Strategies for a discontinuous future.

Friday, April 02, 2004

Price competition

Hits the Australian music download market. If you read my Herring article...

-- umair // 7:43 PM //


Gmail and Evil Google

From the Gmail T&Cs:

"Advertisements. As consideration for using the Service, you agree and understand that Google will display ads and other information adjacent to and related to the content of your email. Gmail serves relevant ads using a completely automated process that enables Google to effectively target dynamically changing content, such as email. No human will read the content of your email in order to target such advertisements or other information without your consent, and no email content or other personally identifiable information will be provided to advertisers as part of the Service."

Bolding's mine. Will this be a big deal? I'm not sure. One thing's evident though: the line between good and evil is becoming trickier and trickier for Google to navigate.

I've begun to think a lot about evil and strategy lately. There's a concept in game theory called strategyproofness, which essentially means that the rules of the game give you the incentive to reveal your true preferences (regardless of whether or not other players are doing the same). This is what being 'not evil' is really all about - telling the truth about your strategy. It's powerful because it forces you to focus on innovation, instead of gaming the system.

The interesting question is why some tech markets are strategyproof - whereas others (think MS) clearly aren't. I think the answer has something to do with this: as disruption accelerates, truth-telling becomes a dominant strategy because gaming the system leaves you worse off in the long run, by making your decisions over time inconsistent. You can think of this as a repeated game where outcomes are path-dependent because both rules and decisions have a memory.

-- umair // 7:24 PM //

Thursday, April 01, 2004


Obviously a killer idea - if it's not an April Fool's prank. More interestingly, it's a great, and easily quantifiable example of value creation. Here's a rough take:

Google's estimate is $2/user for storage etc. Let's assume there's hidden costs of an additional $2, for a total of $4/user. Now the life of a mailbox is related to it's capacity - the smaller it is, the faster it fills up, and the more useless it becomes. This is a nonlinear relationship, but this simple causality is ok for now. How much is it worth to you to have a mailbox that has an exponentially longer life? Clearly, as much as it reduces search costs for others to find you (which is the basis of the switching costs that keep people tied to email addresses). Is this amount greater than $4? Clearly, it's probably far bigger than $4 - unless everyone you know's time is worth next to nothing. How can Google monetize the difference? Advertising - obviously - will capture it (and maybe even more, because the life of the resource is nonlinearly related to value captured, but that's another topic).

The interesting bit is not that Yahoo hasn't done this - it's that Yahoo can't do it - because it hasn't got the resource necessary to transform users into cashflow (AdSense). So the lesson is that bad strategies lock you out of good ones - strategy is heavily path-dependent - and Yahoo's inability to compete with Google on this is a great example.

It's also interesting to note that Yahoo's strategy head is an ex-strat consultant, as is Google's - but Google's is more plugged into the academic circuit, and so Google tries a lot of unorthodox stuff, and more importantly, actually tries to build new business models and dominant designs, unlike Yahoo, who's focused on imitation and horizontal expansion (this is why Kelkoo was such a bad idea - the opportunity cost was very high: it was essentially giving up pursuing radical innovation).

-- umair // 2:10 PM //

Tuesday, March 30, 2004

Another boring Google article. Check out elgooG instead.

-- umair // 2:29 PM //


Majesco will release GBA carts that are 45 min videos. Brilliant stuff.

-- umair // 2:28 PM //


A short empirical look at whether file-sharing correlates with lost album sales. Interesting stuff - there should be a lot more work done in this area.

-- umair // 1:23 PM //


I'm not the only one that hates the new Google interface.

-- umair // 1:12 PM //



-- umair // 1:08 PM //


A bit of ITMS reverse engineering.

-- umair // 1:04 PM //


In the future, everyone will have their own online music store. And it will work just like a blog. Oh wait..mp3.com already did that in 1998.

-- umair // 1:01 PM //


Yahoo vs Kelkoo Pt 2

I recommend reading the Slashdot thread - lots of good stuff there (for a change).

The thread makes one point I agree with - the dominant design in this space has yet to be discovered by the market, so it's going to be one of the hot markets after search itself. Fairly obvious.

Henrik's comments to the left are quite cool - my point was that resources like these need to be both protectable and valuable for this valuation to work (if you agree with strategy orthodoxy). While I think these resources are defensible, I don't think they're inherently valuable - for the reasons I listed below. Make sense? Maybe not - because now we're up against one of the big questions in strategy: where do resources come from? Put another way, what are the mechanisms of resource creation?

You could take a look at this paper by Winter and others (PDF), which is shaping up to be the seminal answer.

-- umair // 12:37 PM //




due diligence
a vc
tj's weblog
venture chronicles
the big picture
bill burnham
babak nivi
n-c thoughts
london gsb

chicago fed
dallas fed
ny fed
world bank
nouriel roubini


uhaque (dot) mba2003 (at) london (dot) edu


atom feed

technorati profile

blog archives