For the record, I'm a believer in prediction markets. A winning bet on a pair of Steelers Super Bowl tickets to prove. Prediction markets power remains largely unrealized. Google had potential to capitalize on the phenom, yet there are some critical factors for success which Google didn't meet to make GPM a viable product on a mass scale. The factors REQUIRED for successful prediction markets are:
1. Statistically significant volume.
2. "Liquid" market.
3. Meaningful financial incentives. (increasing marginal utility)
4. Low barriers to trade / complexity.
5. market manipulation controls
In addition to the necessary above, an internal champion to drive product strategy / marketing makes sufficient the viability of the products future.
Let's take approach one assumption at a time.
1. Statistically significant volume.
- 48% of volume by 13 traders
- 3 month trade volume (450k shares) is less than .00001% of Dow Jones DAILY volume
- even w low volume accuracy impressive. (Degrees of Freedom is significantly met)
2. Liquidity.
- no downside or loss to play. a real futures market is ZERO sum game. This was not designed to be zero sum, but encouraged trading with $1K incentive for volume trader. (didn't Wall Street have same moral hazard with encouraging volume trades?)
- computer bots provide market clearing function! Identifies and eliminates arbitrage opportunities quickly. I though computer trades were adding to risk/ volatility on the exchanges?
3. Low utility payout.
- $1K is meaningless to GOOG millionaires
4. Low barriers / complexity.
- rolled out too many bets (95 markets / quarter)
- dumb down bets. very narrow scope on bets (how many people could competently bet on success of individual internal projects)
5. Market manipulation.
- because of low utility and high percents of narrow traders the GPM are subject to manipulation by a single or multiple players
- lack of regulation / exchange rules
Finally, the suggestions to "launch" the product were nearly all internally focused: "internal emails" "bigger prizes" or "party" only one was arguably forward looking to integrate with social networks.
For now, Google has missed the boat on this. A second chance would largely bet on the talent that produced the beta software remaining largely intact and could only be sealed with a product champion in the "fast" growing organization. The success of any software project is highly dependent on retaining the people involved with originally creating the intellectual property.
There are legal risks to mention as well, especially with 2ndary markets that these exchanges create. FirstDibz / OptionIT encountered those first hand which forced the shut-down of those exchanges. These are highly unregulated and present high risks to the "credibility" of these markets. TicketReserve is taking a platform / hosting approach (like eBay)
I have more than a few practical examples of this. I'll save my thoughts on application to my football pool for class.
Monday, April 25, 2011
Monday, April 18, 2011
Crowdsourcing Capitalism
Both outsourcing and "crowdsourcing" offer the same proposition to reducing one of the core components of Capitalism - "free" movement of labor (the other components being free movement of capital and resources) The desire for cheaper labor directly depends on the cost of access to that labor. Both these phenomenon are neither new nor particularly surprising. The incentives are baked into the profit equation. What IS stunning is the rate at which technology has broken barriers and increased the supply of skilled labor. Something that has been historically expensive to procure. (SETI hoodwinks aside)
One could probably correlate the rate of technological innovation with the cost of any of these components. From the wheel lowering the costs of transportation in finding new markets/distribution to the telephone lowering communication costs in all facets of life. In particular, this weeks case highlights the role of the internet in dramatically increasing labor supply in functions as disparate as professional photography, basic R&D and TV shows development. While it does have amazing potential to redefine markets and harness the power of "collective" knowledge, I believe it's a corollary to the Economic Calculation Problem and a derivative of Market Clearing Price
In fact, price discovery in the most basic sense is "crowdsourcing" - the collective knowledge of what a good or service is "worth" is determined by many people over a broad range of the market. Sure this can be distorted across markets, products and regions, but not for long. The impact of the internet simply shortens the time prices can be "distorted." This can be measured by the variability of price changes across markets which should decrease with each new technology (diminishing marginal price variability - note this does NOT impact price volatility, but price variability across markets) These new technologies expand consumers and producers access to information about the market - including increasing supplies of labor that the Computer Age is connecting with unheralded speed. Similarly, the investment and growth of the internet is also dependent on the profit motive. "Crowdsourcing" may be a new buzz-word, but it's far from novel. Price discovery will always be a play between consumer, producer and market "distortions" - anything to mitigate those distortions increases the effectiveness of delivering goods to consumers and labor resources to worthy endeavors.
The more important questions are:
1. Can the rate of progress be sustained? What are the key factors enabling this progress? Political / Socio-economical? How to reinforce those factors?
2. Can knowledge of the crowds be wrong? It was once true that the "Crowd" believed the Earth flat and the center of the Universe. This wasn't simple laymen believing this, this was the specialized science community "fact" at the time. Science is NOT consensus nor is consensus Science. (see SETI/Aliens above)
3. What are the risks to relying on the "crowd"? In what markets does relying on the crowd work well? In what markets is it deficient?
4. All data not equal. Surely there is more power to leverage if consumers made public their credit card / financial transactions. Identifying fraud and theft would be easier if you could mash up phone / credit / tax records. But who wants to pay the cost of intrusion on privacy? There are limits to this phenomenon.
These are just a few broad questions. I suspect Ehab has not gotten this far - will find out tomorrow.
One could probably correlate the rate of technological innovation with the cost of any of these components. From the wheel lowering the costs of transportation in finding new markets/distribution to the telephone lowering communication costs in all facets of life. In particular, this weeks case highlights the role of the internet in dramatically increasing labor supply in functions as disparate as professional photography, basic R&D and TV shows development. While it does have amazing potential to redefine markets and harness the power of "collective" knowledge, I believe it's a corollary to the Economic Calculation Problem and a derivative of Market Clearing Price
In fact, price discovery in the most basic sense is "crowdsourcing" - the collective knowledge of what a good or service is "worth" is determined by many people over a broad range of the market. Sure this can be distorted across markets, products and regions, but not for long. The impact of the internet simply shortens the time prices can be "distorted." This can be measured by the variability of price changes across markets which should decrease with each new technology (diminishing marginal price variability - note this does NOT impact price volatility, but price variability across markets) These new technologies expand consumers and producers access to information about the market - including increasing supplies of labor that the Computer Age is connecting with unheralded speed. Similarly, the investment and growth of the internet is also dependent on the profit motive. "Crowdsourcing" may be a new buzz-word, but it's far from novel. Price discovery will always be a play between consumer, producer and market "distortions" - anything to mitigate those distortions increases the effectiveness of delivering goods to consumers and labor resources to worthy endeavors.
The more important questions are:
1. Can the rate of progress be sustained? What are the key factors enabling this progress? Political / Socio-economical? How to reinforce those factors?
2. Can knowledge of the crowds be wrong? It was once true that the "Crowd" believed the Earth flat and the center of the Universe. This wasn't simple laymen believing this, this was the specialized science community "fact" at the time. Science is NOT consensus nor is consensus Science. (see SETI/Aliens above)
3. What are the risks to relying on the "crowd"? In what markets does relying on the crowd work well? In what markets is it deficient?
4. All data not equal. Surely there is more power to leverage if consumers made public their credit card / financial transactions. Identifying fraud and theft would be easier if you could mash up phone / credit / tax records. But who wants to pay the cost of intrusion on privacy? There are limits to this phenomenon.
These are just a few broad questions. I suspect Ehab has not gotten this far - will find out tomorrow.
Tuesday, April 12, 2011
Monday, April 11, 2011
Facebook Thoughts
I actually read the FB case last week by accident. I was a bit disappointed that the question posted this week was on LinkedIn rather than FB. I had jotted down some thoughts about the case and didn't want to lose them.
1 - FB low Ad impression rate (50x less than google)
2 - Who does FB Connect create most value for? Users? Connected sites? Facebook?
3 - Stunning that MySpace had technical hurdles around the area of privacy.
I did some poking and found that the backend was run on MySQL at the time. FB is also run on MySQL. An interesting overview of their technical operating paradigms can be viewed here Att 4:30 he starts going into back-end design "philosophy"(simple joins, 2ndary indexes, 100 millisecs response time) and at 12min he talks about the "Long Tail" of database rows. At Oracle we've designed both simple and complex security models that scale with both MySQL and Oracle RDBMS. These designs are typically no more than 3 to 4 relational tables and can even be denormalized for scalable, highly efficient queries. I think Oracle can use some of their bold goals while FB can use some of Oracle's technical talent.
4 - a hodge podge of niche competitive sites (Dogster.com, etc)
5 - Immediate recognition of unpopular features (Zuckerburg's apologies worded "We screwed up."
6 - MSFT investment overvalued the company at $15B. MSFT had vested interest in an overvalued FB to the tune of $240M. Interesting that the valuation was 33% higher in October 2007 to $10B in summer of 2009.
7 - FB's desire for a unified computing platform is at odds with the Darwinian concept of best of breed applications. This desire has been persistent throughout the industry but really is practically impossible. Even the storied Wintel dominant platform is considered by many a thing of the past.
8 - Facebook Connect gets it "right" with an Opt-In model. I wish the No Call List (among many others) would default to the same.
9 - FBML - when you have your own "dialect" on the web, you know you've hit it big. http://developers.facebook.com/docs/reference/fbml/
10 - Twitter's actual function (enabling service update from any cell phone) is a low-barrier to entry technology
11- The 94% of 800K users who didn't like FB redesign represented l.1% of the user base.
12 - what is the "active" user base? No exhibits state distribution of a usage histogram.
1 - FB low Ad impression rate (50x less than google)
2 - Who does FB Connect create most value for? Users? Connected sites? Facebook?
3 - Stunning that MySpace had technical hurdles around the area of privacy.
I did some poking and found that the backend was run on MySQL at the time. FB is also run on MySQL. An interesting overview of their technical operating paradigms can be viewed here Att 4:30 he starts going into back-end design "philosophy"(simple joins, 2ndary indexes, 100 millisecs response time) and at 12min he talks about the "Long Tail" of database rows. At Oracle we've designed both simple and complex security models that scale with both MySQL and Oracle RDBMS. These designs are typically no more than 3 to 4 relational tables and can even be denormalized for scalable, highly efficient queries. I think Oracle can use some of their bold goals while FB can use some of Oracle's technical talent.
4 - a hodge podge of niche competitive sites (Dogster.com, etc)
5 - Immediate recognition of unpopular features (Zuckerburg's apologies worded "We screwed up."
6 - MSFT investment overvalued the company at $15B. MSFT had vested interest in an overvalued FB to the tune of $240M. Interesting that the valuation was 33% higher in October 2007 to $10B in summer of 2009.
7 - FB's desire for a unified computing platform is at odds with the Darwinian concept of best of breed applications. This desire has been persistent throughout the industry but really is practically impossible. Even the storied Wintel dominant platform is considered by many a thing of the past.
8 - Facebook Connect gets it "right" with an Opt-In model. I wish the No Call List (among many others) would default to the same.
9 - FBML - when you have your own "dialect" on the web, you know you've hit it big. http://developers.facebook.com/docs/reference/fbml/
10 - Twitter's actual function (enabling service update from any cell phone) is a low-barrier to entry technology
11- The 94% of 800K users who didn't like FB redesign represented l.1% of the user base.
12 - what is the "active" user base? No exhibits state distribution of a usage histogram.
LinkedIn or LockedOut?
LinkedIn recently hit 100M users. If you were in charge at LinkedIn, what would be your strategic goals for the next several years? How would you achieve them?
At the time of the case, Social (SNS) and Professional Networks (PNS) was a fast growing, internet phenomenon. However, in this increasingly crowded and fluid space, PNS sites faced a strategic question of adopting social "features" or remaining in a "Walled Garden" mode as LinkedIn was very much adherent to. Should LinkedIn mimic popular social value propositions or should it kept it's value in the fact that it was a differentiated network?
LinkedIn was a site for "professionals" - limited use on the weekends, better demographics than WSJ, Forbes and BusinessWeek. More importantly, only 2% of FaceBook users had LinkedIn accounts (as opposed to 41% of LinkedIn users with FB accounts) Clearly, if LinkedIn opens up its model it risks: 1. dumbing down it's user base demographics and 2. making it YASN
It's important to note that a "significant" portion of the revenue is from their ads. Marketers pay top dollar for high-end demographics. A walled garden model to broad ad revenue did not prove successful. Facebooks' ad model was so poor it was only 2% of Googles' click rate.
LinkedIn should try and maintain itself as "different" from simple entertainment/SNS. This is it's core value proposition. Changing it would require significant change in culture. Given the lack of urgency in the organization to address this problem, any radical change in direction would offer limited chances for success.
The bottom line is that being in a "wall-garden" isn't necessarily being completely "LockedOut" Walled gardens were successful elsewhere (Apple) though the product/service quite different. The near-term strategic goal should be to maintain the focus on growing the current demographic. Longer-Term LinkedIn should continue to look for ways to keep its value different from the oncoming competition from (mainly) SNS.
The best way to achieve this would be to try and incorporate the vertical PNS (MedicalMingle, CIOZone) They could tightly control the process of platform integration by being very selective on which other PNS could join their ecosystem. Each additional PNS signed up would generate positive network effects.They were already dabbling in "opening" their platform and had the infrastructure in place to change the mission of only a small part of the organization devoted to exploring new platforms. This gives them avenues for future growth, represents only an incremental change to the processes, and most importantly consolidates the PNS market.
What LinkedIn should really do is LockOut the competition.
At the time of the case, Social (SNS) and Professional Networks (PNS) was a fast growing, internet phenomenon. However, in this increasingly crowded and fluid space, PNS sites faced a strategic question of adopting social "features" or remaining in a "Walled Garden" mode as LinkedIn was very much adherent to. Should LinkedIn mimic popular social value propositions or should it kept it's value in the fact that it was a differentiated network?
LinkedIn was a site for "professionals" - limited use on the weekends, better demographics than WSJ, Forbes and BusinessWeek. More importantly, only 2% of FaceBook users had LinkedIn accounts (as opposed to 41% of LinkedIn users with FB accounts) Clearly, if LinkedIn opens up its model it risks: 1. dumbing down it's user base demographics and 2. making it YASN
It's important to note that a "significant" portion of the revenue is from their ads. Marketers pay top dollar for high-end demographics. A walled garden model to broad ad revenue did not prove successful. Facebooks' ad model was so poor it was only 2% of Googles' click rate.
LinkedIn should try and maintain itself as "different" from simple entertainment/SNS. This is it's core value proposition. Changing it would require significant change in culture. Given the lack of urgency in the organization to address this problem, any radical change in direction would offer limited chances for success.
The bottom line is that being in a "wall-garden" isn't necessarily being completely "LockedOut" Walled gardens were successful elsewhere (Apple) though the product/service quite different. The near-term strategic goal should be to maintain the focus on growing the current demographic. Longer-Term LinkedIn should continue to look for ways to keep its value different from the oncoming competition from (mainly) SNS.
The best way to achieve this would be to try and incorporate the vertical PNS (MedicalMingle, CIOZone) They could tightly control the process of platform integration by being very selective on which other PNS could join their ecosystem. Each additional PNS signed up would generate positive network effects.They were already dabbling in "opening" their platform and had the infrastructure in place to change the mission of only a small part of the organization devoted to exploring new platforms. This gives them avenues for future growth, represents only an incremental change to the processes, and most importantly consolidates the PNS market.
What LinkedIn should really do is LockOut the competition.
Tuesday, April 5, 2011
The marginal quality of "Collective Wisdom" vs the marginal cost of "Authoritative Knowledge"
How do Wikipedia’s processes for creating and modifying articles ever lead to high-quality results? In other words, since anyone can easily edit Wikipedia, how is it that good (and usually accurate) content emerges?
The case doesn't present a proper mechanism to quantify a reasonably accurate answer to the question posited. Anecdotal evidence of error rates in one study on a minute portion of the sites articles (42 of over 3 million) is not statistically significant. Though the idea of collective wisdom has power that perhaps wikipedia has developed a process of "quality" that is greater than traditional authoritative hierarchies cannot be discounted. They say that journalism represents a "first draft of history." The more important question here is: "Has wikipedia designed a process that represents a "continual draft" of history."
To be sure, the model has advantages over the traditional storage of mankind's knowledge. 1. It can't be easily lost (i.e. the Library of Alexandria) 2. It's less likely to be biased by the original writers of "history" (i.e. "the winners) 3. It can be corrected quickly, cheaply and continually. There are more major benefits. The trade-offs of accuracy vs cost/ speed of value delivered to reader cannot be ignored.
The marginally lower costs of quality (if they are in fact borne out by more studies) can be easily mitigated. Some articles rate of change (velocity) are bound to lower than others. A simple visual cue to discern the difference could easily add value to readers. Perhaps a "green" color for articles about less contentious subjects, like the Periodic Table or the Arabic Numeral System (which is really Hindu) Presumably, this would be less volatile than the recent Sendai Earthquake in Japan (pun intended) - that could be colored "Red". In the former, the debates are limited to highly technical matters. In the latter, the information is more fluid and dynamic. Does that mean it's not worth capturing? In fact, some subjects are much more inclined to have embellishment over others. Subjective topics such as music, movies, books, etc... will always be based more on opinion than "fact." Eventually mistakes will be weeded out and reflected in a reduction in rate of article change. Quantifying that in effect "qualifies" the article.
The allusion to a "Bolshevik Soviet" system smacked of an overly-socialist inclination bias that marked this article of lesser quality. The evidence of an equally brutal, bureaucratic system was weak. I've been an infrequent editor of wikipedia over the past 5 years. Though my contributions are mostly frivolous, my non-scientific test was to see how long egregious comments would be removed (in MOST cases VERY quickly) Though I have learned if a user is only making stupid comments those are easy to identify and quickly remove with scanning technology. SO I've adapted and occasionally make some meaningful edits (mostly deleting irrelevant info) Find me a system that ISN'T trying to be gamed, be it overly academic or free to the "common man" to alter.
If we stick to the anecdotal approach to answering the question posited I'll present the following evidence. I've run a football pool that directly measures "collective" intelligence both BEFORE and DURING the entire NFL season. I've done this for over 15 years and have over 23,000 data points over that span. In one game, players pick every football game for the entire season before a single ball is kicked. The "collective wisdom" or accuracy of those picks is not only better before a ball is kicked, it gets better as the season progresses, injuries and poor performances apparently insignificant. It's not always right and doesn't beat the "best" player or win the pool. But it's usually better than 80% of the "NFL experts" and has an impressive track record for a crude, limited version of a "crowd-sourcing" model.
There's a larger irony here to point out. The insulting arrogance of the Ivory Tower (those Phds that produced 12 articles in 18 months on Nupedia) is rooted in the simple danger that the transparency of wikipedia marginalizes their expensively acquired efforts. A distributed knowledge creation system may just be more efficient than "traditional" higher-education systems (no, it doesn't replace the need for doctorates, just diminishes and is better suited for some categories, not all) Given this phenomenon the cost / benefit for higher education is a critically re-framed question for those most heavily vested in the process. OF COURSE they will complain on marginal quality over marginal cost. Anything to challenge the unsustainable increases in tuition costs represents a direct threat to their way of life. They should be worried Zuckerburg dropped out of Harvard. More worried that there is no monetization model for wikipedia. The marginal knowledge added by this select, overly-qualified community is diminishing. Data in social networks much more powerful. But that's a question for next week's case. :)
The case doesn't present a proper mechanism to quantify a reasonably accurate answer to the question posited. Anecdotal evidence of error rates in one study on a minute portion of the sites articles (42 of over 3 million) is not statistically significant. Though the idea of collective wisdom has power that perhaps wikipedia has developed a process of "quality" that is greater than traditional authoritative hierarchies cannot be discounted. They say that journalism represents a "first draft of history." The more important question here is: "Has wikipedia designed a process that represents a "continual draft" of history."
To be sure, the model has advantages over the traditional storage of mankind's knowledge. 1. It can't be easily lost (i.e. the Library of Alexandria) 2. It's less likely to be biased by the original writers of "history" (i.e. "the winners) 3. It can be corrected quickly, cheaply and continually. There are more major benefits. The trade-offs of accuracy vs cost/ speed of value delivered to reader cannot be ignored.
The marginally lower costs of quality (if they are in fact borne out by more studies) can be easily mitigated. Some articles rate of change (velocity) are bound to lower than others. A simple visual cue to discern the difference could easily add value to readers. Perhaps a "green" color for articles about less contentious subjects, like the Periodic Table or the Arabic Numeral System (which is really Hindu) Presumably, this would be less volatile than the recent Sendai Earthquake in Japan (pun intended) - that could be colored "Red". In the former, the debates are limited to highly technical matters. In the latter, the information is more fluid and dynamic. Does that mean it's not worth capturing? In fact, some subjects are much more inclined to have embellishment over others. Subjective topics such as music, movies, books, etc... will always be based more on opinion than "fact." Eventually mistakes will be weeded out and reflected in a reduction in rate of article change. Quantifying that in effect "qualifies" the article.
The allusion to a "Bolshevik Soviet" system smacked of an overly-socialist inclination bias that marked this article of lesser quality. The evidence of an equally brutal, bureaucratic system was weak. I've been an infrequent editor of wikipedia over the past 5 years. Though my contributions are mostly frivolous, my non-scientific test was to see how long egregious comments would be removed (in MOST cases VERY quickly) Though I have learned if a user is only making stupid comments those are easy to identify and quickly remove with scanning technology. SO I've adapted and occasionally make some meaningful edits (mostly deleting irrelevant info) Find me a system that ISN'T trying to be gamed, be it overly academic or free to the "common man" to alter.
If we stick to the anecdotal approach to answering the question posited I'll present the following evidence. I've run a football pool that directly measures "collective" intelligence both BEFORE and DURING the entire NFL season. I've done this for over 15 years and have over 23,000 data points over that span. In one game, players pick every football game for the entire season before a single ball is kicked. The "collective wisdom" or accuracy of those picks is not only better before a ball is kicked, it gets better as the season progresses, injuries and poor performances apparently insignificant. It's not always right and doesn't beat the "best" player or win the pool. But it's usually better than 80% of the "NFL experts" and has an impressive track record for a crude, limited version of a "crowd-sourcing" model.
There's a larger irony here to point out. The insulting arrogance of the Ivory Tower (those Phds that produced 12 articles in 18 months on Nupedia) is rooted in the simple danger that the transparency of wikipedia marginalizes their expensively acquired efforts. A distributed knowledge creation system may just be more efficient than "traditional" higher-education systems (no, it doesn't replace the need for doctorates, just diminishes and is better suited for some categories, not all) Given this phenomenon the cost / benefit for higher education is a critically re-framed question for those most heavily vested in the process. OF COURSE they will complain on marginal quality over marginal cost. Anything to challenge the unsustainable increases in tuition costs represents a direct threat to their way of life. They should be worried Zuckerburg dropped out of Harvard. More worried that there is no monetization model for wikipedia. The marginal knowledge added by this select, overly-qualified community is diminishing. Data in social networks much more powerful. But that's a question for next week's case. :)
Monday, March 28, 2011
KickStarter.com
Found this cool new site: KickStarter.com which helps budding entrepreneurs raise $ for projects. Typically these are small funded operations (less than $100K) that would be difficult to obtain financing elsewhere. Funding can come from anyone willing to donate to the project (usually in return for a product or goodie) The funding doesn't kick in unless a funding hurdle is met in an allotted amount of time ...thereby reducing the chances that your $ is wasted on projects that can get "off the ground"
Definitely this is a platform that has positive network effects. There are a few projects of mine I've had trouble getting off the ground so perhaps you might see one or two of mine on there soon. Though some of the projects are of limited commercial value and limited scope (not every project is going to be the source of a new company) some are just for fun: http://www.kickstarter.com/projects/andrewhyde/monster-records-laser-cut-vinyl-record-puzzles?ref=spotlight
Definitely this is a platform that has positive network effects. There are a few projects of mine I've had trouble getting off the ground so perhaps you might see one or two of mine on there soon. Though some of the projects are of limited commercial value and limited scope (not every project is going to be the source of a new company) some are just for fun: http://www.kickstarter.com/projects/andrewhyde/monster-records-laser-cut-vinyl-record-puzzles?ref=spotlight
Social Media: The Power and Pitfalls for Organizations
The case this week depicts some embarrassing customer interactions for United and Comcast (and a few more) with employees providing poor service, in the case of United breaking a guitar and Comcast serviceman falling asleep on the job. While these individual interactions may represent a minute fraction of the overall workforce, the power of the web to amplify them (viral videos) makes it harder for an organization to control it's "message" or "image" when irate customers go online to complain. Though it's hard to believe that the single event "lost" $180M from United value. The airline sector is a volatile sector having 10% swings on other days as well as the fact that the stock rebounded from it's drop fairly quickly. Still, there is a risk to corporate value, just a bit harder to quantify.
It's true that with any new technology it changes the dynamics between customer <> company interactions. In particular with something so broad as the web, companies can deliver more relevant information across a wide swath of it's customer-base very quickly. Plane schedules, work outages, disruptions - the web enables the company to communicate these more effectively. At the same time, embarrassing situations can cause havok. The number of images / movies / embarrassments is only bound to increase. How a company manages these situations should be incorporated in its' social network strategy (and if it doesnt have a strategy formulated it should create one SOON) At a minimum the strategy should include:
1. Monitoring of social media (twitter, FB, google alerts, others)
2. A central response team (it may not always be best for all employees to have own twitter account)
3. A learning component (like United using the song in it's training videos)
4. The realization that mistakes will happen, embarrassing situations will occur. It's best to embrace the technology rather than resist it.
5. A good legal team to ensure that the company isn't hoaxed by false videos / rumors , etc.
It's true that with any new technology it changes the dynamics between customer <> company interactions. In particular with something so broad as the web, companies can deliver more relevant information across a wide swath of it's customer-base very quickly. Plane schedules, work outages, disruptions - the web enables the company to communicate these more effectively. At the same time, embarrassing situations can cause havok. The number of images / movies / embarrassments is only bound to increase. How a company manages these situations should be incorporated in its' social network strategy (and if it doesnt have a strategy formulated it should create one SOON) At a minimum the strategy should include:
1. Monitoring of social media (twitter, FB, google alerts, others)
2. A central response team (it may not always be best for all employees to have own twitter account)
3. A learning component (like United using the song in it's training videos)
4. The realization that mistakes will happen, embarrassing situations will occur. It's best to embrace the technology rather than resist it.
5. A good legal team to ensure that the company isn't hoaxed by false videos / rumors , etc.
Friday, March 25, 2011
BatchGeo.com Part II
I took a stab at my first batchgeo map. I plotted the "origins" of the bands in my Top 100 Songs list. They are grouped by "decade" as well. Though this is a small sample, the service is very easy to use (took a bit to get duplicate records for "London" or "Manchester" to actually show dupes you need a more specific location) but I can def see the power in this type of analysis. Though with just the spatial data alone it might be a little hard to guess where I grew up :)
http://batchgeo.com/map/2978bc1c7be2eff1c005e2d531425853
http://batchgeo.com/map/2978bc1c7be2eff1c005e2d531425853
Tuesday, March 8, 2011
BatchGeo.com
http://www.batchgeo.com/
Another Fremium model with a cool service. This one wired their web service on top of Google Maps for convenient "cut and paste" use of creating mash-ups / visual data. It's target market is spreadsheet users who require some sort of geographical analysis. Basic service does mapping for desktop / mobile devices. Premium service removes ads, adds support, allows grouping supports over 2,500 records, among many more features. It costs $950 / year - clearly targeted for small businesses rather than individual users.
This service could easily be replicated by Google or a competitor....but my infatuation with spreadsheets it caught my eye. This could easily be an add-on to Google Spreadsheets (push a button, see it mapped) The lack of macros in Google spreadsheet leaves Microsoft a feature-by-feature advantage that keeps my favorite program Excel alive. The day that goes is the day I stop running my football pools since it's built on a souped up/ macrotized 16 year-old spreadsheet.
Another Fremium model with a cool service. This one wired their web service on top of Google Maps for convenient "cut and paste" use of creating mash-ups / visual data. It's target market is spreadsheet users who require some sort of geographical analysis. Basic service does mapping for desktop / mobile devices. Premium service removes ads, adds support, allows grouping supports over 2,500 records, among many more features. It costs $950 / year - clearly targeted for small businesses rather than individual users.
This service could easily be replicated by Google or a competitor....but my infatuation with spreadsheets it caught my eye. This could easily be an add-on to Google Spreadsheets (push a button, see it mapped) The lack of macros in Google spreadsheet leaves Microsoft a feature-by-feature advantage that keeps my favorite program Excel alive. The day that goes is the day I stop running my football pools since it's built on a souped up/ macrotized 16 year-old spreadsheet.
Google: The Early Days
Though the case covers Google til early 2010, I will consider which a few key factors Google had in it's "early" success (1999~2002).
1. Their "special sauce" PageRank algorithm was a powerful and effective tool to rank web pages. Their index / catalog of the web was growing faster than other competitors.
2. They developed an ad revenue model that closely aligned costs with benefits (cost per impression was a better model than Overture's cost per click)
3. They maintained their focus on their core competency - search and advertising. They didn't expand corporate strategy until later on.
4. They recognized their weakness/limitations for corporate management and added experience early on with Eric Schmidt as CEO.
5. The unique governance structure that insulated the people who develop the strategy from the pains of quarterly earnings reports / investor quixotic demands.
6. Google is a platform-mediated network with a self-reinforcing positive network effect. Both user growth and advertiser growth of Google were positive (and still are) this allowed Google to beat Overture both on pricing and added even more advertisers to their network. .
Their own "operating platform" (or philosophy) is quite interesting. Devoting 20% of employee time to future projects "that may seem strange" or may even fail (Google Wave) The company established a very unique culture for continued disruptive innovation.
Some of these are a bit of over-simplifications. There are more complicated reasons for Google's success that we can discuss in class. Though I have to say Google's "Do No Evil" stance is quite hypocritical. Their services existence enables much evil to be done. Like a gun manufacturer that says they don't kill people - of course they don't, but they enable the killing of people (as well as protect people) Yes Google's good still outweighs the evil done, but by refusing to recognize the fact that they enable evil undertakings (like any technology does) they are delusional. But this isn't a class on philosophy so I will stop there.
1. Their "special sauce" PageRank algorithm was a powerful and effective tool to rank web pages. Their index / catalog of the web was growing faster than other competitors.
2. They developed an ad revenue model that closely aligned costs with benefits (cost per impression was a better model than Overture's cost per click)
3. They maintained their focus on their core competency - search and advertising. They didn't expand corporate strategy until later on.
4. They recognized their weakness/limitations for corporate management and added experience early on with Eric Schmidt as CEO.
5. The unique governance structure that insulated the people who develop the strategy from the pains of quarterly earnings reports / investor quixotic demands.
6. Google is a platform-mediated network with a self-reinforcing positive network effect. Both user growth and advertiser growth of Google were positive (and still are) this allowed Google to beat Overture both on pricing and added even more advertisers to their network. .
Their own "operating platform" (or philosophy) is quite interesting. Devoting 20% of employee time to future projects "that may seem strange" or may even fail (Google Wave) The company established a very unique culture for continued disruptive innovation.
Some of these are a bit of over-simplifications. There are more complicated reasons for Google's success that we can discuss in class. Though I have to say Google's "Do No Evil" stance is quite hypocritical. Their services existence enables much evil to be done. Like a gun manufacturer that says they don't kill people - of course they don't, but they enable the killing of people (as well as protect people) Yes Google's good still outweighs the evil done, but by refusing to recognize the fact that they enable evil undertakings (like any technology does) they are delusional. But this isn't a class on philosophy so I will stop there.
Monday, February 28, 2011
Taxi Magic post-mortem
After getting a good presentation from the Taxi Magic folks last Tuesday I decided to try the service for the first time this wknd. I signed up and ordered a cab no-problemo. Though the option for the next cab was over 45 min = no biggie. I scheduled it early enough it didn't matter. (I found out later the driver could've been there quicker but then stopped for coffee and smokes) He showed up on time and accepted cash.
I peppered the cabbie with questions. He actually picks me up at least once or twice a month anyway. He's been driving for nearly 20 years and knows the local demand patterns well. I asked him what % of his rides originate thru TM - amazingly he said more than 50%!! I also asked him if the computer could provide data about expected demand in under-served markets would that information be valuable to him? He said "Absolutely YES!"
Coincidentally, the party I attended was in a part of town that may just be one of those under-served markets. At least at 1 in the morning. Many friends had trouble finding a cab and waited over an hour leaving the party. This begs the question: Could the under-served riders have been serviced more timely? I'm certain geo-spatial data collected by companies like TM could help build some predictive modeling to answer that question. Especially for events whose date/time/location are posted on the web - even "smaller" like my buddies birthday party.
I peppered the cabbie with questions. He actually picks me up at least once or twice a month anyway. He's been driving for nearly 20 years and knows the local demand patterns well. I asked him what % of his rides originate thru TM - amazingly he said more than 50%!! I also asked him if the computer could provide data about expected demand in under-served markets would that information be valuable to him? He said "Absolutely YES!"
Coincidentally, the party I attended was in a part of town that may just be one of those under-served markets. At least at 1 in the morning. Many friends had trouble finding a cab and waited over an hour leaving the party. This begs the question: Could the under-served riders have been serviced more timely? I'm certain geo-spatial data collected by companies like TM could help build some predictive modeling to answer that question. Especially for events whose date/time/location are posted on the web - even "smaller" like my buddies birthday party.
U2's carbon footprint solved! Rap & Quacks
< Originally written in September 2009 >
Fellow music fans,
I am sure many of you are aware of U2's 360 Tour environmental impact and the embarrassing press it has generated: http://www.civilianism.com/futurism/?p=2097 As I go to my first "big show" in years tonight it got me thinking about their problem....and the looming disaster that Big-Bands pose to the future of music and the planet.
Seeing as Bono has been losing sleep at night wondering how to reduce the bands footprint. I've devised a simple scheme to reduce it while leveling the playing field for smaller bands and raising "revenue" for struggling small bands around the world to combat those evil, environmentally hazardous, profit-maximizing Big-Bands! (while simultaneously subsidizing really bad music that no one wants to hear or wouldn't otherwise be supported in a "free-market")
I call it: Rap & Quacks
First we start by issuing a carbon "credit" to all bands in the world. This credit would be distributed evenly. To qualify as a "band" one would need to have: a harmonious making instrument and at least one single member. Think of all the new "bands" this could produce!! Big-Bands that toured or used jets instead of buses could buy credits from smaller bands. This would allow Big-Bands to continue to pollute while giving more money to those smaller bands to produce better quality music at a lower carbon footprint. This might even spur innovative ideas that Big-Bands could use to further reduce their carbon output!! (like not touring maybe?)
Music is borderless. Therefore, an international quasi-governmental organization, such as the fair and incorruptible United Nations, would have to issue the credits and would be responsible for administering the program and distributing the booty <ahem> I mean revenue. This would give countries that produce little/no music, like Micronesia, an equal say in the matter (sorry Micronesians, but I haven't heard any great hits out of y'all lately) Oh and since these Big-Bands already make GOBS and GOBS of cash (I paid $130 for my ticket tonight and that's one of the "cheaper" ones) I am certain they wouldn't pass off the tax to their fans in the form of higher ticket prices. That would be unconscionable.
MAGNIFICENT!
Fellow music fans,
I am sure many of you are aware of U2's 360 Tour environmental impact and the embarrassing press it has generated: http://www.civilianism.com/futurism/?p=2097 As I go to my first "big show" in years tonight it got me thinking about their problem....and the looming disaster that Big-Bands pose to the future of music and the planet.
Seeing as Bono has been losing sleep at night wondering how to reduce the bands footprint. I've devised a simple scheme to reduce it while leveling the playing field for smaller bands and raising "revenue" for struggling small bands around the world to combat those evil, environmentally hazardous, profit-maximizing Big-Bands! (while simultaneously subsidizing really bad music that no one wants to hear or wouldn't otherwise be supported in a "free-market")
I call it: Rap & Quacks
First we start by issuing a carbon "credit" to all bands in the world. This credit would be distributed evenly. To qualify as a "band" one would need to have: a harmonious making instrument and at least one single member. Think of all the new "bands" this could produce!! Big-Bands that toured or used jets instead of buses could buy credits from smaller bands. This would allow Big-Bands to continue to pollute while giving more money to those smaller bands to produce better quality music at a lower carbon footprint. This might even spur innovative ideas that Big-Bands could use to further reduce their carbon output!! (like not touring maybe?)
Music is borderless. Therefore, an international quasi-governmental organization, such as the fair and incorruptible United Nations, would have to issue the credits and would be responsible for administering the program and distributing the booty <ahem> I mean revenue. This would give countries that produce little/no music, like Micronesia, an equal say in the matter (sorry Micronesians, but I haven't heard any great hits out of y'all lately) Oh and since these Big-Bands already make GOBS and GOBS of cash (I paid $130 for my ticket tonight and that's one of the "cheaper" ones) I am certain they wouldn't pass off the tax to their fans in the form of higher ticket prices. That would be unconscionable.
MAGNIFICENT!
Spotify, REM and the music market Collapsing into Now
First, in reference to our presentation earlier this semester on Spotify: Europe gets the "listening" party as a real "social" event on the web. The US gets...NPR. (Which is NOT being zapped by cost cutting GOP since it only gets 1.5% of it's funding from taxpayers) Either way it's not a stirring endorsement of public / government support for the arts or the lack of success in a shrinking market. Perhaps REM's title to the new album is more appropriate than we now know.
Second, Internet start ups face competition from the very low-barriers to entry that make starting a web-business very cheaply. Specifically for companies like MusicJuice.net or Taxi Magic - the technology is not novel and in many cases can be easily replicated. Though Taxi Magic does have competitive advantage of integrating to the 4 major taxi dispatch software systems - it had the backing of $100M founder to fund those operations for over a year. Incentive alignment also seems amiss for MusicJuice.net - the value proposition they pose is more beneficial to the artist rather than the listener. Artists won't share their revenue of disc sales or concert revenue sold "outside" MusicJuice's purview. The case wasn't clear on how this would be tracked or enforced. It took Taxi Magic some time to realize they should charge cab drivers, not riders, to better align value / incentives.
I'd close MusicJuice.net right now and look to build an options/future trading site on what bands will be in the Top 10 Albums, etc on Billboard magazine sales. That's something interactive and "fun" for music lovers to bet on the future of their favorite known bands. With only $5k remaining and such low site traffic it's doubtful even a sale could generate much cash. Another option would be to partner as an add-on service to companies like BigChampagne (a B2B data/information service for music industry)
Finally, I will chime in about "crowd-sourcing" music (or different structures of artists development) with a note I wrote a few years ago before attending a U2 show. I'll save that for a diff post.
Second, Internet start ups face competition from the very low-barriers to entry that make starting a web-business very cheaply. Specifically for companies like MusicJuice.net or Taxi Magic - the technology is not novel and in many cases can be easily replicated. Though Taxi Magic does have competitive advantage of integrating to the 4 major taxi dispatch software systems - it had the backing of $100M founder to fund those operations for over a year. Incentive alignment also seems amiss for MusicJuice.net - the value proposition they pose is more beneficial to the artist rather than the listener. Artists won't share their revenue of disc sales or concert revenue sold "outside" MusicJuice's purview. The case wasn't clear on how this would be tracked or enforced. It took Taxi Magic some time to realize they should charge cab drivers, not riders, to better align value / incentives.
I'd close MusicJuice.net right now and look to build an options/future trading site on what bands will be in the Top 10 Albums, etc on Billboard magazine sales. That's something interactive and "fun" for music lovers to bet on the future of their favorite known bands. With only $5k remaining and such low site traffic it's doubtful even a sale could generate much cash. Another option would be to partner as an add-on service to companies like BigChampagne (a B2B data/information service for music industry)
Finally, I will chime in about "crowd-sourcing" music (or different structures of artists development) with a note I wrote a few years ago before attending a U2 show. I'll save that for a diff post.
Tuesday, February 22, 2011
UnSiriusXM Radio Online
The Value proposition for SiriusXM Radio Online will let you listen to SiriusXM on your smart-phone and thru services like Sonos for an extra $3 / month (in addition to the 12.99 monthly fee). Currently SiriusXM offers 214 channels to traditional subscribers. A full 124 channels are NOT available to SiriusXM online subscribers. I've listed them below. Seeing as I prob spend 95% of my listening time on 43,44,47 and the comedy channels I don't think this a good value prop for me. Additionally, you can't get most sports, news, weather and traffic. Will it be a good value add for you?
34 enLighten
41 Hair Nation
42 Liquid Metal
43 Sirius XMU
44 1st Wave
46 Classic Vinyl
47 Alt Nation
48 Octane
49 Classic Rewind
52 Faction
54 Lithium
55 Radio Margaritaville
56 Jam_ON
57 The Grateful Dead Channel
58 E Street Radio
59 Underground Garage
70 Real Jazz
85 Caliente
86 The Joint
87 The Verge
88 Air Musique
89 Sur La Route
95 XM Scoreboard
96 Canada 360
97 Calendrier Sportif
98 OutQ Gay Radio
107 Sports Play-by-Play
113 Sports Play-by-Play
119 Doctor Radio
121 FOX News Channel
125 Quoi De Neuf
126 CNN En Espanol
127 CNBC
128 Sirius NASCAR Radio
131 BBC World Service
134 NPR Now
135 World Radio Network
136 PRX Public Radio
139 SiriusXM Stars Too
142 FOX Sports Radio
143 College Sports Nation
148 Blue Collar Radio
149 The Foxxhole
150 Raw Dog Comedy
151 Laugh USA
152 Extreme Talk
153 Laugh Attack
154 ESPN Deportes
155 SiriusXM Stars
156 Oprah Radio
157 Martha Stewart Living Radio
158 America's Talk
162 Cosmo Radio
163 SiriusXM Book Radio
164 RadioClassics
165 Talk Radio
166 SiriusXM Patriot
167 America Left
168 FOX News Talk
169 The Power
170 Family Talk
171 Road Dog Trucking
172 Radio Parallele
173 Bollywood and Beyond
174 MLB Play-by-Play En Espanol
175 MLB Network Radio
176 MLB Play-by-Play
177 MLB Play-by-Play
178 MLB Play-by-Play
179 MLB Play-by-Play
180 MLB Play-by-Play
181 MLB Play-by-Play
182 MLB Play-by-Play
183 MLB Play-by-Play
184 MLB Play-by-Play
185 MLB Play-by-Play
186 MLB Play-by-Play
187 MLB Play-by-Play
188 MLB Play-by-Play
189 MLB Play-by-Play
190 ACC
191 ACC
192 ACC
193 PAC-10
194 PAC-10
196 Big Ten 196
198 Big Ten 198
199 SEC
200 SEC
201 SEC
202 The VIRUS
203 Big East
204 NHL Home Ice
205 NHL Play-by-Play
206 NHL Play-by-Play
207 NHL Play-by-Play
212 Atlanta/Miami
213 Dallas/Houston
214 Washington DC/Baltimore
215 Pittsburgh / Minneapolis
216 Detroit/Las Vegas
217 Chicago/St. Louis
218 Tampa/Orlando
219 Phoenix/San Diego
221 San Francisco/Seattle
222 Los Angeles
231 BIG 12
232 NBA Play-by-Play
233 NBA Play-by-Play
234 NBA Play-by-Play
235 NBA Play-by-Play
236 NBA Play-by-Play
237 Sports Play-by-Play
238 Sports Play-by-Play
239 Sports Play-by-Play
241 Sports Play-by-Play
242 Sports Play-by-Play
243 Sports Play-by-Play
244 Sports Play-by-Play
245 Sports Play-by-Play
246 Sports Play-by-Play
248 Spice Radio
34 enLighten
41 Hair Nation
42 Liquid Metal
43 Sirius XMU
44 1st Wave
46 Classic Vinyl
47 Alt Nation
48 Octane
49 Classic Rewind
52 Faction
54 Lithium
55 Radio Margaritaville
56 Jam_ON
57 The Grateful Dead Channel
58 E Street Radio
59 Underground Garage
70 Real Jazz
85 Caliente
86 The Joint
87 The Verge
88 Air Musique
89 Sur La Route
95 XM Scoreboard
96 Canada 360
97 Calendrier Sportif
98 OutQ Gay Radio
107 Sports Play-by-Play
113 Sports Play-by-Play
119 Doctor Radio
121 FOX News Channel
125 Quoi De Neuf
126 CNN En Espanol
127 CNBC
128 Sirius NASCAR Radio
131 BBC World Service
134 NPR Now
135 World Radio Network
136 PRX Public Radio
139 SiriusXM Stars Too
142 FOX Sports Radio
143 College Sports Nation
148 Blue Collar Radio
149 The Foxxhole
150 Raw Dog Comedy
151 Laugh USA
152 Extreme Talk
153 Laugh Attack
154 ESPN Deportes
155 SiriusXM Stars
156 Oprah Radio
157 Martha Stewart Living Radio
158 America's Talk
162 Cosmo Radio
163 SiriusXM Book Radio
164 RadioClassics
165 Talk Radio
166 SiriusXM Patriot
167 America Left
168 FOX News Talk
169 The Power
170 Family Talk
171 Road Dog Trucking
172 Radio Parallele
173 Bollywood and Beyond
174 MLB Play-by-Play En Espanol
175 MLB Network Radio
176 MLB Play-by-Play
177 MLB Play-by-Play
178 MLB Play-by-Play
179 MLB Play-by-Play
180 MLB Play-by-Play
181 MLB Play-by-Play
182 MLB Play-by-Play
183 MLB Play-by-Play
184 MLB Play-by-Play
185 MLB Play-by-Play
186 MLB Play-by-Play
187 MLB Play-by-Play
188 MLB Play-by-Play
189 MLB Play-by-Play
190 ACC
191 ACC
192 ACC
193 PAC-10
194 PAC-10
196 Big Ten 196
198 Big Ten 198
199 SEC
200 SEC
201 SEC
202 The VIRUS
203 Big East
204 NHL Home Ice
205 NHL Play-by-Play
206 NHL Play-by-Play
207 NHL Play-by-Play
212 Atlanta/Miami
213 Dallas/Houston
214 Washington DC/Baltimore
215 Pittsburgh / Minneapolis
216 Detroit/Las Vegas
217 Chicago/St. Louis
218 Tampa/Orlando
219 Phoenix/San Diego
221 San Francisco/Seattle
222 Los Angeles
231 BIG 12
232 NBA Play-by-Play
233 NBA Play-by-Play
234 NBA Play-by-Play
235 NBA Play-by-Play
236 NBA Play-by-Play
237 Sports Play-by-Play
238 Sports Play-by-Play
239 Sports Play-by-Play
241 Sports Play-by-Play
242 Sports Play-by-Play
243 Sports Play-by-Play
244 Sports Play-by-Play
245 Sports Play-by-Play
246 Sports Play-by-Play
248 Spice Radio
The Blood Test: M&A and "STD prevention"
Topic of the day is "Cash out Start-Ups" written up in WSJ last week.
http://online.wsj.com/article/SB10001424052748703312904576146372229938338.html#ixzz1E9U9sazV
They say 50% of marriages end in divorce. Well 9 out of 10 mergers fail to increase shareholder value! While a M&A "Pre-Nup" might mitigate some of the complex causes of M&A failure it would not prevent fall-out costs of failure and ultimately break-up and / or re-organization costs of the merged entities. In that sense having an escrow period is more like the pre-marriage blood screening test or like a pro-athlete having to pass a physical. The original logic behind the marriage blood testing was to ensure neither party had syphilis. In the case of the Redskins it's to ensure that no Albert Haynesworth's make the team.....but I digress! ha!
In the Internet age, with a backdrop of "spectacular" failures (a la Time Warner + AOL) and simply poor synergy (eBay+Skype) it makes sense for an acquiring company to protect it's assets / brand before agreeing to a "marriage" Specifically:
1. Earnouts as a pay for performance. One of the major reasons these fail is that key personnel in the acquired company simply leave. This incentivizes them to stay (at least a while) with real "skin in the game."
2. Looking for a "quick buck." Horror stories of vapor-ware aside, some budding businesses entire model is based on the assumption that they will be acquired by a larger entity to build out / complete their product services and/or features. This doesn't necessarily prevent that strategy, but makes an entrepreneur think twice about its likelihood of success. Businesses that are self-sustainable will be more stable and attractive for any potential purchaser.
3. Valuation. As there is now a hurdle introduced in the M&A game this doesn't mean all the leverage in the bargaining position is in favor of the purchaser. The acquired company may use this as a reason to demand higher valuation, ask for shorter escrow time, etc. What this does do is force all parties involve to pause, think about the value-add for the merged entities and the likelihood of success. Does anyone know the divorce rate for Vegas marriages???
----------------------------------------
Tonight we have TaxiMagic as our guest lecturer. It seems early adopters targeted are business travelers. Can't wait to hear the roll-out / expansion strategy!
http://online.wsj.com/article/SB10001424052748703312904576146372229938338.html#ixzz1E9U9sazV
They say 50% of marriages end in divorce. Well 9 out of 10 mergers fail to increase shareholder value! While a M&A "Pre-Nup" might mitigate some of the complex causes of M&A failure it would not prevent fall-out costs of failure and ultimately break-up and / or re-organization costs of the merged entities. In that sense having an escrow period is more like the pre-marriage blood screening test or like a pro-athlete having to pass a physical. The original logic behind the marriage blood testing was to ensure neither party had syphilis. In the case of the Redskins it's to ensure that no Albert Haynesworth's make the team.....but I digress! ha!
In the Internet age, with a backdrop of "spectacular" failures (a la Time Warner + AOL) and simply poor synergy (eBay+Skype) it makes sense for an acquiring company to protect it's assets / brand before agreeing to a "marriage" Specifically:
1. Earnouts as a pay for performance. One of the major reasons these fail is that key personnel in the acquired company simply leave. This incentivizes them to stay (at least a while) with real "skin in the game."
2. Looking for a "quick buck." Horror stories of vapor-ware aside, some budding businesses entire model is based on the assumption that they will be acquired by a larger entity to build out / complete their product services and/or features. This doesn't necessarily prevent that strategy, but makes an entrepreneur think twice about its likelihood of success. Businesses that are self-sustainable will be more stable and attractive for any potential purchaser.
3. Valuation. As there is now a hurdle introduced in the M&A game this doesn't mean all the leverage in the bargaining position is in favor of the purchaser. The acquired company may use this as a reason to demand higher valuation, ask for shorter escrow time, etc. What this does do is force all parties involve to pause, think about the value-add for the merged entities and the likelihood of success. Does anyone know the divorce rate for Vegas marriages???
----------------------------------------
Tonight we have TaxiMagic as our guest lecturer. It seems early adopters targeted are business travelers. Can't wait to hear the roll-out / expansion strategy!
Tuesday, February 15, 2011
NetFlix and the Future of Online VOD
I did the case write-up assignment this week. So I will only put highlights online today.
In addition to using their movie predictor rating they could expand that skill set to other services. Books, music, TV shows, magazines. Why not look to acquire a business in one of those spaces and test out their abilities to predict? Any business where the problem of monetizing the long tail with "lean inventory" management would fit NetFlix's core competency well.
I am surprised that the case did not mention the NetFlix competition that ran during 2006-2009. Essentially the company crowd sourced the next version of their secret sauce. This competition effectively created many “recommendation” engines. The many "sub-optimal" engines that didn’t win could be used by new or existing competitors quite easily. Also, partnerships with IMDB or RottenTomatoes could capitalize on competitive advantages by leveraging the collaborative knowledge on those services as well. Combined the data-sets of these online movie complements with the ratings / queue of NetFlix might give it a critical mass in discovering their “beachhead” in the online VOD market (though I find it extremely unlikely they could not find early adopters given their core competencies of pattern analysis and data driven recommendations) The NetFlix brand would not be diluted by partnering with smart devices such as network-enabled DVD players or set-top boxes as long as the logo appeared on the screen (or box). The company has worked too hard to build the brand equity to simply give it away as a bundled service on someone else’s platform.
Tuesday, February 8, 2011
Help Yelp!
What do you think is the best way for Yelp to monetize the reviews and content they’ve generated, going forward? How scared should Yelp be of Google Hotpot and what should they do to maintain/grow their position?
Yelp! has a tough decision to make. In order to monetize the options were to charge readers or hire a salesforce to enroll businesses to increase ad sales. The former goes against the free "culture" of the service, the latter is expensive and increased revenue generation is highly uncertain. I don't believe the case made a very compelling argument for either option. In addition, the print business is supposedly still the dominant medium for "local" searches as of 2005 - with a 1300% ROI. I have doubts about the size of the print market in 2010 and could not find any credible footnotes referencing research or surveys that point to it's demise by 2010 (notes 74 and 78) The article for Business Week had no citations either - and 5 years is an eternity in the online world. In that same time frame, physical CD sales lost over 50% of it's market value:
I assume the print business, even if still profitable, can be leap-frogged by a better subscription-based model. Companies that can cite increased sales as a result of the online marketing channel would be excellent references. These companies would tend to be small, the ones that don't have "$1Billion marketing budgets" A subscription model would not interfere with the Yelp! culture or brand, which seems to be it's most significant source of value.
I have not heard of Google Hotpot before, but absolutely Yelp! should be concerned. Google's trove of data they can access about a customer (through other Google services) can provide extremely relevant, location-based, local searches. It can proactively seek the best "reviewers" using analytics and intelligence. As you can read here the few can have massive influence on the many (think PageRanking your Twitter "score"). Finding these people has gotten easier and can often be counter-intuitive. Recently Verizon used linear regression to discover that the 1% of their main "influencers" were people who received many short messages / calls around 5pm on Fridays and Saturdays - the idea being that people contacted them to see what was going on for weekend entertainment. They were part of the "in" crowd that had massive influence on purchases.
Yelp! Might offer a partnership with Google to combine their brand and Google data mining techniques to stave off what could be crushing competition from the search giant.
Yelp! has a tough decision to make. In order to monetize the options were to charge readers or hire a salesforce to enroll businesses to increase ad sales. The former goes against the free "culture" of the service, the latter is expensive and increased revenue generation is highly uncertain. I don't believe the case made a very compelling argument for either option. In addition, the print business is supposedly still the dominant medium for "local" searches as of 2005 - with a 1300% ROI. I have doubts about the size of the print market in 2010 and could not find any credible footnotes referencing research or surveys that point to it's demise by 2010 (notes 74 and 78) The article for Business Week had no citations either - and 5 years is an eternity in the online world. In that same time frame, physical CD sales lost over 50% of it's market value:
I assume the print business, even if still profitable, can be leap-frogged by a better subscription-based model. Companies that can cite increased sales as a result of the online marketing channel would be excellent references. These companies would tend to be small, the ones that don't have "$1Billion marketing budgets" A subscription model would not interfere with the Yelp! culture or brand, which seems to be it's most significant source of value.
I have not heard of Google Hotpot before, but absolutely Yelp! should be concerned. Google's trove of data they can access about a customer (through other Google services) can provide extremely relevant, location-based, local searches. It can proactively seek the best "reviewers" using analytics and intelligence. As you can read here the few can have massive influence on the many (think PageRanking your Twitter "score"). Finding these people has gotten easier and can often be counter-intuitive. Recently Verizon used linear regression to discover that the 1% of their main "influencers" were people who received many short messages / calls around 5pm on Fridays and Saturdays - the idea being that people contacted them to see what was going on for weekend entertainment. They were part of the "in" crowd that had massive influence on purchases.
Yelp! Might offer a partnership with Google to combine their brand and Google data mining techniques to stave off what could be crushing competition from the search giant.
Tuesday, February 1, 2011
Webvan
Webvan was the first of many "spectacular" failures in the go-go Dot.Com days.
There were some core reasons Webvan failed.
1. "We believe we had a brilliant concept. We were just ahead of our time." - Webvan spokesman Bud Grebey. In fact, Webvan was not a novel idea at all. Home delivery was common in the 50s and 60s (bread, milk) but both lifestyles and economics changed the fundamentals here.
2. Webvan delivery costs were $30-35 per order. This was a cost that consumers were already absorbing in their visits to grocery stores. Why subsidize that which consumers are already willing to pay? In fact, the number of consumers who would actually pay for the delivery function of the business was a very small fraction of the market.
3. Technology in and of itself is not a solution. In Webvan's case they had a technological "solution" looking for a problem. There was no sizable market demand for home delivery with or without Webvan's technology. The existence of Webvan services did not change this fact.
4. Webvan entered a mature market that was highly efficient and had razor thin margins (Kroger's, Giant and Safeway have about a 1% net margin). With such fierce competition, Webvan was a guppy learning to swim in a pool of sharks. The likelihood of success in this competitive environment is very low.
Had Webvan had the institutional knowledge of the home delivery market and the reasons for it's failure they may have chosen to alter their strategy or avoid the home-delivery market entirely. This was another company that was caught up in the glitz of the Dot.Com era believing that their simple existence would guarantee a booming stock price and .... eventually profits.
Wednesday, January 26, 2011
My first blog!
I signed up for a graduate class in eCommerce so the focus of this blog will be about topics about, or related to, online business ventures. I intend to focus on not just successes, but failures as well. The Internets' many value propositions are intriguing, but not infinite. There are many strategic reasons to be on the web for business, there are also limits to what value the web can add to your business, depending on your industry / specific business function.
Reading is light for the semester. I've only run out of ink cartridge twice so far printing out materials.
Reading is light for the semester. I've only run out of ink cartridge twice so far printing out materials.
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