broadstuff

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.

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.