Christopher Golda

In this month’s Wired, Chris Anderson discusses “Free”:

There is, presumably, a limited supply of reputation and attention in the world at any point in time. These are the new scarcities — and the world of free exists mostly to acquire these valuable assets for the sake of a business model to be identified later.

Suffice to say, the best investors lack interest in business models. Radical and disruptive business models are created through experimentation, iteration; they can’t be designed or planned. Ironically, giving a product away for free should be part of your business model. Free maximizes the potential for value creation (by increasing market size, etc) and free, abundant goods/resources make existing scarce resources more valuable. Alex Iskold at ReadWriteWeb thinks that’s too complex:

The downside of freeconomics is a monopolistic market, with barriers to entry, and little incentive to innovate. In addition the middle-man and transactional complexities are the other side effects of this new economic trend.

Free doesn’t create monopolies — it just helps kill incrementalism. That gives you more incentive to innovate. As usual, Umair says it best:

Liberating value creation from the strictures of price is the story of nearly every radical innovator in the last 5 years. It’s the story of Google - how far would Google have got, if at it’s birth, it worried about free vs not free, and charged us all pennies for search? Clearly, not very far.

I read this Q&A with Lego CEO, Jørgen Vig Knudstorp, in the first issue of Monocle magazine almost a year ago. It’s a fascinating look at innovation; rethinking strategy, advantage, etc. When faced with pressures of globalisation and shifts in consumer behavior, Lego made drastic changes to its business. Namely, transforming into an “open source”, “platform” company, developing formal innovation processes, exploring new business models (most notably, Lego Factory) and collaborating with select global partners.

Successful innovators have ways of seeing the world that throw new opportunities into sharp relief. They have developed, usually by accident, a set of perceptual “lenses” that allow them to pierce the fog of “what is” in order to see the promise of “what could be.” How? By paying close attention to four things that usually go unnoticed:

1. Unchallenged orthodoxies—the widely held industry beliefs that blind incumbents to new opportunities.
2. Underleveraged competencies—the “invisible” assets and competencies, locked up in moribund businesses, that can be repurposed as new growth platforms.
3. Underappreciated trends—the nascent discontinuities that can be harnessed to reinvigorate old business models and create new ones.
4. Unarticulated needs—the frustrations and inconveniences that customers take for granted, and industry stalwarts have thus far failed to address.

Gary Hamel

IPartee is a consumer Internet service that improves how people discover and participate around events. The service is built on a social-network designed to help you and your friends plan outings and organize events. With IPartee, you can easily discover events and venues related to your interests and those of your friends.

IPartee allows any user to plan, publish, promote and monetize their events for free. It’s currently in private beta.

Paul Denninger at the AlwaysOn Stanford Summit:

The Cisco Market Cap at the time of its IPO was $225M. Today, he asked would Sequoia Capital or other VCs have taken Cisco public, or would they have tried to shop it to AT&T for $250M? The data shared with us seems to lead to the belief that they would have tried to find an acquirer. The challenge is: would Cisco have created the value in the tech market and for other entrepreneurs if they had simply been acquired?

via R/WW

Mesh Should Old Media Be Afraid of New Media?

The single most mentioned company at the mesh conference this week was Facebook. It’s because the platform is exciting news for the types of people that attended: the geeks and VCs get excited because widget-style companies have a new safe-haven; the press get excited because they can report this as an attack on MySpace. However, in the “Barbarians at the Gate - Should Old Media Be Afraid of New Media?” panel conversation, Loren Feldman made a very interesting comment about Facebook: he said that Platform has turned them into the closed-system AOL of Web 2.0. Contrast this with Mark Zuckerberg’s Facebook f8 developer event keynote in which he said,

We can look around and we can see that people are already building social applications — they just need to try to interface and reconstruct the whole “social graph” themselves in order to do that. Facebook Platform is going to solve that problem, and it’s not just going to enable people to build social applications, it’s going to make it so that developers world-wide can do completely new things. Right now social networks are closed platforms and today we’re going to end that. With this evolution of Facebook Platform, any developer world-wide is going to be able to build full applications on top of the “social graph” inside of the Facebook framework

Stage Fright Mark Zuckerberg giving his keynote

He claims three benefits of Facebook Platform:

1. Deep integration into the Facebook site
2. Mass distribution with the “social graph”
3. New business opportunity

On MySpace, the problem is that you can’t work with the “social graph” and there’s less business opportunity. On Facebook, the problem is that you have to work inside of the Facebook framework. This brings me to one of my main points: despite what Zuckerberg says, Facebook is still a closed platform — applications have to be built on the Facebook “canvas” with the usability issues, branding, etc that accompany it. While deep integration into the Facebook site may be attractive to application developers, the integration may not be deep enough for applications that aim to solve core problems.

In Paul Kedrosky’s “Facebook is Microsoft Office of Social Apps”, he points out that none of the Facebook applications are as good as their counterparts; the only reason they are successful is because all of them are available in one place. Zuckerberg doesn’t hide this fact — in his keynote he explained how Facebook photos is missing several important features that competitors have. He claims the success of Facebook applications are due to the “social graph”, defined as the network of connections through which people share information and communicate.

The Platform is designed to serve the long tail with periphery applications. If they ever explain how to use Platform they will definitely see more users and traffic, but I also believe it presents a huge opportunity for competitors. Users don’t care about the majority of applications — they only care about applications that solve problems they experience. However, we know from Kedrosky a priori that core applications designed to solve these problems are done poorly on Facebook. More importantly, periphery applications balkanize the context for interaction, minimizing the SNR and the potential for value creation by core applications. Before the Platform was announced, the context for interaction on Facebook had already been slowly balkanizing since networks were opened up to companies, individuals and organizations — the school-related context for interaction slowly deteriorated. The opportunity for competitors exists for anyone bold enough to recreate the “social graph” with a strong context for interaction and build better core applications.

Addendum: It’s easy to identify core applications for social-networks — they are the applications that create the most value from relationships. Hint: there is only one application since the launch of Platform that has more than 1mm users: iLike.

via NewTeeVee:

The BitTorrent cell phone. Hungarian researchers have developed a BitTorrent application for Symbian-based smart phones, complete with an integrated tracker and the ability to use private torrent sites. Too bad the constant data transfer is likely to eat up your battery life in no time.

Unfortunately, this application, SymTorrent, operates over your carrier. I worked on a similar project, HyperTorrent, at the University of Toronto, but it operates over Mobile Ad-Hoc Networks (MANETs) via 802.11, so it will act without any underlying infrastructure, allowing unrestricted, trackerless BitTorrent-based file sharing in any environment. You don’t need a data-plan; you don’t need service (can be underwater, the desert, on an airplane, in the subway, etc).

Addendum: HyperTorrent was built using HyperCast, a software system for self-organizing application-layer overlay networks

Abundance thinking–understanding the implications of “practically free”–is a core competence of our age. It brought us everything from the iPod to Gmail. -Chris Anderson

The economy of abundance suggests that the consumer will choose abundance over scarcity. There are several examples of this - just think of YouTube, the television of abundance. The problem is that the premise of an economy of abundance is that advances in technology have driven costs to zero. This isn’t the case, as cost is entirely electricity-based in the IT world, and this becomes poignant with the same example of YouTube. Simply put, YouTube was not a profitable business. It then becomes obvious that true, sustainable success will be based on innovative business models and frugal computing. It’s no coincidence that Google are pioneers in frugal computing, as advocates of a new power supply standard for computers, innovators in hardware efficiency, etc. It’s clear that the economy of abundance is realized by companies with well-established infrastructure like Google, Yahoo, Amazon, et al. The rest of us can expect to be investing in services such as Amazon’s S3, which have great prospects of reducing the non-zero costs.

Addendum: For a more in-depth analysis of the paradox of abundance, read Nicholas Carr’s post on frugal computing.

Umair Haque has posted a paper on Media Innovation in collaboration with Innovaro in which he explores the three forces of successful radical media innovators that are trumping today’s media incumbents.

The reason today’s media incumbents are suffering are threefold. First, a new breed of media revolutionary is building a newer, better media industry, whose economics differ radically from yesterday, and one which requires fundamentally new approaches to strategy and innovation. Second, these revolutionaries are doing so by transforming yesterday’s hapless, powerless, disconnected consumers into connected, empowered, choice-rich, and attention-saturated consumers, whose market power in unison is volatile, explosive, and unpredictable …

The consumer to prosumer language is being noticed by many as a more appropriate way of describing, as Umair puts it, the deceptively simplistic concept of user-generated content. The report examines how markets, networks, and communities are redefining the media industry by promoting a shift from core to edge, to efficiently organize consumption/production and ultimately explode value creation. It’s important for anyone who wants to understand the true value in MySpace, Craigslist, Wikipedia, etc. Read the full paper here.

This is a great piece on innovation (or lack thereof) at Microsoft, and how they’ve managed to become “me too” players in markets. Most notable are zune, soapbox (pretty much all web efforts actually), xbox, etc. Although Google have yet to develop significant revenue stream beyond their search business, at least they’re trying to create value through their 70-20-10 innovation.

Soundtrack: Clipse ft. Pharrell - Mr. Me Too