Recombinant Web

Dan Farber writes:

A story on ZDNet today by Martin LaMonica connected me back to that BW story, compelling me to add another technology to the list: the recombinant Web. Martin refers to what I’m calling the recombinant Web (I’m probably not the first to utter the phrase) as Web mash-ups in his story. It’s not exactly the same as the music-related definition of mashing together a few pre-existing songs into something new, but it has the same flavor. Sometimes referred to as Web 2.0 (and there is debate in the blog echochamber about that name), the recombinant Web, Web mash-ups, Web 2.0 or just the next phase of Web evolution heralds the use of the Web as a platform for creating new kinds of user experiences and businesses. Jon Udell calls it remixable Web applications. Martin gives the example of Cheap Gas, which mashes GoogleMaps and GasBuddy together to locate gas stations with the lowest prices.

Content and Conversation

Jeff Jarvis writes:

Distribution is not king.

Content is not king.

Conversation is the kingdom.

The war is over and the army that wasnt even fighting the army of all of us, the ones who werent in charge, the ones without the arms won. The big guys who owned the big guns still dont know it. But they lost.

In our media 2.0, web 2.0, post-media, post-scarcity, small-is-the-new-big, open-source, gift-economy world of the empowered and connected individual, the value is no longer in maintaining an exclusive hold on things. The value is no longer in owning content or distribution.

The value is in relationships. The value is in trust.

Meeting The Numbers

Brad Feld writes:

Ive been involved in over 100 startups at this point and have seen many more. I can only remember a few instances where the company exceeded its revenue numbers in its first year of product ship. Many companies make their expense, EBITDA, and cash forecasts by adjusting spending, but thats fundamentally different than making the top line and the bottom line numbers early in the life of the business (again lets focus on year 1 of product ship not after the company has had several years of products in the market.) Ive found that for year 1, the correlation between the sales plan and reality is completely random.

As a result, I generally take a different approach to year 1 of sales / revenue. Rather than hold a company to a revenue plan in year 1, I try to focus on the cash spend in year 1 (Fred highlights cash flow as the ultimate measure and focusing on managing the negative cash flow is equally effective as managing the positive cash flow.) An early stage company needs to spend a certain amount to make progress, but managing the expense line should be straightforward. As revenue comes in (especially high gross margin revenue), it becomes easy to step up the spending, especially on variable cost (more demand generation) or highly leveraged items (more sales people) that impact future sales.

Hunch Engine

David Weinberger writes: “Eric Bonabeau, of Icosystem, says that there’s much in life we recognize without being able to explain why. He says we’re great at detecting patterns but terrible at exploring alternatives. Let computers search and the humans do the evaluation. The computer then generates new alternatives reflecting the humans’ choices. He gives examples from car companies creating new designs, pharmaceuticals generating new drugs, etc. He also shows live demos of interaction with flickr and then Amazon: Select the closest results from a search and it generates returns that are closer and closer to what you want. E.g., if you select the Eiffel Tower photos that get returned from a search for Paris, it starts showing you more photos with the Tower. (It’s working on tags, not on the images.)…He ends with the question: Can this become a consumer application? Is it a new way of browsing?”

Mobility Future

Sadagopan points to Antoine Wright who writes:

It is a forgone conclusion now that computer buyers are more likely to purchase a notebook than a desktop. And for many corporate types, a BlackBerry or Treo has become their main tether to the office community. Therefore, seeing the advancing state of wireless acceptance is something that we will see more often in the workplace, and even public places. It’s true that in many major cities, and increasingly so in smaller ones, you can walk into places like coffee shops, restaurants and libraries and be treated to a free (or low cost) wireless Hotspot. My guess is within 2 years wireless standards such as 802.11n and WiMax will enable these connections to happen over a larger area, and even eliminate Internet inaccessibility in some areas.

Wireless technologies will continue to compete for your wallet and air space…In terms of devices, the competitive wireless landscape will push fringe devices to the lower rungs of usage (meaning non-connected PDAs, phones that cannot access the Internet and act as a modem, and notebooks/tablets that have only limited versions of WiFi). We have seen, and will continue to see PDAs morph into handheld connected terminals (GPS and VoIP probably being the next main features). Notebooks will continue to get smaller, and convertible TabletPCs may take a larger slice of the traditional notebook market share

TECH TALK: Internet Tea Leaves: China Internet Potential

A Bloomberg commentary in the International Herald Tribune lays out the challenges for the Alibaba-Yahoo combo:

The question is whether Yahoo can overtake eBay, China’s leading online auctioneer, and win more search-engine customers in the second-biggest Internet market after the United States.

“The Alibaba purchase gives Yahoo a strong local entrepreneur, a heavyweight in the industry, who can drive the company to success,” says Duncan Clark, managing director of BDA China, a technology consultant in Beijing. “China is a high-maintenance market. It is highly regulated, highly sensitive and difficult to manage from 15 hours’ time difference away.”

Yahoo controls just 3 percent of China’s online auction market and ranks second among search engines. To turn the company into a leader, Ma must win the loyalty of Yahoo’s 600 China-based employees and attract customers in a relatively undeveloped electronic-commerce market.

“Chinese Internet users tend to focus on online games and spend a lot less on e-commerce,” says Frank Shi, an analyst at CLSA in Hong Kong. “The Chinese market is still immature.”

The battle for the China Internet market has been joined in earnest. Google may have a small stake (2.5%) in Baidu but will no doubt be looking for a bigger slice. eBay, which was also rumoured to be in the race to acquire or partner with Alibaba, will be contemplating its next move hoping to ensure that the history in Japan (where Yahoo is the leader in the auctions space) does not play out again in China.

For now, at least, the two events together put the spotlight firmly on the potential of the Chinese Internet. There are over 100 million Internet surfers and broadband penetration is increasingly rapidly. Baidu joins the likes of Sina, Sohu, Netease and Shanda in monetising the growing user base. The mobile users base in China is at over 350 million. [By contrast, the Indian numbers are about 25 million for the Internet and 60 million for mobiles.]

As a side-effect of the China interest, Indian portal Rediff saw its stock nearly double to $14 (giving it a market cap of over $350 million). On a related note, Indiatimes (of the Times of India group) raised $36 million selling a 15% stake to Sequoia and Westbridge. (It is probably looking forward to a Baidu-like IPO in the next year given its entrenched position across the Internet and mobile spaces in India.)

Soon, India will join China as one of the worlds largest Internet markets. How soon that happens depends very much on the speed with which we can get broadband rolled out at affordable price points for the mass-market. What is clear about the two August events related to China is that finally the East is starting to come of age and the global Internet leaders are paying attention.

Tomorrow: Googles Googlies

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Planet Earth Challenges

Scientific American has a special issue (Sep 2005) focused on the challenges facing us: “Three great transitions set in motion by the Industrial Revolution are reaching their culmination. After several centuries of faster-than-exponential growth, the world’s population is stabilizing. Judging from current trends, it will plateau at around nine billion people toward the middle of this century. Meanwhile extreme poverty is receding both as a percentage of population and in absolute numbers. If China and India continue to follow in the economic footsteps of Japan and South Korea, by 2050 the average Chinese will be as rich as the average Swiss is today; the average Indian, as rich as today’s Israeli. As humanity grows in size and wealth, however, it increasingly presses against the limits of the planet. Already we pump out carbon dioxide three times as fast as the oceans and land can absorb it; midcentury is when climatologists think global warming will really begin to bite. At the rate things are going, the world’s forests and fisheries will be exhausted even sooner…These three concurrent, intertwined transitions–demographic, economic, environmental–are what historians of the future will remember when they look back on our age. They are transforming everything from geopolitics to the structure of families. And they pose problems on a scale that humans have little experience with. As Harvard University biologist E. O. Wilson puts it, we are about to pass through ‘the bottleneck,’ a period of maximum stress on natural resources and human ingenuity.”

Future Web

Ramesh Jain writes about the future of the Web after his purchase of a Canon EXILIM S500:

Is it a video camera or a photocamera? Well, it is both. It does amazing job with both. It takes 5.25M pixels and can take dvd quality video with MPEG4 compression. The quality is amazing. I like both the photographs and videos equally well. First time that I saw a camera that can do equally good job with both photos and videos. This is a step towards removing the distinction between photos and videos. Fundamentally a video captures a microcosm visually over a period of time while a photo captures the microcosm over a moment. In that sense, photos are the limiting case of a video.

This camera is the smallest camera that I saw size of a credit card and about half in thickness maybe less than my wallet. That means that I can carry this camera very easily in my pocket. I have 256M memory card with it, but I can get one of 1G today and possibly several G in the next year. One can easily put several thousand pictures or more than I hour of video in 1G. Today this camera is not connected to internet. But given its technology and what you are hearing from Samsung in phones, it is a matter of months when such quality will be available with your phones. Now consider that soon there will be 3G or always connected infrastructure in which you may be paying flat monthly rates for any amount of connectivity and data transfer. When you combine these with even conservative progress in audio and video processing technology and infrastructure related to this, it becomes clear that finally the time has come when more information will be produced and consumed in non-textual visual and audio form than in text form.

…it is clear that for the first time in the history of civilization we will be able to take audio-visual notes, capture our environments in its natural form, edit it, store it, upload it to a central location, access similar content created by others, distribute our content to specific people or post it at locations for access by anybody who cares about it.

The Week on India’s Internet

The Week recently covered the Indian Internet’s first decade. It also carried a profile of me (for which I did not provide any direct inputs – I don’t particularly like being written about). The quote they picked from my writings is nice and relevant:

Looking back at his dotcom days, Jain feels that a positive aspect of the Internet boom was that it triggered a “flavour of entrepreneurship”. He wished that the boom had lasted a little longer. “With any new technology, we tend to overestimate what it can do in the short term and underestimate what it can do in the long term,” he says. “For anything to work, the eco-system has to fall into place.”

MySpace

The New York Times writes:

Created in the fall of 2003 as a looser, music-driven version of www.friendster.com, MySpace quickly caught on with millions of teenagers and young adults as a place to maintain their home pages, which they often decorate with garish artwork, intimate snapshots and blogs filled with frank and often ribald commentary on their lives, all linked to the home pages of friends.

Even with many users in their 20’s MySpace has the personality of an online version of a teenager’s bedroom, a place where the walls are papered with posters and photographs, the music is loud, and grownups are an alien species.

Although many people over 30 have never heard of MySpace, it has about 27 million members, a nearly 400 percent growth since the start of the year. It passed Google in April in hits, the number of pages viewed monthly, according to comScore MediaMetrix, a company that tracks Web traffic. (MySpace members often cycle through dozens of pages each time they log on, checking up on friends’ pages.) According to Nielsen/NetRatings, users spend an average of an hour and 43 minutes on the site each month, compared with 34 minutes for facebook.com and 25 minutes for Friendster.

WSJ(Lee Gomes) writes:

It is becoming clear that the collective Internet is growing into that immersive reality, even if it doesn’t have the animated “avatar” guides and realistic 3D graphics that these places have in science fiction.

How else can you explain Web sites like MySpace (www.MySpace.com)? There, untold tens of thousands of young people spend many hours a day wandering around as if in a suburban shopping mall, looking for friends, expressing opinions, acquiring trends and, in general, leading a life that at times seems to have more reality to it than the life they lead when they log off.

MySpace’s technology doesn’t explain its success. Instead, some unpredicted perturbation in the cultural atmosphere seems to get a few people interested in a particular site, and that quickly snowballs into a full-fledged viral phenomenon.

What does it take to build India’s MySpace?

TECH TALK: Internet Tea Leaves: Alibaba and Yahoo

Yahoo invested a billion dollars and handed over its Chinese operations to the local Alibaba management in return for a 40% stake in Alibaba. The deal valued Alibaba at $4 billion. Alibabas flagship site is a marketplace for SMEs helping Chinese SMEs sell to others in China and globally. It had revenues of $46 million last year. (By contrast, Baidus 2005 revenues are expected to be about $30 million.) Alibaba also operates two other sites: Taobao is a consumer auctions sites (in direct competition with eBay in China), and AliPay, which is a payments and settlement service along the lines of PayPal.

The Wall Street Journal wrote about the deal: The deal marks a supreme vote of confidence in [Alibaba CEO Mr. Jack] Ma, whose knack for bold statements and charismatic leadership has helped build his company but has rankled local and foreign competitors along the way. The Yahoo connection will cement the 40-year-old as one of the most prominent public faces of China’s new entrepreneurial culture and give him a much larger platform from which to pursue his ample aspirationsThe tie-up will create a company with a formidable presence across all major segments of the Internet industry in China, combining Alibaba’s existing business-to-business and consumer-auction sites with Yahoo’s stable of Chinese search engines and communications services.

Bill Bishop added: “No question this creates a monster in the China Internet. It will have a powerful combination of search, communications, commerce and auctions. All they need is a game component and they could have a shot at becoming number one…This deal is potentially disastrous for Ebay in China.”

An article a few months ago in Knowledge@Wharton outlined why Alibaba is so important:

Alibaba has been successful because it recognized it could fill a gaping market need: China has virtually no printed directories or electronic databases that allow companies to describe their products and help buyers and sellers find one another while providing a certain level of comfort that the firms are on the up and up. Moreover, Alibaba focuses on mom-and-pop businesses in China, of which there are untold numbers, rather than trying to facilitate transactions between multinationals, which often have their own web-based systems for dealing with suppliers, and other big companies.

Alibaba “offered a platform where China manufacturers can reach world exporters and vice versa,” says Safa Rashtchy, an e-commerce analyst with the investment firm Piper Jaffray. “It’s a pretty inefficient system [in China] right now. The company figured if it signed up all the manufacturers in China and carefully listed their products and made them available to the U.S., Europe or wherever, it could extract good revenue. That’s what they’re doing.”

I have followed the fortunes of Alibaba since its early days. I liked the idea of an SME marketplace very much. At that time, Global Sources was the leader in the print media in helping connect SMEs. Alibaba raised a lot of money and went through many ups and downs in its journey. (There are two Harvard Business School case studies on Alibabas early days.) Alibaba has crossed one mountain another lies just ahead.

Tomorrow: China Internet Potential

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Ideas are Multiplier of Execution

Derek Sivers writes:

It’s so funny when I hear people being so protective of ideas. (People who want me to sign an NDA to tell me the simplest idea.)

To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.

Explanation:

AWFUL IDEA = -1
WEAK IDEA = 1
SO-SO IDEA = 5
GOOD IDEA = 10
GREAT IDEA = 15
BRILLIANT IDEA = 20

NO EXECUTION = $1
WEAK EXECUTION = $1000
SO-SO- EXECUTION = $10,000
GOOD EXECUTION = $100,000
GREAT EXECUTION = $1,000,000
BRILLIANT EXECUTION = $10,000,000

To make a business, you need to multiply the two.

The most brilliant idea, with no execution, is worth $20.
The most brilliant idea takes great execution to be worth $20,000,000.

That’s why I don’t want to hear people’s ideas.
I’m not interested until I see their execution.

Windows 95 and Vista

John Jordan connects the dots:

Everyone is watching Microsoft, which is preparing to launch a new operating system next year. Last month merely changing the name from code (Longhorn) to product (Vista) devoured a lot of attention, and more recently a stripped-down version of the product shipped to beta testers. The product has been a long time in coming, and the scope has been managed downward in several respects. Nevertheless, both Microsoft and the industry more generally see Vista as a potential jump-start very much in the same category as Windows 95 ten years ago. Because Vista represents the first opportunity in over ten years to begin with a “clean sheet of paper,” unlike Windows 3.1, 98, ME, and 2000/XP, Bill Gates has repeatedly linked the two products in public.

Here’s another way of thinking about the comparison. In 1995, Microsoft turned the telephone network into an extension of the computer, or vice versa: between them AOL and Windows 95 made the Internet a household utility. In 2006, no parallel leap into an adjoining domain – think of home entertainment, specifically the television – will be supported. Bill Gates longstanding prediction about widespread adoption of a voice and speech interface to the PC will be addressed with Vista support, but even given a powerful standard processor configuration at its disposal, Vista still won’t make masses of people retire their keyboards.

In short, Windows Vista looks like a solid product for corporate purchasers, but the lack of “gee-whiz” and “I’ve always wanted to be able to do that” desirability will prevent end-user excitement from reappearing the way it did ten years ago. An industry in search of the next big thing will probably have to keep looking.

Building on the Wisdom of the Crowds

Greg Linden quotes Chris Anderson: “Amazon and Google … have built their brands on the power of their filters … Google’s search algorithms [and] Amazon’s recommendations … are nothing more than the wisdom of the crowds, the statistically measured opinions of millions of … people. That’s why we trust them.”

Greg adds: “Systems like Amazon’s recommendations and Google’s PageRank implicitly share the wisdom of the crowds. Collaborative filtering-based systems like Amazon’s recommendations use algorithms to find people with similar interests and share their wisdom. Google’s PageRank algorithm mines the link graph — links people made between web pages — to surface authoritative and useful sources of information…Implicit systems like Amazon’s and Google’s surface the wisdom of the crowds anonymously, quietly, and with no effort from users.”

Post-Media Age

Jeff Jarvis writes:

When you think about it, media are the artificial inventions of their means of distribution: Books begat authors; fast and cheap presses enabled reporters and press barons; TV bore anchors. But there is nothing to say that these media are preordained as the best methods of sharing knowledge and getting things done in society. They were the convenient ways. Emphasis on the past tense.

The natural means of interaction and of sharing information is, of course, conversation, through the ability to ask and answer questions, to impart and collect knowledge. Im not one to make allusions to primitive life as if that describes the natural state of man, but I will in this case: When you listened to the tribe storyteller, you could remix before passing on; when you heard from the town crier, you could stick your head out the window and ask for details; when you set the price of a good or service, you got to haggle with the seller. This is why Socrates said that education is a conversation, and why Luther said that prayer is a conversation, and why Cluetrain says that markets are conversations, and why I say that news is a conversation. That is the natural order of things.

Media changed that. Media made society one-way.

But now the internet drains the one-way pipes of media and pours us all in the same pond together. The internet enables conversation.

The internet is not a medium. It is the thing that challenges media.

TECH TALK: Internet Tea Leaves: Baidus August Action

It has been a fascinating August. A number of events have focussed attention on the Internet and the future. I had originally intended to write a column to look at ten years of the Internet and mobile phones in India. In fact, I wrote a column on the New Internet for Business Today. (It appears on pages 98-99 of the latest issue. I will reproduce it here later in this series.). The Week too had a recent cover on the Indian Internets first decade. But Ill take up that discussion later. For now, we will take up the bigger discussion opened up by six events which took place in August.

The first was Baidus IPO. Baidu is Chinas leading search engine. The perception that it is Chinas Google set the stock on fire on its opening day as it rose from $27 to over $150. (It has since settled at around $80 giving it a market cap of $2.5 billion.) Baidu raised over $100 million. For a brief period, it seemed like the dotcom heydays once again as discussions on revenues and profits were set aside. Investors who perhaps missed out on Googles IPO last year dont want to be left out! (For the record, Googles IPO a year ago was priced at $85. Today, Google trades at about $280, giving it a market cap of $80 billion, making it the most valuable media company in the world.)

In an article shortly after Baidus IPO, the Wall Street Journal provided additional context about Chinas Internet in which to view the IPO:

Internet companies in China are fighting over a small pie. The Chinese Internet-search market attracted total ad revenue of just $148 million in 2004, according to iResearch Inc. of Shanghai. While China’s advertising industry is booming, many major advertisers focus big campaigns on banner ads posted on Internet portals such as those of Sina Corp. and Sohu.com Inc., which remain more popular than search sites such as Baidu.

“We treat the portals as a national medium, after TV and print,” says Ralph Szeto, the China director of WPP Group’s mOne unit, which buys media space for clients’ ads. “But user habits are changing toward searching,” he adds, giving sites such as Baidu a niche among an estimated 600,000 small and midsize Chinese companies that pay anywhere from three fen to five yuan per advertising link. The yuan trades at about 8.1 to the dollar.

Moreover, most Chinese can’t afford computers and the country’s electronic-commerce market remains immature. Many Chinese prefer to download entertainment and communicate with friends through mobile phones, which are less expensive than computers.

In the future, “Internet content will merge with mobile-phone technology,” putting even more of a premium on media companies that can offer attractive content, says Peter Tan, director of consumer insights for Interpublic Group’s McCann Worldgroup ad agency in China.

Baidus IPO was the first of two events related to the Chinese Internet. The second had to do with Yahoo and Alibaba.

Tomorrow: Alibaba and Yahoo

Tech as Business Leveller

Hal Varian writes: “When we think about the economic impact of information technology, the first companies to spring to mind are the industry giants like Amazon, eBay, Google and Yahoo. But the biggest impact on the economy may well show up in small and medium-size enterprises…The reason is that information technology is a great leveler. As computers get cheaper, more powerful and more connected, technologies that were only available to the Wal-Marts of the world become available to the small fry.”

Playing Scrabble

WSJ has a first-person report on the US Scrabble Championship by Stefan Fatsis. Scrabble is one of my favourite games, so I enjoyed reading the account.

Only we few know how complex Scrabble really is.

For starters, there are the 120,000 or so words. Compare that to the standard working vocabulary of around 20,000 words. The truly elite players have studied and can recognize in a jumble of letters nearly all of the words found in the Official Word List, the lexicon for the game.

Beyond that, there’s the strategy. It’s not enough to know the words, you have to find them at the right time. Like some Broadway understudy who waits years for the knock on the door, words go unseen, hidden in the backstage of the brain, until called to make their debut. I wrote down a few words played by the leaders of the expert division — where a 20-year-old from Thailand named Panupol Sujjayakorn, who barely speaks English but is one of the world’s best players, stands in first place with a 13-1 record — during the first two days of the event: BELADIED, VALGOID, RETIARII, MOTTLY, BIBLISTS, SACBUT.

Manmohan Singh Interview

The McKinsey Quarterly has an interview with the Indian Prime Minister on the economic agenda. Excerpts:

Manmohan Singh: The first and foremost priority is to finish the unfinished task which the founding fathers of our republic set out for us at the time of our independence: to get rid of chronic poverty, ignorance, and disease, which have afflicted millions and millions of our people. Great progress has been made. Particularly in the last 20 years, the India economy has done quite well, social indicators and development have improved, but we are not quite where we ought to be. The next 5 to 10 years are crucial for moving forward in areas to stimulate economic growth and also to ensure that this accelerated economic growth really benefits the poorest segments of our society. We need a growth rate of about 7 to 8 percent per annum, sustained over a period of the next 10 to 15 years. We need to underpin that growth by strong performance of our agriculture, strong performance of our physical and our social infrastructure. These are our key priorities.

With regard to education, I think at the top we have an excellent superstructure. The IIMs and IITs,11 the regional engineering colleges, they have served us well. But ultimately, if the educational pyramid is not right there are limits to getting dividends. Therefore we are making, for the first time, the most determined effort to ensure that all our childrenparticularly children coming from disadvantaged families, particularly the girl childin the next four or five years have the benefit of minimum primary schooling. But that will generate demand for upgrading the quality of our secondary schools. We have not given that much attention toward upgrading our secondary-school system, and that is our next step. After what we have done in the last one year, primary education is well looked after. What we have now in place is a system which will ensure that all our children who are of school-going age are in primary school. But the secondary-school system will require a major effort, and it worries me.