Tuesday, September 30. 2008
Rory Cellan Jones asks "which way to the mobile web"
How do you get the mobile internet? Via wi-fi - or perhaps through one of those dongles that you plug into a laptop?
The answer right now is both. Neither is good enough to be compelling as a single solution.
Technically the user sees very little difference. Right now, 3G has better coverage, WiFi usually has better speed.
Economically, there is little to choose between them IF (i) your usage is vaguely normal (video downloading is extortionate via 3G) and (ii) you are paying for WiFi - what is shifting is that WiFi is increasingly being given away for free in "fixed mobile" places - ie places where you sit down, even when you are on the move - coffee shops etc. However, as Rory notes, the grand plans to create WiFi municipalities has died, as did those for WiFi ISPs in 2002/3, the technology still doesn't lend itself well to more than local area broadcast.
Who will win in the future is the person who can make the best convergent platform:
We welcome the day....and a seamless bill as well would be very nice.
There is an interesting piece on Business Week (link tip via Drew Benvie) on the 25 most influential people on the Web right now. Interesting in 2 respects:
- It would seem, according to Business Week anyway, that the long tail starts early - from Rupert Murdoch, Google and Yahoo to still fairly small scale startups in 25 steps. No space for Sir Tim, then
Timing, as they say, is everything - this was no doubt commissioned pre-meltdown. Given the changes in the funding markets that has become clear in the last few weeks, it is very unlikely that many of the FreeConomic funded Web 2.0 plays will see out another year, relying as they do on Other People's Money for funding (ooops) and being sold to companies whose own stock is under pressure for an exit event (those that have got in their money for the Nuclear Winter will be fine*, others will probably follow Wall St to the wall). (To be fair, I think all the small companies here have found funding recently)
Our own view - the big players have still got cash, but the current market will see a move to quality and proven capability. Read it yourself and work out who you think will be around same time, next year. Answers on a postcard in the comments below
The other thing in Drew's post that is interesting is this article from Management Today about the Gen Y(oof) and their expectations from Work 2.0:
It splits workers up into ages; generation Y, X and baby boomers. The article and the research behind it talks about how the 30 and under generation has had and wants many different jobs and is used to prosperity.
How indeed? It remains to be seen how much of the Shiny New New Media World is mere froth on the latte....... big losers will be those with high cost bases, those who operate on shoestrings are the "cockroaches of the Nuclear Winter" as Will McInnes puts it
*Fred Wilson makes exactly this same point here.
A few months ago, Microsoft walked away / was pushed away / whatever from the Yahoo purchase. Since then, quite a lot has changed in fair TechLand, and Yahoo looks like a much better buy now:
6 month comparison of MSFT, YHOO and GOOG share movement (Yahoo Finance)
A lucky break a few months ago, anyway - Microsoft would look a bit dim now if it had bought Yahoo. But it may well be a good time to start running the ruler over Yahoo again..... and there is still all to play for on the GOOG / YHOO front too.
We reported last week that the initial response to the Bailout that we could pick up, from the online zeitgeist, was the joy of the worthies who stood to benefit from it - but in very short order we could see a strong counter coming up (see our analysis over here.)
This is not an economics blog per se, but we do deal with behavioural psychology & economics, and game theory - mainly as it pertains to online business strategies and e-commerce - and we do believe that the Paulsen team are missing a big trick, as they have been ignoring the behavioural economics of the situation. Worse than that, they have done it in such a way that makes them come across as extremely arrogant and insensitive to the very people whose help they need.
Now in normal circumstances politicians, financiers and other worthies blithely ignore the Will of The People - its one of the reasons why people normally can't be *rsed to vote - but in an election year, with their seats not firmly attached to their bottoms, the politicians are more likely to actually listen to the Vox Populi. Timing, as they say, is everything.
Thus it is worth examining the behavioural economic mistakes here:
- Firstly, study after study has shown that people would prefer to take a loss themselves, rather than give a benefit to people they believe are cheats. Its a part of the way humans are socialised. And make no mistake, outside of Wall St, the bankers are seen as cheats, if not worse.
For these reasons, I believe that the actual initial bailout plan actually made the conditions worse, not better, for acceptance. (Update - these same points are made in this video from Yahoo Finance with Aaron Task & Henry Blodget - by the way, the sponsored Ad worked very well I thought)
If I were to hazard a guess, based on (my own interpretation and view) of what the behavioural economics tells us, then it would be that the successful bailout plan would now have to encompass something like this:
- More of the "cheats" will have to go to the wall. We suspect there is little appetite to give any money to banks while the perceived cheats are still running the joints, and certainly not at inflated values. In a nationalisation or bankruptcy the "bad guys" get visibly wiped out, and the assets get bought at lowest possible cost, so its hard to imagine why the public would support any other approach in preference.
Also, removing the "you're doomed if we don't get $700bn in 24 hours" is probably a pre-requisite - the only people doomed in the very short term (next few weeks) are bad bankers, and people probably get that..... and, we suspect, want a bit more reasoned thinking before handing over the loot.
Punting a bit further, if I were to hazard a guess then the most trusted form of organisation to oversee the resolution of this mess would be one that was totally publicly accountable and overseen by elected representatives, and would have a strong "public good" element to it. This almost argues for a Publicly Owned Bank - like an old fashioned Building Society - to manage out the mortgages. In addition I suspect it would not be acceptable for it to pick up inflated assets this side of a Chapter 11 or bankruptcy.
Furthermore, I suspect the "Elliot Spitzer" lesson post dotcom bust has not been forgotten, and many a politically ambitious lawyer is sharpening the blades..... hang on for a whole new class of class action suits if it can be proved the bankers lied to their computers about risk
Update - I see there is a NYT article reflecting similar things, but imho not understanding the underlying behavioural psychology - and also drawing a parallel with the New Deal structures of the 1930's which in my view maps closely to the endgame structure I mooted above (props to Dave Winer for link, he has been one of A list tech guys onto this issue early)
Update 2 - it seems that those who voted against this are being castigated for actually listening to what their consituents wished for. I know it seems incredible that one should do this rather than follow the whip, but when you are facing your own re-election.... Democracy eh
Update 3 - was reading Ina Fried's article on Tech stocks taking a bath and came across this brilliant line from a broker interviewed:
In other words the bankers are still hoping to be first in the queue for lifeboats, and beggar the women and children - which is exactly the reason why Main St doesn't want to let them off the boat until it goes down.
Update 4 - interesting article on the scale of existing corporate bailouts in the US - the only difference here is the size and the public awareness just before an election.
Monday, September 29. 2008
Richard Stallman of GNU fame is the latest luminary to cast doubt on the idea of cloud computing. His point is that it's unwise to hand over your data. I do agree with him and worry about the way that our privacy is being undermined. On the other hand, many of the cloud services do offer great utility and when users have to choose between utility and security.......
As seen on the Grauniad:
One wonders if Beacon is spying on MI6, or vice versa?
Profy notes how its done:
CareerBuilder generated all the activity required to make the name of the site the most discussed topic on Twitter on its own. The thing is that the guys behind the website simply configured a few Twitter accounts (each account focused on a particular city) to broadcast all the latest job positions advertised on CareerBuilder automatically to Twitter. This resulted in a few dozens of new tweets posted to a few timelines belonging to different CareerBuilder geographical sections every hour (as I believe they must have some moderation for new jobs where they approve new postings to the site in bulk).
But heck, I reckon more than half the A Listers on it and various OTT "community managers" knew that already . Its just that this is maybe the first to use an automated process - and we showed you how this could be done back in May.
Extraordinary how for years you hear nothing about a meme, and then it come in threes in a matter of hours....on Saturday I went to an old colleague's birthday bash, and it resolved itself into one of the larger collections of business System Dynamics / game theorists outside of a conference on the stuff. Last night I read this note, arguing that game theory predicts the bailout won't work, and today on Twitter I see Kathy Sierra also talking about System Dynamics. (Heres is a simple System Dynamic model dealing with "Bricks to Clicks industry outcomes - you can run it yourself on iThink over here)
System Dynamic Model - "Bricks 2 Clicks" on iThink
Interesting its coming back, the last time all this stuff hit anything like mainstream public consciousness was with the book The 5th Discipline, in the early 1990's. (The last time there was serious property financial trauma, interestingly enough)
However, having written many types of simulation models, business games etc and consulted around this space for the best part of 30 years, I can testify to a number of issues the approach has as a methodology - best encapsulated by one of my early lecturers in Operations Research:
The problem with simulation modelling for client work seems to be twofold - firstly, persuasion:
- the high level models give the best learnings and insights, but are attacked by critics as not being comprehensive enough.
Secondly, timing - even the best models find it very difficult to predict "when" - our models of the UK housing bust showed it would be 2005/6, not 2007/8, for example (there is a whole lesson there about what I now term the Momentum of Vested Interests - ie its amazing how you can see broad collusion to push something well past its "natural" zenith).
The other downside is it is costly to build anytin but very high level models. When it works, it can lead to amazing insights, but it needs clients who are open to the approach - and is thus sensitive to people who would oppose the predicted outcomes, which is why it is not more commonly used.
However, I do note a number of interesting trends - the internet is effectively a closed loop system system, and that allows it to be used as one huge System Dynamic playground. The growth in data collection by Web businesses of all stripes, the increasing use of heavy duty analytics in understanding that datastream is thus no accident. Also, note the small but growing numbers of predictive system plays that are popping up.
In addition, emerging applications such as Social networks, and social media overall, are probably very fertile fields to apply SD thinking and modelling
And the large numbers of quamt jocks forcibly leaving the financial sector gives a one-off infusion of the people with the sort of skills to do this work.
Update - I saw this article in the WSJ, about using video and games to make business more interesting, and it did occur to me that there is probably a whole new approach to simulation gaming possible. Years ago I worked on DVD based business video games, but modern technology is a lot better and a lot cheaper to produce content with.
Sunday, September 28. 2008
....they do it even in good markets.
Responding to a post on the top of Techmeme, where Jason Calacanis writes a long and winding article on Henry Blodget's (yes, that one) Silicon Alley Insider about company failure - the key hypothesis being:
It's my believe that the economic downturn will be much worse than it is today, and that 50-80% of the venture-backed startups currently operating will shut down or go on life-support (i.e. 3-4 folks working on them) within the next 18 months.
It kinda encapsulates the worst of Web 2.0 thinking for me, in that it is long on fluff and short on facts around the central hypothesis, which, while very plausible, is provably misleading with a bit of analysis. Not because there is no crisis, (nor that it won't have an impact) but because small companies fail in high proportions in any market - typically 2/3rds in the first 2-3 years* - so the 50-80% was a given anyway.
What is true however is that businesses being set up on FreeConomic principles (ie using other people's money) can only run as long as those others' pockets stay lined. So if they cannot mature into real business models (or sell themselves to Google etc) they will die. And there is a shortening of that runway in tighter times. (ie they will fail sooner). It is also true that there will probably be less money for me-too's now, as there is just less appetite for them.
The essay actually also has a lot of good sense at a tactical level, thus making it's central tenet very believable because much of the rest of it is good stuff for startup survival.
Because it is promoted by one of the Web 2.0 grandees (and don't get me wrong, Mr Calacanis is a very capable person, and is probably more skilled than lucky in my opinion - but even very smart people sometimes say daft things) it gets more uncritical acceptance than it otherwise would.
Except here of course
Update - the article has been pulled from SAI, sadly along with all the comments - c'mon guys, thats pretty poor form! And it wasn't that bad!
Update to the Update - its back on Jason Calacanis' blog - apart from the 50-80 stuff, the rest is tactical and rather more useful.
*I've never seen formal VC stats (wonder why ) but friends of mine in the industry used to tell me its 1/3rd die, 1/3rd live, (of which 1/10th make a decent return) and 1/3rd are "zombies" - living dead - that can stagger on for ages until either sold or put down. Hence the 2/3rd fail estimate
Saturday, September 27. 2008
Day 4 of the Technorati State of the Blogosphere dawns, and we can finally follow the money. (See earlier articles on Technorati blogonomics here and here). So, what can we glean:
Firstly, about half of the blogosphere (46%) don't use Ads. Of those that do, most (28% out of 54% who use Ads) use 3 Ad methods or more (Search 38%, Display 30% and Referrals 20%) As you'd expect, most (69% ) use Pay Per Click Ads, but (35%) use referrals and 19% negotiate deals directly. Most who don't advertise feel its because they either don't want the hassle and/or the site cluttered, and the most of the rest don't think they don't have enough traffic.
But what you really wanted to know about is the money, I'm sure
This is the money-shot slide:
Blog Ad Revenue from Technorati
Look at the European vs US revenues - you would have thought the US would have higher earning blogs, given people like Shiny Media's travails vs the clear funding offerings the US blogs have received. Its doubly surprising given the CPMs:
Blog CPM forom Technorati
European blogs get, on average 80% higher revenues with 75% of the CPM rate, that implies nearly double the traffic. The Median also implies double the traffic....hmmm
And the typical pro-blogger profile - a top 10% blogger earns $19k pa, is likely to be professional, and many (c 2x) more are self employed than employed. The typical output is vc 80 posts a month, c half blogging over 10 hours a week (a lot more to get 80 posts methinks) and investing $7.5k, for a return of c $11.5k - so just under $1k a month.
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