course be keyed with color. But I think you get the idea.

I'm even thinking of adding other features, like "openness" — i.e., can you access, gain copies of, share, and mash up the data controlled by each company? If so, the city won't be walled. Apple, on the other hand, may well end up a walled city, with a moat, on top of a hill.

Now, a bit more detail on the data categories. You all gave me a lot of really good input on my earlier post, where I posited these original categories. But I've kept them the same, save the addition of the wildcard data. Why? Because I think each can be interpreted as larger buckets containing a lot of other data. I'll go through each briefly in turn:

Purchase Data: This is information about who buys what, in essence. But it's also who almost buys what (abandoned carts), when they buy, in what context, and so on.

Search Data: The original database of intentions — query data, path from query data, "intent" data, and tons more search signals.

Social Data: Social graph, but also identity data. Not to mention how people interact inside their graphs, etc.

Interest Data: This is data that describes what is generally called "the interest graph" — declarations of what people are interested in. It's related to content, but it's not just content consumption. It includes active production of interest datapoints, like tweets, status updates, checkins, etc.

Location Data: This is data about where people are, to be sure, but also data about how often we are there, and other correlated data — i.e., what apps we use in location context, who else is there and when, etc.

Content Data: Content is still a king in our world, and knowing patterns of content consumption is a powerful signal. This is data about who reads/watches/consumes what, when, and in what patterns.

Wildcard Data: This is data that is uncategorized, but could have huge implications. For example, Microsoft knows how people interact with their applications and OS. Microsoft and Google have a ton of language data (phonemes, etc.). Carriers see just about everything that passes across their servers, though their ability to use it might be regulated. Google, Yahoo and Microsoft have tons of email interaction data. And so on ...

Now, of course all these data categories get more powerful as they are leveraged one against the other, and of course, I've left tons of really big data players off the map entirely (small startups like Tynt, Quora, or Sharethis have massive amounts of data, as do very large companies like Nielsen, Quantcast, etc.). But you have to make choices to make something like this work.

So, that's where we are with the Web 2 Summit map data layer. Naturally, once the data layer is live, it will be driven by a database, so we can tweak the size and scope of the cities and buildings based on the collective intelligence of the map users' feedback.

What do you think? What's your input? We'll be building this over the next two months, and I'd love your feedback before we get too far down the line. Thanks!


May 11 2011

What are the key data categories companies want to control?

This post was originally published on John Battelle's Searchblog ("Building A New Map And I Need Your Help: What Are The Key Categories of Data In Today's Network Economy?").

Web 2 Summit MapMany of you probably remember the "Points of Control" Web 2 Summit Map from last year. It was very well received. Hundreds of thousands of folks came to check it out, and the average engagement time was north of six minutes per visitor. It was a really fun way to make the conference theme come to life, and given the work that went into its creation, we thought it'd be a shame to retire it simply because Web 2 has moved on to a new theme:

For 2011, our theme is "The Data Frame" — focusing on the impact of data in today's networked economy. We live in a world clothed in data, and as we interact with it, we create more — data is not only the web’s core resource, it is at once both renewable and boundless.

Consumers now create and consume extraordinary amounts of data. Hundreds of millions of mobile phones weave infinite tapestries of data, in real time. Each purchase, search, status update, and check-in layers our world with more of it. How our industries respond to this opportunity will define not only success and failure in the networked economy, but also the future texture of our culture. And as we're already seeing, these interactions raise complicated questions of consumer privacy, corporate trust, and our governments’ approach to balancing the two.

How, I wondered, might we update the Points of Control map such that it can express this theme? Well, first of all, it's clear the game is still afoot between the major players. Some boundaries may have moved, and progress has been made (Bing has gained search share, Facebook and Google have moved into social commerce, etc.), but the map in essence is intact as a thought piece.

Web 2.0 Summit, being held October 17-19 in San Francisco, will examine "The Data Frame" — focusing on the impact of data in today's networked economy.

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Then it struck me — each of the major players, and most of the upstarts, have as a core asset in their arsenals data, often many types of it. In addition, most of them covet data that they've either not got access to, or are in the process of building out (think Google in social, for example, or in deals, which to my mind is a major play for local as well as purchase data.) Why not apply the "Data Frame" to the map itself, a lens of sorts that when overlaid upon the topography, shows the data assets and aspirations of each player?

So here's where you come in. If we're going to add a layer of data to each player on the map, the question becomes — what kind of data? And how should we visualize it? My initial thoughts on types of data hew somewhat to my post on the Database of Intentions, so that would include:

  • Purchase Data (including credit card info)
  • Search Data (query, path taken, history)
  • Social Graph Data (identity, friend data)
  • Interest Data (likes, tweets, recommendations, links)
  • Location Data (ambient as well as declared/checked in)
  • Content Data (journey through content, likes, engagement, "behavioral")

Those are some of the big buckets. Clearly, we can debate if, for example, identity should be its own category, separate from social, etc, and that's exactly the kind of argument I hope to spark. I'm sure I've missed huge swaths of landscape, but I'm writing this in a rush (have a meeting in five minutes!) and wanted to get the engine started, so to speak.

I'm gathering a small group of industry folks at my home in the next week to further this debate, but I most certainly want to invite my closest collaborators — readers here at Searchblog, to help us out as we build the next version of the map. Which, by the way, will be open sourced and ready for hacking ...

So please dive into the comments and tell me, what are the key categories of data that companies are looking to control?


Reposted bycheg00 cheg00

November 24 2010

Publishing needs a social strategy

TOC 2011This post originally appeared on Joe Wikert's Publishing 2020 Blog ("Publishing in the Social World"). It’s republished with permission.

I spent most of last week at the Web 2.0 Summit in San Francisco. If you missed it, you'll find all of the video for it here.

I came away from it with two things in mind. First, Google is under attack from every angle. Sure, they've felt competitive pressures before, but whether it's from Facebook, Bing or some startup in a garage, I get the impression it's more intense now than ever before. No wonder they're giving all employees a 10 percent pay raise! Seriously, search is getting more social every day and tomorrow's recommendations from people you know via Facebook are infinitely more valuable than search results from yesterday's algorithm.

That brings me to my second key takeaway from Web 2.0: The importance of a social strategy for every industry, including publishing. I can already hear the skeptics saying, "reading is a time of solitude, not something that's done socially." That's mostly right, but it ignores at least two key areas where a social strategy can have a profound impact on the publishing industry: recommendations and remixes.

Amazon pretty much pioneered the online recommendation aspect of book publishing. Everyone wants 5-star reviews of their book, but I'm pretty sure we could also agree that a trusted friend's recommendation is even more powerful than a stranger's. Almost every ebook purchase I make these days is because a friend suggested it. There are just too many options (and too little time!) to risk buying a dud, even if it's only $9.99.

What's missing in the recommendation area though is a fast and easy way to share excerpts. If I come across a terrific sentence or paragraph I want to share from Drew Brees' ebook, "Coming Back Stronger" (a terrific read so far, btw), what are my options? The Kindle reader on my iPad doesn't offer a way for me to even tweet/email from within the app, let alone share an excerpt.

Even though I mentioned Google could face challenging times ahead I think they're on to a solution for this particular problem. Google Books lets you share links right into the book's content. For example, I love it when Brees says, "Anyone can see the adversity in a difficult situation, but it takes a stronger person to see the opportunity." I could tweet that sentence but it wouldn't leave much room for an attribution. I prefer to share a link, like this one, which takes you right to that page in the book (the quote starts at the bottom of the previous page and runs through the top of the one linked to).

Since Google Books already offers this service it seems likely the much-anticipated Google Editions will too. If it does, that's one reason I'll seriously consider switching from Amazon to Google for all my future ebook purchases. I want to be able to not only share excerpts but also give my friends more context though a service that lets them dive right into the book I'm talking about.

Even though Google lets publishers determine what percentage of a book visitors can view for free in their Books service, it's clear many publishers aren't participating. For example, I've queued up Bill Bryson's "At Home" to read soon but all you'll find about it on Google Books is this content-free catalog page.

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Any publishers who are skittish about sharing content previews today are likely to choke on the idea of content remix in the future. Remix isn't great for all types of content but it lends itself to formats like how-to, for example. The author may have one way of solving a problem but a reader might find an even better approach. Why not make that reader's solution available to other readers, even if it's just a small change to one of the steps originally provided by the author? Some readers will offer their approach for free and others might want some form of compensation; we need to come up with a model that supports both. And remember, nobody's trying to jam these remixes down anyone else's throat. I envision an ereader app that lets you hide all other reader comments and content. But for those of us who are curious to see what other readers, especially our own friends, have to say, I think this will be a nice new service.

The social publishing/content options suggested in this post are things that can't effectively be executed upon in the print world. Up to now, ebooks have mostly been nothing more than quick-and-dirty conversions of the print product. I look forward to a future where social options and other features more fully leverage the ebook medium.


November 22 2010

Why "Delivering Happiness" is a must read

At Web 2.0 Summit last week, Tony Hsieh explained to the audience that when it came to phone support at Zappos, he had opted to use the phone as a branding tool rather than to focus on expense minimization or revenue maximization (upselling). Zappos is thriving. In his tenure as CEO of Zappos, Tony has made many decisions that might fly in the face of conventional advice, and in his book "Delivering Happiness," readers gain wisdom from his stories and processes.

For more than 40 years, we've escalated our obsession with productivity. From efficiency experts at Disney in the 1960s peering over the shoulders of animators to being accessible 24/7 by checking email and answering the phone in the bathroom today, we have worshipped at the altar of output, efficiency and accessibility. Our productivity- obsessed society manages time and not attention.

At many companies, software developers are rewarded for knocking out the list of features and cranking toward the release date with no emphasis on the quality of the feature being checked. Does it work? Check. Tests ran? Check. Is anyone asking if it's contributing to the excellence of the product or service? Is there another way, a path to quality results and profitability that is not productivity-obsessed?

One might venture a guess that Apple has found that path. Readers of "Delivering Happiness" realize that this alternate path is the secret sauce at Zappos.

Our productivity-obsessed society is in the more, faster club. Sometimes that's a good thing. Sometimes it's not. Which is why I started a discussion about post-productivity computing and an era characterized by post-productivity values.

Post-productivity does not mean unproductive. It does mean, let's take the best and leave the rest, as our burned-out selves, our burned-out workforce and our burned-out economy take steps to move into a thriving and prosperous 21st century. This era of engagement is post-productivity because the motivations and metrics mine, in the best ways, our human assets (positive emotions, positive relationships, meaning, engagement) as well as profitability. I use the term post-productivity primarily as a reminder that a productivity-obsessed approach to an era of engagement takes us right back into the murky swamp.

This is about a new mindset. Tony Hsieh figured it out and last year, 25,000 people applied for the 250 job openings at Zappos. Applicants are enthusiastic to be part of an era of engagement, post-productivity company -- selling shoes online, being part of the Zappos team.

Like many of you, I've worked in companies that pit employees against each other by rating on a curve. Productivity, which could be contagious, instead, becomes a zero sum game. The brilliant and insightful Stanford professor Carol Dweck, author of "Mindset," would view this as a management process with a fixed mindset orientation. Hsieh manages Zappos for what Dweck calls a growth mindset, a mindset that welcomes challenges, embraces exuberant learning, and experiences failure as part of positive forward motion.

Once you start reading "Delivering Happines" you'll feel an irresistible pull to email Zappos for a copy of their "Culture Book". This crowd-sourced, edited collection of stories bathes the reader in stories of a corporate culture characterized by trust, productivity, joy, and profitability. "Delivering Happiness" is an inspired and inspiring must read for our journey into an era of engagement.


November 19 2010

We're entering the talent economy

Jeff WeinerNews that Google has more than 2,000 job openings reinforced a point LinkedIn CEO Jeff Weiner made at Web 2.0 Summit: We're entering the "talent economy."

During our interview, I asked Weiner about near-term drivers of the Internet economy. Here's what he said:

... The economy, generally, is going to be increasingly driven by talent. The world has evolved. If you look back at history, we've moved from an agrarian age to the industrial revolution, followed by an information age -- arguably a "meta" information age -- and I think we're transitioning into a talent economy. Where it's not just about the information you know, but about who you know and the information they possess.

... Knowledge is now evolving so quickly, I think it's equally, if not more important, to have access and be connected to the people who have the knowledge you most need to get your job done ... Talent is going to be driving where value gets created.

Weiner touched on a number of other topics during our discussion, including:

  • How LinkedIn uses data science to create relevance from massive streams of information. Case in point: aggregated statistics reveal how companies stack up against competitors in areas like R&D and employee tenure.
  • How new features, like the Career Explorer beta, are combining personal networks and predictive tools to help job seekers find career paths. Put another way: Data tools are shifting the focus from what did happen to what can happen.

The following video contains the full interview:

The marriage of data science and data products will be discussed in-depth at the upcoming Strata Conference (Feb. 1-3, 2011 in Santa Clara, Calif.). Save 20% on registration with the code "STR11RAD."


November 15 2010

Hiring trends among the major platform players

After re-reading Tim's post on the major internet platform players, I looked at recent hiring trends* among the companies he highlighted. First I examined year-over-year changes in number of job postings (from Aug to Oct 2009 vs. Aug to Oct 2010). Consistent with the recent flurry of articles about hiring wars, all the companies (except for Yahoo) increased** their number of job postings. Winning the battle for the Internet's points of control requires amassing talent:


Below is the breakdown by most popular occupations over the last three months:


[For a similar breakdown by location (most popular metro areas), click HERE.]

(*) Using data from a partnership with SimplyHired, we maintain a data warehouse that includes most U.S. online job postings dating back to late 2005. Since there are no standard data formats for job postings across employment sites, algorithms are used to detect duplicate job postings, companies, occupations, and metro areas. The algorithms are far from perfect, so the above results are at best extremely rough estimates.

(**) As a benchmark, the total number of job postings in our entire data warehouse of jobs grew 68% from Aug/Oct 2009 to Aug/Oct 2010.

Livestream from Web 2.0 Summit

Leaders from across the Internet Economy are converging in San Francisco this week for Web 2.0 Summit. They'll be discussing "points of control" -- the key companies, technologies and platforms that will shape the future of the Internet.

A free (and registration-free) livestream of the presentations is available below. We'll also be posting interviews and sessions on the Web 2.0 Summit site.

Note: Sessions begin at 2:30 PT today (check out the full schedule here). Highlights from past events will be streamed when live sessions aren't be held.

November 08 2010

What lies ahead for angels and startups

Web 2.0 Summit 2010Ron Conway has been variously described as the "Godfather of Silicon Valley" and a "super angel." He certainly was in on the ground floor of an impressive portfolio of high tech giants, including Google and PayPal.

Conway, who will speak at the upcoming Web 2.0 Summit, recently talked to me about how he approaches investing and what he expects to see in the near-term startup environment.

Our interview follows.

The investment model seemed to change after the dotcom bust. Has the most recent downturn had a similar effect?

Ron Conway: I would say no. After the bubble burst, there was a line drawn in the sand that any company that gets funded has to have either a great plan for traction with consumers -- i.e. lots of eyeballs -- or an actual revenue model. But if you look at Google, Facebook, and Twitter, none of them monetized before four years after startup. But they did get traction with faithful users who loved the product.

What do you look for in a company?

RC: We are much more into the vision and the chemistry that we have with the entrepreneurs themselves. The idea morphs so much, in some cases hundreds of percents, that the idea itself isn't the idea that you're going to end up with. But the team is constant.

How has the current intellectual property (IP) landscape changed startup investments?

Ron ConwayRC: I would never invest in a company that was a basket of patents and then made a business of litigating with people. I think that is ... I want to say "slimy," but I don't want to be that bad. I just think that's a really difficult way to think you're going to add value and make a return on investment.

I see litigation reducing, not increasing, because so much of the success of these companies now is not based on algorithms as much as it's based on creative user interface. The value of a good, easy-to-use interface that's consumer-friendly is now as valuable as Larry Page and Sergey Brin's algorithms were 13 years ago. I see the IP landscape changing a lot.

It used to be that an IPO was the brass ring for a startup. Has that been replaced by acquisition?

RC: Yes, for better or for worse. For 85 percent of our companies that have a liquidity event, it's an M&A event. It is a very desirable liquidity path for entrepreneurs. It's mainly because IPOs have become so difficult. The appetite doesn't seem to be there, and Sarbanes-Oxley makes it completely onerous.

Ron Conway will look at the future of innovation and technology during his Web 2.0 Summit session. Request an invitation.

Many companies in the Web 2.0 space have at least a North American hub. Is that going to change?

RC: I think the technology ecosystems in the Bay area and in New York are just conducive to innovation. It's very difficult to produce that ecosystem elsewhere.

If you look how long it took to build the tech startup ecosystem in New York -- it's been the last 10 years -- the flywheel is now spinning and significant new startups are being created in New York everyday. To create another center of innovation like the Bay area and New York, it's going to take 10 years for that to blossom.

What do you have planned for Web 2.0 Summit?

RC: I'm going to have 10 of our portfolio companies do a 30-second elevator pitch. This will give the audience a snapshot of the crystal ball of the future of innovation and technology. It's the companies that I believe will be the Twitters and Facebooks in four years.


November 02 2010

RIM pursues consumers and "web harmony"

Research In Motion (RIM) has always been the 800-pound gorilla of enterprise mobile. Lately, though, there's been a sea change. RIM has moved aggressively into the consumer space, while Apple and Android (to an extent) have become more common inside corporations.

In the following interview, Jim Balsillie, co-CEO of RIM and a speaker at this month's Web 2.0 Summit, discusses shifts in the mobile world and RIM's strategies for apps, tablets and the consumer market.

Why has RIM moved toward the consumer market?

Jim BalsillieJim Balsillie: If you look at our last quarter, I think more than 80 percent of our net revenues were consumer. We've totally crossed over. I don't think this compromises the enterprise because enterprise gets to ride on all of the design, volume and engagement of the carrier.

If you were just enterprise, would you get as much retail prominence? No. Would you get the promotion and pricing from the carrier? No. Would you be able to do as much innovative design and high-performance infrastructure around the world? No.

Does the penetration of the iPhone into the enterprise space concern you?

JB: ActiveSync has been around in the enterprise for a while. There's Windows Mobile devices. There were some other guys. I don't think this is particularly new. The space is growing, and we're growing with it and others are growing into it.

You've got to remember, when we launched BlackBerry we were in a sea of huge companies asking "they're the way to go?" We prevailed on that. And now that we've grown so well, we're still in a sea of huge companies saying there's more than one way to do this. That's just the way technology is and the way companies look at things.

Where do tablets fit into RIM's strategy?

Web 2.0 Summit 2010JB: They fit in on a standalone basis and they fit in on a pairing basis -- or a mirroring basis with your smartphones. You can do all of your desktop editing off of your BlackBerry paired with a tablet. Or, it can run as a master to the Internet.

We've put tablets forward with a web-fidelity approach, supporting Flash and open web development tools like JavaScript and WebKit. Tablets are a critical part of the computing shift, but they're going to connect in and render in a bunch of different ways. Ours come forward with web harmony, performance, and being friendly to a CIO's requirements.

Will phones and tablets converge?

JB: It's possible. I think the reality is that you want something you can clip onto your belt and put up to your ear and talk to. But you also want something with a big screen for media consumption and a bigger UI for the web.

You start asking the question: If you're carrying around a tablet, how much performance do you want in the smartphone? Because you want to do a certain set of tasks really well, but you don't want the smartphone to be a proxy for a tablet-type job because now you've got the tablet. The interplay is uncertain. It's going to be quite a broad array of things. That's why our focus is very simple: Give people web fidelity and give them a development platform that's web-based. They can craft their consumption and experience as they wish.

How is RIM encouraging app development?

JB: The huge thing we've announced is our web tools, which are not proprietary. You can run Adobe Air on our tablet, so you've now got three million Adobe Creative Suite developers who are BlackBerry developers. The development environment now just becomes enormously powerful, and it's harmonious with what's out there.

We're radically enhancing App World with the acquisition of Cellmania. We're also integrating and have launched carrier billing, so you can pay for these things on your carrier bill. We have an application environment that is very open, powerful and familiar. If you've written apps for the web and you don't think you need to change them a lot for mobile, you don't need to change them now. You can just sell them on mobile.

"The web doesn't die when you go mobile." -- Jim Balsillie will expand on this at the Web 2.0 Summit, being held Nov. 15-17 in San Francisco. Request an invitation.

How do you view Microsoft's re-entry into the mobile space?

JB: A lot of the opportunity in this market is migrating to services. I think that's where there's opportunity for Microsoft with their Bing stuff and their B2B stuff. Whether they want an OS in there or not is their prerogative.

The better question is: Is Microsoft's future in advanced services? Or is it about licensing and OS? I would never count them out. They're a good company. But I think we've seen that people don't really buy an OS. They buy services. People don't say, '"I want to buy that new Java J2ME BlackBerry, or that new UNIX real-time OS BlackBerry tablet." They want a BlackBerry.

This interview was edited and condensed.


November 01 2010

The economics of gaining attention

A fascinating article at the Daily Beast chronicled an attempt to reverse engineer the Facebook social news feed. It sought to answer questions about how and who Facebook chooses to display on your news feed page.

Not surprisingly, Facebook makes assumptions based on behavior to ensure that it propagates people and information with the highest likelihood of gaining attention or engagement. For example, individuals whose profiles are “stalked” by others show up disproportionately in news feeds because Facebook assumes they must be stalked for good reason. They must be interesting.

Facebook screen?

As Facebook becomes an increasingly vital part of how businesses connect with customers, the algorithms determining who gets attention will become increasingly important. They shape business communications and behavior.

We have now a long history of content being written to accommodate the rules of search engines -- particularly Google. We research keywords and then ensure they are placed at the front of our headlines and titles. We reorganize content into staccato bursts of bullet points and subtitles, and so on. Optimization of this kind now dominates all professional content production on the web and shapes our experience as consumers of that content.

As our social, economic and political lives are increasingly mediated through a few consolidated technologies such as Facebook and Google, software exerts a profound influence on the way we engage with one another. The natural, sociological secrets of how to gain attention are being codified. In turn, this creates a normative effect on how we behave. We conform to the rules embedded in the code.

We have always written lead lines with an eye to attracting readers, but there are two aspects here that are new:

  1. The widespread incorporation of scientific rigor into the exercise. For example, the Huffington Post does A/B tests of its own headlines to favor the winning headline.
  2. The uniformity of the resulting norms. We are conforming to a few dominant algorithms.

Gaining attention in this world becomes as much about the science of standing out as the art of being outstanding. And every link forged is a form of currency exchange where the market favors the heavyweights.

While I don't doubt that we will see a continued wellspring of creativity emerge from an open web, these algorithms themselves represent a bias toward those who decipher the code. Doing so requires resources that favor the large over the small, and the organization over the individual. There is nothing new to this progression, but it does run counter to the heroic individual archetype (the lone blogger, the basement video show broadcast around the world, etc.) that the web often celebrates as its own unique progeny.


October 29 2010

Points of control = Rents

I watched Tim O'Reilly and John Battelle's "Points of Control" webcast on Wednesday (archived video will be available here soon). I thought it was great and I dug the map. But as I listened, I kept seeing the "Points of Control" notion through a slightly different frame: economic rents.

Web 2.0 Summit 2010Economists use the term "rent" to mean "a return in excess of the resource owner's opportunity cost." That basically means the amount you pay people in excess of what you really have to to get them to do something. In a way, the history of computing has been a history of the evolution of rent-taking within the industry. The fact that we are now talking about "Points of Control" is at least partially because the sources of rent aren't what they used to be, and in our guts that seems bad.

At the very beginning, innovation was the only source of rent in our industry. In a perfectly functioning Schumpeterian system, that's where all rents would come from. But rents from innovation are ephemeral and they are quickly eroded by competition. People and companies get paid enough to keep doing the cool things we want them to do, but they have to keep innovating if they want to own a yacht suitable as a platform for mooning.

Microsoft was early in figuring out that innovation in an open ecosystem could create a network effect, and network effects were very effective barriers to exit. Microsoft's ability to extract rent has been amazing. Innovation was the catalyst, but the rents grew on the back of that network effect to be way out of proportion to the effect of innovation alone. (This weighs heavily on my mind as I contemplate shelling out $279 for Office for Mac so I can effectively share docs with my work colleagues).

A decade or so later, the Internet created new ways to build network effects, and rents at scale. (e.g. eBay).

Now just to be clear, it doesn't mean that we didn't (or don't) get lots of value out of these things. It just means that economically, we didn't have to pay Meg Whitman enough to fund the most expensive campaign for governor to get her (or someone like her) to do what she did. She would have done it for less.

Open source is a really interesting twist in the midst of all this. Software businesses with profit margins greater than the current Treasury yield hate open source because it mostly eliminates rents. Forkability is a rent vaccine, so open source "products" tend to be sold or serviced at just about their producer's opportunity cost. In the case of community based software, it is by definition at opportunity cost, but that cost is as likely to be paid in reputation as in dollars -- making this a conversation on sociology and psychology rather than economics.

In any case, open source software is a leverage-less wasteland from the point of view of anyone that has an MBA. Or, it's a wonderfully rich source of innovation for the people that never liked having rent forcibly extracted. You can see this by comparing the relative market caps of Red Hat and Microsoft as a multiple of revenues when they were at similar stages of growth (number of processors they are running on or similar measures). Microsoft probably had a one- to two-order of magnitude advantage on this measure at any point along their growth curves. Or, as someone from Red Hat once told me, "we love making billion-dollar businesses into hundred-million-dollar businesses."

Obviously digital distribution has also damaged the traditional channel model of the music, film, and photography markets. The impact of this is that the tail-end of the curve can probably shift business models and still make the same money (by touring, selling FLAC files, whatever). But the head -- where the record companies are -- will struggle to extract rents like they used to. As they realize this, they do what rent holders who are losing always do: dispense patronage from their existing franchise and try to influence the law to make their rents more permanent.

Apple has historically lived on rents derived from superior design, which is a very hard thing to do consistently. So they've earned their rents so far. Recently, they've gotten even smarter. The App Store is an MBA's dream because it combines network effects with classic distribution channel control and slotting fees. It also has strong barriers to exit. Interestingly, Foxconn (and its employees) mostly continue to work at opportunity cost levels of renumeration. Rents stay with the leverage and are not evenly distributed through the supply chain.

Apple also finds itself in the odd position of Karmic enforcer. The software developers that once helped destroy content owners' iron-clad grip on distribution now find themselves selling their creations for 30 percent of $.99. Karma is a bitch.

Google extracts amazing rents through a combination of innovation and network effects, although they have really struggled to duplicate their core search / AdSense monopoly. Innovation is keeping Google ahead of Schumpeter for now, but hasn't yet created a second vortex of network effect monopoly. So Bing is an important threat if its share continues to grow. Emerging and effective competition in the area where you are extracting rents will have a non-linear impact on your bottom line. If all goes well (in a Schumpeterian sense), both Bing and Google's search franchises will be rent free in an economic sense. Good for people buying ads, bad for people that hope Google will keep taking the cash thrown off to innovate in other areas (like creating an Office rent-neutralizing alternative in the cloud). It's like watching a pair of Ultra Kaiju trying to choke each other out over Tokyo.

Twitter is the odd case of the network effect without the rent. I like it even more for that.

Both Apple and Google are innovating (obviously) so their network effect and distribution channel rents are at least initiated by innovation. However, we should be observant to those signals that they may be following in Microsoft's, or the record labels' footprints, and attempting to make ephemeral innovation rents more permanent through lobbying, aggressive (and abusive) patent strategies, or other approaches that help them avoid Schumpeterian logic. After all, no one hated the Robber Barons when they were laying track and industrializing America. They were heralded. It wasn't until later, when they distributed rents as patronage to buy politicians (and policies) to lock in the rent streams from those maturing investments, that they became the subjects of political cartoonists.

Mobile telecom providers are my favorite because they are just so obvious. Spectrum auctions are the modern equivalent of the East Indies Trading Company. It's a royal monopoly charter with a direct lineage from the original form. This is where the word "rent" comes from.

We give these charters because we think the physics can't be dealt with without ceding monopolies. Too bad, because they are really bad for innovation. The culture of monopoly becomes part of their DNA. Now as computing goes mobile, that same DNA has found a viral vector and is splicing itself into software and computing companies. Obviously Apple, with its historical predilections, is a more accepting host for the splice, but don't think Google and others won't be immune to rents. The government auctions spectrum to control it, but what they also get is a patronage network of massive proportions.

Facebook is a hard one to describe in the standard terminology. Innovation, yes. Network effect on distribution, absolutely. But also there is this weird bit about knowing more about us than we ourselves know in a conscious way. It's a network effect, but the first to be based on our most personal social network. Maybe this will come to be called "Faustian rent."

Another way of thinking about it is this: for every technology company whose stock we are proud to tell our friends we own, there are significant economic rents being extracted on the other side -- otherwise the money would be equally well invested in treasury bonds. No one brags to their friends about that.

The question is, what is the source of the rents? A company that lives by "deliver more value than you extract" is probably living on innovation rents, at least at the catalyzation point. Then it moves faster than the competition to stay out of the chute of Schumpeter's creative destruction chipper. However, many companies are finding other less palatable sources of rent, or are moving toward them just as fast as their newly minted lobbying crew in DC can make it happen.

As this industry matures, it will either look, economically at least, like a DuPont Styrene plant or it will look like most of Microsoft (the non-Xbox part). A company whose sources of rent have largely tipped from innovation to those based on barriers to exit (lock in), policy (lobby against open source), and patronage (let's bring the entire USAF IT staff to Redmond for a conference and feed them ice cream at every break!). The thing is, those of us that love doing this kind of work love it for the innovation. I hope we aren't getting comfortable with the idea of doing it so that we can build our own Burg Pfalzgrafenstein in software.

From the perspective of buyers, we don't notice rents so much when they are based on innovation. It's early in Apple's transition and the faces of the fangregation are still glowing as they come up Peter Bohlin's 5th Ave. spiral glass staircase. They just spent twice what the device would cost if it was a commodity, but they are grinning as they fondle those little white backpack bags.

On the other hand, rents of the less palatable lock-in variety taste like cod liver oil. And there are some early signs that even for Apple, shiny isn't always adequate salve for that feeling of being taken. Microsoft is the company we love to hate, but Apple may well become the one we hate to love as it relies less on the shiny and more on the locks to keep us paying.

On a related note, last night my Dad said to me: "I can't stand Microsoft and avoid it as much as I can. I've switched to Ubuntu because I got tired of paying Bill Gates a tax so he could run a charity." I thought that was funny.

Associated image on home page courtesy Apple.


October 25 2010

The battle for the Internet Economy

Battles are brewing for the Internet's points of control: search, location, identity, commerce and more. How these battles play out and who emerges victorious will shape virtually everything and everyone involved in the Internet Economy.

Tim O'Reilly and John Battelle will examine the people, organizations, and chokeholds relevant to points of control during a one-hour webcast on Wednesday (Oct. 27) at 1 pm PT / 4 pm ET. Registration and attendance are both free.

"Points of control" is also the theme of this year's Web 2.0 Summit, being held Nov. 15-17 in San Francisco. Learn more about Web 2.0 Summit at the conference site and check out the illustrated Points of Control map.

October 22 2010

The upside of open

Web 2.0 Summit 2010In a previous interview here at Radar, author and Web 2.0 Summit speaker Lisa Gansky (@instigating) discussed both the defining characteristics and the companies related to "The Mesh." Mesh organizations use data, networks, and offers of shared goods and services -- i.e. things people can access without owning them -- to actively engage with customers. ZipCar is "meshy," as are Netflix, Amazon Web Services and others.

There's a number of concepts that plug into The Mesh; continuous deployment, lean startups, open web, and the like. I got in touch with Gansky to get her take on some of these broader/adjacent ideas. Our interview follows.

What's the connection between The Mesh and things like continuous deployment, lean startups and perpetual betas? Is there a connection?

Lisa GanskyLisa Gansky: Absolutely. An organization that is capable of continuous deployment, for example, understands that we operate in an always-on, continuous touch environment. Frequent updates of the deployed offerings -- especially when combined with fresh, transparent and authentic communication -- clearly show where the product is in its evolution, including the holes.

Likewise, lean startups can use teams, tools, platforms and partnerships that are organized around convenient access to goods and services, rather than traditional ownership-based models. This orientation and capability allow many early-stage companies to get into the market, grab the attention of early customers and investors and grow by learning ahead of competitors.

As for perpetual betas, they have certainly become a core aspect of web-based services. Companies that put the "beta" stamp on an offering provide "air cover" for testing raw ideas, the user experience, brand positioning and specific offers. Beta has become code for: "Don't be impatient with us. We're inviting you into our not-ready-for-prime-time attempts and we want your feedback."

Betas are two-way. They invite high levels of engagement and provide a cloak of cover as the product is still in the kitchen. Trials, testing and tweaking are all essential elements of these perpetual betas. Interestingly, some companies have never removed the "beta" from their products. The beta stamp seems to to create a level of freedom for the team, and wonder for the user community.

The theme of Web 2.0 Summit 2010 is "points of control." Does sharing run counter to points of control? Or, does a point of control form when a sharing community gains critical mass?

LG: I think it means both. The differential of power in a world of sharing will become increasingly interesting to watch and important to engage with. Sharing -- or at least the illusion of sharing -- benefits all the parties as a new language and standards are formed, and expectations are being developed.

Once a particular person, company or architecture has established a clear lead, then sharing, I believe, has been limited between the newly established point of control and others vying for position and leverage. As we see social networks become more sophisticated and action-oriented, I'll be curious to see if the critical mass shifts too quickly from one point of control to another.

Will Google's dominance wane as Twitter, Facebook, Quora and other companies increasingly build social mass, brand equity and the capacity to activate large communities? It appears that as social networks grow in size and sophistication, the time it takes to launch and get traction behind a campaign, brand or technology may be shrinking. Will that erode the power of today's clear "points of control" in short order? Or will they need to further enhance peer-to-peer to maintain community power?

Does The Mesh require an open web?

LG: The Mesh thrives in an open anything. The sharing of data, networks, tools and teams isn't completely dependent on the web, but certainly the open web reduces the friction of sharing. It allows communities, value chains and ecosystems that are more responsive to opportunities and challenges to form and reform. They are, in many ways, more naturally formed and dissolved in an open environment.

Lisa Gansky will examine sharing's influence on business at the Web 2.0 Summit, being held November 15-17 in San Francisco. Request an invitation.

Will the debate about open systems versus closed systems continue forever because one will ascend and the other will be used to knock it down?

LG: Let's hope not. My view is that the closed systems are an outgrowth of last century's premise that there is a finite amount of know-how and talent, so that isolating the intellectual property (IP) and owning it will create more value for a company and its shareholders. While it is hard to dispute that if you own an essential piece of technology, you have power, I believe that business models based on collecting royalties solely from licensing IP are becoming less important and less trusted. The necessity to build partnerships, ecosystems and systems to interchange assets (hard and soft), means that closed systems are at a disadvantage. One cannot predict from the beginning of the business which partners will be necessary or compelling. Given that, responsiveness, transparency and time-to-market favor the open model.

This interview was edited and condensed.


August 31 2010

Points of Control: The Web 2.0 Summit Map

In my blog post State of the Internet Operating System a few months ago (and the followup Handicapping the Internet Platform Wars), I used the analogy of "the Great Game" played out between England and Russia in the late Victorian era for control of access to India through what is now Afghanistan. In our planning for this year's Web 2.0 Summit, John Battelle and I have expanded on this metaphor, exploring the many ways that Internet companies at all levels of the stack are looking for points of control that will give them competitive advantage in the years to come.

Now, John has developed that idea even further, with a super-cool interactive map that shows the Internet platform wars in a kind of fantasy landscape, highlighting each of the players and some of the moves they might make against each other. Click on the link at the top of the image below to get to the full interactive version. You might also want to read John Battelle's description of the points of control map and how to use it.

Some of the battlegrounds are already clear, as Google has entered the phone hardware market to match Apple's early lead, while Apple is ramping up its presence in advertising and location-based services to try to catch up to Google. Meanwhile, Facebook adds features to compete with Twitter and Foursquare, Google (and everyone else) keeps trying to find the magic bullet for social networking, and tries to eat Yelp's lunch with Place Pages, Microsoft gains share in search and tries again to become a player in the phone market. Areas like social gaming, payment, speech and image recognition, location services, advertising, tablets and other new form factors for connected devices, are all rife with new startups, potential acquisition plays, and straight-up competition.

In the map, we've tried to highlight some of the possible competitive vectors. I'm sure you'll have other ideas about companies, possible lines of attack, and possible alliances. We hope to hear your feedback, and we hope to see you at the Web 2.0 Summit, where we'll be talking with many of the key players, and handicapping the next stage of the Great Game.


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