Wednesday, February 29. 2012
1. Go to the google homepage and sign into your account.
By the way, its not just Google.....
This is a public service announcement. You have been publically served. Do it or you will be served on a platter, as you are the Free Lunch. Thank you.
(Update - as Steve G notes in the comments, if you do not have Web history turned on you are OK- but check tomorrow, I am not certain what will be "opt in auto" then.
Also, I see the EFF are advising you to clear your browser history stacks anyway, and to stay off Google or do searches in browser Incognito modes now)
Monday, February 27. 2012
Social Media Value Chain - High Level view (Broadsight Analysis)
Good summary post from Adam Tinworth, on 5 lessons from London Social Media Week (my abridgements, see Adam's post and rather good liveblogs for the full monty):
1. This is just beginning
I'd add the following thoughts:
1. This is just the beginning. And as Bill Gates said about the Internet in the late 1990's, the changes are less than you will expect in the next 2 years, but far greater in the next 10.
2. Practical Advice is thin on the ground - so make sure the people advising you are practical There are people in this space who have been doing it for several years, but we are now in the phase where they are being drowned out by...
3. Beware the noise.....Snake Oil Y'all
4. Lots of Work on Curation - I agree, and more - the Aggregation stage is is where the value is created at the middle game of any new media value chain (see Social Media Value Chain diagram above). There will also be a major push to unify the many different Screen experiences, and then open walled garden Social Graphs (the Next Netscape). A very interesting development is the drive to Social Net Commerce (eg Facebook's new moves for mobile)
5. Events are the new media - very interesting perception. It is well known that in the first phase of the Hype Curve more money is made from talking about something than doing it, but I think Adam has hit a truism here - from the very beginning of the the 'Net, increasing online communication has also increased the desire of people (and I'm not just talking about the swingers) to meet face to face.
Monday, February 20. 2012
Article in Techcrunch arguing ERP needs to go all cloud:
SAP and Oracle should be pushing innovative cloud solutions that cannibalize their bases. Instead, they’re attempting to acquire themselves into innovation. That’s not a strategy. That’s a shift into survival mode.
Well, having worked with ERP systems and hosting and the Net for 20 years or so, we'd argue this is like saying all companies should buy electricity from the grid all the time. It is true for some companies all of the time, but for some companies it isn't. And information, despite what CloudCos like to argue, is still far from being a fungible commodity.
The argument though, is that by refusing to go cloud at the droplet of a hat, these companies are not innovative:
In each case, an industry leader first denies the relevance of a technology, then frets over losing marketshare to it, then finally spends big money to acquire it under the pretense that it’s the key to “expanding innovation”. Overnight, that technology is now worth far more in the eyes of customers and investors. But more importantly, the acquisition strategy failed in each case. Instead of leading the way, the deal makers never committed to the technology, and their actions usually helped open the door to a whole new class of companies to take over.
But this is basically saying "ignore your huge installed base to grab this small cool new thing over here". It's like telling Telcos in the 1990s to drop their huge PSTN revenues to embrace the Internet. Any smart company is going to manage the decline of it's bread and butter revenue while slowly moving up its ability in the new. These large businesses do not move when the new new thing is 1% of revenue, they acquire solutions that have come out of the primordial startup soup and jumped the chasm - ie proven themselves - at 5 to 10% of revenues. So to say:
The bottom line is this: A series of cloud acquisitions won’t help lumbering old ERP one bit. Acquiring cloud companies doesn’t make you a cloud company any more than buying a Giants jersey makes you Eli Manning. It’s not a strategy for an on-premise solutions company. It’s an attempt to distract customers and hope they will forget about the ERP boat anchor they’re stuck with.
...sort of misses the point. Yes you are right. And so? Can you buy a massive ERP from a CloudCo? No. Can you run a massive corporate on SOP, some Ajax and a Social Business network that a CloudCo sells? No. So rather than arguing that:
The big ERP players had their day, but now it’s coming to an end. This is the classic Innovator’s Dilemma. For too long SAP and Oracle have watched the enterprise market innovate around them, stuck to their knitting and failed to adapt. The cloud technology wave has passed them by, and now it’s too late.
...it is probably more interesting to ask the following question: Is it easier to stick your current Oracle system on some tins in the cloud, or easier to pull it pull it out and start afresh with a new ERP system?
The answer to that tells you the evolution of the game - which is why we still have Telcos. It's more useful to look at where earlier new point entrants came in. Where did PCs take hold? Where did the 'Net first take hold in corporates? Why hasn't Salesforce.com morphed into ERP.com yet?
Update - in other words, as Vruz points out, the real opportunity for CloudCos is the Medium sized business market (and point functions in corporate divisions)
Thursday, February 16. 2012
Scanning the London Social Media week programme I see that we seem to have traded in "Enterpise 2.0" for "Social Business" in about the last 2 years or so (Well, it was Enterprise 2.0 2 years ago in Social Media week ). I naturally got curious about whether it was a new bottle for old wine, or if there is genuinely something new going on. (Ironically, I can't attend as I am far away designing an Enterprise IT strategy, and it encompasses Enterprises 0, 1, 2 and elements of Social media - see further below)
Wikipedia defines it as:
Enterprise 2.0 is the use of "Web 2.0" technologies within an organization to enable or streamline business processes while enhancing collaboration - connecting people through the use of social-media tools. Enterprise 2.0 aims to help employees, customers and suppliers collaborate, share, and organize information. Andrew McAfee describes Enterprise 2.0 as "the use of emergent social software platforms within companies, or between companies and their partners or customers".
This once meant (says Wikipedia):
"Social business, as the term is commonly used, was first defined by Nobel Peace Prize laureate Prof. Muhammad Yunus and is described in his books Creating a world without poverty—Social Business and the future of capitalism and Building Social Business—The new kind of capitalism that serves humanity's most pressing needs.
And I once understood Social Enterprises, which back in the day were:
"A social enterprise is an organization that applies business strategies to achieving philanthropic goals. Social enterprises can be structured as a for-profit or non-profit."
In essence, Social Busines has shifted its meaning to encompass for-profit enterprises, and the aim is to increase profits and reputation. As Wikipedia delicately puts it:
Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is fundamentally motivated by the perception that such commitment will ultimately make the enterprise more financially valuable.
So has anything actually changed apart from For-Profits trying to put on prevously Not For Profit clothes? Whereas I think we have seen a semantic shift in the use of the term Social Enterprise/Business recently, no doubt partly motivated by the above, after reading Adam Tinworth's liveblogging, it did seem to me that Social Business is now also absorbing parts of what were once "Enterprise 2.0". I think this was clarified by some of the talks Adam covered, from people I have had a lot of time for, for a long time. JP Rangaswami talked quite a bit about the Cluetrain Manifesto, which was of course a cornerstone of Enterprise 2.0 as well, noting that:
Cluetrain suggested that there were two sets of conversations: one inside the firm, and one outside. And they’re different. If you live in a broadcast and hierarchical world, you have a measure of control – and safety.
Joanne Jacobs also made points that I recall were also fundamentals of Enterprise 2.0 - Cluetrain customer treatment, and crowdsourcing rare expertise
People flock together, but not just for safety, bit for an opportunity to work collectively towards goals, but individually their opinions count. They are a collective of individual opinions. The word “customers” belittles communities to buyers. Of course, we need to make money as businesses. We understand that. If you think of them as buyers, then you are not allowing them to contribute to your business except as buyers.
But if you look very closely at what they were saying, there are some important differences - Euan Semple noted that Social Media is now "in the knitting":
We’re turning social media into a “thing” – it’s the thingification of social media. It becomes sellable, marketable, something people have to do. But what I see is the web becoming part people’s lives, and encroaching into their workplaces. And this is why IT gets jumpy – they have this ordered, structured thing they call the workplace.
JP I think really addressed the main change we have seen, i.e. it has increased the customer voice:
Customer interactions are always referred to in the past tense, because they’re only accessed after they happen. “Transaction processing” – it was once called, and it was expensive. Now, the pervasive presence of technology – and especially mobile – we can produce constant activity stream of what we’re doing. And it’s easy enough to do it in expectation of figuring out how it will be useful later on.
And Joanne warned potential Snake Oil chuggers that it's not a surface fix anymore, another major trend we have found in the last 2 years or so:
Any marketer or PR person in the room who thinks it’s about controlling the message? You’re going to fail. Start thinking organically. Marketing warfare is dead. Get over it. If you think you can manipulate people’s opinions, you will create a muppet community.
Well, in our view what has really changed underneath all this is the sheer number of people using the online ecosystem - social and otherwise - far more heavily to research, to buy, and to get service. Thus there is a reason the "buzzword" has moved on from Enterprise 2.0, but in my opinion there is now a risk the "Social" bit is being seen as the The New Big Thing, rather than a component of what is still an end to end infrastructure, i.e it is stilll just a part of an end to end value delivery chain, and it is only as good as the weakest link. I therefore propose the term "Social Enterprise 2.0" to remind us that it is just a component, and that it won't work properly unless it is looked at systemically.
Now, as you may know, we do a lot of the back end systems work (infrastructure layer, not presentation layer, if you like) and put in our first Social Network based system in 2007. We have been doing a lot of work in this emerging "Social Infrastructure" space over the last 2 years, and here is my take of what "Social Enterprise 2.0" is really all about. As a first point, bear in mind that there are only 2 ways a "For Profit" makes a profit:
(i) Increase Sales - to more people, or charge more for what you sell
(There is a 3rd option - tax avoidance - but you have to be a very big company with Friends In Power to pull that off it seems).
Anyway, taking these in turn we have found the following:
Social Media has two well known impacts here - everyone knows it can recruit more potential customers via word of mouth, viral marketing, friends recommendations etc. But this is pretty well known from Enterprise 2.0 days, and an entire Social Marketing/PR industry has emerged in the last 2 years or so to do all this. I think fewer people know that it can be a useful tool for cross selling, but this is more subtle and requires the company to set up trusted communities, as the ideal is customer A and B telling customer C that they should try Product Y as well as X. Many have tried....
However, our work has also found two other rather more subtle factors:
(i) One of the impacts of Social Media is that the customer service reputation is now a major part of the buying process. c 90% of all buyers go online before buying now, and a bad service reputation is quite a big part of the buying decision (We have researched this for clients - its is a major purchase driver, especially for higher cost/longer duration deals)
(ii) It is fairly well known that if there is a disconnect between the Company Spiel and reality, it is found out much faster, goes farther with social media, and is harder to manipulate. It is also now possible, by tracking the datastream, to understand which disconnects matter most, and understand it early. So far so good - now here is the kicker. More and more customers know this, and are becoming familiar with it, so they expect far more rapid action - and many more of your customers work in customer service in some form or another, or know someone who does, so are becoming far more savvy. And they are getting more clued up about privacy issues too.
In other words, as Joanne pointed out, it is going to get harder and harder to gloss over operational errors with glossy marketing and PR, and datascraping, so the pressure on getting the operations - and infrastructure - right is going to become more critical. Sockpuppeting the comment streams is not good enough anymore....
We have seen quiet a lot of trends here, not as visible as in the "presentation layer" but for the reason given above, probably more critical.
And then there is the Great Spoiler, which we have found to be absolutely true in 5 years of this work - your top layer "Social Business" will only as good as the supporting Enterprise 0, 1 and 2 layers around it- ie:
Enterprise 0 - the non IT stuff - the processes, skills and culture of a company - the bedrock layer - will scupper any attempt to add higher layers if it isn't a strong enough foundation. In all our work we have g=found you have to strip back to the processes and skills as a minimum.
In other words, there is something new in "Social Business", but there is less to the eye than one may think if one drinks all the Snake Oil (or at least one should note the old bottles it may come from) and a lot of back end work to ensure you do get what you see.
Tuesday, February 14. 2012
We noted yesterday the spat between the NYT and Silicon Valley bloggers re Path and its (ahem) "data sharing features" (see here). This has now opened into a full blown blogspat, with Dan "Fake Steve" Lyons weighing in with some interesting thoughts of what the wanna-be-rich blogger may do:
First you establish yourself as an “influencer” by posting a lot of noisy stuff on a blog and building an audience. Then you need to “monetize” your influence. You tell all the VCs in the Valley that you are starting an “angel fund,” and you ask each one to give you, say, $500,000. They go along because (a) $500,000 is pocket change to these guys — so small, in fact, that they don’t care if they lose every penny of it; and (b) you’re an influential hack and they don’t want to piss you off; and (c) they figure you can maybe write nice things about their portfolio companies, which would be especially useful if/when one of their portfolio companies gets caught up in some scandal; and (d) if any independent journalists write something critical about one of the VC’s portfolio companies, you can can use your influential personal blog to savagely attack those journalists and try to discredit them.
As Lyons notes, this is in fact just a new version of an old racket that used to be practiced in the tech space by “independent analysts.”, ie: “Pay seven figures a year to buy a corporate subscription to my newsletter and I’ll say nice things about your company, and when the press needs a quote, I’ll be there to puff you up. Or, don’t buy a subscription and I will bash you relentlessly.” Most big companies paid up and considered it a cost of doing business. (I believe in even earlier days this was called a protection racket, where you pay me to protect yourself from your foes - and from me)
Anyway, Lyons believes Mike Arrington's new vehicle, CrunchFund, is up to this now. And given his insightful Fake Steve Jobs satires, it is clear he probably knows of what he speaks. Naturally of course, Mr Arrington and other Ex TechCrunchers ride to their own defence. Arrington has a good point - why pick on just Path (and by extension, why pick on just Mr Arrington....), but - to my mind anyway - this is all still avoiding the underlying New Media business model issue, ie the conflict of interest of investing in the companies you write about, or take advertising from, etc etc - because getting a user to pay, and finding a sustainable business model, has proven very hard so far. In other words, big picture, will some form of independent media exist in the professional non-mainstream media arena?
Also, as Dave Winer (another old hand) notes, the initial underlying Social Media issue - the abuse of user privacy - is increasingly being lost in the noise:
Given we are entering the last phase of the Bubbletime, you can be sure the hype machine will still get a lot louder and shriller, but - as opposed to the dotcom years - it would seem that those who wish to puncture the bubble have better access to media too.
I can't help juxtaposing this with the ongoing Leveson enquiry into the UK media, dealing with mainstream media abuse of privacy (phone hacking, paying people for data, etc) and the emerging realisation that they are on the horns of a dilemma:
- firstly, regulate the mainstream media how you will, the blogosphere will still say everything they can't anyway, so any censorship is probably moot
As we have remarked before, Bubbles have a role of washing away the old and bringing in the new, and we suspect that mainstream news media may well be collateral damage in this next Social Media Bubble cycle - the Old Media business model is not really working anymore, to my mind CrunchFund et al are looking for new ones. A blog protection racket may not be the end game for the New Media, but I was struck by something my colleague Martin Geddes noted yesterday about the binary "New Media Technology" market that is emerging, viz:
"Two stable states: user is customer, user is product. No viable space between"
I think he is on to something here.........and I think it will apply to Media. You will either pay for truth, or have to mine it yourself from the free media
Monday, February 13. 2012
The Path brouhaha rumbles on, the NYT weighed in with:
Now of course all the Lilies of the Valley (except they spin, and they sew....) rushed to their keyboards to call the NYT names, but this says more about them and who pays their wages (I loved the Arrington showing the belly one). To anyone outside of the (soon to be) vested interests, that Social Media companies make money from your data is blindingly obvious, and thus it should surprise no-one that they are less than careful about user data - after all, users are the not the customer, they are the free lunch. As the NYT concludes, there is a well established path in doing things this way:
At Mr. Morin’s last job at Facebook, his boss Mark Zuckerberg apologized publicly more than 10 times for privacy breaches. It seems the management philosophy of “ask for forgiveness, not permission” is becoming the “industry best practice.” And based on the response to Mr. Morin, tech executives are even lauded for it.
But timing is everything, and this is not what is wanted a few weeks from everyon'e payday, when Facebook IPOs and the blue toucghpaper of the Social Media bubble is lit.
But there was another article in the NYT though which was very interesting, about users being paid for their data.
This is something that has interested me for years - about 15 years ago we participated in a Futurist conference and one of the big things that came out of it was that there would be a premium on the Net Present Value of the User's future income, and a race for their personal data would begin - what was also clear is that initially the service providers would try and pay as liitle as possible (the model at the time was supermarket loyalty cards) but the belief was that online, people would use tools to bargain their data at higher value - so far, not so good though, as social networking and gamification of applications makes users throw it away.
I have always hoped that VRM style tools may emerge for this, but not yet. Still, lets see what happens in the next 12 months - the technology is available, and they say all things carry the seeds of their own destruction.
Thursday, February 9. 2012
Luis Reys - The marvels of Dinosaur Diversity.
Another interesting talk at Design of Understanding conference was by artist Luis Rey. He draws and paints dinosaurs. Now, any talk by a Spanish Londoner who draws and paints dinosaurs is interesting to start with, but he told a fascinating story which is even more fascinating.
Luis is a Dinosaur Geek - he wasn't content to just draw them, he had to get it abolutely right so started getting into paleontology and corresponding with all the leading dinosaur experts. This was in the 80's/90's when dinosaur reserach took two great leaps forward:
So Luis had started drawing dinosaurs with straight spines and feathers (see picture above). And guess what - no-one wanted to publish them - because everyone knows that is not what dinosaurs look like. They told him he was barking - even though he was taking advice from the best authorities in the field at the time. The Jurassic Park movies coming out at the time took the decison to run many of the dinosaurs in the traditional poses as that is what dinosaurs "should" look like. It took the BBC's "Walking With Dinosaurs" to really change perception, and it was a somewhat courageous decision for them to do it (I suspect they could take the risk at the time as they do not rely on commercial funding - another reason to keep the BBC funding model there IMO)
It has taken most of the 90's and 'noughties for attitudes to change, and for feathered, fast running dinosaurs to become socially acceptable.
What amused and intrigued me is the dinosaur attitude problem (ie belief in things because of traditional received wisdom rather than keeping up with a changing fact base) even existed for dinosaurs.
But the lesson is that it took about 20 years from research findings to acceptance. It made me redouble my belief that we are seeing other many other "dinosaurs" all around us. I mean, if we can't even see dinosaurs clearly......
Wednesday, February 8. 2012
And what goes for Path goes for Facebook, in multuplicate. Getting to that $15 - 20 ARPU to justify the IPO valuation is going to be far harder than assumed I think.
One to watch....
Why Bubbles need to happen (Source: Carlota Perez)
I gave a talk at the Design Of Understanding conference few weeks ago about technology prediction, a part of which was about the role of hype and bubbles in technology, been meaning to write it up, but this is it in a nutshell.
Bubbles are the last stage in the Creative Destruction cycle as one technology overtakes another.
This sequence is quite well described by Carlota Perez (see slide above)
In essence, the new is always suspect and the old has all the big battalions on its side to prevent the new succeeding. Machavelli recognised this a long time ago when he wrote:
For the Best New to emerge, there is a period of Darwinian evolution as all the new new things compete to get over The Chasm and establish themselves in the market. In technology, the very disruptive new things can often asymmetrically hurt the business models of the Old (ie the small newcomer can afford to undercut the existing behemoths for a while), and this is of course exploited (in what we call "Pirate World" )
But the Pirate World in itself is not enough to shake the Old, which has many advantages - cashflow, and typically recourse to other blocking forces like political access and regulation, and besides has the resistance of the late adopters and the reluctance of the lukewarm supporters of the new on its side. Also, the New often needs complementary infrastructure and other parts of its own value delivery chain to be built, plus money to
The role of the Bubble is to give the New Things a sufficiently large amount of fast, cheap money (as in you know most of it will be worth nothing) - a Tsunami of Cash - to wash the foundations of the Old away. The role of Hype is to stoke the Bubble, so that the Wisdom of Crowds is converted via Irrational Exuberance into the Madness of Crowds.
Perez's view is that the bubble then leads to a "Golden Age" when the services can be built out in relative calm, on massively discounted assets (eg the huge amount of pipe, power, port and ping left over by the dotcom crash). My observation is that the creation of the new involves the destruction of the old, but also carries significant collateral damage - the destruction of the Irrational Investors' wealth (or not, if you are a bank and too big to fail) which means not all new agers will see it as Golden.
The So What.
In my view, the Facebook IPO is the final act of the Hype cycle of the coming Social Media bubble. Just make sure, in your Irrational Exuberanace, that you are not one of those creatively destroyed in this last part of the cycle.
Incidentally, for the Dinosaurs, Riepl's law shows that the Old do not die, they gradually fade away....
A very useful update comment:
I found Fred Wilson interviewed Carota Perez at Web 2.0 Expo last year, and this copy of her presentation at Web Expo 2.0. Soem of what i mention here she talls about. Cracking stuff, though I'm not sure about her synthesis of the latest financial bubble burst.....
Friday, February 3. 2012
It's been quite interesting, that despite all the predictable booster hype, quite a few articles out yesterday on the actual value of Facebook feel $100bn might be too high - to me the real shocker was that even Henry Blodgett doesn't think it's worth $100bn at the moment (a core value of c $75 according to his calculations). I await Mary Meeker's pronouncement with eager anticipation
And of course a few of our troublemak... loyal readers asked me the same question. What do we at Broadstuff Towers think its worth?
Well, the analysis we did yesterday would suggest that if you think it is the "next Google" then its about 1.75 - 2x overvalued compared to Google at IPO, so c $50bn - $60bn would be a much safer bet. If you think its "worse than Google" then head for the hills now, if you think it is 2x better, then buy - but you need to know why you think this. Based on the Broadstuff Digital Bubble Atmosphere Exposure* methodology, I'd estimate it will have an IPO valuation of c $75 bn +/- 10%
So the real question, assuming you are in for the long haul, becomes "how sustainable do you think it all is" ?
There is a nice article on Slate today asking if Facebook is a Good Company that goes down this line, and this comment hit me:
As far as I can see, Facebook's "analogy" business model today is mainly to erect billboards on our digital social pathways, and try and get us to turn off the road every so often to buy digital souvenirs. If this sounds suspiciously like the "eyeball" arguments that launched a thousand failed dotcoms, you'd be right. To succeed therefore, it needs to navigate the travails of its own S-1 warning:
If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed.
But its also more than that - it's not enough that they don't fall - to justify this valuation over time, these things all have to go up, by more than an order of magnitude by our calculation.
And the next 800m users will not be as wealthy as the last 800m, and after that there aren't many left to find - so additional revenue is not going to come from a pure volume increase, but from a value per user increase. So you have to believe that there will be more money from our mobile usage, more user activities to keep you on the site, more games played, more billboards, and - The Ultimate Goal - that the billboards will be far more targeted than anything that has come before so advertisers will pay far more per view than today.
And to do that you have to intrude on privacy far more than anything has done before.
And for that to be viable you have to believe there will be no backlash to further privacy erosion, social or legal.
Which I don't. We have neen tracking concern about privacy, and it's been growing quite rapidly in the last 2 years.
Which means that Facebook's core business is going to get harder and less profitable to run over time. I don't believe there are major new economies of scale after 800m users, so no new scale benefits. So it comes down to whether you believe they can use the $5bn or so they raise to buy their way into more stickiness and newer, better and more profitable revenue streams. Which I don't believe they can do, at least in the short to medium term (I cite Skype and YouTube as evidence).
I do believe that if anybody can pull it off it is Mark Zuckerberg, he has successfuly navigated all the landmines to date - but he has done it with majority ownership of a private company. But can one do the same with a much scrutinised public company, is the (tens of) billion dollar question?
*Take your digit, expose it to the atmosphere....(Actually, I read a paper once that argued asset bubbles inflate underlying values by an average of c 40% - it was on the Internet, so it must be true....)
(Page 1 of 2, totaling 12 entries) » next page
More Broad Stuff
Poll of the Week
Will Augmented reality just be a flash in the pan?
Creative Commons Licence
Original content in this work is licensed under a Creative Commons License