What the Fuss

In one of my favorite movies - 'High Fidelity' - there is a scene where the protagonist, Rob Gordon, asks his long time college girlfriend if she has any kids, to which she replies 'Oh no. I'm too young. Too single. Kids are too time-consuming, I guess, is the expression I'm looking for'. Rob then turns as if talking to the viewers, saying - 'I'm not making this up. This is how she talks... as if nobody ever had... a conversation about having kids in the entire history of the world'.

This is kind of how I felt about this week's announcement from Google about GoogleTV. (chuckle) excuse me Google, but, hmm... bringing web to the tv? That sounds all too well familiar, doesn't it? i mean.. can somebody tell me what is so uniquely different in that specific product?

Showing web content on the tv screen? Didn't Microsoft try that about at least 10 years ago? (and failed). Mixing cable tv content with web content? Right. But wait a minute - that has been part of Tivo 3 series at least 3 years old. A feed of OTT selected content on the tv screen maybe? But that is what Boxee does, isn't it? The fact this is Google? Yes. That is new, alright.

Has somebody ever thought how come that with all these Over The Top (OTT) on TV initiatives, at the end of the day, it always goes back to having YouTube and Pandora on your big TV screen? That might be nice or cool to some people (most of them already know how to connect their PC to the TV set) but we all believe that the real potential of OTT is with premium content. Don't we?

Well, yes, if by 'we' you mean the technology vendors and the VC industry that backs it up. Not so much though for the actual tv networks and content provides that see over 30Bn of annual affiliate fees paid by the TV operators. This is 30 billion good reasons not to bite that hand that feeds them. It's one thing to innovate with some new business models on your PC screen hoping to see some online advertising revenues. It's a different thing altogether to declare a direct assault on the operators at the living room battle field. Now you know why Hulu almost sued Boxee of allowing to access their content on the TV screen.

Don't get me wrong. I'm not saying Google is doomed to fail. Certainly, they have the skills, daring and deep pockets to solve some of the Internet tv today's impediments such as content discovery, user experience and ease of use. They could certainly compete with Operators by paying their own fees to secure content rights. But that last point is really the key one. OTT or not, the fundamentals don't change. It's all about content, content, content.

Broadband has merits as an alternative delivery vehicle. OTT certainly has some potential to (somewhat) disrupt the existing value chain. But only those companies that can secure the distribution of premium content could stand a chance to play in this game. So far, only two companies had some success in that - Netflix with their DVD and Instant Streaming distribution and Apple with iTunes. They are the ones who could and are posing a real threat to the incumbents of the living room.

If Google wants to be the third player it will have to try a little harder. So far, I haven't seen any evidence that this is the case.

(You Won't Fool) The Children of the Revolution

Yesterday I've been to the Mash Bash event that was organized by blog Mashabale, at Tel-Aviv Port. I figured out it'd be a nice opportunity to get some feeling of the web 2.0 scene while getting a free booze at the same time.
With only 5-6 presenters fixed in low-budget booths around the exterior (man, they didn’t even have an Internet connection, and had to connect to the Free Hot Spot of the public port), I realize quite quickly that this was more of a gathering event for the web 2.0 evangelists to exchange notes and quick shots of their mobile cameras to be later uploaded to their Facebook or Flickr profile, rather than a professional trade-show, but nevertheless I tried to make a best use of my time by trying to catch quick chats with the various presenters, hoping I'll be able to make a better sense of the web 2.0 phenomena.

My quest started with Copenda - a dating service. After few minutes with 2 graceful cheerleaders-looking girls who explained to me they know nothing about the technology, I managed to get to one of the founders who patiently explained to me that his company innovate by the fact that they search in 3rd party social networks like Facebook, but through these connection try to create their own network.
Funding? Angel, Revenues? No, Business Model - Advertising. Got it - Moving on.

Next was Outbrain. They have developed a widget for Bloggers to embed in their blog (yes, I installed it this morning). The widget enables readers to rank your post. Hmm ...
"And why would bloggers like that?" - "Why not?" said they "We're giving it for free"
"And how do you intend to get money?" asked I - "Oh, we have money from a VC"
I could see the question was lost on him, so I had to try again -
"How do you plan to give back money to the VC?"
Suddenly I got his attention "Oh, you mean our business model ... well, we haven't figured that out yet. We focused on bringing the users first"
Focus on the traffic, and the money will follow – I heard that before. I have to say that I’ve been once to a Chinese latrine. Boy, I’ve seen a lot of traffic there., but I still don’t see Google buying it.
Anyway, I didn’t want to interrupt anymore with my silly questions, so I left him to be cross-examined by 2 runny nose kids who claimed they have developed a Facebook-killer social network.

After a short visit to Hooqs, I went to talk to the founder of Sightix. A people-search facebook application that enabled you to reach people over a degrees of separation chart (friend of friends of friends …). That looked somewhat interesting, and I even happily shared with him my People Rank idea (see previous post). Alas, the guy wasn’t quite interested in talking about his product, and instead started talking about his management vision. Sightix are looking to recruit a very small number of very good engineering and treat them like kings. He wants to put every developer in his own office and have no managers at all. Every developer will manage himself and there will be an absolutely flat organization. He was talking on and on about that. Man, was he in love with the idea. It broke my heart to tell him that this was already tried more than 20 years ago in XEROX PARC and was proved to be quite non-scalable. I couldn’t escape the thought, that the guy has created his all idea of a product just as an excuse to exercise his real start-up of Self-managers Company.

I was just about to leave when I suddenly spotted Blonde 2.0 (a.k.a Ayelet Noff). If Yossi Vardi is the priest of the Israeli web 2.0, Blondie is the high-class Madame. She was floating lightly amongst the many bloggers, twitters, flickrs and diggers and with polished English spread out her marketing soundbites to everyone who was willing to listen.

Finishing my last drink, I took a last look at the surroundings. At all these children of the 2.0 revolution - widget developers, social nets app creators, user-generated uploaders, AJAX gurus – what have you.
How nice is life for them – playing with VCs’ and angels’ money, showing off one to another with new ideas with no accountability for revenues, every now and then putting on their nice clothes and shmooz out in social events.

Who needs a customer?

The Akamai in Apple

A week ago Apple has confirmed the secure of another broadcaster on its iTunes Store - the prestigious HBO http://tinyurl.com/6fsn7p . I logged in into iTunes Music Store and counted over 60 networks in its TV Shows section - that's a lot! Quite comparable with any cable or satellite operator. And we're talking the big names here, not the noname brands Joost are trying to sell us as the next-generation TV, but the whole alphabet soup of ABC, CBS, NBC and now HBO.
I've heard several times in the past the claim the iTunes Music (and Video) Store is only the means of Apple to sell more iPods and iPhones, but I'm starting to believe now that the opposite is true. I don't think people are encouraged to buy iPods anymore because of the availability of music through iMS. People buy them because they’re cool and have a great UI. Using iTunes is more often than not the necessary evil of having an iPod. Which is exactly how Steve Jobs would like it to be. Being both Apple's CEO and the largest stakeholder of Disney, Jobs has a clear view out his window of the future of the media world. And in that future there's a value chain that begins with the networks and ends at your iPod, and Jobs wants to control both ends of the stick.
Forget about content democratization, long-tail and UGC, according to Jobs the world of the future is the same world of the present minus your cable operator and its primitive box. It's where content is premium, paid-for, globally accessible (or at least where Apple has a retail presence) and is delivered directly to your Apple mobile device.
There's only one piece missing to the puzzle - Apple doesn't really control the distribution of the content. Rather it relies on the services of a content distribution network - Akamai. Akamai had a very unstable year, with its stock jumping up and down ($25.00-$51.00 range over the last year), but it is still the leader in the CDN market. In my view, buying Akamai would make perfect sense for Apple who will gain a full control over the distribution of content. This could complete the transition of Apple from a computers company into a media company.
Here’s a prediction for you.

PeopleRank - how important you realy are

With all the different social networking platforms around (Facebook, Twitter, LinkedIn and many many others), all exposing APIs allowing you to access the entwined web of social connections, mind the following interesting idea - PeopleRank.

I assume most of you are familiar in one way or another with Google's PageRank algorithm which is at the heart of Google’s search engine. The idea is that website pages are ranked according to their relevancy and their relevancy is determined by two main factors - the number of hyperlinks pointed to them and the quality of the hyperlinks, where quality is defined by the PageRank (a recursive definition) of the referring pages. So Google is constantly running over webpages and updates their PageRank in an iterative process.

The same can be applied over people to determine their online importance. Using social networking APIs, a person can be analyzed by these very same parameters - the number of followers to this person (that is - the number of people that consider him as a friend, not the number of friends he think he has) and the PeopleRank of the people referring to him.

Once we establish importance of people, the next question is how we use this system of ranks. Unlike PageRank, I can't see PeopleRank driving the mechanism of a search engine (not even people search engine), but there are other applications more suitable to use this database.

For example, consider viral marketing. It is a fair assumption that high-ranked people have better viral marketing abilities than low-ranked people. My hunch is that Michael Arrington and even Blonde 2.0 will get a higher rank, then say ... me. So, why not allow an advertiser or other parties who are interested in accessing a large and relevant crowd in an effective manner, to approach high-ranked people as marketing agents. A new business model may emerge, including paying money for these new marketiers in this value-chain.

That's only one example - feel free to use the comments link for other ideas for PeopleRank apps.

Apple Computer

The March 6th event of Apple introducing iPhone software roadmap is interesting for many reasons, but what I found most impressive was a piece of statistics that Jobs presented at the first 10 minutes of the presentation or so, regarding the usage of web browsers on mobile devices. According to it (source: Net Applications) 71% of all mobile web browsing is done via the Safari browser, which is another way of saying that 71% of the time people are browsing using the iPhone. This is for a device which is less than a year since its launch.
While I find this figure quite exceptional, it doesn’t come to me as a real surprise. As an iPhone holder myself, it is very clear to me how it stands out among the other so-called smart phones as a real mobile computing platform. It is the touch screen with its high resolution. It’s the accelerometer. It‘s the rotating and the pinching. All come together, it is the understanding that a mobile device needs a designated user experience; the PC equivalents of mouse and “drag&drop”, if you will. Something which most Mobile players from Nokia to Microsoft have missed, but Apple understands very well.
It goes much beyond browsing o’course. With the introduction of the iPhone SDK, Apple really brings the power of the Mac OS X into mobile computing. This is the most important point here. See - the phone is merely a side effect. It is a new computing platform which is as powerful as a PC, as mobile as a laptop and as elegant as a cellular phone. And why is that so revolutionary? - it all boils down really to a simple math.
There are less than billion PCs in use worldwide, compared with more than 2.5bn Mobile subscribers. It is fair to assume that 5 years from now; at least 75% of these phones will be smart phones. Apple is already 28% of the U.S smart phone market and growing. The big rival RIM/Blackberry with its poor excuse for UI is not a real alternative (remember, it’s not about making calls or reading mails, it’s about computing in a phone form factor). Apple is in the best position to take (or take back, us 80s geeks say) dominance in the compute market.
What a brilliant strategy - iPod and mobile music as the beachhead, followed by iPhone as a prototype for mobile computer, and whatever comes next as the real thing.
Vista has never looked so pale. Let’s just hope they won’t screw it up this time.
Microsoft beware.

Web 2.0 is content, and content is king

If you are an old school technology guy like I am, then just like me you probably can’t escape feeling puzzled by all the web 2.0 buzz going around. I mean, we were born and raised on the old eighties model of a startup – that is, two founders in a garage with a good idea for a product, 2 years or so of self-funded R&D work, then some external funding, building the organization, first sells …well, you know the drill.
So what with all that 18-years old punks that turn out every day with a new idea of a web 2.0 applications? Are any of these companies really sustainable? For most part, it looks like these ideas are nothing more than the result of a nice thought someone had while drinking in a bar. “Hey, why not have a website with a text field that lets you type in where exactly are you each moment of the day, and share it with your friends” says Joe – then pour some extra ten grounds or so to develop it (in AJAX o’course), color it in green, add a BETA label and a new startup is born. Then a week later someone says “well, Twitter is nice, but wouldn’t it be nicer if instead of just typing your message you could also SMS it to your friends” – and here goes yet another web 2.0 startup.
Could it be the bubble days all over again? Possibly, but I think that this time we go far beyond than just not having a business plan. Where every feature becomes a new company, you have 20+ different ways to do the same thing, nothing is compatible and no-one knows how the hell they gonna make some money out of it (save for the 1-size-fits-all answer – advertisement).
So unless the world has gone completely mad this time, we should expect everyday the bubble burst and a return to a more reasonable business framework, right?
Maybe not
What if it is our way of thinking that needs changing. After all, it is an old Kohn’s philosophy that when too much of the new data conflicts with the theory, it may just be the time for a new one – a paradigm shift.
Consider this – what if instead of thinking of all these new web 2.0 initiatives as distinct companies, we will regard them as a new form of content. In the same way, that TV shows, movies, cartoons and games are all forms of content. What we define here is a new content category – applications. Now under such view a lot of the anomalies of the startup mode start making sense – the entrepreneurs of web 2.0 are really a new breed of content provides, the seed investments to run up their site is production money. It very nicely justifies the existence of so many different apps in a variety of flavors and tastes – not much different than your 500+ channels TV guide.
We as users can pick and choose the content to our likes, we can play around with Fickr for a year, and the year after dump it in favor of ‘the new season of’ Picasa, and so on.
For some apps we may pay premium (which fits well the new move of apple to use their iTunes Store to sell 3rd party iPhone apps), but it should make no wonder that the bulk of money for this industry will come from advertisements. Again, this is not so different than your regular cable TV.
And just as content providers of the TV are rarely independent, and typically survive through their attachment to the big TV networks (ABC, CBS …), what is then more natural for these web 2.0 startup if not to get acquired by Google, Yahoo, Microsoft – the new media conglomerates of our times.
I have to say, I begin to like that model. It does make much more economical sense, doesn’t it? I’m sure there are some other insights hidden here if we’ll think about it a little harder. Might be the subject of some future posts.