broadstuff

Facebook - valuing the billboards on your digital pathways

nospam@example.com (Alan Patrick) — Fri, 03 Feb 2012 11:34:23 +0000

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:

Facebook’s all-encompassing mission to “make the world more open and connected” seems positively zany. It’s not only that Facebook is ambitious; lots of Web companies, especially Google, strike the same revolutionary tone. What’s different about Facebook is its product: Facebook is us. You go to Google for Web pages, you go to Apple for computers, and you go to Amazon for stuff. What does Facebook give you? Me and you and everyone we know. Or, to quote another movie: It’s people! Facebook, is made out of people!

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....)

Facebook - numbers and valuation

nospam@example.com (Alan Patrick) — Thu, 02 Feb 2012 09:06:12 +0000

Google vs Facebook in 2004 $, assuming c 20% inflation

Now that Facebook has filed it's S-1 it is possible to look at the actual reported numbers, which are in short for 2011:

Revenues £3.7bn
Operating costs 2bn
EBIT $1.7bn
Tax $0.7 bn
Profit $1 bn
845m users

The chart above compares the Facebook valuation against fundamentals with Google. Note that I use Google's IPO filings, its actual performance in 2003 turned out to be far better (c $1,5bn revenues and $350m profits), whereas Facebook's probably won't be.

What it shows is that Facebook is in essence trying to get about 15% more value per $ of revenue (or 75% more if you plug in Google's actual 2003 performance), and underlying that is an assumption of a c 2 x valuation per user and per user dollar earned vs Google. Now Google overperformed, so it's not unbelievable at all that Facebook will hit its valuation too, but as it has set the bar higher Facebook will still be under more pressure to deliver the results than Google was.

So, what do we have to believe to believe that Facebook is worth the $100bn?

Firstly, you need to believe that the numbers are even achievable. A valuation of $100bn on a user base of 845m implies a valuation of c $118 per user, within a reasonable timeframe. In financial modelling that is usually taken as 5 years. There are about 2 billion people online today, most estimates think it will be about 3-3.5 billion in 5 years or so time, a reasonable estimate of the the maximum Facebook user base is probably in the region of about 1.5 bn, ie roughly double today, so let us assume the endgame is the valuation of $100bn over 1.5m people, ie about $70 per person in 5 years time. A simple approximation therefore is that Facebook needs to go from c $70/5 = c $15 ARPU, from the c $4 today. Incidentally, Google's ARPU is about $18 today. So it comes to this - do you believe that Facebook can eventually make the same sort of ARPU as Google does, and keep its current market share? Bear in mind that the next 800m people Facebook adds will have much less disposable income than the current 800,000, so the ARPU growth in ratio terms is far higher than Google had to do, as it grew from a smaller base into a wealthier market.

Secondly, long term, ultimately valuation is based on profit. Facebook has a higher profitability than Google at IPO, at c 25%. Google's IPO was c half of that and it only hit the c 25% sort of ratios c 2 years after IPO, and has more or less stayed at around that level. Google now has a c $150bn valuation on c $40bn revenues and c $10bn profit, so for Facebook to justify $100bn longer term you have to believe it can hit c $6-7bn profits, ie revenues of c $24-28bn in about 5 years, and maintaining profis at about 25%. So the question is do you believe there is a sustainable 6-7x growth in profits?

Thirdly, to believe the above two things, we pretty much have to believe that Facebook has as easy or easier a time in the next 5 years than Google has had, ie you have to believe competition and regulatory interference (little surprise the Facebook is beefing up its lobbying arm) will be at worst the same, preferably better and that it makes better use of its cash in funding its growth.

Now this is not a "proper" analysis, but it does bracket the relative IPOs and trajectories for comparison. What it boils down to is that Facebook has set a significantly higher value per dollar earned and user gained than Google, and you have to believe Facebook gets a fairer wind for the next 5 years than Google had over its first 5 years post IPO to justify the $100bn valuation. In other words, you heve to believe it is a (2x) better company than Google.

Do you believe that?

Facebook and the starting gun for the Bubbletime

nospam@example.com (Alan Patrick) — Wed, 01 Feb 2012 16:52:41 +0000

The Broadstuff Bubble-O-Meter is about to hit the jackpot

We were asked last week by the Grauniad to comment on the Facebook IPO valuation (see here), and to contrast it with Google, as excitement increases (or maybe not). The valuation I will deal with later, but the compare and contrast with Google is very interesting. In a nutshell, at IPO Google:

- Had revenues of c $1.5bn and had been profitable for several years, making c£350m in the pre-IPO year
- Was a $23bn IPO, ie a ratio of about 15 of IPO $ value/$ revenue, and sold c 8% of its shares at IPO
- Had c 50% of the search market share of about 1bn people online at the time, and was achieving about $2-3 annual revenue per user (ARPU)
- If you assume that translates into about 500 million users, Google's IPO value per user is about $50
- Had been going about 7 years

Facebook is something like this (considerable connjecture, as its reported finances vary widely):

- Revenues of between $2 and $4bn in 2011, profits between breakeven and $1bn (depending on who you read)
- Is seeking a $80 - 100bn IPO, ie a ratio of between c 25 and 50 (on $4bn and $2bn revenue estimates respectively) IPO $ value/$ revenue, and will sell c 10% of its shares
- Which translates into a c $2.5 - $5 ARPU of current users
- Has c 800 million registered users, of about 2bn people online - about 40% of all users - at $100bn that is a $125 per-user valuation
- Has been going for c 8 years

So, Facebook and Google have quite a few similarities at IPO, but there are 4 glaring differences:

- Whichever way you look at it, Facebook's valuation as a ratio of its business fundamentals is 2-3 times higher than Google's
- Facebook's user base is expected to grow by c 25% - 33% next year and revenues are expected to grow by a similar amount. Google more than doubled its user transactions and revenues in the year after IPO.
- The ratio of IPO value to user ARPU was c 16, for Google, c 30 - 50 for Facebook
- Arguably, Google faced less opposition from elsewhere (privacy etc) that could impact the business model profitability.

My take is that Google IPO'd earlier in its growth trajectory, and was able to more easily "grow into" its IPO value both because it had a lower valuation as a proportion of its fundamentals, and it had more growth in it as less users were connected at the time and revenue is not bounded by registered users but by number of searches per user.

Now, as to the Facebook valuation - is $100bn overvalued? The answer is "what do you need to believe to get to $100bn". If you believe it is worth $100bn, then you need to believe that:

- That the ARPU of c $2.5 - $5 per user can be made to fund a per-user valuation of $125.
- Google had $2-3 ARPU on $23m valuation, and ARPU is c $20 today - so Google hit its numbers. Do you believe Facebook can make a similar jump in ARPU?
- There is probably about a maximum doubling of Facebook users possible, so you have to believe by far the bulk of this growth is in revenue per user from Ads, games etc.
- That Facebook's business model is very scalable, and that there are better economies of scale in Social Networks than in Search so profits are long term sustainable.

So, what do you believe.....

This is a classic dotcom IPO play (small number of shares on sale, lots of hype, very high valuations). Very few make the grade. Google managed it, and more, and today has a comfortable $150bn market cap - but Facebook has set itself a far higher set of bars. In other words a lot more things have to go right, for a long time, for Facebook.

The really inteesting thing will be when Facebook's numbers are published, and every analyst worth their salt will try and work out how the above will be achieved.

But one thing is for certain - this is the starting gun for the Social Media bubble, as we predicted a year ago (see the Broadstuff Bubble-O-Meter above, we started it about this time last year), and we shall now see the extraordinary madness of crowds in spades - as Chris Dixon predicts:

- a bunch of second-tier social media companies go public to satisfy investor demand for "social media allocations" (facebook's reportedly small float of 5b will make this more likely)
- high private valuations for social media companies will last at least another year
- the press will write thousands of breathless stories that make it seem like the future of western culture depends on new facebook revenue streams (see coverage of google's business model post-IPO)
- facebook will continue to do small talent acquisitions until they have their "Google Video" moment and then like all mature tech companies will start acquiring real businesses for 1b+ valuations.
- facebook will - in the eyes of the press - go from darling to "evil" over the next 5 years. (again, see google coverage). (My note - it is already see as more evil than Google ever has been)
- the next 1-2 years will mark the end of this "Patterson cycle", after that, really interesting innovation will start gestating for the next cycle.

The next post will be on the Patterson cycle and the role of Bubbles...stay tuned.

How should Politicians use Twitter?

nospam@example.com (Alan Patrick) — Fri, 06 Jan 2012 17:45:29 +0000

I have been somewhat fascinated by the whole Diane Abbott affaire over the last 24 hours or so. A brief history - Diane is a black, female UK MP whose roots are in the Old Left Labour party of the 1980's, and she was having a debate over Twitter with Grauniad journo Bim Adewunmi, who has summed it up as follows:

In the course of tweeting the events around the trial, conviction and sentencing of Gary Dobson and David Norris for the murder of Stephen Lawrence, I wrote: "I do wish everyone would stop saying 'the black community' though." I expanded in a followup: "Clarifying my 'black community' tweet: I hate the generally lazy thinking behind the use of the term. Same for 'black community leaders'. This led to a reply from my local MP Diane Abbott, in which she said: "I understand the cultural point you are making. But you are playing into a "divide and rule" agenda."

We went back and forth for a few tweets more and then Abbott sent out the tweet that caused the furore: "White people love playing 'divide & rule' We should not play their game #tacticasoldascolonialism." Nothing much happened, until late night, when I began to get a flurry of replies from non-followers. On Thursday morning, MP Louise Mensch retweeted it with her addendum: "you what? <~~~ #racism". Abbott has since apologised and Thursday afternoon deleted the tweet. The remainder of our conversation is still on Twitter.

I had a look at what she actually said on Twitter (given that it was clear that opinions on what she said were polarising along various party lines) and it was:

@bimadew I understand the cultural point you are making. But you are playing into a "divide and rule" agenda.

@bimadew Ethnic communities that show more public solidarity & unity than black people do much better #dontwashdirtylineninpublic

@StephanieBusari @bimadew I am not talking cultural differences. I am talking political tactics. #dontwashdirtylineninpublic

White people love playing 'divide & rule' We should not play their game #tacticasoldascolonialism (This was the one that was accused of being racist and was deleted)

Tweet taken out of context. Refers to nature of 19th century European colonialism. Bit much to get into 140 characters.

The racist accusation was when she used the term "white people", or rather when it was taken (expurgated of the #tacticasoldascolonialism) out of context by her opponents. As you can see from the overall context, the discussion is more nuanced, and its fairly clear what she is getting at. But it has caused a massive hue and cry, and sadly for Diane, as she has pulled exactly this sort of trick before herself, so her opponents have been queueing up to take revenge shots at her. IMO the best summary as to the "why" is the New Statesman:

Let's call this what it is. It's pretending. It's not genuinely being offended. It's artifice, completely made up in order to get a bit of publicity for people's vexatiously contrarian columns and to get their godawful faces on television. If you're genuinely wounded by Diane Abbott's comments, I pity you. You're beyond saving. It's a wonder we white people manage to stay in control of everything in the world ever if we're so bloody sensitive -- we should be sitting in a cupboard crying all day about what the nasty lady said about us. But it's not genuine hurt; it's the sensing of a mistake by a political rival, and the careful depiction of a representation of what these woeful human beings think being offended actually is, in order to capitalise on that.

That one's political opponents should be so cynical as to pull one down and then kick while one is down is so upsetting....in calmer momenets Diane may reflect on this being a karma moment

Labour Party boss Ed Milliband made her apologise, but then stepped on a landmine himself when he tweeted

"Sad to hear that Bob Holness has died. A generation will remember him fondly from Blackbusters."

The message was hastily deleted, and re-written to correctly refer to the 1980s trivia quiz as "Blockbusters", but there is now a #blackbusters hashtagfussfest deriding poor Mr Milliband.

To me, the lessons here are 4-fold:

Firstly, Twitter is a very bad tool to have any nuanced discussion on.

Secondly, Your opponents will gleefully seize on any phrase and edit it to suit their purposes of attacking you (that's par for the curse), but it is so much easier not to see (deliberately or no) the nuances of an argument of a few twts, compared to something with more words in it - even an interview transcript on TV would have more opportunity for Ms Abbott to argue she was misunderstood.

Thirdly, a slip (freudian or otherwise) can undo weeks, if not months of careful PR image building and lead to a story out of nothing like #blackbusters

Fourthly, once out the story metamorphoses into a metastory - no one is taking about what Ms Abbott or Mr Milliband actually said now, its all about being racist or foolish, so no amount of Spin Doctoring can put these back in their boxes, they will just have to wait out the storm

There is no doubt that Twitter is a great tool for a politician to reach their audience, but the lesson here is that it has asymmetric risks (ie a small slip can cause a huge fall) when dealing with anything nuanced or sensitive, and Twitter - in my opinion - is better used as a means to point to something more nuanced elsewhere' like on a blog post, Facebook page or similar.

I am reminded of Nicholas Taleb's term Black Swan - the disproportionate role of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance and technology - in this case. The downside of one unfortunate slip like this undoes a lot of good work. And when a Black swan falls, the vultures will always circle.....

Is the dedicated Mobile website yesterday's news?

nospam@example.com (Alan Patrick) — Tue, 06 Dec 2011 10:08:58 +0000

Consider the following 3 facts:

- I now own a tablet and a smartphone, so the dedicated mobile site is irrelevant for me. I am far from alone.

- Mobile sites by and large have lower functionality and a crapper user experience

- There seems to be an increasing number of sites recently wanting to point me to their mobile site (and i know from previous experience once you are there you are stuck - there is usually no way back)

Spot the contradiction.

It seems odd to me that just as these sites are becoming less necessary, they are increasing. Clearly the time lag of consultants suggesting companies adopt mobile assets is greater than the development paths of mobile hardware

Should women use the 22 year old male entrepreneur model?

nospam@example.com (Alan Patrick) — Thu, 01 Dec 2011 22:44:26 +0000

How to make startups attractive to women according to Penelope Trunkwriting in VentureBeat. The argument is that startups are not for women,and women don't need start ups:

The problem is that the funding world is set up to reward behaviors of 22-year-old guys. Living on very little salary, working very long hours, making your whole life your company, traveling at the drop of a hat — these are things people do when they do not have families. It’s a life that guys who are not even in a startup choose because it’s fun for guys. Women don’t choose that kind of life.

......

The thing is, women in their late 20s are the happiest they will be in their whole life. They are very happy. So I don’t think they are walking around wishing they could do a startup. I don’t think they care.

To make it more attractive they suggest 3 points.

1. Pay more money at the beginning. Women want a good house, good clothes and a cushion for emergencies. This is not sexist, this is basic research, and yes there are exceptions, but we have to talk in generalizations if we are going to talk about women as a group. Women shop more than men; women get more pleasure from buying stuff than men do. Whatever. Who cares? Women earn more than men do, so it’s a moot point. Except in the VC world, where the entrepreneur has to “bootstrap.” Women don’t like that. So VCs would have to give up on the bootstrapping mentality if they want women to do startups.

2. VCs would need to give up on speed. They would need to decide that their rate of return on investment can be slower, and they would need to learn how to invest in companies that could go a little slower. Such companies would want to take short breaks during summer vacation, for example, when the kids are home. VCs would have to be more patient, with a family-friendly policy toward growth and exits.

3. VCs would need to raise their own funds differently. You say, “Slow and easy? Then it’s not a startup!” And that might be true. But if we are really missing so many opportunities because women’s ideas are not getting through to market, then the market is probably so desperate for these ideas that VCs can afford to let them develop more slowly. And if someone would get to the market faster, well, then we are not really missing out on having women’s ideas in the status quo, are we?

Women must find their own way:

And in the meantime, let’s stop pretending that the stuff of startups is the stuff that most women want for their lives. Women should use a more current blueprint for their lives—one that takes into account what is important to women rather than what is important to men.

Questions in my mind:

- VC's have not so far felt the need to worry about female VC's, what will tip them over?

- Is the 22 year old male entrepreneur the only fundable model?

Answers on a postcard.

The Reverse Whuffie Effect

nospam@example.com (Alan Patrick) — Thu, 01 Dec 2011 20:46:23 +0000

Remember Whuffie? It was gong to allow you to tell the cowboys from the genuine service providersand extract favours for being a good customer. Downside is when the service providers turn it back on the customers - CNet

Dentist Stacy Makhnevich requires patients to sign a form handing her copyright to any online reviews. Should the reviews not glow in the dark, she allegedly has them removed for breach of copyright. This seems entrepreneurially nifty, if legally shifty.

......

Organizations, though, can be formed on both sides of an argument. Indeed, a body called Public Citizen has taken out a class action suit against Makhnevich.

The suit claims that not only did the dentist make use of the legally questionable Medical Justice forms, but that she charged an unhappy patient $100 a day because he wrote negative reviews (about her billing practices, not her dentistry) and refused to take them down.

It seems that the two sites where negative reviews were posted--Yelp and DoctorBase--also refused to have the reviews removed

.
Social Biz fundis say your brand is what your customers think of you - seems like also you may be what Brands think of you...

Your purchases as eBay Ratings are the New CRM. In spades. We told ya.

Red Light Restricts

nospam@example.com (Alan Patrick) — Thu, 01 Dec 2011 21:13:56 +0000

The algorithms of predicting red light runners- the telltale signs are not what you think - MIT:

To predict red light behavior, MIT’s car geeks looked into all sorts of variables. Where you or I might think, “tricked out ride … tinted windows … young driver … we’re in New Jersey … yep, he’s going through the light,” MIT tracked more concrete data and found it could confidently separate potential violators from compliant cars by tracking vehicle deceleration (or lack thereof) and distance from the traffic signal. For all this to work, says MIT professor Jonathan How, the algorithms need a new generation of smart cars with vehicle-to-vehicle (V2V) communications, or short range transponders that constantly report location, speed, direction, rate of acceleration, and brake status.

Another interesting application of the Internet Of Moving Things, but how wellmight is compare to good old enforcement?

It’s unclear how many lives would be saved each year if the red-light running algorithm makes its way into a future generation of cars with vehicle-to-vehicle communications. The most would be 700; last year there 32,788 US traffic fatalities. According to the National Highway Traffic Safety Administration, there are 2.3 million car crashes at intersections each year, with 7,000 deaths; 700-plus fatalities are the result of running red lights. But no predictive model is 100% accurate, drivers won’t always listen to good advice, and half the deaths are probably also logged as drunken driving or no-seat-belt fatalities as well. (Fatalities, like success, have many fathers.) Cut DUI fatalities with tougher enforcement and you’ll take a big bite out of red light fatalities; the MIT algorithm ought to cut the toll still further.

Maye its just me, but I wish it was connected to an anti-car missile, so the bad guys buys it every time....

11:11:11:11 - Lest We Forget to Remember

nospam@example.com (Alan Patrick) — Fri, 11 Nov 2011 11:11:00 +0000

The 1930's Jarrow march. Early stages of WW2

Today is a day that comes round once a century - 11/11/11 (And the US and UK calendars actually are in line too). It is also the day when the the Great War ended, and we choose to remember the dead on the 11th hour of the 11th day of the 11th month, which was when the guns stopped shooting and it was all quiet on the Western Front.

For a while.

George Santayana noted that "Those who cannot remember the past are condemned to repeat it". As well as remembering those who fell, its also worth also rembering why another war started on the Western Front, especially in 2011. After World War One there was a time of conspicuous consumption, and then a Great Depression. During the Great Depression, the Ordinary Man was essentially mugged financially by the bankers and capitalists of that era while the state stood by or colluded. The net effect was to push the desperate Ordinary Man to vote for autocratic, populist regimes in many countries, even in the USA the New Deal was a major swing towards the Powerful State. It is now in danger of happening again.

After WW2 a new social compact was formed in the West, with State tax and spending forcing a trickle down from rich to poor to reduce wealth disparity. That compact has largely disappeared, the wealth gap has been in reverse for about 20 years (back to pre WW1 / WW2 levels worryingly), and the rump is now being increasingly rapidly rescinded. Despite being bailed out by taxpayers in 2008, the banks have not changed their behaviour at all - if anything it has got worse as they now know they won't be asked to pick up any mess they create. At least in the 1930's the US Government had the fortitude to bring in the Glas Steagal Act to separate "normal" banking from casino banking. In 2011 no government has had the balls. So 2008 will likely happen again, soon.

Unelected governments are now in power in Greece and Italy, Europe is now essentially being run by a cadre of unelected Technocrats, democratic process is being flouted left right and centre. In the UK the tax burden on the Ordinary Man is being ramped up, as subsidies are cut, in parallel with reducing tax burdens on the rich and corporate sectors.The tent cities in St Paul's and elsewhere are little different to the early protests of the 1930's, and mark the phase when most citizens still trusted their governments to act in their interests. The next steps, when people stopped trusting their Governments, are far worse - in the 1930's that directly led to the guns opening up on the Western Front again. We have been here before, the tragedy is if we don't remember it now, we will repeat it.

One of the big differences between now and then is modern comms technology that returns power to people - as the Arab Spring has shown, electronic comms can greatly empower the weak people vs the strong vested interests. Little surprise therefore that the strong are now arguing hard to restrict access to technology in tough times (eg shut down the Internet when there are riots). Hitler silenced his opposition by burning the Reichstag and blaming it on the Communists. Our role, in the Tech community, is to be very wary of useful public and democratic assets and rights being removed, and the removal being blamed on phantom "enemies of the state" or "economic necessities" - muslim fundamentalists, evil rioters, big bailout bazookas etc etc. And to speak out for these digital freedoms, because pressure to give them up is only going to intensify, and will come from all sorts of seemingly innocent and worthy angles.

So, while we remember the dead this year, it's not just 1918 and 1945 we must not forget, Its 1930 - 39 we also must remember now.

Tech Blogging in Europe

nospam@example.com (Alan Patrick) — Thu, 10 Nov 2011 17:16:03 +0000

Interesting article by Mike Butcher at TechCrunch EU on Tech blogging in Europe - the times, he says, are a-changing:

Now, in 2011, the scene and perhaps the economics, are starting to change. The tech scene itself is bigger, there is more potential money around. There’s just more heat. I daresay a few people are eyeing up the market.

But even in standalone media terms it’s not a ‘straight’ play. Most of the European tech blogs are either run by people who also consult on the side, or, as in the case of TheNextWeb, are attached, like a Pilot Fish to a their host shark, to a large annual conference. However, recently, a couple of things have changed.

Other big guns have parked their tanks on the European lawn. GigaOm now has a European writer, Bobbie Johnson (based in Brighton), so does WSJ Europe (Ben Rooney, in London), VentureBeat has Ciara Byrne in Amsterdam and The Next Web (especially with Martin Bryant in Manchester) has done a pretty good job internationalising in English (although good luck trying to monetize that Dutch language blog guys). Wired UK‘s magazine’s site has become an important adjunct to the print title. Some might say it’s already the ‘Vanity Fair’ of tech. So, leaving aside the economics of online publishing, in editorial terms alone, pan-European coverage of tech and startups has never been better.

I do hope the economics change - we are that classic "Consultancy-with-a-blog" model Mike mentions above, in 2006 we felt that you had to put your mouth where your money was (or in blogging's case, wasn't...) and actually use the technology we were consulting on. We have certainly learned a lot from blogging and the blog has led to some interesting assignments and opportunities indirectly, and forged some good friendships, but it has certainly not been a profitable endeavour - we see it very much as a marketing cost. In fact, we took a bit of a hiatus this summer because we were so darn busy with client work!

It's interesting that the US blogs now have a "European Foreign Correspondent" too, so lets see, maybe Mike is right. Our own observation is that there are only 3 scenes in Europe that are really worth keeping an eye on - London, Berlin and the European emigres to Silicon Valley (with maybe Paris deserving the occasional glance as a 4th) as pretty much anything happening in Europe will wash up in one of these nets. Most of the running is still very US centric.

Mike also wants to see more attitude...well, Broadstuff has always been a tad, well, satirical - Bubblewatch has been this year's running joke - In fact more than one person has told us we could never get Ads owing to that Broadsnark. We are quite proud of that actually

So clearly we may even be on the right track.

Siri TV

nospam@example.com (Paul Lancefield) — Sat, 29 Oct 2011 00:12:25 +0000

Suddenly it clicks. What Steve Jobs had in mind for improving TV (as reported by the New York Times) and why he felt he could do something special with it. And as so often before, he was ahead of the curve.

There was a psychologist I once read about who studied behavioral patterns and was researching the tendency for human thinking to get stuck “on rails” and fail to innovate. Unfortunately I can't remember the name of the psychologist, but I do remember clearly a story he told about a female interviewee. The psychologist was studying a woman while she was preparing a roast to be cooked in the oven. He observed her cut off a corner of the meat with kitchen scissors before placing it in the baking dish. 'Why did she do that?' he wondered, and quizzed her about it. But the woman didn’t know why. After thinking about it a bit she said it was just how she had been taught to do it by her mother.

The psychologist then went and interviewed the mother and asked about how she prepared the same meat dish. The mother talked through it and when asked why she had taught the daughter to cut the corner off the meat, she replied “I remember doing that. I often had to do that to get it to fit in the small baking dish I used to use.”

This story gives the perfect example of how we are creatures of habit. Once we learn a way of doing things, we tend to stick with it, often without questioning why. Steve Jobs was famous for his ability to buck these kinds of psychological blinkers. So when the fruit eating perfectionist, said to his biographer, Walter Isaacson, of TV "I've cracked it.” The rest of the TV industry would do well to sit-up and take note.

I have been skeptical Apple would release an Apple TV set (e.g. not just the little black box) but now I’m not. Primarily I was skeptical because Apple’s modus operandi is to deliver technology which meets and excels over the needs of the majority through judicious simplification. Whilst it has been clear to me for some time, TV’s have some dreadful “thinking on rails” design features (like the fact on many, you still have to cycle linearly through AV source after AV source, when changing AV source is now one of the most common operations I want to use the RC for), still they in the main, pretty simple devices – at least in day to day use. There is a degree of unnecessary complixity and I can certainly see how they can be improved. But I couldn’t see there was that much to frustrate with current TV solutions that the improvement would be in the “must have” category. There never seemed to me to be much opportunity for Apple to get their teeth into the problem and apply the 'less is more' philosophy they have so successfully employed for technologies with more complex use cases.

But now there is Siri and the answer has suddenly become, "because less can be so much more."

The biggest problem faced for years by the TV industry trying to deal with convergence has been how to reconcile lean / back versus lean forward modes of use. The TV is firmly what the industry refers to as a “lean-back” device, but all attempts to make it more connected / interactive / social have suffered because they entail less comfortable lean-forward mode of use. Things have improved greatly over the years, but still lean-back TV viewing sits uncomfortably with lean-forward style interaction. The connected TV has never quite managed to shake off a debilitating reputation for schizophrenia.

But that is about to change because now there is Siri. For those who have been hiding under a rock and don’t know what Siri is, it is a technology allowing natural language to control of a device and can also perform tasks. It is proving to be far more capable of understanding advanced grammar and natural ways of speaking than any other voice control solution.

Once more, just as the world is asking if they can possibly do it again, Apple are about to mainline a new category of device. The connected voice controlled information / entertainment system and it won’t have even one ounce of schizophrenia. Siri allows the user to talk naturally and ask for things using language as we already know it and use it.

Start to think about how voice control can be used with a TV and survey the impressive results Siri is already starting to bring iPhone 4S users and it soon becomes clear just how big this can be.

On the following matrix, I compare the kind of use-cases keyboard, button and touch interfaces are good for. Clearly this will be something of a subjective exercise, but I have tried to ensure I have been even handed in evaluating the relative strengths of each interface type for each kind of activity. The last column is something of an odd one out. In the last column, I estimate whether the Use-Case is a significant one in the context of the connected TV.

Look at the results. At first it looks like a fairly random spread. 1 = not well suited. 2 = middling. 3 = well suited. So clearly typing on a spreadsheet is less suited to voice control, a Remote Control or a touch device than it is to a keyboard and mouse. It is also not particularly well suited to a TV. Requesting the latest episode of a Podcast can be accomplished much quicker with a voice interface. “Siri, play me the latest episode of the Archers”, is likely to be far quicker than retrieving the latest episode by navigating a graphical interface with a remote control or mouse.

Here is the thing that really stands out for me with this table. For every use case I’ve thought of that is of higher relevance to the connected TV, voice control provides an as good or superior method of control than the others listed. The one exception here is gaming. But gaming apart, if Apple are implanting Siri technology in an upcoming TV as the New York Times suggests, it seems Jobs will indeed have cracked it.

Steve Jobs RIP

nospam@example.com (Alan Patrick) — Fri, 07 Oct 2011 07:26:58 +0000

I remember seeing the first Apple microcomputer, and realising the guys who built it were a step ahead of anyone else. What is amazing is how Apple has kept that step ahead for 40 years, and that is no accident. Many people claim to "change the world", Steve Jobs was one of the select band who did - and in a positive way.

What is astounding is that he has been making technology easy to use for all those 40 years, and many of his competitors still don't "get" it!

(Update ...this does not mean Mr Jobs - like any genius - did not have flaws, or was not difficult to work with, of course)

Fire burns iPad

nospam@example.com (Paul Lancefield) — Thu, 29 Sep 2011 03:53:39 +0000

Before the Kindle Fire was launched I was thinking it would be less a rival for the iPad and more a rival for other Android tablets. Now I think it is a really effective rival for the iPad. Amazon have out Apple'd Apple through effective implementation of the "less is more" philosophy and Apple finally have serious competition in the tablet space. The answer to one simple question will worry Apple more than anything else and illustrates why, to my mind at least, Amazon are about to pull off a great success;

"Which is the more techie device ?"

The answer for tablets pre-Fire was never iPad. Now it is.

Amazon have also, for me, illustrated why Apple are right in their complaints about Samsung copying. Here is a company who have come along, analyzed the problem and thought carefully about how they can best leverage their assets to serve the market. It will be a success precisely because they have learned key lessons from Apple and applied them intelligently. Amazon have attacked an internally consistent and coherent portion of the tablet Use Case that also happens to be the most significant Use Case for tablets as a whole; Content consumption. The result is something unique and effective, an always open portable shop for content be it games, books, music, movies or apps. They have recognised, according to the "less is more philosophy," if you look at how tablets are actually used, you better serve the majority of user time by taking "iTunes" or the online store, and expanding it to be not just the centre of the OS but the whole of the OS. They have played to their strengths and asset base made the OS the centre point for loading and consuming content. iOS by contrast fragments the buy and "consume content" use-case across a number of areas of the OS (most noticeably dividing iTunes and iPod). The Fire illustrates iOS has perhaps a little more old school PC centric thinking than even Apple realized. I'm pretty sure Steve Jobs will be highly respectful of what Amazon have unveiled and achieved - something that can't be said of his other tablet rivals.

The death and resurrected life of Delicious

nospam@example.com (Alan Patrick) — Tue, 27 Sep 2011 20:29:39 +0000

When Web 2.0 broke out in the mid noughties, Deli.cio.us was one of the main services pointed to as part of the New Wave. Now it has been resurrected. What is more interesting is who the the owners are - Liz Gannes on alt.hings.D

New owners Chad Hurley and Steve Chen (a.k.a. the creators of YouTube) have ported Delicious over from previous owner Yahoo, and are ready to show their first revision to the public.

Expectations aren’t terrifically high for the new Delicious, given the rareness of tech comeback stories and the fact that Delicious was never really that popular. But we can’t help but watch, given Hurley and Chen’s magic touch at YouTube.

As Liz says, this was not eventually a major part of the Web 2.0 movement (though it has its own dedicated following) and was bought by Yahoo, who essentially strangled it before selling it on for a song.

Far be it for us to suggest that this goose is being fattened up for the Bubbletime....and postulate how many other defunct mid-noughties brands will become Laz.ar.Us brands....

Take two tablets (please)

nospam@example.com (Alan Patrick) — Wed, 28 Sep 2011 21:33:58 +0000

Amazon has launched a demi-tablet to not compete with the Apple iPad - The Omnivore has a good synopsis:

Unlike a wave of other tablets that have emerged hopefully only to flop, such as the HP TouchPad, the Motorola Xoom, and the RIM PlayBook, the Kindle Fire has a good shot at turning the newest theater of war in high-tech into a two-tablet battle. With a 7-inch display, the Fire is about half the size of the iPad. At $199, it’s also less than half the price of the cheapest Apple model. Amazon has painted over the rough surfaces of Google‘s Android operating system with a fresh and easy-to-use interface and tied the device closely to its own large and growing content library. Kindle Fire owners can watch the film Rio, scroll through magazines such as The New Yorker or Esquire, and access their music collection on Amazon’s servers.

“What we are doing is offering premium products at non-premium prices,” Bezos says. Other tablet contenders “have not been competitive on price” and “have just sold a piece of hardware. We don’t think of the Kindle Fire as a tablet. We think of it as a service.”

Its not an iPad in other words - its not a premium product, its smaller screened, cheaper and (knowing Android) probably nastier to operate - so its a mass market play that hopes to be a Good Enough for most of the rest of the (non iPad owning) market.

We have done quite a lot of work for clients inthe e-reader/tablet supply chain, and the one thing that drives success - time and again, as for all devices - is a good variety of content. It took Google a long time to get this in Androidworld, but Amazon has the best chance of taking Apple on of all the players (as they showed with Kindle).

So, an early hypothesis from me - Apple will probably continue to sell high margin, high class product to the 20% at the top of the tablet market (as they have done since the 1970's in every market). Amazon will be mopping up the low margin mass market. The fact that Microsoft, the arch mass-market mop-up player, is underpinning the Fire's OS is another pointer to this.

No doubt there will be a bigger Fire soon, but no doubt Apple will also be innovating. They could launch a prodcuct that is half-way between the iPad and iPhone in a fairly short time we suspect - maybe call it the iPhad

Andreessen foretells Oracle's future

nospam@example.com (Alan Patrick) — Wed, 28 Sep 2011 20:46:25 +0000

Marc Andreessen thinks that the clock is ticking on Oracle and other old-line software and infrastructure companies - Business Insider.

His evidence: not a single one of Andreessen-Horowitz's startup investments use Oracle software. They all use cloud-based alternatives instead.

............

"Ten years ago, it was a joke: you'd raise $20 million in venture capital and write a $4 or $5 million check to Oracle, Sun, BEA, and EMC....When it started, Salesforce looked like a toy compared with Siebel. Look ahead five years later, it's obviously better. Not a single one of our startups uses Oracle."

The thing was that Oracle, BEA, EMC - and even Sun - were not appropriate for startups even 10 years ago, and everyone knew it - but you had to "look big fast" in the high hype world of dotcom share price pimping - and every dotcom with attitude was going to be huge in 2 years, of course - so get the Big Boy systems in now rather than buy a decent SME accounts package now and buy Oracle later when you were bigger. Brave indeed was the dotcom startup who went for the appropriate technology, therefore . What Marc also doesn't mention is that many times these large companies would give you the kit on some sort of for-shares or low interest long life loan basis, so you would be financially daft not to take it.

My main issue with Oracle (and the other big players by and large) is that they have done little in the last 10 years to redress that known weakness - and you would have thought Sun's demise would be a lesson. They saw Hosted solutions coming 10 years ago, so this cannot be a surprise - and thus why no action?

The reason is the fairly standard large company issue - addiction to the current business models, and finding it very hard to invest in new technologies that don't "move the needle" and are unreliable by "tried and trusted" standards. In fact, Oracle innovation has typically been "buying the market" as its innovation ploy - either buying out sector competitors, or small companies with interesting products - and then sadly (and probably even unintentionally) slowly strangling them by underinvesting and burying them in corporate treacle.

(This was part of Marc's argument that there Is No Bubble- he believes the cloud computing revolution has made the titanic valuations of major Web 2.0 companies like Facebook and Twitter completely justified - which we just don't buy)

So my prediction is slightly different to Marc's - I would predict that as the Cloud market grows, and becomes more stable, then Oracle, SAP, IBM et al will increasingly just buy their way in. Give it 3 years or so, and Marc's investments will be using Oracle

And as totitanic valuations being justified, we shall see.....

HP Still in search of excellence?

nospam@example.com (Alan Patrick) — Fri, 23 Sep 2011 12:53:06 +0000

A few years ago we collaborated in a piece of work for NESTA on the extraordinary innovation that US companies formed in the Depression showed. It seems that being born and surviving in that cauldron gave them an extraordinary resilience. Hewlett Packard (HP) was one of them, and was mentioned (along with quite a few of the other Depression era companies) in the 1982 book In Search of Excellence. Sadly along with many others, inclusion in that book was a sort of death knell.

HP has had a tough last 15 years or so, and has had a succession of unfortunate CEO choices. Now its just been confirmed that Meg Whitman (ex eBay) is the new CEO - AllThingsD:

The board of HP, which has had its own series of blunders in recent years, is hoping Whitman can help turn that around, especially as its competitors — such as Oracle, IBM and others — increase the pressure.

Whitman herself will need a lot of help. She has had a successful career in the consumer Internet space, but has little experience in enterprise and hardware, which are at the heart of HP’s big businesses. Among the most immediate issues to deal with: Coming up with a clear strategic plan; reevaluating Apotheker’s move to spin off its consumer PC business and shutter its webOS device development; reassuring rattled employees and restoring morale; and, most of all, calming disgruntled shareholders and getting the stock moving in an upward direction.

Other than that, Mrs. Whitman…

Good luck....she will certainly need it! Will this end a run of unfortunate CE choices? I'm not particulalrly optimistic as apart from her (in)experience in this space, this is a long mismanagede company in a decining industry, to pull out of and it seems to me that the HP board - which surely must be seen by now as a major liability - is still in situ. Still, if a biscuit hustler* could pull IBM around, there is hope for HP.

*I haven't done any research on this, but I wonder if there is a higher success rate for bringing in CEOs from outsuide the industry - I have certainly found it works well at middle and senior management level.

Bubbleworld Deflation?

nospam@example.com (Alan Patrick) — Wed, 21 Sep 2011 11:30:40 +0000

News today that Ning managed a $200m all-stock sale to Glam Media - AllThingsD:

Glam Media, a social content platform for sites primarily targeting women, said it’s buying Ning, the custom social-platform start-up co-founded by Marc Andreessen. The purchase price wasn’t disclosed, but sources close to the deal said the sale price was $200 million, mostly in stock. Glam has been eyeing an initial public offering, so shares being part of the deal is not a surprise. I had reported in August that Ning was on the block and had been talking to a number of companies, including Google and Groupon. The sale price is well below previous loftier valuations for Ning, which topped $750 million several years ago. Its venture funders have put close to $120 million into the company since it was founded in 2004.

Timing is everything, Ning was an early-generation SocNet that didn't sell at the time its contemporaries like Bebo, MySpace et al did, and has been superseded by next-generation ones. This is a face saving sale for the Ning founders and a part of Glam's "pump up the volume" of traffic pre IPO.

But this capitulation by the Ning founders also points to early signs of a deflation in The Bubble - Groupon has pulled its IPO (to be seen when it has another shot), and Facebook has now been pushed back for another year. Be interesting to see what Zynga does, given it is another of the recent Tech darlings that has recently filed a $1bn IPO.

If the last Tech Bubble is anything to go by, there will be a series of deflations like this followed by increased inflations in this one. Too early to all this deflation, but definitely a reduction in inflation.

Update - contra indications to a still infalting bubbleworld - an Incubator's Incubator! (hat tip @bobbiejohnson)

Disrupting TechCrunch

nospam@example.com (Alan Patrick) — Mon, 12 Sep 2011 17:01:44 +0000

From TechCrunch itself - AOL has issued the following statement:

“The TechCrunch acquisition has been a success for AOL and for our shareholders, and we are very excited about its future. Michael Arrington, the founder of TechCrunch has decided to move on from TechCrunch and AOL to his newly formed venture fund. Michael is a world-class entrepreneur and we look forward to supporting his new endeavor through our investment in his venture fund. Erick Schonfeld has been named the editor of TechCrunch. TechCrunch will be expanding its editorial leadership in the coming months.”

But Mr Arrington is still hosting TecgCrunch Disrupt, it seems - interviewing Doug Leone from Sequoia among other activities. But as to the new Arrington vehicle, startup fund Crunchfund, even Seqoia is pointing out its a me too in the Bubbletimes - from PEHub:

Asked by Arrington if Sequoia would squeeze a new fund like his out of a round while it’s working to help shape a young entrepreneurial team, Leone said no, that if an entrepreneur thinks that “CrunchFund has a differentiated set of skills that will help you, then by all means” take its money. (It wasn’t exactly a ringing endorsement.)

Pointing out that too much money is already chasing startups, including from Europe, Russia, and the likes of Goldman Sachs, Leone then told Arrington, “You’re joining the abundant side of market, instead of the scarcity side of the market…Why you want to join [the world of venture capital] is beyond me.”

Mind you, Seqoia is itself not too pleased about the rise of the dumb money tide:

Leone tried to be diplomatic about all the cash sloshing around Silicon Valley these days, but it clearly irks Sequoia that the firm – along with all venture firms – has been painted as a later-stage investor by many seed and angel entrepreneurs, despite that it regularly makes seed investments.

Indeed, Leone said his advice to entrepreneurs is to “think of investors as your business partners” and not just in terms of “what you need over the coming months but over the next four to five years.

The role of the incubators, accelerators etc etc is to now manufacture enough startups for all the sloshing money to be thrown at. Maybe the next Arrington business should be a Y-Crunchinator?

W(h)ither TechCrunch

nospam@example.com (Alan Patrick) — Thu, 08 Sep 2011 14:42:32 +0000

I was about to write down my thoughts about what happens now that Mr Arrington is no longer with TechCrunch*, until I saw Fred Wilson had written down pretty much what I would say - and even stolen the title I would have used . So, why write anything myself when I can ~~plagiarise~~ use Fred's words:

The media has had a lot of fun over the past week watching AOL, Huffington Post, TechCrunch, and Mike Arrington figure out how to move on. I feel badly for the TechCrunch crew including MG, Erick, Sarah, and many others. They are awesome at what they do and I feel that they've been left dangling as this soap opera has played out.

I do not feel badly for Mike. He's a bigtime player in silicon valley and he will be fine. Contrary to what many in the media say, he does not need TechCrunch as a platform to be influential. He is influential becuase of who he is, not where he writes. His reputation is made and as long as he finds his next platform, be it a venture fund, a blog, or both (how can anyone have both a blog and a venture fund????), he will remain a hugely influential force in silicon valley and tech.

But TechCrunch is a big question mark. If AOL can keep the rest of the team together, then TechCrunch has a bright future. No company is so reliant on one person that they can't survive that person's departure. But if others move on, including the people I mentioned above, then TechCrunch could lose its swag, as my son would put it. Yes TechCrunch gets scoops. That happens because it has a huge audience of the right readers and people in tech choose to leak to TechCrunch to reach that audience. But TechCrunch also has a voice, a swagger, a "fuck you" attitude that comes from Mike. That can also live on without Mike if AOL allows it. They need to keep the remaining team, the voice, and that attitude if they want to remain at the top of the world of tech media.

I also wonder what will happen to the European assets in the business, I think TC UK has been a good force over here.

Fred also alludes to the thing I have always really liked about TechCrunch, and in my opinion is a real jewel in its crown - Crunchbase:

There's also a super awesome asset inside TechCrunch that doesn't get much attention. It is Crunchbase.....Crunchbase, which is free, almost open, almost peer produced like Wikipedia, is fantastic. Whatever happens to TechCrunch AOL, please don't mess up Crunchbase. It is the premier data asset on the tech/startup world and an incredible example of how free beats paid in the online world we live in.

I also feel it is incredibly valuable, and if correctly used is (IMO) longer term worth more than TechCrunch the Blog - as many have pointed out, there are so many others doing what it does now.

*At the moment. The lady has yet to sing the death aria......

Google, Zagat...who is eating whose lunch?

nospam@example.com (Alan Patrick) — Thu, 08 Sep 2011 16:54:59 +0000

Google has bought food review business Zagat - ZDNet:

Google on Thursday acquired Zagat in an effort to bolster its local products with the restaurant rating service. More notably is that Zagat is a content company.

In a blog post, Google said that Zagat will “be a cornerstone of our local offering.” Zagat is best known for its original reviews and rating service.

There are a few key elements to the Zagat purchase:

- Google will build out its local coverage and have reviews in more than 100 cities.
- Google is showing that it may actually have to own some content instead of merely aggregating it.
- As Robert Scoble noted, Zagat’s reviews are social friendly and play in with Google+.

Earlier this year, Google ran afoul of Yelp. Yelp argued that Google was importing its user reviews on the Google Places page and not providing any link love. Google later removed external links from its Places page. The Federal Trade Commission is also poking around Google’s actions and whether it favors its own sites over others.

That says it all about why Google may have done the deal really, but the reason I'm even writing about this post is a few years back we were asked to do a study of what Zagat could become in a social media setting and who it may be sold to, and for how much, but I never dreamed Google would be the one to buy them as it made no sense (at the time) that Google would be a content owner. (Our client was not Zagat, but wanted to interest Zagat in a potential transaction - and this was not them as far as I know). ZDNet asks the right questions:

- Will Google keep Zagat’s pay wall? Probably not.
- Will Google maintain Zagat’s guide publishing business?
- Is this Zagat purchase the beginning of a series of content moves for Google? Google’s timing is notable given the struggles of both AOL and Yahoo of late. Both AOL and Yahoo are building out content to differentiate themselves from Google. Now the search giant enters the content game via Zagat.

Even so, with opening up the reviews and sticking ads against them, this is not really going to move the Googleneedle. Zagat is not the quite Huffington Post, or even TechCrunch.

So despite the purchase and the above justifications and possble strategic plays, does it make sense that Google is a content owner now? I must say I'm still not clear why Google would want to be a content owner, it's a whole different culture and business model compared to being an aggregator, especially for a search based one. It ws very fashinable in teh Muiltimedited Mid 90's, everyone talked about being "Gatekeepers" to content and extracting "surplus value" - a bkit like medieval castles on large rivers. Ironically it was Google that broke this content/aggregation model by allowing neutral searches on the open web.

The argument clearly is the "Social" changes things, but we didn't see it at teh time we did the study, and don't see it now. Twitter and Facebook point to content outside themselves all the time, both can give me a restaurant review in a few seconds if I ask (or search them), and there are umpteen free startups out there already.

One to watch, but at the moment I am scratching my head.

Yahoo - Bored of the Board

nospam@example.com (Alan Patrick) — Wed, 07 Sep 2011 22:55:00 +0000

GigaOm notes that firing Carol Bartz is not nearly the whole problem, its goes deeper than that:

There is one place Yahoo can easily finish first: the company with the worst and most ineffectual board with the spine of a centipede. I have not been a fan of Yahoo’s board for a long time and nothing really has changed my mind. Even before the firing of Carol Bartz, Yahoo’s board has been taking actions befitting a coalition government. Yahoo’s stock performance only proves that fact. From a high of $33 a share in October 2007, Yahoo is now down to $13.50 a share.

I agree...I think Bartz has been made the scapegoat (sure, it comes wuth CEO territory) but getting a new CEO is not going to fix the problems of a company stuck in the peanut butter. There 's lots of talk about M&A, new businesses, back to basics etc etc - but only a mass transfusion of new blood at the head will work now.

In my opinion, of course....

Update - seems to be Carol Bartz's view as well

Ousted Yahoo CEO Carol Bartz has given an exit interview with Fortune magazine’s Patti Sellars, in which she says about Yahoo’s board of directors: “These people f*#&ed me over.” She also called them “doofuses.”

This has been an entertaining week....

TechCrunch - Lessons in Economics and Ethics Part II

nospam@example.com (Alan Patrick) — Tue, 06 Sep 2011 20:14:10 +0000

In a post earlier today we noted that the problem with a blog like TechCrunch is that its Economics will conflict with Ethics, most specifically the Ethics* of being part of of a large corporate - "Fast and Loose" is great for a small independent organ, not so good for a slow and tightly run large media empire. When you are a small organ you can both write about, and invest in, the same companies. You can't as part of a large corporate media empire. Michael Arrington, TechCrunch founder, has pretty much laid this dilemma out in a post on TechCrunch in what looks a lot like an ultimatum to his acquirers:

We’ve proposed two options to AOL.

1. Reaffirmation of the editorial independence promised at the time of acquisition. Given the current circumstances, that means autonomy from Huffington Post, unfettered editorial independence and a blanket right to editorial self determination. To put it simply, TechCrunch would stay with Aol but would be independent of the Huffington Post.

or

2. Sell TechCrunch back to the original shareholders.

If Aol cannot accept either of these options, and no other creative solution can be found, I cannot be a part of TechCrunch going forward.

AOL are unlikely to be able to do (1), for 2 main reasons:

- They are a large corporate and a great, rich lawsuit/hate campaign target for any pressure group they upset, so allowing their Tech organ to effectively look like a DotCom style market analysis business for it's Editor's investment fund is a PR disaster and maybe a legal one. Remember Henry and Mary and all that from last time round - the resulting scandal made the SEC force banks to drop doing both analysis and sell side activities in the same unit and pay large fines ( Purely out of goodwill, of course ).

- Even worse, AOL are co-investors in this same startup investment fund run by Mr Arrington, doubling the conflict of interest complications

For these reasons the financial and legal risks are probably too large to give TechCrunch pure editorial independence, especially now.

Option (2) is quite hard as well - If they sold it back so soon after buying it, at a loss, they would looks like fools and no doubt prompt all sorts of questions about their management competence. Senior heads would roll. If they tried to sell it for more, who would buy?

This is a real sign of the Bubbletimes, this whole brouhaha wouldn't be happening without the silly money now being thrown at Silicon valley technology startups, and all who sail with them. In fact one wonders why TechCrunch sold to AOL when it did (Sep 2010) as the Bubble was already evident (we opened our Bubblewatch section in April 2010) but to be fair it was only visible to geeky trend watchers like us - the really obvious froth only started about February 2011 (this year) after AOL bought HuffPo. One imagines a certain amount of D'Oh at TCHQ soon after that

In our early post we pointed to the interesting insight into the economics of a Tech blog that the TechCrunch datasieve is opening up, but putting the backroom negotiations on the front page is a new one on us old M&A hands too. And given that that post has set the scene for this one, we do now turn a slightly quizzical eye at the alleged independence Messrs Siegler and Carr claimed they have

In that post, I also commented on Stowe Boyd's point that this was looking like a tragedy like Titus Andronicus and wondered it was not a tragedy or even comedy. I am wondering now if this is more the Theatre of the Absurd....and here we all are in the front row.

*Please note - When we talk about Ethics here, we are not talking about Morality - we are talking about What Gets You Flamed/Sued/Fined/Incarcerated.

TechCrunch - Lessons in Economics and Ethics

nospam@example.com (Alan Patrick) — Tue, 06 Sep 2011 15:03:03 +0000

There have been some interesting behind-the-screens revelations of TechCrunch's modus operandi as it implodes (or whatever its doing) - MG Siegler:

First and foremost, the concept of an “editor” at TechCrunch is essentially just a title and nothing more. Generally speaking, neither Mike nor Erick (TC’s two “co-editors”) are overlords that dictate what everyone else covers. With a few exceptions (mainly for newer writers), no one person even reads posts by any other author before they are posted.

Traditional journalists may be appalled to learn this. But this is a big key of why TechCrunch kicks their ass in tech coverage. We’re fast and furious in ways they can’t be, because they’re adhering to the old rules. Are there benefits to those old rules? Sure. But in my opinion, the benefits of the way we work far outweighs the benefits of the way they work.

If you want a more objective take, simply look at the number of tech stories we’ve broken over the years versus the number any old school publication has. Our system works.

And it works because instead of a reliance on top-down management and editing, the emphasis is on hiring the right people. TechCrunch works because we’re a bunch of driven reporters with great instincts that excel at working independently. Sometimes junior writers hone those instincts by watching senior writers and asking questions. And there is plenty of good, healthy collaboration. But for the most part, it’s very a much a trial by fire — only the strong survive.

.....

Mike certainly could have that power if he wanted it. Again, he is the creator and the driving force behind the site. But he’s smart enough to know that the site wouldn’t function as well that way.

Instead, he sits back and lets the rest of us do what we do. Again, he’s hired extremely well. He knows we’ll kick ass without any oversight from him. In fact — and I think he’d be the first to admit this — sometimes any guidance from him can be a distraction. “Hey did we hear about this?” “Yes, Mike, we covered that two weeks ago.” “Oh. Okay. Carry on.”

Then Paul Carr (apparently writing at the same time as MG above, apparently unknown to each other)

For one thing, TechCrunch writers edit and publish their own stories. We don’t have a morning editorial meeting in which Mike — or anyone else — signs off on stories; we don’t have an editorial work flow at all in fact. Generally speaking, Mike doesn’t see stories until they appear on the site and if he has any input on what’s written it’s given after the fact. I have never, ever known Mike to tell even the most junior writer what line to take on a story. A personal example: I once wrote an extremely negative post about a company in which one of Mike’s friends is a significant investor. I heard nothing from Mike when I posted the piece. It was only months — literally months — later that he mentioned to me in passing how many calls he’d received complaining about the piece and demanding that he “do something” about me. Mike had laughed them all off: he doesn’t interfere with his writers.

Low Overheads, Low Cost Management and Low Cost writers (I don't know how much the writers are paid, I'm assuming they are mainly on freelance rates) - a lesson in Economics for the serious News Organs if ever there was one.

But it doesn't come without risks, and I think they are around what Stowe Boyd calls Linelessness, in that the New Media does not accept the invisible lines of the Old....

Even at a old school bastion of journalism like the NY Times, editors and authors have to pick what stories to follow, out of the infinity of potential stories in the universe. There is no infallible, objective mechanism to pick stories, one that is fair and unbiased in some truly general and provable sense. The reality is that all organizations (and individuals) have to settle for extreme approximations of what a hypothetically unbiased approach to news coverage would produce, if such a thing actually existed.

Arrington’s heresy in all this is the simple fact of owning stock in the companies that he and others at Techcrunch are covering. This was old news years ago, when Mike was a small entrepreneurial blogger, and even later as the head of a go-go tech blogging company. But now that AOL has purchased TechCrunch, and then invests in CrunchFund, old school media takes another look and cries foul.

They cry foul for good reason, as in the past you can quote examples ad infinitum where if the analyst and the investor are on the same side of the Chinese Walls*, you get very biassed advice ( Dot Com coverage anyone?) and over time, this destroys reputations and businesses. That is one sort of risk for an independent fast and loose blog to take (TechCrunch), but not for a slow and tightly managed wannabee major media (aka sue-able) empire (AOL/Hugffington/etc). As Stowe points out though, this brouhaha is all the product of the Machiavellian cocktail of greed, power...and fear of missing out on the Bubbletime.

it wasn’t journalists that created Arrington, but the tech scene: a tight-knit, self-absorbed community of investors, entrepreneurs, and wannabes, all desperate for ink, share-of-mind, and a chance for the brass ring. So many hanging on every word printed in TechCrunch, trying to get written up, hoping for a leg up in the steeplechase that is the central animating goal of the tech scene.

Maybe the deep libertarianism of the West Coast tech scene is a factor here, also. The ideology that the elite should be allowed to do whatever, and that there is no need for regulation or lines.

So - some predictions from the lessons of TechCrunch - the New Economics clearly are the future, but the Lineless New Ethics may not prove to be quite so stable. Stowe again:

But in the current TechCrunchgate, the lines aren’t about illegality: this is a story about identities, and the communities that create them. An identity conflict, a culture conflict, and one that might end with a truly Shakespearean close, like Titus Andronicus, with nearly all the dramatis personae lying in a heap on the stage.

All the world is a stage, but whether this is just another drama, an unfolding tragedy or a bit of comedy remains to be seen.....

*Update - please note When we talk about Ethics here, we are not talking about Morality - we are talking about What Gets You Flamed/Sued/Fined/Incarcerated.

TechCrunch Crunchtime

nospam@example.com (Alan Patrick) — Mon, 05 Sep 2011 22:45:00 +0000

Something is in the air at TechCrunch:

TechCrunch is on the precipice. As soon as tomorrow, Mike [Arrington] may be thrown out of the company he founded. Or he may not. No one knows. And if he is, he will be replaced by — well, again, no one knows. No one knows much of anything. Certainly no one at TechCrunch. This site is about to change forever and we’re in the total fucking dark. I’ve been able to piece together little bits of information here and there, and it’s not looking good. Hence, this post.

By now, if you read TechCrunch, you likely know about the nuclear situation that has exploded over the past several days. Mike unveiled an investing entity known as the “CrunchFund” with full AOL support — so much support, mind you, that they’re the largest backers of the fund — only to have his legs kicked out from under him due to what can only be described as nonsensical political infighting and really poor communication. To make matters worse, some Journalists (with a big “J” and even bigger senses of entitlement) have proceeded to pile on, despite having no real knowledge — at all — of the way TechCrunch actually works. And now here we are.

The only thing that surprises me is that anyone thinks you can (i) sell to AOL and then (ii) "pivot" from writing about, to investing in, startups without major changes.

It's a Bubbleworld brouhaha, as it means the money flooding into funding flimsy startups is higher than the money going into talking about them. The old Gartner Hype Curve says it all - when a market moves from talking about some new new thing at conferences to actually investing serious money in it, its getting to the top - the "Peak of Unrealistic Expectations" - of the hype curve.

The Auto-Oxymoron of Corporate Innovation

nospam@example.com (Alan Patrick) — Tue, 06 Sep 2011 10:36:32 +0000

One of the things we write about every so often on here (and were therefore sufficienly motivated to co-write the Big Potatoes Innovation Manifesto) is that Innovation has been morphed in the current corporate climate to mean "continuous improvement" at best, and "don't-rock-the-boatism" all too often (see Innovation - What innovation for starters). Now, some research from Cornell (The Bias Against Creativity: Why People Desire But Reject Creative Ideas) shows that as a species we may be culturally adapted against Innovation and creativity it seems.

The next time your great idea at work elicits silence or eye rolls, you might just pity those co-workers. Fresh research indicates they don't even know what a creative idea looks like and that creativity, hailed as a positive change agent, actually makes people squirm.

"How is it that people say they want creativity but in reality often reject it?" said Jack Goncalo, ILR School assistant professor of organizational behavior and co-author of research to be published in an upcoming issue of the journal Psychological Science. The paper reports on two 2010 experiments at the University of Pennsylvania involving more than 200 people.

The studies' findings include:

- Creative ideas are by definition novel, and novelty can trigger feelings of uncertainty that make most people uncomfortable.
- People dismiss creative ideas in favor of ideas that are purely practical -- tried and true.
- Objective evidence shoring up the validity of a creative proposal does not motivate people to accept it.
- Anti-creativity bias is so subtle that people are unaware of it, which can interfere with their ability to recognize a creative idea.

For example, subjects had a negative reaction to a running shoe equipped with nanotechnology that adjusted fabric thickness to cool the foot and reduce blisters.

To uncover bias against creativity, the researchers used a subtle technique to measure unconscious bias -- the kind to which people may not want to admit, such as racism. Results revealed that while people explicitly claimed to desire creative ideas, they actually associated creative ideas with negative words such as "vomit," "poison" and "agony."

The lesson for companies that want to take advantage of creativity and real innovation is that teh problem not fostering it, but making sure it isn't strangled at birth.

"uncertainty also makes us less able to recognize creativity, perhaps when we need it most," the researchers wrote. "Revealing the existence and nature of a bias against creativity can help explain why people might reject creative ideas and stifle scientific advancements, even in the face of strong intentions to the contrary. ... The field of creativity may need to shift its current focus from identifying how to generate more creative ideas to identify how to help innovative institutions recognize and accept creativity."

Now, I always felt this was the actual case. I think that too often, fighting this problem is too hard as it is institutionalised in most heirarchies, and is a classic "ekephant in the room" - so Creativity Consultants find it easier to sell a comfortable project on "fostering creativity" than a hearts and minds change program based on culling their clients' ability to stop the dangerous mavericks in the business.I never saw companies where there were no creative people - but I don't think I'm the only one who has observed in their corporate careers that the Power of No is an endemic problem - here's Machiavelli on the subject in the 1500's pre-saging a host of 20th century Business Sages:

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.

QED as they say. Nice of Cornell to put the academic verification in 500 years later

Mixed signals in the Bubbleconomy

nospam@example.com (Alan Patrick) — Thu, 01 Sep 2011 22:17:00 +0000

Broadstuff Bubble-O-Meter

Its business as usual on BubbleWatch, as AOL/TechCrunch's Michael Arrington starts a startup fund:

Mr. Arrington is starting a venture capital fund to invest in the start-ups that TechCrunch covers.

The $20 million CrunchFund is financed by AOL, Mr. Arrington’s employer, and by many of the top firms in venture capital — including Sequoia Capital, Kleiner Perkins Caufield & Byers and Greylock Partners — which Mr. Arrington also covers on TechCrunch.

Nothing like a conflict of interest there......but so far, so predictably bubbly (In fact he's a bit late to the startup fund party, see our Bubble-O-Meter above - but the more the merrier in Bubbletimes)

And yet, there is also this interesting aberration - Analysts are calling Groupon overvalued, the bounders - PE Hub:

In one of the nicer reports to be published about the daily deals company in recent weeks, Benchmark Co. analyst Fred Moran told Reuters that he considers the company’s oft-cited valuation of $25 billion “very high.”

This morning Henry Blodget of Business Insider jumped into the fray, defending Groupon from the many slings and arrows it’s been taking by writing that the company “can make money – but it won’t be easy.”

Well, that's Henry for you, ever the optimist...but it is interesting that a DotCom II darling is actually being called OverValued. Sarah Lacy thinks its because essentially they Werent Invented In the Valley. I think its because they are overvalued.

What will be interesting is to see if this new crop of analysts have a pop at some other overvalued IPO's in waiting......We have a sniff that step 6 is starting, but Step 7 in the Bubble-O-Meter may be delayed a bit!

10% Influence Rule on Social Networks

nospam@example.com (Alan Patrick) — Thu, 01 Sep 2011 13:28:45 +0000

Tippng Point in social network influence - Courtesy Rensellaer Polytechnic Institute

Don't know if anybody saw this study on how influence works on different social network structures, but its very interesting:

In a study of networking, researchers at Rensselaer Polytechnic Institute in Troy, NY developed computer models showing that when 10 percent of the population holds an unshakable belief, that belief will be adopted by the majority of society. Their study of minority belief becoming majority opinion appears in the July 22, 2011 online edition of the journal Physical Review E.

.....

When the number of committed opinion holders is below 10 percent, there is no visible progress in the spread of ideas. It would literally take the amount of time comparable to the age of the universe for this size group to reach the majority. Once that number grows above 10 percent, the idea spreads like flame.

More interestingly, they modelled how it spreads on different social network structures and found that the type of network and the location where an opinion starts and spreads in society have little bearing on the percent of committed opinion holders required to shift majority opinion. To reach their conclusion, the scientists developed computer models of various types of social networks.

- One of the networks had each person connect to every other person in the network.
- The second model included certain individuals who were connected to a large number of people, making them opinion hubs or leaders.
The final model gave every person in the model roughly the same number of connections. The initial state of each of the models was a sea of traditional-view holders.

Each of these individuals held a view but was also, importantly, open-minded to other views. The human dynamic is something like this:

In general, people do not like to have an unpopular opinion and are always seeking to try locally to come to consensus.

As agents of change start to convince more and more people, the situation begins to change. People begin to question their own views at first and then completely adopt the new view to spread it even further.

I recall research about 20 years ago (can't find it now of course) that said once about 10% of a population cheat, then its nearly impossible to stop cheating proliferating. Also, early Memetic Artificlal Life models showed that once an idea had "infected" about 5% of a population in a clustered aea it was very hard to eradicate as they kept on reinfecting each other, and at about 8 - 10% it started to become viral.

This is no doubt something that will be used for good and evil in the coming years.

British IT Education

nospam@example.com (Alan Patrick) — Sat, 27 Aug 2011 10:10:31 +0000

Eric Schmidt laid into British IT education today - BBC:

"The UK is home of so many media-related inventions. You invented photography. You invented TV. You invented computers in both concept and practice.

"It's not widely known, but the world's first office computer was built in 1951 by Lyons' chain of tea shops. Yet today, none of the world's leading exponents in these fields are from the UK."
Television transformed

There are 3 reasons for this - economics,entrepreneurialism,and education

The Economics is simple - the US is a far larger homogenous market, so any company that starts to get momentum there can grow far larger than a comparable British one. The usual plotline is that British companies either Go West (eg MicroMuse) and becomeamerican or get bought by Americans (eg not-so-Autonomy). The Commonwealth - the engine that once allowed British companies to grow larger than the home UK market - is gone and the EU, with its polyglot cultures and (often subsidised) local heroes - is a far tougher prospect to expand into.

The Entrepreneurialism issue is well known too - study after study shows that the barriers are higher for startups in the UK than the US - less money available, ,unVenturous capital, tougher labour laws, more business red tape. The only things on our side are that we speak a reasonably understandable dialect of American and our conditions are still marginally better than most other Western European countries. The US gets a Silicon Valley with universities and an ecosystem, we get a Roundabout as a PR wheeze with a contraflow.

And then there is Education. Schmidt said he had been flabbergasted to learn that computer science was not taught as standard in UK schools, despite what he called the "fabulous initiative" in the 1980s when the BBC not only broadcast programmes for children about coding, but shipped over a million BBC Micro computers into schools and homes.

"Your IT curriculum focuses on teaching how to use software, but gives no insight into how it's made. That is just throwing away your great computing heritage," he said.

Its more than that though. In the UK, Engineering and Science have always been lower class things. In every other country I have worked in or lived in (and that encompasses Europe, US, Asia and Africa), being good at Maths and Science are hugely respected abilities and parents agonise about how to improve kids skills at these subjects. Engineering is a registered profession like Accounting, Law or Medicine.

And then I fly back into the UK and its like being on another planet. The guys that fix my boiler are Engineers. Universities are warning (my) teenage kids that ICT and Computer Science are not seen as a "real" subjects for University entrance - rather do (say) Geography and Chemistry. The way to get ahead is still the Oxbridge PPE (Politics, Philosophy and Economics) rather than the Sciences. The thinking man (and woman's) airwaves are more full of Luvvies than ever, often giving technology a good kicking en passant. The Luddites seem to have have won. PhDs in Physics and maths Tutors in Universities get paid a less than Bar owners, never mind Accountants or Lawyers. Quids (or lack of) Est Demonstratum.

I think Schmidt had it right when he talked about a "back to Renaissance Man" necessity (albeit Victorian ones):

"the UK needed to bring art and science back together, as it had in the "glory days of the Victorian era" when Lewis Carroll wrote one of the classic fairy tales, Alice in Wonderland, and was also a mathematics tutor at Oxford"

In the US when I go to a magazine stand there are lots of publications on Science and Technology, in the UK there are more on faux metaphysics and (typically very British centred) history. That is the difference.

I think there are things the Government can do to help all of the 3 areas, but the key is to do them holistically. No point in making a big deal of maths and science and computing in Education if the job outcomes are crap, or if companies starting in the space can't get money/cant take on subsidised rivals/strangle under the red tape.

But Eric's right too. A start is making damn sure that the top Universities can't get away with the attitude that ICT and Computing are not "real" subjects, whereas say Georaphy and Chemistry are. It'll need some reforming of the syllabuses I'm sure, but it also needs some knocking old attitudes out of heads.

Steve 2.0

nospam@example.com (Alan Patrick) — Fri, 26 Aug 2011 10:41:00 +0000

Steve Jobs resigned today as Apple CEO,for a new position as chairman. He said that:

“I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.”

Stock markets have fallen, hair has been rent, and TechWorld is in mourning as if he had already died. He is ill, but news of his death is somewhat exagerrated. And senior guys move on,it happens.So why the sturmand drang?

I think MG Siegler at TechCrunch is right when he says:

The root of this lies in the emotional ties that people have with Apple products. And that fact that we’re shifting towards a world where having contact with at least one Apple product on a daily basis is the norm. It may be an iPod, it may be a Mac, it may be an iPhone, it may be an iPad. It may even be an Apple TV.

And that was Steve Jobs' genius. Computer OS User Experience was crap until the Mac. Internet Mobile experience was crap until the iPhone. Tablets were crap until the iPad (though let us not forget that There Comes A Time in technology - the Newton was hardly a soaraway success)

That is what Apple needs to continue - that constant, fanatical, putting the customer first. And that is all that anyone else needs to to do match Apple. The time has never been better to take them on.

Doing it, of course, in large risk-averse cover-my-arse corporate heirarchies is another matter altogether. Just ask Nokia. And that is why the only position you can make the change from, that you can knock all the heads together from, is the top job.

Hedonic Market Buzz in a Social Media World

nospam@example.com (Alan Patrick) — Wed, 24 Aug 2011 11:10:57 +0000

Pre-Hedonic Buzz Marketing makes early demand seem far more dramatic (Courtesy Cass Business School)

Interesting observation in the NYT re the increasng speed of killing one's mistakes:

Seven weeks after it was put on sale, Hewlett-Packard killed its TouchPad tablet, the company’s competitor to Apple’s iPad. Hewlett-Packard killed the TouchPad after 48 days, cut the price and created a buying frenzy.

Last year, Microsoft pulled the plug on its Kin mobile phones only 48 days after they went on sale.

In recent years, technology companies have been cutting their losses with increasing speed. Google proudly released Wave, its platform of collaborative work tools, to the general public in May 2010. It canceled Wave 77 days later. Palm announced its first tablet, the Foleo, on May 30, 2007. By Sept. 4, the company halted development and the product was never sold.

This is a change from a few years ago and is apparently due to Apple:

When Microsoft released the Xbox 360 in 2005, there were widespread reliability issues and the console faced serious competition from the Nintendo Wii, yet the company stayed the course, and now the Xbox is one of the best-selling video game consoles of all time. That kind of tenacity seems to be in diminishing supply.

Some analysts trace the origin of this blockbuster-or-bust mentality to Apple. Each release of the company’s popular iPads and iPhones crosses over into being a mainstream media event. Al Hilwa, an analyst at the research firm IDC, described the accelerated lifecycle of high-end hardware as “Darwinian.”

Are other companies misreading the game plan though,and thus making wrong decisions? When we did the TEDxTuttle II session, Dr Caroline Wierz of Cass Business School explained that Apple spends a lot of time and effort winding up the market before any launch, so there is a pent-up demand at product release and thus the product appears to achieve its market penetration levels very fast (Pre-Hedonic Buzz marketing, I believe it is called) and thus makes the competition think the game is over.

Halwa also thinks Social Media has exacerbated the speed of the post-launch feedback loop:

The crush of tech bloggers and Twitter-using early adopters who chronicle every bit of news — good and bad — about new phones and tablets also raises the stakes around how well new products perform in the marketplace.

“You know pretty quickly, and in a very public way, whether a product is successful or not,” said Mr. Hilwa.

However, this is not necessarily all good news- Dr Wierz went on to talk about how Social Media was probably having a measurable impact on movie success on the first weekend of release as early moviegoers gave the thumbs up - and down - for later attendees.

We think there is something in this - if it is true for movies, why not for consumer tech too?

This also ties in with other work we have done recently, where we have found that the reputation for customer service for existing customers - now that it is all over the web - increasingly impacts the buying decision of new customers. We think its the same dynamic in operation here.

So Apple's real skillis not just the Pre Hedonic Buzz, but also making products that people love to have without a lot of iteration.

Facebook blinks on Privacy

nospam@example.com (Alan Patrick) — Wed, 24 Aug 2011 09:27:54 +0000

Facebook has made significant changes toits privacy setings to compte with Google Plus - SAI notes you can now:

- Control who sees each post. Each time you post, a dropdown menu will appear to the right of the post and will let you control who you want to share the post with. At first, this menu will contain the same categories that you can get to through the Settings menu today -- "Public" (formerly called "Everyone" -- Facebook is changing the name), "Friends," and "Friends of Friends." But eventually it will include other Facebook Groups you've joined. In other words, it's a lot like Google+ Circles.

- Cange who can see updates AFTER you post them. If you change your mind and don't want your mom to know that you got falling-down drunk at a party last night, you can go back and change the sharing settings on that status update. That's new -- before, once you put it out there, it was out there forever.

- More control over people tagging you. Today, whenever somebody tags you in a photo, an indication of that tag appears on your wall. With the new settings, you'll be able to see who's tagging you and ask them not to tag you, or even send a message to the photo-owner asking them to take the photo down. Similarly, whenever somebody wants to add a tag a photo you've posted, you'll have an easy way to block that tag, block all tags, or take down the photo entirely.

- Facebook is also letting you share location info for any post you make, and add location to posts in the past. For instance, if you took a bunch of pictures on a trip to London, you can tag them after the trip is done. Previously, the location feature was only available on the mobile version of Facebook, and only let you tag from the location you were in.

- The mobile "Places" feature is being phased out, although similar functionality will be available from the new version of the mobile app. You can add your location through a normal status update.

Facebook product manager Kate O'Neill says Facebook started planning these changes long before Google+ rolled out. Course you did, Kate - its so in the company's DNA

What is most interesting is that competition is forcing privacy levels up, which is a hopeful sign for the future of social networking.

Flashmobbing, London style Part II

nospam@example.com (Alan Patrick) — Tue, 09 Aug 2011 22:51:00 +0000

Riot Cleaner Flashmob (Photo courtesy Guardian/Matt Dunham/AP)

Yesterday we pointed to the Bad Side of using social media for London's looting and rioting. This story is about the Good Side - Londoners using social media to organise ad-hoc Flashmobs to clean up. Grauniad:

Hundreds of people armed with brooms, binbags and rubber gloves turned out across London to help clean up the damage caused by a third night of rioting, looting and arson.

Co-ordinated online on Facebook and Twitter, volunteers mobilised in the worst-hit parts of the capital to sweep streets, help local shopkeepers and show solidarity with communities thrown into turmoil by the violence. Though their efforts were thwarted in many parts by police work, their presence on the streets gave a valuable morale boost to those seeking an end to the disturbances.

The origins appeared to be the Twitter user @sophontrack who suggested a #riotcleanup operation shortly after 6pm on Monday. It was, however, a tweet from @BenDylan which found its way to Dan Thompson that set the trend going.

Thompson, who runs a social initiative encouraging people to use empty shops and open spaces, decided to use social media to co-ordinate those looking to help. By 10am the tag was the top trending topic in the UK and the second worldwide.

"There are now people on the ground all across London," he said. "Even just putting on some gloves, picking up a dustpan and brush and clearing one broken window on the way into work. People are saying, 'We're Londoners, we're resilient and getting on with it.'"

Makes me proud to be a Londoner (though I was in Wales at the time.....)

In other news, it would appear that Blackberry turned off the BBN service overnight to make it more difficult for the looters to organise thier flashmobs. Hard to tell if that, or the well publicised 16000 police on duty, was responsible for the far lower number of outbreaks in London (though predictably, Flashmob looting broke out in the cities the Police sent to London had been drawn from). Police are also using working smarter, listeing in on Twitter now and using social media sites such as Flickr to identify looters

What is also interesting is the emerging evidence of "Flashmob Defenders" - locals organising to defend their areas also using social media.

Flashmobbing, London style

nospam@example.com (Alan Patrick) — Mon, 08 Aug 2011 11:50:40 +0000

London's Burning - Flashmobbing as constantly denied by Social Media apologistas (Photo TechCrunch UK)

London erupted in rioting over the weekend, initially sparked by questions about the police shooting of a renegade youth gang member/young local community member (make your mind up) but the most interesting bit has been the use of social media (apparently mainly Blackberry Mobile Messenger, but that may just be Twitter and Facebook apologists trying to ensure that they are only seen to promote Good Riots* )

Apparently the looters and vandals used "flashmobbing" techniques to organise the liberation of many televisons, pairs of trainers and other goods essential to the revolution, and then to dynamically keep ahead of the police - this from onlookers in Brixton - BBC:

I saw Foot Locker on fire in Brixton High Street after midnight on Sunday. They got in and made off with widescreen TVs, vacuum cleaners, and computers. KFC and McDonalds were smashed up.
About a five-minute walk away in Effra Road, Currys was getting broken into. Nearly 200 people were there trying to get through the metal shutters. Eventually they got in and made off with widescreen TVs, vacuum cleaners, and computers. There were riot police near Brixton station, but there was no police presence in Effra Road for at least 40 minutes.

.....

I live close to Currys in Brixton. I watched hooded youths brazenly running up my road towards the store. At about 01:00, my usually quiet road was filled with cars coming from the direction of Effra Road and Currys. This could have been due to traffic being diverted, or it could have been the opportunists taking their loot home. One man walked casually past my window carrying a fairly large box, with a wide smile on his face.

Anyway, regardless of the whys and wherefores of why the riots started and by whom, this brings home the dark side of Social Media that we have been going on about for years but is typically blithely ignored by the Social media pundits - apostles, conference promoters, authors and service suppliers. Probably a good thing, as it allows a more reasoned discussion of what checks and balances Social Media services need. Also a wake up call for the London (and any big city) police to get more "with it" with new media technology.

*Twitter was full of the data too, as my first information on ths came within minutes that way - so in my opinion blaming Blackberry only is a tad disingenuous

Spotify and the US Patent System

nospam@example.com (Alan Patrick) — Thu, 28 Jul 2011 22:58:00 +0000

Spotify is being sued for alleged patent infringement already - Techdirt:

just a couple weeks after entering the US market (finally), Spotify is being sued by PacketVideo for patent infringement. I knew the name PacketVideo sounded familiar... and then I remembered. A decade ago it was considered one of the hottest startups on the planet for trying to figure out ways to do streaming video on mobile phones

Now its not that their patents are probably any use, you understand, that is not the game - but by threatening a lawsuit it delays Spotify, costs them a lot of money and hassle....and thus creates an opportunity for PacketVideo to be paid to go away:

Once again, we see patents being used as a tool to shakedown companies who were actually innovative in how they executed, with a ridiculously broad patent that contributed zippo to the actual state of the art.

This is big business in the US now, in fact ex Microsoft CTO Natan Myrhvold's company Intellectual Ventures is dedicated to buying and enforcing such patents (and more - it tries to create patents around emerging areas, not for use but for the purpose of suing others). There was a rather good program on This American Life in the US last week on this issue:

"....people at companies that have been approached by Intellectual Ventures don't want to talk publicly.

"There is a lot of fear about Intellectual Ventures," says Chris Sacca, a venture capitalist who was an early investor in Twitter, among other companies. "You don't want to make yourself a target."

Sacca wouldn't say if Intellectual Ventures had been in contact with any of the companies he's invested in.

"I tried to put you in touch with other people in this community to talk to you about this and they almost uniformly said they couldn't talk to you," Sacca told us. "They were afraid to." IV has the power to "literally obliterate startups," Sacca says."

The irony is software patents have emerged despite the US Patent system supposedly not being allowed to patent algorithms! The US is trying to reform this now, but the proposed changes are deemed to be inadeqate and would come too late for Spotify anyway.

They'e just waitin' for the Shakedown....

European VCs and the laws of niche markets

nospam@example.com (Alan Patrick) — Wed, 27 Jul 2011 22:59:00 +0000

Earlybird Europe Venture Capital Report

View more presentations from earlybirdjason

EarlyBird Report saying that European VCs have better results than US ones (see above presentation), but I think it is misleading - as GigaOm points out,the reasons are not necessarily great for European entrepreneurialism:

Because venture money is scarce in Europe, on the other hand, companies have to compete harder for funding — which keeps the value of investments down. At the same time, it also means that VCs can cherry pick the very best investments and focus on backing real winners — which keeps their hit rate high. It’s a combination that creates a more efficient ecosystem, for investors at least.

This is encapsulated by a quote in the report from the head of Deutsche Bank Private Equity, who says that “European venture capital is a cottage industry characterized by an insufficient number of private investors with the capacity and willingness to invest in venture capital, mainly due to past disappointments and the resulting lack of confidence which still inhibits the European venture industry today.

I recall looking at this issue for McKinsey in the mid 1990's, and I don't see that - big picture* - much has changed. Its still the same cottage industry propelled by the laws of niche markets, but not maximising the total entrepreneurial potential value in Europe, just the returns to VC investors. The truth is that a startup is still more likely to get funded in the US, and get a higher valuation and more money.

What I have never understood is why the market hasn't become more competitive, and its still not even economically efficient as it is not maximising the total potential surplus from European entrepreneurialism - if it were a real "Free" VC market in Europe then nearly everything with a positive possible return would be funded - and some real turkeys of course.

The outcome is usually that European companies eventually go Stateswards or get bought by larger, faster growing US ones, and there is a dearth of European champions. For the European VCs its great, for Europe's own wealth creation, less so.

A more efficient market - definitely (within the narrow definition used). A more effective one - probably not.

*By this I mean that even though it has changed structurally, from an outside point of view - as an overall industry sector - it still quacks like much the same duck.

Google+, Jennifer Government and Johnny Reggae

nospam@example.com (Alan Patrick) — Fri, 22 Jul 2011 13:57:15 +0000

Google+ won't let Brands have pages, and this is upsetting the e-Marketeers, poor things - an Open Letter from Danny Sullivan :

Hey Google, I'd say I know you're all new to the social game and should be forgiven that you have messed up with how to handle brands here so badly. Except, you're not new.

For one, you know that Twitter and Facebook both support brands, and that there would obviously be demand for this here. You failed to implement that support. Bad on you.

I know it's all "field trial," but that's not really an excuse, given that you knew -- had to know -- this would happen.

Worse, you gave no clue that Google Profiles were suddenly changed to bar non-humans from using them. Before Google+ came along, this wasn't a problem. I know. I remember Google Buzz, when plenty of brands, including our own +SEL on Google Buzz account, started up.

No one said a word against this. No one told us not to do it. So when Google+ happened, no one had any idea the rules had changed - and especially changed for Google Profiles which are a superset of Google+.

IE, plenty of profiles that have nothing to do with Google+ but which are for businesses were suddenly made outdated.

I know you have great plans to have super wonderful business profiles eventually. But if you're going to only let a "tiny" number of businesses operate before that, then you taint them and yourselves with favoritism.

At least when you announced applications for business profiles, there was a sense that anyone interested would have some type of a fair shot. Now that's gone.

Don't try to put the genie back in the bottle. Restore the business profiles you have closed. Drop the rule you silently added that blocks business profiles. Let businesses use profiles here just as regular people do. Works just fine on Twitter. Then upgrade those accounts when you're ready

Two things we would note - one serious, one not:

(i) Facebook also tried the same approach initially (Broadstuff blog was thrown off Facebook when they tried to persuade advertisers that all avatars were individuals) but eventually gave in to the lure of lucre, no doubt Google will do the same - once it works out how the House wins the game.

(ii) In the interim we suggest Brands followthe example set in the book Jennifer Government,and force all their employees to change their surnames to the company name and take out Google+ accounts. We eagerly await Google+ accounts from Johnny Reggae Reggae Sauce, Jenny Colgate-Palmolive, Steve Microsoft and Charles Schwab (now that's clever -naming your company after yourself - such anticipation!). In fact one could go further and change name to actual products too - Dave iPad, Toni .

Spot the serious one

...and just beware of the unfortunate combinations - you know, the Wayne King, Mike Hunt etc equivalents (examples in the comments section please, there will be points, and points mean prizes)

Remora Blogs for Shark Businesses

nospam@example.com (Alan Patrick) — Fri, 22 Jul 2011 05:41:18 +0000

Demand Media is trying to censor blogs that record its suckiness* - Forbes :

There’s something perversely flattering about having an entire website devoted to your supposed terribleness. But Demand Media is evidently not enjoying the attention from Demand Studios Sucks, a blog maintained by refugees, malcontents and other critics of the so-called content farm. This week, as Demand’s market capitalization fell below $1 billion for the first time since it went public in January, the company’s lawyers sent a cease-and-desist letter to the proprietors of Demand Studio Sucks, and temporarily succeeded in getting its internet service provider to take down some internal documents it didn’t want posted.

We thought the Demand Media business model sucked pre IPO, and still do, but its nice to see these sort of shark practice businesses get their own remora-blogs.

One of the lessons of the New Media is your critics are always with you......... and like remoras,they won't go away easily.

*Suckiness - a business that sucks at sucking suckers'

Nokia needs Putsch Technology

nospam@example.com (Alan Patrick) — Thu, 21 Jul 2011 15:42:59 +0000

Since setting up this blog we have railed against the myopia of Planet Mobile in general and of Nokia (read here) - the Olde Guarde mobile phone makers and the elements in the Mobile Telcos that have fought tooth and nail against Mobile IP and decent IP devices. (The well powered, user friendly smartphone was technically possible some years before Apple brought the iPhone out, all it required was the will) so it is with no surprise we note Nokia is hitting the wall of its own self-created obsolescence - PaidContent:

Nokia today reported an operating loss of €487 million for the quarter, a decline of €782 million from the same quarter a year ago, when it made an operating profit of €295 million. The declines seen at the handset maker were near-total, represented by a string of negative percentages down the balance sheet.

That doesn't even begin to cover the disaster that is Smartphones:

In sales, smart devices saw a decline of 33 percent, to €2.368 billion from €3.503 billion a year before; in volumes that worked out to a 34 percent decline to 16.7 million units. In comparison, Apple sold nearly 34 million units and the combined Android makers sold around 37 million, according to figures from analyst Benedict Evans.

The "Microsoft Effect" had better be felt, and fast then..... if they want to have anything left of the JV and all the $ they are pumping into it. But they can't carry on doing "more of he same" - our own view is that they are better off putting their young turks in charge, rather than carrying on with the current management team.

Putsch Technology in other words......

The Broadstuff Friendfee...I mean Google+ Review

nospam@example.com (Alan Patrick) — Wed, 20 Jul 2011 21:24:30 +0000

Had a look at Google+ reviews briefly, reminds me of Friendfeed but as it would be done by guys whose previous successes were Buzz and Wave. Anyway a lot of the A listers seem to be ~~spouting the same shill~~ saying much the same as they did about Friendfeed , so the Broadstuff review is to be honest and to rehash our Friendfeed Review of 2008 and replace Friendfeed with Google +:

Fred Wilson* notes, re Google+ and the new new forum:

But it means I have to log into Google+ every day now and check out what people are saying and weigh in. Which I've been doing in the past couple weeks. And that increases the chances that I'll comment on someone else's posts at Google+.

So now, in addition to this blog, my tumblog, and twitter, I have to pay attention to whats' going on in Google+. So it's gone from being an aggregator of attention to a demander of attention. Good for them. That's the way to play the game on the web.

But I would like to see them get those comments portable in some way. Or I'd like to see someone aggregate those comments.

I love the last line's implications - I need another aggregator to aggregate the stuff this aggregator is aggregating so I don't have to visit yet another website

Fred also quotes Umair Haque**:

Umair, who is so right so often, said:

The real point is: Google+ is a next-gen, open version of Facebook's social feed.

Sorry guys, I'm being a bit slow here - which bit of the "yet-another-proprietary-service-that-I-have-to-have-an-identity-and-a-social-graph-in" is the next-gen, open version here?

Or is it that it pumps out stuff in that hate-object of the Web 2.0 faithful, email?

* Fred didn't say it this time round....but pick any sensible pundit you like.
** Ditto Umair

Anyway, I reckon this review will stand the test of time as well as the Friendfeed one did - with one eddition - Friendfeed never got an iPad app at launch.

Broadstuff 10 Point Bubblewatch now at Level 6

nospam@example.com (Alan Patrick) — Wed, 20 Jul 2011 13:43:13 +0000

Broadstuff Bubble O Meter - from Force 2 to Force 6 in 6 months

We (triumphantly, yet reluctantly) crank the Broadstuff Bubble-O-Meter to Level 6 (see above) in July, based on the news from Betabeat that yet again. as in 2006/7, Lawyers, Consultants, MBAs and Bankers are leaving for startups.

“I can’t tell you the whole idea.” The Internet entrepreneur on the other end of the phone sounded panicky. “It’s going to sound ludicrous and ambitious, more ludicrous and ambitious than most.”

The voice belonged to a 27-year-old Stanford law student—“just about the oldest you can be where I cannot remember not having a computer”—who was in New York last week to talk to people about his new concept for a website.

He gave a few vague descriptors that could apply to half the start-ups in New York.

“I definitely don’t want it in the newspaper,” he said. “I’m worried that even little sign posts toward what I want to build are dangerous.”

When the Tech world moves from collaborative to competitive it means (silly) money is entering the game in large wodges, and get rich quick dreams are right behind. As Betabeat notes:

Cheryl Yeoh was working as a management consultant for KPMG, an 8:30 a.m. to 8:30 p.m. gig that kept her in Scotch tastings and Michelin stars, when she realized sometime in the middle of April that she needed to do an Internet start-up for something. Anything. The idea was secondary. What mattered was making something amazing that could reach not just hundreds of people or thousands, but millions. “I knew I could do something greater,” she told Betabeat. “Every time I met someone who told me, ‘Oh, I’m a founder of so-and-so,’ or whatever, I don’t care what company it was, every time they said that I thought, oh my gosh, why am I not doing this, I know I can start something, I know I can do something.

Those who were around last time will remember this mindset only too well, as Betabeat alo notes:

Whether it’s due to The Social Network or the new wave of billion-dollar tech I.P.O.’s, lately it seems like everyone has a start-up. Betabeat first noticed it in our own neighborhood, the tech-tending East Village, home of Foursquare. On a recent weekend, we overheard an entrepreneur talking about pitching investors over brunch on St. Marks and glimpsed another demonstrating his website’s Twitter integration to a friend at Ninth Street Espresso. We tried to eavesdrop on a bearded, 40-ish fellow ranting about his start-up to a friend in Tompkins Square Park around 9 p.m. on a Wednesday and caught the words “convertible note.” The trend has invaded our building as well. The Goldman Sachs engineer on the second floor wants to join a start-up. He asked us about tech events.

Another strong predictor is the increase in the number of startup recruiting events (production of startups is key to meeting the increasing amount of dumb money entering you see....)

Evidence of the city’s start-up fever can be seen on Meetup.com—the New York-based, dot-com-era start-up that became a hub for local techsters—where the number of recurring tech events has wildly accelerated: Startup Lunch, 104 members; Dumbo Tech Breakfast, 641 members; UWS Startup Meetup, 164 members; the NYC Startup Garage, 208 members; NYC Startup Weekend, 337 members; the NYC Lean Startup Machine, 1,553 members; the New York Technology Bathhouse Meetup, 25 members.

And then there is Twitter - $800m in, of which half is to cash out the existing investors....

In a move reminiscent of one done by Facebook in 2009, Twitter is close to completing $800 million funding deal that will include a second part in which around $400 million of the total will be used to cash out current investors and also employees.

......

That is especially important since the company is not likely to go public for at least a year or more. And, while it could also be sold to a bigger company such as Google, that is also not in Twitter’s immediate future.

Its not Twitter we are looking at for stage 7, though...

The Circle of Bubblelife says there is one every minute...... just don't invest the 401(K) this time round!

Murdoch, Google+ and Facebook News - you ain't seen nothing yet...

nospam@example.com (Alan Patrick) — Sat, 16 Jul 2011 14:17:33 +0000

I assume everyone has been watching the unravelling of News International with some fascination, and all the little birds we know (and Rebekah Brooks) are telling us there is still more stuff to come....

However, the real long term question is this: how did power corrupt the organisation? On what planet do youh ave to live to have a world view that thinks hacking the phones of dead children is OK.

Befehl ist befehl, as they said at Nuremburg*

But that is not it - the real reason is "because they could", it was inevitable that in the pressure for results,to perform,to climb the greasy pole,that one person would go for this option - and so long as they don't get caught, the corporate game theory says they keep on winning (and even if they do get caught, the payoff for hacking may still be better than the punishment - we shall see)

I was reflecting on this with news today that Facebook is"becoming a News Organisation", and in a hard competition with Google+ (Forbes):

Facebook has a war on its hands, and Mark Zuckerberg knows it. Practically overnight, Google+ has gone from a rumor to a thriving community with over 10 million members. With some 700 million members of its own, Facebook is thinking less and less about how to grow that number and more about how to get current users to live more of their lives within its virtual walls. One answer it has come up with: asking a select number of news outlets to produce “Facebook editions” — basically, app versions of themselves that can be read and consumed right there on Facebook.

Add to that the article that there is a war on social network counting going on....Search Engine Land

Whether on purpose or not, Google and Twitter are having a little back-and-forth this week about the size of their social networks — or, maybe more accurately, about the activity levels on their social networks.

Google+ has X amount of users and the +1 button gets served Y times per day. Twitter delivers N tweets every day and saw P new signups just yesterday. It’s all quite reminiscent of the early/mid 2000s, when all of major search engines made a sport out of bragging over the number of pages they’d indexed

My take on Facebook's corporate culture is that they are not exactly angels, and Google long ago stopped "doing no evil". Twitter is still an unknown quanity.

But the user data they have access to makes the stuff that News International could get from mobile phone hacking look like a cupcake party confessions session.

And as the competitive pressures intensify, there will probably be the same corporate game theory emerging..... so even if everyone there today are saints,the corporate sleazeball would still triumph - one hopes that these companes put practices in to prevent it, or even better (and probably necessarily) US and UK regulators look at the NI event as a wake up call to put measures in place to prevent social network user data hacking.

Or else we will be saying "we told you so" in a few years time....

*Give us a break - Broadstuff is 4 years in and we only now invoke Godwin's Law .

Social Media and its part in News International's Downfall

nospam@example.com (Alan Patrick) — Sat, 09 Jul 2011 14:56:05 +0000

The story so far - no sooner had News of The World announced its ~~role as an ablative coating for News International~~ closure, than various parties were quick to proclaim Facebook, Twitter and Mumsnet as the causes of its collapse.

Mumsnet? I hear you ask - WTF is that? Well, no less a luminary than the Times (another News International paper) in fact accused Mumsnet of breaking the News Of The World - Editor Roger Alton (See video above) accused Mumsnet:

“the comfortable middle-class mothers of MumsNet sitting down to their fair-trade tea and organic shortbread biscuits I hope are very pleased with the Twitter campaign they organised, getting advertisers not to advertise in the News of The World. They’ve done as much as anybody to close this paper and put 200 reporters, photographers, editors and young people just starting their careers out of work.. These yummy mummies have done as much as anybody to put them out of work. I hope they’re feeling pleased with themselves.”

Of course, as many people on Twitter pointed out at the time, he omitted to mention Andy Coulson or any other News Corps employees, or even the phone hacking issue - no surprises there given his newspaper's propensity for censoring of comments that they didnt like, even behind its paywall from paying subscribers.

There were the standard paeans to Facebook and Twitter of course, and we have commented on those sort of things many times before, but MumsNet is a new one so we did a bit of digging (so you lazy lot don't have to) - and its quite interesting, so allow us a little diversion first.

For those who don't know it, the foundation narrative runs something like this:

Mumsnet's two founders met at an ante-natal class in 1999 when they were both pregnant with their first children. Frustrated at the lack of decent information about parenting, they set up a website for new mums to be. At the time one founder hadn't even sent an email, let alone considered setting up a website. But, having spotted a gap in the market and keen to strike a good work/life balance, they set about creating Mumsnet. It was their high profile court battle with Gina Ford in 2006 which gifted Mumsnet the sort of publicity money couldn't buy. (Ford, author of The Contented Little Baby Book, took issue at some of the forum members' heavy criticism of her childcare methods and went for libel against the site. The case was eventually settled out of court with an apology to Ford). But it generated a lot of press and they came out of it quite well. It has burgeoned as a service since then.

But be that as it may, when you have a look at Mumsnet the way it works is in fact merely another Social Media system that aggregates the voices of many people, who can then agitate for a campaign in a certain direction, much like Twitter or Facebook. But it does seem to campaign as an organisation too, something Twitter and Facebook don't do (if you discount privacy lobbying, of course...). Now the Times clearly has form on them already, arguing in 2010 that it's the Founders who are driving the agitation and that "there were bullies hiding behind it's skirts":

"what started life as a gentle, mutually supportive online community of mothers seems to be turning into something different as it grows up. A decade after its birth, Mumsnet sometimes seems more like a bitchy, opinionated teenager than a sweet 10-year-old.

......

Flattered by suggestions that their 850,000 members could swing the general election, Mumsnet’s savvy co-founders, who set up the website after meeting at an antenatal class, have gone into PR overdrive in the past year, recruiting a dazzling array of big-name politicians for heavily publicised live webchats....

...[The Founders] Roberts and Longton are using the huge collective influence of Mumsnetters to push for changes in areas that matter to mothers."

The clue to their influence is more in the size of their user base, over a million now and of the more educated middle class mums (i.e. the sort who are less backward about coming forward), which gives them their power. Its critical role in reaching women made all parties in the last election very keen to be seen on it, to the extent it was dubbed the "Mumsnet Election". Also, one of the founders being married to a Grauniad Editor clearly doesn't hinder said PR media overdrive

Now the Times clearly has "Ishoos" with Mumsnet, but the Founders' increasing frequency of appearance on TV etc also clearly shows that they are doing more than just letting their membersip kick off in various random directions, and that is where they differ from Twitter or Facebook, which tend to be pure platforms for people to raise issues. In that respect thay are more like the campaigning newspapers of old, using their readership's views (or curating them?) as a base to champion various issues (The Times was once famous for this ironically, being known as "The Thunderer"). This makes them different to Twitter and Facebook, in that those two argue they are truly neutral platforms that allow people to say what they will, whereas the MumsNet founders are clearly more a part of the process, which may cause some problems down the line if someone really takes them to task.

But enough about Mumsnet - what did Social Media actually do?. It's worth looking at the timeline (in 10 easy stages):

1. Up until the last week or so, there has been a slow drip feed of revelations coming out, but all small enough and slow enough that various traditional means of assertive PR (paying policemen, possibly even buying off police enquiries, getting politicians to look the other way etc) had sufficed. Dedicated journalists and bloggers have been stitching things together, but the news that celebrities had their phones hacked to get at their lurid (or not) sex lives didn't really exercise the public mind.

2. The "Tipping Point" was the story broken by Nick Davies, a Guardian Journalist*, that they had also been hacking the phones of murdered schoolgirls, even deleting messages. A wave of revulsion wept the nation, and this was followed by news that they had also hacked the phones of soldiers killed in Afghanistan and their famlies. This is where Social Media first came into play, rapidly disseminating these stories ahead of the traditional Media/PR/Political circus that News International controlled, so NI were left putting the screws on gates long after the horses had bolted.

3. Social Media (Twitter, Facebook, MumsNet et al) drove a number campaigns of revulsion, turning News Of The World into a "Toxic Brand". When the story started to surface in the USA, it was easy to count the furore in the Social Nets, Advertisers became concerned and shied away, and then started to pull their support.

4. News International then closed News of The World, the storyline being that it was a toxic brand and so no longer a viable business. This was picked up by all the media, but the blogosphere was probably the most cynical about it straight off compared to the (sue-able) mass media, which played a more straight bat.

5. A campaign started, to drive protest responses to the public listening exercise on the News International takeover of BSkyB, this was flashed across Twitter and Facebook and elsewhere (I can't see it on Mumsnet though) and c 156,000 responses were received (normally a few hundred are received) forcing the embattled Media Secretary to announce an indefinite delay and OfCom to muse on whether News International were "fit and proper" to own it. This impacts on whether they are fit and proper to own anything, and in the long term this is The Big Story..

6. As with the Egyptian Revolution however, it was Television that put the real boot in. On Thursday night the very influential (and hugely watched) BBC Question Time programme kicked off with the question that had been on Twittter all day "Is the closure of the News Of The World just a cynical attempt to insulate News International from the fallout over phone hacking" (as quite a few of tjhe people in charge at the time now hold bigger jobs in the News International empire, and the real agenda is getting the BSkyB deal done). Hacked actor Hugh Grant was on the panel, and played his best role ever - that of an eloquent, elegant and aggrieved hacked actor (see video here) - while the panel's usual cadre of politicos and journos wriggled on the various News International petards thay had hoisted themselves on over the years. Question Time has its own Twitterstream (#bbcqt - we covered it some time ago) and this was ticking over like a geiger counter.

7. Roll forward to Friday morning an Opposition leader Ed Milliband went live on TV, crossing the Rubicon and going against News International on prime time TV (it has been an open secret in UK political circles for at least a decade that Murdoch is a kingmaker). The Prime Minister managed another wriggly politico petard performance, but by now Twitter was in overdrive and he was sliced, diced and dismissed in minutes. Twitter was the main conduit throughout the day, pointing to analyses across the UK and US as they emerged, but by now the 24 hour TV channels and mass media were on the case and were bearing the main story load.

8. On Friday afternoon, NI UK supremo Rebekah Brooks (who had been News Of The World editor at the time of the hackings of Millie Dowler, one of the dead girls's phone) held an off -the-record meeting to the sacked News Of the World employees, which was of course recored on various "User Generated Media" sources such as Audioboo and instantaneously disseminated on Twitter and Facebook, and picked up by the 24 hour TV news channels as it happened, including her comment that worse was yet to come.

9. On the BBC flagship political programme Newsnight on Friday night, another hacked actor, comedian Steve Coogan, gave another virtuoso performance (see video here) to millions of watchers (and more tuned in as it flashed across Twitter). Again, mainstream media carrying the load, Social Media carrying the signal.

10. Roll forward to Saturday, now the story is across all the mass media, and the Twitter #notw hashtag is still spinning like a geiger counter, the latest campaigns are to boycott not just the News Of The World but the Sunday Times tomorrow. Facebook has campaigns a-plenty as well, it would seem. Carl Bernstein (yes, that one) has weighed in on the UK's Watergate. Also by Saturday, the Googlebots have indexed all the media so it is fairly easy to pick up on the story. Oddly enough, according to Twitter the #Icantgoadaywithout hashtag is the biggest trending, but as I watch its not turning over as fast as #notw, so quite how they define "trending" I don't know.

And Mumsnet? well, on the main demi-political sections, the "Chat" and "Am I Being Unreasonable" boards, the biggest stories (apart from the perennials) are ""Message deleted by Mumsnet"" and "To start a Friday night drunk"

(To be fair, there are a few discussions of News Of The World related topics on Mumsnet but they are quite small volumes comparatively - but given they were accused of breaking News Of The World, they are clearly very influential....).

In conclusion then, Social Media is a messenger. It was not able to unearth or set up the target (that took courageous analytical journalism), but was excellent at running faster than the opposing media blocking plays, was excellent at alerting, aggregating and activating simple mass responses (boycott NOTW! boycott the Advertisers! Sign the petition against BsKyB takeover!) and pointing to alternative analyses. However, to really have mass impact it has required prime time TV with well known personalities to drive the agenda. My take on the Arab Spring ongoing story is that Socisal Media is also not that good at setting up alternative structures, its better at protesting against existing ones.

And Tomorrow? Well, we shall just have to see.....but one thing is for sure, adding Social Media to the mix has allowed small, nimble media to run rings around even interests as vested as the Tory party and News International. The real proof will be how quickly the investigations start (the Government is procrastinating) and what happens to BSkyB.....

*Nick wrote "Flat Earth News" which in my opinion is The seminal book on modern media

Crisis At News International Commits The Times To Censorship

nospam@example.com (Paul Lancefield) — Fri, 08 Jul 2011 07:49:30 +0000

As Corporal Jone’s would have said “They don’t like it up-em.”

[UPDATE see a development to this story at the end of this post, the Times really are in crisis mode - it will be interesting to see if this time they publish my comment, or just keep digging]

A newspaper should not be about the suppression of news and views. Ever. Yet that is precisely what News International owned The Times has done. What is worse, they censored the legitimate, non-profane, reasonable feedback of a paying (non-activist) customer; Me. Twice.

What I wrote is only provocatively worded because they had already effectively banned wholly legitimate comment. Read what I wrote and you will get the gist.

This is the text of the second, comment I submitted last night, (after they failed to publish the first) against The Times article "Hacked to death: News of the World is shut down". Interestingly, it was actually published for about a couple of minutes, before being taken down, thus confirming it was actually actively censored:

“OK I submitted a comment half an hour ago saying pretty much the following:

‘Could this simply be a cynical move to deflect criticism from senior executives? What of the reports I’ve read to the effect sunonsunday.co.uk was registered two days ago ?’

Strangely is hasn’t been published, but other later comments have been. Times: THIS IS THE AGE OF THE INTERNET. This time I have a screenshot of my submission and will tweet and comment on the other newspaper sites with evidence of your suppression of bad news. Go on, censor this non-profance, non-insulting comment, I dare you. Or alternatively, show [*] you are made of less bankrupt stuff and publish it.”

*typo corrected

So let’s put this in context. This is a newspaper, which claims to be at the quality end of the market, trying to bury a paying customer’s feedback questioning the motivations for the actions taken by senior management in the owning group during a time of crisis. The hypocrisy of a newspaper taking this action is simply staggering. It is wrong on every level, and confirms News International are an inauthentic organisation, at least in their moderation of user comments. But let's face it, that inauthenticity has now been shown to have spread through several departments of the organisation. So which nodes has the cancer spread through (and from) ? Having censored my first comment, which I’m sure was uncomfortable reading for them, but not at all provocative, they then censor the second, which was admittedly more provocative but for good reason.

Sorry News International, I may be small fry, but this is the age of the Internet. The balance of power is shifting. I do have a voice. It’s not as though I’m a left-wing activists seeking to see the back of you. And now I'm annoyed.

Here is the documentary evidence of the post:

Unfortunately I didn't get a shot of the fact it had been published. Perhpas naively thinking they had let it through and it would remain published.

UPDATE: The Times really are in crisis mode. I have returned to the story to see if they have published my post (they may do once there are more comments so it is buried by the volume) and found this comment by a Times staff member. You can see I have replied to it. It will be interesting to see if this time my comment is published.

Why I'm not Blogging, Twittering and Spotifying as much....

nospam@example.com (Alan Patrick) — Thu, 07 Jul 2011 22:58:51 +0000

You may have noticed that the blog output is much less recently - the reason is simple - very busy on client work - that happens - but now with a lot of travel thrown in, which has just made me too tired most of the time. In addition, to be honest a lot of the stuff that has been on Techmeme and has happened in the last few weeks has been less interesting than the client work I have been doing, which is all about Enterprise 1.0 - 2.0 stuff - so expect a lot more down that line when I have the time. (I had to stifle a yawn over the "Content Bubbles" the other week, we've been writing about that for years).

With Twitter, the reason is twofold, firstly the new Twitter interface on my mobile is crap. But secondly, and more to the point, the content is just not compelling enough anymore to make me bother to get a better client. The question re content is interesting, I am saddened that a lot of the people I followed who were interesting are saying less, and (sadly) some other people seem to have shifted to a sort of perma-pimp mode.

With Spotify, its interesting - I had it going pretty much constantly while I was doing rote work at my computer. Then they cut it to 10 hours. I racked up my 10 hours the first month. As an experiment I decided to see if I could go "Cold Turkey" for a week. You know what - by day 2 I didn't even notice it was gone. There is just so much good content on the 'Net its like restaurants....one service closes down, or you don't like the food anymore, plenty more are out there.

VRM, Loopt and the Reverse-Groupon effect

nospam@example.com (Alan Patrick) — Thu, 23 Jun 2011 19:53:40 +0000

I am fascinated with the concept of VRM (Vendor Relationship Management) and have been an irregular regular (or is that regular irregular) for some years.VRM is the idea thhat the user owns the data about themselves,and uses the data inexchange for better dealsfromthe seller. Obviously, it works better if more data is given, and also if more users can aggregate their demand. Thus this play by Loopt caught my eye - Business Insider:

That's the idea behind Loopt's new "u-Deals" product, which it's rolling out first in the San Francisco Bay Area. It's sort of the reverse Groupon.

The big idea: You come up with a deal, get your friends on board, and submit it to Loopt. They'll then try to get their sales team to get the merchant to give you the deal. If it works, you get the deal.

It's an interesting idea. Will it work?

People will have to be realistic about the size and value of the deal, otherwise it's a non-starter.

And better, more desirable merchants probably have no incentive to cut their prices, unless they can fill their shops up during slow times.

I thinkthat'sapretty good summaru of the issues - in Dotcom 1.0 a number of the aggregationsites (or C2B as they were also known) were mooted (some were even floated, iirc) but it all fizzled out as it seemed that toet a bunch of "C" side people to agree on their demand proposition was like herding cats- it still seems easier for a retailer to"propose" a proposition and consumers to react.

However, the thing that keeps me interested in VRM is that part of me thinks that if (i) the power of today's web was harnessed (ii) with modular product design ansd (iii) the sheer numbers onlinenow, it may become a reality.

One to watch.

On the Lies, Damned Lies and Statistics of Olympic ticket sales

nospam@example.com (Alan Patrick) — Fri, 17 Jun 2011 23:17:30 +0000

I am watching with some fascination the emerging story of the 2012 London Olympics ticketing approach - from a strictly game theory point of view, you understand

The background is the following - UK citizens, especially Londoners, are subsidizing these games to an amount ~~far greater than the officially admitted~~ of £3bn (original estimate £700m....)

They have been allowed to apply for c 3m tickets as a first tranche, using a rather curious lottery system. In essence, 1.9m people sent in c 19m bids for these tickets. You had to bid at once, for everything you wanted, hence the overbidding. The outcome was also rather curious - 700,000 people got about 4 tickets each, 1.2m people got nothing.

LOCOG, the Olympic society, claims that this was the fairest approach, and is trumpeting an "average" of merely 4 tickets per applicant. It isn't of course, as only about 33% got any at all. The "average" is actually more like 1.5 tickets per person, the "mode" is zero, the "median" is none, and the distribution is thus very highly probably a power distribution with the rich getting richer etc etc.

The winning game theory of the lottery thus becomes clear - those that can afford to risk a large bet were going to win, those millions of less wealthy souls who cautiously bid for what they wanted were far more likely to get nothing.

LOCOG claim this isn't the case (but so far have refused to show the actual allocation distribution, just a very vague non-sensical description*), but I'm buggered if I know how a theoretically random lottery would give me any other outcome. And it it was filtered, why not maximise by number of applicants?

And Unbeknown to UK people, at the same time tickets were being sold normally in Germany and other countries at the same time. So clearly an auction was not the only, nor even optimal, approach to actually selling tickets.

If this sounds odd to you, it also sounds odd to many applicants. Despite reassuring noises from LOCOG that the demand was unpredictably large (wtf? Country of 60m people, one Olympics per generation....) and no other system would be fairer, and the MSM being roped in to bland things over, a rather large rat is being smelled..... It also appears that that the number of tickets on sale to joe public for key events (like the opening) were pitifully small, since much of those have been given to vested interests, (aka "sponsors"), as opposed to the citizen taxpayers funding the olympics (aka "suckers")

Anyway, a "second opportunity" has appeared to buy tickets in a weeks time, mainly of the football tournament and expensive tickets for some other sports, which no-one wanted in the first round - with "priority" being given to first round applicants. It's at 6am on 24 June on a first come, first served basis. The whiff of another rat is starting to permeate the air.....

As a game theorist, I stand back in admiration at the design of the lottery system to maximise rewards for the ~~touts~~ well to do (I await the tickets on eBay at 10+ x face value**) , and the subsequent creation of a panic demand for the less popular stuff.

As a London citizen who will have extra taxes for the next N years to pay all this off, it really p*sses me off. And no, no-one I know got any tickets.

*"Eighty percent of applicants applied for between one and five sessions, with just 5% applying for more than five and "a fraction of 1%" applying for the maximum of 20." Thus by by my calculation 15% of applicants applied for none? FTW?

**They allegedly cannot be sold on eBay et al. We shall see how the 'Net routes around that....

Spotify now worth $1bn

nospam@example.com (Alan Patrick) — Fri, 17 Jun 2011 21:25:27 +0000

From AllThingsD, Spotify:

....has raised around $100 million from DST, Kleiner Perkins and Accel. Spotify has been working on the round for more than six months, but people familiar with the company tell me it didn’t actually close until this week. Spotify CEO Daniel Ek can use some of that cash to support a planned U.S. launch this summer. He now has U.S. licensing deals with three of the four big music labels and is in advanced talks with holdout Warner Music Group. Spotify is also working with Facebook on a significant integration deal, but that won’t be tethered to the U.S. launch, I’m told.

Some context for the funding: U.S. Web music service Pandora, which went public Wednesday and got hammered in the markets yesterday, is currently valued at about $2.1 billion

One assumes there is some link between Pandora's IPO and the sudden funding of Spotify

It's still a tough play, as AllThings D note:

Unlike Europe, however, the U.S. has several existing subscription services that also stream unlimited tunes for $10 a month, and those have yet to take off, even though the services are now compatible with popular handsets like Google’s Android and Apple’s iPhone.

During the time that Spotify has spent trying to get to the States, meanwhile, three different cloud/locker services have launched in the U.S. as well: Amazon and Google allow users to move their own music to an Internet-based server, where they can stream it to PCs and some phones.

Couldn't come soon enough therefore, as they have had to cut down on the free service in Europe which, however you look at the "why", reduces the ability to grow. No doubt most of the money will be used to ~~bribe US labels~~ penetrate the American market, but we also wouldn't be surprised to see the free service limitations released therefore, as news of crashing European numbers does not play well in the run-up to an IPO.

Watch this space..........

The first Bitcoin Crash

nospam@example.com (Alan Patrick) — Thu, 16 Jun 2011 12:45:41 +0000

Mt Gox Bitcoin exchange rate

Been watching Bitcoins* in a low level mode for a while, it's market structure always reminded me of Second Life (ie there is a scarce Good you can speculate on, but actually that Good can be massively increased at the flick of a switch and thus crash the market). I was also intrigued by the potential for global currencies and tax evasion of Second Life far more than I was ever interested in the actual virtual world, and Bitcoin reminded me of that, just without the hassle of coding virtual structures and having to be avatars with cocks on their heads.

But the stuff going on over the last few week has made me sit up - I was not too bothered about the the First Bitcoin Bubble of the last few weeks - it's a very limited market so even a few newbies pouring in will set it off - and fully expect to see the First Bitcoin Millionaire in Fortune soon (anyone remeber the same with 2nd Life). But I was very interested by the First Crash, as that came very early in the cycle - NYO:

The price of a Bitcoin climbed slowly but steadily until May, when Gawker and the tech blog Launch published two big stories about the phenomenon. Prices started zigzagging up, hitting a high of $33.11 last week after three weeks of increasingly frenzied trading, and then fell a spectacular 30 percent Friday morning, what the blogs dubbed “Digital Black Friday.” As of now—3 p.m. Tuesday—a Bitcoin can be had for around $18.

So why the fall? Until last week you could exchange Bitcoins for Dollars on Paypal, but that was then blocked by Paypal, so converting Bitcoins to real currency became a lot harder, and the Bitcoin fell sharply (and has continued down, bitcoins hit c$10 before coming back to c $19 - see the graph above).

Nonetheless, the Boosters are out - NYO again, quoting Wagner:

“It’s a bubble, but it’s an unbreakable bubble, one that is just going to keep growing and growing and growing,” he said. He had predicted Bitcoins would be going for $10 each by the end of May; the price hit $9.999 on June 1. He now says it will hit $100 by the end of the month and $10,000 within one year. That nutty-sounding forecasting recalls dot-com bubble boy analyst Henry Blodget’s famous 1998 prediction that Amazon’s pre-split stock would double to $400, which happened less than a month later. (The call earned him a job at Merrill Lynch, but his public cheerleading of tech stocks eventually led to a $2 million fine for securities fraud.)

My take - conventional economics suggests it isn't going up anytime soon - its hard to see how it will attract a lot of specualtion now the easy liquidity route is gone.

* To copy and paste NYO because I'm lazy - Bitcoins are snippets of code that use encryption to prevent counterfeiting and double-spending. Complex algorithms control the money supply, in theory replacing the need for banks or a central regulator. Right now Bitcoins can be generated—or “mined”—by running a program on a powerful computer. This task requires exponentially more time and processing power as the number of Bitcoins grows, and the absolute number of Bitcoins is capped at 21 million, mimicking the scarcity of gold. There are now 6,539,450 in circulation; $2 million worth were traded on the main Bitcoin exchange Mt. Gox on Friday.

Duke Nukem nukes PR

nospam@example.com (Alan Patrick) — Wed, 15 Jun 2011 23:04:00 +0000

It would appear that Duke Nukems PR threatened to nuke people who said nasty things about the new release and was then nuked itself! Ars Tech:

...the Redner Group's official Twitter account posted something you almost never see: an open threat stating that outlets who reviewed Duke Nukem Forever poorly may not receive review copies of games in the future. Anyone who has done this job for any amount of time has suffered through a dry spell after giving a publisher a bad review, but this is the first time the threat of a blacklist has been made public.

"Too many went too far with their reviews...we are reviewing who gets games next time and who doesn't based on today's venom," the company tweeted. "Bad scores are fine. Venom filled reviews...that's completely different," another tweet read. Currently, Duke Nukem Forever has a Metacritic score of 49 on the Xbox 360, the format most commonly sent to the press. For a game with such a large marketing budget and name recognition, that's shockingly low.

The furore spread out all over the social media nets in a viral way that any PR would have been proud of, sadly in this case Duke didn't take to the Wildean view that any publicity is good publicity and thus nuked the PR Agency:

2K Games has officially weighed in on the issue. "2K Games does not endorse the comments made by Jim Redner and we can confirm that The Redner Group no longer represents our products. We have always maintained a mutually-respectful working relationship with the press and do not condone his actions in any way."

Face saving nuking move, may even have got the correct PR bang, and maybe even without paying the bucks. We eagerly now await the discovery at Redner that it was an Intern wot done it

Reinforces my view that you should never buy anything until after it hits the market, time passes, and the independent reviewers can get a good look at it.