Tuesday, November 30. 2010
This morning we learn that Google is apparently going to pay $6 billion for an online coupon company, Groupon (or is it $5.3bn - there is a $0.7bn earnout, not clear if its part of the $5.3bn or not). In the Real World, these are basically shoe-leather sweatware businesses and typically trade at about 1x revenue or thereabouts, but this is a 10x price at least (Groupon "self reports" monthly revenues of $50m, and I'm betting that it's not being conservative).
There is very iittle to suggest that moving the coupon medium from paper to digital changes the basic cost structure of such a business, nor is it clear that Google's software algorithm based business model has any real synergies with what is in essence a (never mind whether Google has the culture to run this sort of business) wetware salesforce based model. (As late as June this year it had a $1.35 bn valuation on expected $500m revenues, now its apparently c $5-6bn on $600m revenues.....go figure)
This follows on the heels of the "re-valuation" of Facebook from c $30m in September to c $50bn now - apparently after Mary Meeker used the Web 2.0 stage in November to predict the social media/mobile internet market was waaaay bigger than any other (clearly dumb) forecasters were prepared to argue for. But Mary, you may recall, has prior form in this space - do the words "dotcom" and "bubble" ring a bell?
As an aside, what does this tell you about The Google Of Today?
As Fred Wilson pointed out yesterday, there is a large (and increasing) amount of "dumb money" flowing into the space, which is the required precursor to a bubble.
So there you have it - a heady cocktail of dumb money, analytical optimists, desperate Olde Web companies paying over the odds and a bunch of investors desperate to cash out (VC-dom has had a torrid time of late, and the real truth is that the exit market is still languishing). All we now need is a concerted effort to rev up the PR press to hype this all to the nines (hooray - between Dotcom 1.0 and today we have invented the blogosphere-for-rent ) and we are done. As I wrote on Fred Wilson's blog yesterday, we now need to look for the tell tale bubble signs:
Well, firstly we now have to manufacture more entrepreneurs, so I can predict the rise of:
I await the New Economic Paradigm with bated breath. It will be along the lines that social media is Truly Different, and that Local, Mobile will change the way the world works.
Monday, November 29. 2010
News just in that Mary Meeker, the Morgan Stanley dotcom bubble Optimys...we mean Analyst - is moving to VC firm Kleiner Perkins.
This occurs at the same time as the Venture Capital industry is hitting an "interesting" problem all of its own, as Fred Wilson points out today:
Sounds like a bubble is forming to to me. And in such conditions, who better to advise all these desperate funds on where to invest them than Ms Meeker
What is more telling though is "Why leave Now"? I would take this as an indication that Morgan Stanley et al are not playing too hard, probably because although lots of money is going in, the number of IPO exits is still small, most are trade sale. Mind you, at these sort of overblown values, you can see where bubblemania is coming from....but despite this, relying on Google to pay over the odds for every prospective exit is not a viable strategy.
(i) The FT makes the same point about the big banks not really in the game at the moment.
(ii) Sarah Lacy at TechCrunch:
I asked Zynga CEO Mark Pincus what specifically Meeker would bring to Kleiner that the firm doesn’t have already. He emphasized Meeker’s data-driven approach* to championing new markets versus the Valley’s more common gut-feeling, intuitive approach. “She has been the first to call many major markets, showing with data what many of us are pursuing based on instincts,” Pincus said. “In the past year she has called out the social Web and mobile Internet as opportunities of much bigger scale.Facebook’s market valuation probably went up significantly after her presentation at Web 2.0, in which she showed the potential impact of the social Web.”
Calling Social Media and Mobile Internet in 2009 - good lord, how did everybody else miss it till then The next sentence on in the quote tells you everything you need to know.....
*Data-Driven eh...well, here was the last one at Web 2.0. and - well, it shows that social media and mobile internet are waaay bigger than anybody thought, as the man Pincus said above. And thus it was..... .
I am not sure what Wikileaks is trying to achieve here by emptying the diplomatic bag (see here for typical meedja peek-a-boo), in terms of cost/benefits.
As Shefaly puts it, in terms of the benefits "The leaks reveal the obvious about nations, confirming stereotypes of bullies the world over. What else?"
What worries me is the costs.
What do Assange & Co think these organisations are supposed to do when they are trying to honestly evaluate issues - wrap them up in fluff-speak?. There is shedding light in dark places to root out corruption, and there is opening up stuff that stops people who are trying to help you.
I suggest Wikileaks needs to be able to discern the difference PDQ or we are all going to suffer, as I cannot see the governments of the world allowing these sorts of data to be leaked ad infinitum, and a lot of good stuff will be lost if they do crack down. Doing the former is a major boon, doing the latter makes them a risk.
For people who believe in an open, neutral internet this sort of stuff is an own goal, as it gives increasing ammunition to those who would gag the 'Net, and makes it harder for the 'Net's friends to defend it.
The 'Net is a technology, usable for good or ill - and heaven knows there are enough people trying to use it for ill already without these guys playing into the hands of the Nay-Sayers in the corridors of power.
With power comes responsibility, use it or we shall most surely all lose it.
Update - This article - titled "US embassy cables: The job of the media is not to protect the powerful from embarrassment" from Grauniad journo Simon Jenkins in my opinion shows the inability of the "all data must be free" extreme fraternity to differentiate between exposing data for public interest and exposing data as an irresponsible act for private profit.
This reminds me of the action of bovver boys in perfectly respectable protests (take the latest one on tuition fees) - the activities of a few hotheads who take it too far compromise the aims of the protest and alienate the majority who otherwise would support it.
Protecting privacy in the 'Net age is a hard enough act to master without this sort of irresponsible, ill-considered stirring. People who actually understand how the 'Net works know that public net neutrality and open-ness is a delicate thing and not an automatic outcome. What do these guys think (I use the word loosely) the outcome is going to be here?
Broadsight's Paul Lancefield has been doing some musing on the future of the TV value chain:
Something big has happened in the TV business and the launch of Apple TV has just underlined it. That's not to say Apple designed this shift or even are the likely victor in the living room. They didn't and they aren't. But their device ecosystem, covering as it does TV, PC, Notebook, Phone and Tablet now proves the viability of this new much heralded model, but more than that, because we can see it in action, because we can play with all the constituent parts we can now begin to get a sense of what it will really mean and the world that is emerging is radically different from the world most of the major TV players are planning for.
Moving forwards we are going to see the massive and deliberate disaggregation of content presented via TV: Note, I'm saying "disaggregation" not "aggregation". I’m not, however, attributing this move towards disaggregation to the normally cited cause. It won’t be because there are multiple standards and technologies competing for your patronage in the Living room that this disaggregation will take place, rather we will see disaggregation by design.
AppleTV is one of the new breed of TV device offering so called "Over The Top" (OTT) content. What this means is it works exactly how most Internet users think it should work; you make a request for content, it get’s delivered. You don’t have to first subscribe to a TV Service as such and you don’t need an installer to come and install any specialist equipment in your home. The content delivered is network agnostic, with the caveat that your ISP connection has to give you sufficient bandwidth and implement TCP/IP (but which networks don’t - TCP/IP is now a given). You no longer need to be connected to Virgin cable or have a subscription to Sky to get HD TV. All you need is a fat-pipe, a TV capable device, 802.11n WiFi and a credit card.
For years the TV Service delivery industry has existed because if you wanted video to be piped to your goggle box, there was no alternative than to build a dedicated transmission network. Then, after the arrival of the Internet, unicast IP held out the promise that TV could be delivered along with the large number of other services we know and love on the Internet but, until recently, there simply wasn't enough capacity available to provide the kind of timely and quality service TV viewers demand. More recently however, services like Apple TV and Sky Player, have shown the specialist TV transmission business as we once knew it, is no longer essential. I’ve now rented some 15-20 HD films on Apple TV and all have started within 40 or so seconds and played from beginning to end without interruption.
Quality OTT content delivery demonstrates we have entered the promised land and you can now get HD video from any location to any device (albeit delayed for 20-60 seconds for buffering). For the last couple of years we have been living in an n2n world, which is like the p2p world we already know, only with added spice; In an n2n world any device can talk to any other device and handle and operate with any of the popular streamed media formats. But now even before we have had time to fully assimilate the implications of this step, we are moving into what I would like to call the n2nd world. And in this world - at least so far as TV is concerned - the constraints of Apple versus Android or Windows versus OSX or XBox Vs PS3 all become irrelevant. It is a world where anyone can play content out to any device, where the the display, the terminus for what we want to play-out, is no longer the device running the player application. We know this world is coming because iPhones and iPads can already stream out content wirelessly to Apple TV for display. Of course streaming from one device to another to display it is nothing new, devices with DLNA have been doing so for some time. But what is new is that this capability is now part of a unified ecosystem where all the parts of the chain have been designed to work together. Today I can go to a friends house and output the DRM protected video from my cloud data store, or my iTunes rented movie from my iPhone or iPad, to my friend’s Apple TV.
As sure as eggs are eggs, the component parts of this ecosystem will be replicated in the open standards world (though there is a surmountable gotcha I discuss at the end of this article) and adopted by all mobile device manufacturers. So in a short while it will be possible for anyone to throw video from the device they carry in their pocket onto a local display.
The big shift to OTT means the need for dedicated TV transmission systems will, over time, diminish to near zero. The people who put software on Set Top Boxes, the people who integrate back-end systems with those Set-Top-Boxes for playing out linear channel programming and Video on Demand and the people who integrate all the other stuff required to deliver service like billing systems EPG schedule data systems and the like, will have far less work to do. I don’t think the industry has yet fully caught on, but in the new n2n world, there is hardly any need for specialist TV technology people to exist as we know them. A fact particularly unfortunate for me because I have for some years earned a living as a consultant and Program Manager in the Digital TV space.
In the old world, if you owned content you needed a network and you didn’t think too hard about the fact an EPG was imposed on the pipe your content was delivered through because that’s how you got your content in front of the audience. The systems for doing these things were far too expensive and specialist for you to seek to deliver them yourself (though if you were big enough - like Disney - you might take the extra step of arranging your content to match your own wishes in your own channel). But in the n2nd world, the need for your content to be aggregated with other content just so it can be economically passed through a pipe, has been almost entirely eroded. In the n2n world, every element of the old TV pipe including the Set-Top-Box and the EPG, is now a commodity and is replaced by more generic technology already available in the field. Now a bedroom programmer, albeit one with sufficient financial resources to pay hosting fees and CDN caching fees, can deliver video to any device in the broadband n2n ecosystem and retain full ownership and distribution rights over the content.
The EPG of today looks as it does because of the past constraints of TV Service Transmission. If the world had never seen TV and then, all at once, someone invented the Internet, Google indexed search and n2nd technologies - after recovering from a heart attack at the excitement of it all - I’ll wager no one would then go on to invent an EPG as we find it today.
In a world of n2nd distribution current EPG design displays available TV content like Walmart stacks it’s shelves with groceries. Apple doesn't sell iMacs next to HP Notebooks at Walmart, so why would Warner Brother’s do the same with Harry Potter movies? Big blockbuster movies like, Transformers, James Bond and blockbuster TV series like The Sopranos, Band of Brothers, Hero's etc are each a franchise in and of themselves. And thanks to being rendered in the medium of the moving image the brand of the franchise is quickly and strongly established in the minds of their audience.
Brand is something to be built cherished and nurtured in the way an iMac in the Apple Store is presented like a tablet from the gods reverently placed on a shrine. Part of the reason cinemas survive in the world of large flatscreen personal TV's and Home Theatre technology is because going to the cinema is an all encompassing experience, and the experience starts with the sense of anticipation you feel as you walk through the doors. Control the space your content occupies and you control the experience and gain the opportunity to burn your brand franchise into the deepest levels of the viewer's psyche.
When you own a valuable brand, you try to shift it as far away from ‘commodity-land’ as you can manage. All the time you are a commodity you are competing on little other than price but when you are a TV brand, you are competing on promise, anticipation and excitement and these things flourish in the context of individuality (but not in the ‘supermarket shelf’ straightjacket of the EPG). So my prediction is content is going to become increasingly disaggregated. Content owners will increasingly present their wares from within their own content specific portals.
There will be limits to this process of disaggregation of course. Some content benefits very much from time-bound delivery as distinct from on-demand delivery (sports and news to name two) and there can be no doubt many returning tired from a day’s work will want a video magazine of news and entertainment to be prepared for them for when they slump in the couch. In the n2n world, owners of complimentary content co-operate and co-ordinate to deliver it as part of a unified TV magazine (here I am using the term magazine in the non-print material sense). Still there will be little incentive to present content on a ‘supermarket shelf’ alongside non-complimentary direct competitors, especially if you own the market leading brand. Co-operating with complementary content partners and developing your own portal (and so retaining control over the entirety of the customer experience) is the far more attractive option.
Areas to watch:
The EPG Model
As a counterpoint to my argument above, while we wait for the n2nd ecosystems to mature, there is still opportunity for a content aggregating device or OS which gets OTT video content efficiently onto the TV screen to have an significant impact. The current leading contenders are Apple TV and Google TV, though there are other devices worth looking out for, such as the Boxee and Roku STB’s.
Both Apple and GoogleTV, however, are excessively paternalistic and look too much to how things were done in the past whilst in Google’s case, simply throwing a bit of indexed search into the mix. It has not been build from the ground up to support how content owners will present their wares in the future. It is informed too much by the notion shows are self contained entities (which for now they are) and need to exist independent of their own hypermedia portals (which increasingly they do not). In the old world, developing a client TV content presentation solution was expensive. It involved integrating bespoke software (known an embedded system OS and a higher level TV centric addition that has become known as Middleware) and few vendors have ever managed to produce an integrated solution in less than nine months and each integrated solution would be specific to a physical network and so would only reach a small fraction of the total market for any give show. In the new n2nd world, where the n2nd TV Service pipeline has almost every element in place already, the delivery of a new TV show the added work to be done will be the delivery of a portal app for iOS or Android or the like and will be closer to 2 weeks. Abstraction technologies like Titanium allow web based hypermedia content to be delivered to native compiled applications for both iOS and Android are already available and massively reduce the effort required to get hypermedia and video content running together natively across multiple devices.
For an analogous model to the one I am proposing will emerge, look at how printed magazines / newspaper vendors have responded to the emergence of the tablet computer. News International publish a monthly magazine called Eureka which can be downloaded as an entire app (e.g. the Magazine itself is an app). The app doesn’t present the magazine content in a traditional page 2 follows page 1 style at all. It is a true hypermeida reading experience. But importantly the reader doesn’t first download a magazine reader and use it to order the magazine, for Eureka the “reader” and magazine are one. The reader code is part and parcel of every magazine download and in terms of network and device resource usage is extremely “cheap.” We can expect to see a similar strategy for n2n and n2nd OTT video delivery.
Of course generic magazine “reader” apps exist, such as the excellent reader produced by Comixology and used by Marvel and DC comics, but even in this case the presentation of available purchase options is not unified across the two companies. You download both the Marvel version of the App and the DC version of the app.
In the short to medium term there will be a place for a TV centric operating system which looks after some of the content owners content navigation requirements, but this will reduce over time, especially with the emergence of n2nd solutions. Both Google TV and Apple TV are well positioned to morph into the required solution (Google TV already has an Apps solution and Apple TV, built as it is on iOS and utilising the same A4 processor as the iPad, could easily implement the iOS apps solution).
The Player Device / Display Device interface
Open solutions for streaming TV to a separate local display device. In the n2nd world you carry your downloaded content and streaming content subscription rights with you. Round at a friends house and want to watch the game on his HD TV? Simple,
pluck your phone out your pocket and stream to his / her TV.
But for this possibility to emerge as a general solution beyond just e.g. the Apple technology ecosystem, content owners must be able to trust the link between the player and the display device (the n and the d of n2nd). This is no small problem. Player devices already have DRM solutions, however content owners will need to know their content won’t easily leak out of the display device before they will be willing are to supply to a given technology ecosystem. The only way to ensure this is either to use a closed ecosystem like that provided by Apple, or to implement a trusted certification process for certifying players and display device solutions together with a centralised database serving up per-play entitlements. The current DLNA standard simply doesn’t address this need, so something new is required.
Hyper-live TV Magazine Content
The integration of time-bound content with unicast delivery hypermedia style navigation. TV magazine style show will have a start time, but if you start late, it will contain skippable segments and also the reverse, optional segments which will take you away from live transmission, only to return you to live minus the length of the optional segment when done.
OTT content is currently hobbled by a bad channel surfing experience. The need to channel surf however is likely to reduce as the navigation paradigm is replaced by a hybrid time-based hypermedia based. But even with this reduction, it is still a viewer unfriendly to have to wait 10-30 seconds for the stream to buffer before video can be displayed. However in 2011 Sky will be introducing adaptive encoding which will allow the much faster display of low resolution video when acquiring unicast streamed video. After an initial low fidelity video lock is obtained, the quality of the stream will be increased as more of it buffers.
Update - we post this in the morning, in the evening Microsoft announces it is getting into TV and it could blow up broadcasting...
Saturday, November 20. 2010
Broadstuff has been quiet the last few weeks, owing to the annual vacation and the inevitable massive workload before and after going (I need a vacation to recover from my vacation....)
Anyway, that meant I was nowhere near social media for a good 4 weeks, and I think the experieince is interesting. I have gone "Cold Turkey" in a way, as coming back to Twitter, Techmeme, TechCrunch etc I was struck by how much PR cr*p is on them all now!
I am sure it was not always thus, so I had a look at Techmeme by about 3 years back , and - this is just an impression, rather than a scientific study - my impressions are:
In other words something has been lost - maybe it was ever thus, but the content now is - in my view - very lightweight. Now, this is clearly good for advertising - my experience with this blog is that lightweight, topical content drives far more traffic than long, considered articles in the short term. The question is whether it drives influence for that blog or writer. For the promoter it clearly does - the more blogs parroting a story the better, there is a quality in quantity, but whether it is good for the blogger is another matter. (Over the last 3 yaers, my "biggest selling" articles have been the longer, more thoughtful ones and those have oened the door to the conferences, clients and so on)
With Twitter, the thing that really hit me coming back after 4 weeks was that it was a complete tower of babble, and the sooner I can get self-determined filters that I control on this sort of medium, the better.
For "Social Media" I think it has hit its Point of Maximum Hype and is on the slide - the grasping at "Social Commerce" is the last desperate act to monetise the f*cker. (A point made on one of the posts three years back was that Social Commerce was like your friend coming up to you at a pub or dinner party dressed in Coca Cola gear (or any other brand you care to name) and trying to recommend you buy it, knowing he gets paid for it, and wondering why the guy didn't realise he was being a complete w*nker).
Anyway, they knew it wouldn't work then, but clearly today the need to monetise these companies has unleashed a blizzard of tame pundits trying to persuade us it will actually work, and that you will take said friend unto your bosom, welcome him heartily, and (most importantly) buy the stuff.
A nation no longer of shopkeepers, but of virtual Ponzi salespeople. These are what the word "friend" is used for these days.....
Thursday, November 11. 2010
South African War Memorial, Delville Wood. Thousands of young South African men were killed there in a few days in July 1916 to ensure another country held onto a handkerchief of land for a few days......two weeks later the British introduced tanks on the Somme. There is a lesson about fighting other people's wars here!
....was rather brought home to me this year by a visit to the Delville Wood memorial on the Somme, to the South African troops killed in World War One. I lost two grand-uncles in that war, and an uncle in the next one. Seeing their names - and the ages they died at - in the rolls brings it home very sharply.
Wednesday, November 3. 2010
Yes, dear reader, who could resist the linkbait of this one - Facebook has launched a service down the well worn path of allowing local businesses to push their special deals onto your mobile phone. The interesting thing is, as Inside Facebook explains:
So - well worn Use Case, but with Freeconomic play from subsidisation elsewhere to push for-pay startups out the space and grow market share fast (roll over Groupon, and do tell Foursquare the news....).
But it won't be available on the iPad - TechCrunch:
Zuckerberg was pretty blunt when it came to explaining why there wasn’t an iPad launch during today’s mobile event: “The iPad isn’t mobile”. He later qualified this statement to say that Facebook loves working with Apple, but that the iPad isn’t as mobile as a phone (he’s right).
In other words, the use case and demographic for the iPad is not likely to support a shedload of coupon adsh*t on their screens. Guess which device I am using around town from now on
There is a substantial customer subsegment that clips coupons, so there is no doubt a market for this - but what size this is, what they are worth vs the cost to serve, and whether they will wade through all the Adcr*p on such a small screen will be interesting to see, it may well be that Facebook is better off limiting its players to a smaller number of (large, high paying) high street brand names.
Definitely a "watch with interest", as I think the "No iPad" rule means they have clearly carefully considered the market (Zuckerberg thinks the iPad is a computer - we agree). I suspect that the iPhone user demographic will be rarer users too by the way.
(Disclosure - we have helped two interactive mobile Ad startups set up their businesses, so we know there is a market, and roughly where it is....)
Monday, November 1. 2010
Given that the blogworld is abuzz with Googlers option-surfi... - sorry, fulfilling their creative potential - to Facebook, it is interesting to think about what will cause them all to surf out again once it IPO's - Dave McClure has 3 assertions on how to beat Facebook (Broadstuff abridged version):
ASSERTION #1: Facebook doesn't get Intimacy.
ASSERTION #2: The stuff that's really valuable in my social graph tends to the extremes -- very public (ex: Twitter) or very private (ex: email).
look, it's either Gaga, Shaq, & Glee (extremely public, better on Twitter than Facebook) or else it's only my closest buddies (u know, the evil VCs I collude with at Bin38 to fuck over YC startups).
ASSERTION #3: Intimacy depends on Context, Connection, & Continuity... which determine Closeness... and ultimately, drive Commerce.
One might suggest that Intimacy is determined by:
I'd buy Assertion 1, and i think he is onto something with Assertion 2 - that the value is in the polarities - but I think Assertion 3 highlights the chimera in all this, ie that it drives Commerce.
It is my view that Social Commerce is a Pull, not a Push, function, and the successful platforms are enablers rather than enforcers. Different culture - and probably revenue model. Since the beginning of time we have gone down to the market square to trade, and the pub to meet friends. Sometimes the pub is at the market square, but it has a different role.
Different places different functions, same people
Om Malik calling Google's biggest problem, ie that it is no longer a growth stock and thus attractive to "the talent" as it is harder to Get Things Done:
Never mind the receptive and nurturin stock options that are a far better call at Facebook, 2 years pe-IPO
Hate to say "we predicted this" - but we did....in October 2006 after the GooTube Gambit wnen we wrote:
This is their Netscape Moment, when it becomes clear they are not really in the vanguard for the next wave.
Some things are just, like, so predictable. Four years later there are now N++ new businesses tried and failed, bought and failed etc etc. Google is now a fully fledged Big Corporation, with all that it entails.
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