Starting in a coffee shop

It's a normal thing in Silicon Valley to start a business working out of a coffee shop. Last weekend I was discussing this phenomenon with a couple of Amsterdam entrepreneurs since it's a trend we don't really see happening here. The Guardian has a nice story on this topic.

"Since opening last year, Ritual Coffee Roasters' plain wood tables and leather sofas have become a cradle of start-up companies, including Rubyred Labs. The firm aims to 'turn ideas into top class internet products and services'.'We would come here a lot with our laptops, because so many people come here,' explained one of its co-founders, Jonathan Grubb, 27, wearing a sports hat and sweatshirt. 'The coffee shop has replaced the garage for internet start-ups."

AI in trading and marketing

That artificial intelligence will become more important in our daily lives has been clear for a while now. Nevertheless I found this little fact (below) mentioned in a NYT article on Ray Kurzweil very interesting, and it would not surprise me to see these kinds of techniques to be increasingly used in other industries like marketing as well. Google’s AdSense is probably a good example.

“Studies estimate that a third of all stock trades in the United States were driven by automatic algorithms last year, contributing to an explosion in stock market activity. Between 1995 and 2005, the average daily volume of shares traded on the New York Stock Exchange increased to 1.6 billion from 346 million.”

Abundance in virtual worlds

Wise words by Raph Koster on the recent events in Second Life. Yes, Second Life will have to face zero as well.

“Microtransactions for digital assets and virtual goods is a rising, potentially multibillion dollar industry. To succeed, entrepreneurs who are building networked systems based on user content (be they citizens of Second Life or the makers of virtual worlds themselves) must realize that anything displayable is copyable; the value lies instead in service and in server-side functionality. Content is like songs around a campfire: destined to be enjoyed for free. Those who build businesses around hosting campfires would be wise to focus on making the campfire experience great, rather than charging listeners by the song.”

Whisful thinking

I find it hard to imagine that social networking and IM services will provide mobile operators with new revenue sources. Sure, there will be more data traffic over their networks, but I wonder if that's going to make them happy given their flat-rate offerings. Anyway, Vodafone clearly thinks differently.

“Sarin says social networking, mobile advertising, mobile video, and other advanced applications are on the rise. “We expect these services to generate 10% of our revenue within three or four years,” he says. Vodafone generated $29.4 billion in revenue and $6.6 billion in profit during the first half of the year, beating analyst forecasts.”

What happened to Lonelygirl15?

She's still alive. Detailed Wired report on the advent and future of the YouTube-girl apparently coming from the Midwest, but who actually is an actress in a Beverly Hills home.

“Many assumed the series would sputter and die. Media reports zeroed in on how viewers had been duped, suggesting an inevitable backlash. But the fans — raised on the unreality of reality TV and with the role-playing ethos of the Web — seemed to take the revelation in stride. One guy who had corresponded regularly with Bree wrote to ask if he’d been conversing with Jessica Rose. “No, you’ve been talking to Bree,” came the reply (from Amanda). “If you want to talk to Jessica Rose, you can go to her MySpace page. If you want to keep talking to Bree, use this email.” “Fair enough,” the fan wrote back, and then went on to tell Bree the latest news in his life. To many, it didn’t seem to matter whether she was real or not. A number of posts appeared on YouTube denouncing the series, but many more responded with variations of this simple statement: If you don’t like it, don’t watch.”

What's wrong with Second Life?

With all outside attention focused on Second Life it's interesting to follow its development from an insider perspective. Many signals are pointing at fundamental problems. Read this interview for some insights.

“I mean, there is room for just about everyone on Second Life. I don’t personally believe it’s the corporations that are the problems. It’s the core attitude of the host company. The eagerness to put the bottom line ahead of the benefit and safety of their customers… the ones who are paying the bills. As an example… Linden Lab has much vaunted their “more than 1 million members” status. To get there, they opened the grid to no-ID registration. Email addy only. And we all know how easy it is to get an email addy. As a result, griefing increased by major amounts. The number of adolescents (and resulting problems) increased by major amounts. These things were not for the good of the grid.”

Born in 1985

Interesting article in the Guardian on how today's 21 year-olds have been raised in parallel with the advent of the internet, gaming, etc.

“These kids have been socially conditioned in a universe that runs parallel to the one inhabited by most folks in the media business. They’ve been playing computer games of mind-blowing complexity forever. They’re resourceful, knowledgeable and natural users of computer and communications technology. They’re Digital Natives - accustomed to creating content of their own - and publishing it.”

The semantic web, for real

New York Times has an article on Web 3.0. Formerly known as the semantic web, with Tim Berners-Lee (WWW inventor) as the driving force behind that vision.

Leaving aside all the jokes about the term Web 3.0 there's a deeper thought in the article, something Nicholas Carr recognizes as well. It also has a lot to do with what Tim O’Reilly calls ‘harnessing collective intelligence‘, a key characteristic of Web 2.0.

Anyway, I feel all these thoughts and terms really do point at a logical evolutionary path for the web.

“Their goal is to add a layer of meaning on top of the existing Web that would make it less of a catalog and more of a guide — and even provide the foundation for systems that can reason in a human fashion. That level of artificial intelligence, with machines doing the thinking instead of simply following commands, has eluded researchers for more than half a century."

Web 2.0 Summit summarized

I like this summary of everything I've read about the Web 2.0 Summit. Microsoft’s TechEd in Barcelona (which I attended this week) was more interesting I think. More on that later…

“When we were in Los Angeles a couple weeks ago, there was tangible excitement about the new age of digital media. The Hollywood types were bursting to talk about this revolutionary age of amateur talent ushered in by YouTube. This week, web 2.0 crowd treated the YouTube acquisition simply as a huge transaction, with the only interesting aftermath being lawsuits. Here, we’re so far ahead of the curve, it’s a race to see who can be cynical first.”

Brands producing own content, new?

Is this new? They started doing this back in the 1930's....

“Marketers have found a new way to try to keep viewers from tuning out: offer them TV shows, movies and online programming created by the marketers themselves, often with help from their advertising agencies.

These new offerings, the marketers hope, will be entertaining enough to endear viewers to the brands behind them.

Burger King, for example, is making a feature-length film that may star — no surprise here — the “King” character of its ad campaign. Office Max recently created a show on the ABC Family channel. Anheuser-Busch plans to start a seven-channel TV network online, called BudTV.

“It’s the exploration of sort of a new world,” said Doug Powell, chief integrator of Maiden Lane, an advertising agency. “Clients would love to have a way for customers to be able to participate with their brands more often and not have to rely on the traditional media world.”

The importance of 0

Techdirt’s Mike has been writing about the concept Chris Anderson now calls the ‘Economics of Abundance’ for a while. He explains why this concept is really very simple, but still difficult to understand for some. Who knows what might happen when they start to get it….;-)

“However, the point is that if you understand the zero, there’s nothing to worry about and the model works perfectly. It just requires a recognition that the scarcity doesn’t exist. Instead, you have abundance. You can have as much content as you need — and in that world, it makes perfect sense that there’s no costs, because without scarcity there need not be a cost. Supply is infinite, and price is zero. That does not mean, however, that there’s no business. Instead, it just means you need to flip the equation and use the zero to your advantage. Instead of thinking of it as forcing a “price” of zero, you think of it as being a “cost” of zero. Suddenly, you’ve lowered the cost of making something to nothing — and you should then try to use as much of it as you can. One simple example of this is to use that item that “costs” zero as a promotional good for something that does not have a zero marginal cost. When you realize how zero factors in, you realize that there’s nothing new or radical here at all. It’s just coming to terms with the idea that free market economics still works in the face of zero (in fact, it thrives) and there’s no reason to put in place government-sanctioned barriers to shape the market.”

The world in 3D

Like I said before, Second Life to me is especially interesting because of the idea it gives us on how we might use the web in the future. Microsoft’s latest Virtual Earth release is also a clear step in that direction. And it's clear where it is going:

“Pretty wild! 3 Dimensional virtual world navigation in a web browser. Best of all, Spaceland has been architected to work the way the web works, from the ground up. You can link to a place in Virtual Earth in 3d, the same as you would in 2d! just use the Share menu above the map to clip a permalink to your current view. Same as it ever was."

Optimizing the newspaper

Google starts a test where they will be selling newspaper ad space. Will be interesting to see when, and if, newspapers will start optimizing their printing process (localization for example) to make sure the most relevant and profitable ads will appear. Optimizing from a revenue perspective that is, not from a cost perspective like today.

“Some newspapers see Google’s proposed system as a way to increase sales. “Every day in the newspaper we have a fair amount of space we set aside for ads that we are unable to fill,” said Owen Youngman, a vice president for development at The Chicago Tribune. “Google says they can bring us thousands of small advertisers for space we would otherwise fill with house ads, and we say ‘Great.’"

Trust through the blogosphere

Tim Berners Lee blogs about blogging and highlights something that is indeed becoming more visible every day. Blogs provide filters for the web and a certain level of trust as well. Multiple initiatives that are rooted in the blogosphere are making this trend even stronger.

“A great example of course is the blogging world. Blogs provide a gently evolving network of pointers of interest. As do FOAF files. I’ve always thought that FOAF could be extended to provide a trust infrastructure for (e..g.) spam filtering and OpenID-style single sign-on and its good to see things happening in that space.”

The future of Second Life

Would you like to understand how virtual worlds like Second Life should develop and evolve? Read Stef Wade's thoughts on this topic, I can only agree. Like I said before, Second Life is a great prototype of how we might use and experience the web in the future, but that does not necessarily mean Second Life itself will be a success.

“It is not easy for Linden Lab to give up the monopoly they have in SL. But as far as I can see, it is the only possibility to be successful in the market. An open system will invite competition to the LLs own court, but it will be the only way to prevent the marketplace from splitting into many small pieces.”

A lot to learn

All the rumor surrounding YouTube makes it even more clear that most content companies still have a lot to learn. Hyperpeople explains it better then I could have...

"Television producers are about to learn the same lessons that film studios and the recording industry learned before them: what the audience wants, it gets. Take your clips off of YouTube, and watch as someone else – quite illegally – creates another hyperdistribution system for them. Attack that system, and watch as it fades into invisibility. Those attacks will force it to evolve into ever-more-undetectable forms. That’s the lesson of music-sharing site Napster, and the lesson of torrent-sharing site Supernova. When you attack the hyperdistribution system, you always make the problem worse."

Large and small social networking services

I agree with Robert Young that Facebook and Six Apart are two of the most interesting 'mainstream' social networking services at the moment. However, I have difficulty with his implicit statement that advertising revenues will create a lot of wealth for these companies.

Marc Canter's vision is very appealing. He says there won't be only a few large centralized social networking services, but instead expects there to be many smaller ones that are relevant in a specific context. The larger ones will facilitate this by building the social networking infrastructure (with Facebook and Six Apart as leading examples), using standards and open APIs. However, a consequence of this will be that at least part of the advertising revenues will go to the niche oriented services. The fact that a user uses SixApart's Vox to create a profile, write blog posts and submit videos (read Robert's piece on 'consoles for consumer control') doesn't necessarily mean they will be seen (consumed) by others at the same place. They will be cross-posted to the relevant niche networks... And that's why I think opening up Facebook for everyone was a bad idea. They are losing their context (students, universities). How will that end...?

"I’m probably also one of the very few that felt Facebook made the absolute right decision when they opened up its social network. Their timing, in my opinion, could not have been better, particularly in terms of competitive positioning against MySpace. With the move, there is no doubt in my mind that Facebook has placed itself on a new growth curve… one that will benefit from the churn of members from competitors as well as newbies to social networks. Having said that, let me qualify my thesis a bit. As I wrote in my last post, Facebook has a low “narcissism” ratio, relative to more “Hollywood-oriented” social media services… and it’s very important that it stay that way as it pulls back its velvet rope to the masses. But doing so puts Facebook on the same evolutionary path with Six Apart… at the conceptual level, both companies are ultimately aimed at becoming personalized portal platforms (what I’ve previously referred to as “consoles for consumer control“)."

What ever happened to OhmyNews?

BusinessWeek has an update on OhmyNews, the newspaper largely made by citizens and itself very newsworthy a couple of years ago. Beginning 2003 I wrote about for the first time.

Apparently OhmyNews is not yet structurally profitable. Read the article for the details, but this quote from McKinsey's Korean director is very short sighted for someone who is a strategic advisor to large corporations....

"Other industry watchers also express doubts that citizen journalism will turn out to be a going concern. Had it been an attractive global model, "someone would have made lots of money by now," adds Stephen
Bear, Seoul-based director of McKinsey's Korean operation."

Wikipedia rules

I find myself using Wikipedia more and more these days. And linking to it as well. Apparently I'm not the only one when looking at these research results. Increasingly I'm using Wikipedia directly however, not through a search engine. So it will be interesting to see how, and if, Google and Yahoo will embrace that trend(?).

"In a research project, Cuhalev gathered a random sample of about 1,000 of the 1.4 million topics covered by Wikipedia. He then ran the terms through the Google, Yahoo, and MSN search engines. He found that Wikipedia did in fact appear with remarkable consistency in the upper reaches of search results. On average, the online encyclopedia appeared in the top-ten search results 65% of the time - and 26% of the time it actually had two results in the top ten. (Cuhalev has posted a summary of his findings on his blog, and the full report can be downloaded here.)"