Strategies for a discontinuous future.

Consulting & advisory, research notes, in the press, about bubblegen,
next wednesdays.

Saturday, November 27, 2004

Interesting book list


-- Mahashunyam // 11:24 PM //


Next Big Thing

Slashdot | Envisioning the Desktop Fabricator

This is huge! I've been following MIT's Center for Bits and Atoms every now and then, but until a friend pointed me to the fablab site, I didn't realize what exactly they were going trying to do. Strong potential to disrupt manufacturing industry.

-- Mahashunyam // 12:18 AM //

Friday, November 26, 2004

Procedural Urban Modelling - interesting stuff. Recommended.

-- umair // 2:38 PM //


Next Big Things

So my gf is looking for a new flat. While helping her, I stumbled across this interface, which is...awesome. It is a value multiplier - by integrating geographical and price interfaces, it slashes the transaction costs of using multiple interfaces and creates massive gains.

Now, the interesting bit is imagine this as a local search service you could access from a mobile device. Then imagine hooks to that built into dumb objects - Semacode style. Many, many, many possibilities begin to emerge. Highly recommended.

-- umair // 2:11 PM //


Finance 2.0

Human capital equity stakes: backing succesful gamblers.

"...Each share is now being paid over $35,000. Thus, I am paying out over $2.1 million to my backers. My largest single backer invested $5000 two years ago, and will be paid over one-third of a million dollars."

(Later post, same thread):

"...Its like a share in a corporation, they buy into his poker career for a year or more at a time. They have a share in everything he does poker related, since it all comes from a pool of money he and the backers created. So how much money it took to win a seat doesn't matter, it comes from the pool of money backed by his backers."

Apparently, finance 2.0 is a lot like finance -2.0 - this kind of thing used to happen much more openly in the 18/19th centuries if memory serves correctly. Of course, the dark side of human capital equity did then too (slavery).

-- umair // 2:04 PM //


Corporations vs Public Works

Dear readers, this is a very old story - usually a tactic to protect strategy decay, or to protect entry into a new market. In this case, it's Verizon versus a city which wants to build WiFi as a utility.

Another example: in the early 20th century, the car industry forced the shutdown of DC's local tram lines - which to this day people curse. A strategically misguided appeal to authority - the long-term opportunity cost is greater than the short term gains. The DC example highlights why - eventually, more bridges would have had to be build to accomodate cars *and* trams, which would have relieved congestion, which would have heightened demand.

-- umair // 1:58 PM //


Business Models - Malware

"...Quite the contrary, they're clearly expecting payment from the makers of the software installed, payments usually calculated on a per-install basis."

Obviously - there's no other model that makes economic sense.

-- umair // 1:57 PM //



Demographics from Clickz. Interesting stuff - if only to note that the picture is muddy at best.

-- umair // 1:56 PM //


Publishing 2.0

Peneberg says newspapers should worry, because of a demographic shift away from reading them in younger people. I'm not so sure, for two reasons. First, I think younger people traditionally haven't read papers. Second, I think they read them even less now because they're simply not as interested in reading in general. Peneberg counts online time as reading - I think that's off. Surfing Fark is not equivalent to reading the WSJ.

So should newspapers worry? Yes and no. The industry will shift to even more extreme winner-take-all dynamics, because the net extends natural monopolies across local geographies. So in each niche, there will be one winner - one NYT, one WSJ, one Economist, etc. This means newspapers won't go away; there will simply be less of the,

The industry should worry that the fundamental value driver in such a market are about succesfully co-opting, on internet time, the innovations in the online publishing space - from blogs, to coming ones, like sell-side ads, viral revenue chains, open-source journals, etc.

Upshot: I expect to see newspapers essentially evolve into publishing markets, much like Lloyd's is a market for insurance underwriting.

-- umair // 1:22 PM //



Surowiecki on the death of the brand. Funnily enough, I was thinking about this after I got woken by a call in the early, early morning. What will replace brands? I think something akin to repositories for consumers' emotions about businesses, products, services, etc. Now, I know I'll take heat from marketing guys who say this is what brands are - I disagree - I think brands operate at a less fundamental psychological level; the level of associative learning.

'LoveMarks' is on the right track, but it's obviously biased to one end of the emotional spectrum. A better term might be emotioneering (although that's pretty bad as well).

-- umair // 1:16 PM //


A step closer to video blogging.

Blog Torrent Beta

-- Mahashunyam // 1:28 AM //


Innovation by integration

Machinima : machine and animation.

via Slashdot

-- Mahashunyam // 1:27 AM //


Canada gets a piece of the outsourcing action

U.S. firms look to Canada for outsourcing help

-- Mahashunyam // 12:31 AM //

Thursday, November 25, 2004


"...Plagued by a series of ailments -- including a heart attack, cancer, pancreatitis, and a diseased gallbladder -- Mr. Selby has had to shell out tens of thousands of dollars. In the process, he has learned to shop for health care the way other Americans shop for cars. He haggles over prices. He asks for discounts if he pays upfront. He goes to different hospitals, scouting out their best offer, and then pits them against each other.

If he still can't get what he wants, he goes to the top, appealing to hospital executives. "A lot of people in a hospital don't know what to do when someone says they want to pay cash," Mr. Selby says.

Mr. Selby has already done what millions of Americans may soon be doing, as companies shift to "consumer-driven" health-care plans, and health-savings accounts."

A killer example of the morality (and mechanisms) of the marketplace extending into every sphere of life. What's interesting is the irrationality of hyperconsumption - in this case, we can gauge the risk of health of deterioration exactly: it's equivalent to the gains from haggling.

But clearly good health is worth far more than the price of this risk - otherwise people would be crashing cars, smoking heavily, and shooting each other more than they generally do. So we can only conclude that, in this case, like any other form of hyperconsumption, preferences are nonlinear and strange things like preference reversals happen - there's diminishing marginal utility to gains from haggling (or novelty, if you put this in the context of mall shopping). So the question is - is this a preference shift which happens when market mechanisms take over, or are people always this irrational about the marginal value of health?

Link (Sub).

-- umair // 1:34 PM //

Wednesday, November 24, 2004

Welcome to the Citizen's Patriot Liberties Police Force. Link

"Bush gave the attorney general 90 days to provide plans for the creation of a "specialized and integrated national security workforce" within the FBI. "

-- kh // 7:17 PM //


The cost of communication has essentially come down to *zero*. Telecom companies just don't get it, as witnessed in Philadelphia. Other examples include skype. So if people don't have to pay to play, where is the revenue stream? Services, content, information, and media. Check out what Masayoshi Son has done in Japan. The funny thing is that with over-capacity in infrastructure, all the value-add over IP companies that went belly-up during the Bubble, actually have a viable value proposition now.

-- kh // 6:09 PM //


Outsourcing 2.0

"...European companies may be outsourcing work to Indian firms but in one Delhi-based call centre it's Europeans who make up a fair number of the workforce."

The fate of the unskilled worker in the globalized economy - nomadism. Or, if you like, an interesting reversal of the typical arbitrage proposition of most outsourcers. Link.

-- umair // 5:41 PM //



Surowiecki on the gold bubble - something you'll be hearing much more about in coming weeks.

-- umair // 5:10 PM //


Paper is dead.

Or at least well on it's way. With spectacular inventions like electronic paper, and some less spectacular invention like the tablet PC, the truely digital era is starting to take shape.

Here's a good invention helping libraries and businesses cross the digital divide.

-- dhd // 4:49 PM //


Next Big Things

The extension of the Net into dumb objects is something we've talked about quite a bit as one of the Next Big Things for this/next year. Here's a nice example: snap a barcode with your phone and Amazon will call up the same item (only in Japan...so far).

-- umair // 2:43 PM //



Roach may be more optimistic than the now infamous Globe article contends:

"...In my view, the measured venting outcome is the most likely of the three possibilities. That would entail a managed but sustained decline in the dollar, a gradual increase in real US interest rates, a moderation of growth in interest-rate sensitive components of US domestic demand, and a related rebuilding of private saving. It would also require a regeneration of domestic demand elsewhere in the world � gradually transforming Asia and Europe from savers to spenders."


-- umair // 1:45 PM //


Link of the Week - Radical Innovation

BrainPort - sensory substitution. As radical as it gets. Plasticity is an amazing thing - highly, highly recommended. More info (with movies).

"...Mr. Weihenmayer, a 35-year-old adventurer who climbed to the summit of Mount Everest two years ago, recently tried another version of the BrainPort, a hard hat carrying a small video camera. Visual information from the camera was translated into pulses that reached his tongue.

He found doorways, caught balls rolling toward him and with his small daughter played a game of rock, paper and scissors for the first time in more than 20 years. Mr. Weihenmayer said that, with practice, the substituted sense gets better, "as if the brain were rewiring itself.

...the research team had thought of dozens of applications for the BrainPort, which he called a "USB port to the brain.

...Dr. Raj said the tongue unit had already been tried out in a game that involved shooting villains. "In two minutes you stop feeling the buzz on your tongue and get a visual representation of the bad guy," he said. "You feel like you have X-ray vision. Unfortunately it makes the game boring.""

Uhh...I cannot stress how revolutionary this could be. If it works out, this is the cheap brain interface everyone's been waiting for. Evolved versions of this technology will create the kind of sci-fi style brain interface that will absolutely vaporize and recreate industries like music, film, games, education, communication, web, etc.

The economics are exactly right - the technology leverages the brain to do all the costly heavy lifting. There's a learning curve involved, and quality's not great - but both of these become irrelevant as the technology diffuses and newer versions realize order-of-magnitude shifts in output.

-- umair // 1:40 PM //


USB mince pie.

-- umair // 1:35 PM //


Coordination Machines (Almost)

15megsoffame. More Dot Com 2.0 - rebirth of MP3.com.

-- umair // 1:25 PM //


Coordination Machines

Apologies Accepted.

-- umair // 1:21 PM //


Strategy Decay

The technics of food as competitive disadvantage. Scale and efficiency matter less and less in this market's value equation.

Of course, you could choose to ignore this basic reality, and spend more and more on anti-innovation, like using increasingly desperate marketing to try and sell more Goldfish.

-- umair // 1:18 PM //



Rating the effectiveness of spam hyping stocks by measuring price effects. Interesting.

-- umair // 1:05 PM //


Replication Wars - Endgame

"...Buried inside the massive $388 billion spending bill Congress approved during the weekend is a program that creates a federal copyright enforcement czar.

...Under the program, the president can appoint a copyright law enforcement officer whose job is to coordinate law enforcement efforts aimed at stopping international copyright infringement and to oversee a federal umbrella agency responsible for administering intellectual property law."

This is the endgame - the legislation of a total solution to protect the entertainment industry's dead business model. Of course, other industries were likely involved as well (pharma) - but it's fairly clear who's behind this. Will it work?

Look, it won't matter. That's the tragedy of this - by protecting themselves, the entertainment industry's simply denying it's own strategy decay. You can protect something, but if no one wants it, it's not worth protecting.

So the point is that the opportunity cost of this strategy is radical innovation supporting newer business models aligned with the massively disrupted environment the industry finds itself in. They've chosen protection over innovation - exposing vital points for smaller, nimbler competitors to strike.

-- umair // 1:00 PM //


Politics of the Day - 2004 is 1984

Our Leader.

-- umair // 11:56 AM //


Slashdot | Torvalds Dubbed Most Influential Executive of 2004

Go, Tux!

-- Mahashunyam // 8:35 AM //


Vacation Reading List

I am about to take off on a month-long vacation, so I thought I'd make a list of unusual, thought-provoking books to read on the trip. Top of my list is Fooled by Randomness by Nassim Nicholas Taleb. Did I mention that I think Taleb is just insanely brilliant?

Second on my list is the latest one from Steve Wolfram. Did I mention that I think Wolfram is just insanely brilliant? (I see a pattern developing here...).

Hmmmm...I think I should round this up with something on economics and religion/philosophy.

What are some of your most favourite books that are *not* the usual literature/b-school stuff? For me, it is undoubtedly the books by George Gamow I read in my childhood.

-- Mahashunyam // 8:07 AM //


Science & Technology in Ancient India

This site just blew my mind. Fascinating! Done by someone who seems to be an amateur historian, but the content is pretty cool. Scroll down the page to see links to individual chapters on the left hand side. My favourite chapter is the one on Shipbuilding.

-- Mahashunyam // 7:29 AM //


Centre for Civil Society

CCS is a highly influential, pro-market think-tank in India. Found some interesting articles by their researchers on this site. A must-read for anyone who wants to understand contemporary Indian discourse on macroeconomics and policy making by a most eminent group of pro-market Indian scholars. More resources here. You can even shoot off a question to an economist :-).

-- Mahashunyam // 5:29 AM //


Macroecon : the effect of free-market reforms in New Zealand.

Marginal Revolution: Have New Zealand market reforms failed?

-- Mahashunyam // 5:10 AM //


This one's for the anti-globalizers...

Marginal Revolution: Race to the bottom?

-- Mahashunyam // 5:07 AM //

Tuesday, November 23, 2004


A very nice paper by Roubini that DeLong has called 'essential'. I agree - you had better read this (repost from a few months ago).

-- umair // 4:44 PM //


The First World is the New Third World

"...Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.

But you should hear what he's saying in private.

Roach met select groups of fund managers downtown last week, including a group at Fidelity.

His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.'"

Link. No comment (Via Atrios).

-- umair // 4:31 PM //


Death of the VCR. RIP.

-- umair // 1:59 PM //


Finance 2.0

The Post has a very nice series of articles about ratings agencies and the dynamics and history of the industry. There are massive, massive innovation holes here for clever innovators to exploit. Link, Link, Link.

-- umair // 1:54 PM //


Bankrupting Innovation

Byzantine visa rules post 9/11 massively raise transaction costs for the kind of global talent we need to harness to drive our innovation engine. Zakaria's written a nice piece about it:

"...Undergraduate enrollment from China dropped 20 percent this year; from India, 9 percent; from Japan, 14 percent. The declines are even worse in graduate schools: applications from China have dropped 45 percent; from India, 28 percent."

-- umair // 1:45 PM //


Death of a Brand

The anatomy of how to uncool yourself - begin by selling out at the critical moment when your brand needs desperately to reassert it's authenticity in the face of hyperimitation and growing consumer skepticism.

-- umair // 1:41 PM //


Social Responsibility as Competitive Advantage

Example. A rapidly growing shift in consumer needs. Will it pass an inflection point into exponential growth and become a basic value driver of business for the next decade+?

-- umair // 1:38 PM //


Next Big Things

O'Reilly talks about remix culture:

"...can we build systems that are designed better for letting people remix content?"

Indeed. In fact, this is a massive innovation hole - the gap between what people do informally and what they're offered by the market is absolutely huge. The fact that new economics are emerging - distributed economies of scale, in particular - tells us that people are hacking their own stuff together to exploit this hole.

We tried to build such a system with the Human Licenses.

-- umair // 1:05 PM //


Politics of the Day

"...Just to clarify: In order to claim the chairmanship of the Judiciary Committee, Arlen Specter was forced to abandon future personal or independent judgment�the very judgment the people of Pennsylvania elected him to exercise. He has pledged�in advance of knowing who they are�to endorse the president's judicial nominees...

Is it ironic that judicial nominees may not speculate at their confirmation hearings about how they will vote in future cases, but the chairman of the Judiciary Committee himself cannot be seated until he's pledged in advance to confirm those unknown nominees?"

Welcome to your future - you have been divided and conquered.

-- umair // 1:02 PM //

Monday, November 22, 2004

The First World is the New Third World

"...In a mark of China's growing economic confidence, the country's central bank has offered blunt advice to Washington about its ballooning trade deficit and unemployment.

...�If there is a small deficit, we are not concerned. But certainly we don't want to run into the US situation of having a trade deficit of 6 per cent of GDP,� he said.

�That is not sustainable,� he added. �The appreciation of the RMB will not solve the problems of unemployment in the US because the cost of labour in China is only 3 per cent that of US labour they should give up textiles, shoe-making and even agriculture probably.

�They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.�"

Highly unusual, to say the least. Ignore the political motive of the prescriptive advice (ie, we won't float the rmb yet) and focus on the fact that he marks 6% of GDP as a danger sign for the deficit. That's a clear signal that China's only willing to grant the US so much latitude - roughly 6% is where the US will begin to lose creditworthiness (relatively speaking), and China will shift it's peg to a basket most likely heavily weighted with euros as the slide of the dollar accelerates on the back of this info.

That is really big news - because I think most people expected the US's credit to be good for more than 6% of GDP. This places a nice big constraint on current levels of consumption growth/savings decline.

-- umair // 10:50 PM //


Videogame companies aren't fun places to work. Sounds like the Industrial Revolution. How about true profit sharing- a videogame company where everyone gets a piece of sales profit? That would get the creative juices flowing. The most innovative company in this space, Rare, was bought by Microsoft.

-- kh // 10:36 PM //

Sunday, November 21, 2004

Where Have All the Protesters Gone?

"Critics of globalization may be less visible, but the opposition is, in fact, deeper and more widespread".

-- Mahashunyam // 10:10 PM //


Slashdot | Internet Hunting

This is just *so* wrong!

-- Mahashunyam // 9:02 PM //


Macroeconomics : solving world hunger and poverty

CULTURE CLASH: A Talk with Hernando De Soto

De Soto is just brilliant. His analysis of the root cause of poverty being lack of predictable legal infrastrucutre is right on. This is a key point that many people miss : it's not so much democracy as a predictable and efficient infrastructure to protect & enforce property rights that is key to wealth creation in a free market system. Case in point : Singapore has done a much better job of creating wealth than Latin American democracies or India or Bangladesh.

-- Mahashunyam // 8:52 PM //


Voices from Jesusland

Foreign Policy: Rogue State Department

Newt Gingrich weighs in on the State Department's failure to stem the rising tide of Anti-Americanism around the globe and recommends that the US focus on better communication.

"Ultimately, a revamped and effective communication strategy is necessary because the United States should actively stand for and promote its values around the globe. Every person deserves safety, health, prosperity, and freedom. The United States supports the core values of constitutional liberty, the right to private property, free speech (including a free press), independent judiciaries, free markets, free elections, transparency and accountability in government, the equality of women and of opportunities for women, racial equality, and the free exercise of religious beliefs. Without these values, it is hard to imagine a world in which U.S. safety can be secured. We should not confuse respect for others with acceptance of their values if they violate these principles....
...Key to transforming the State Department�s culture is the adoption of the right vision�President Bush�s vision."

Three questions :
1.Shouldn't the US be actually trying to achieve all these fine ideals in its own society?
2.How much credibility does the US have in a world that is subject to US's actions, not words?
3.What exactly will you communicate nicely when you pick whom you're going to bomb next?

Note to Newt : please follow the advice of a great Republican from the past - "You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all the time."


-- Mahashunyam // 8:05 PM //


Jesusland spreads to UK

"What happens when the government's flagship "academy" schools are run by evangelicals who want to teach creationism?"

-- Mahashunyam // 6:45 PM //



"The story of electric light illustrates the entanglement of science, technology and commerce"

-- Mahashunyam // 6:35 PM //


Reputation economy

RateMyProfessors.ca - Teacher Reviews and Ratings

I've been checking up on the ratings of my potential b-school profs all this morning.

-- Mahashunyam // 4:46 PM //


MercuryNews.com | 11/15/2004 | New service converts CDs into digital audio files

RIAA/MPAA, meet the Grim Reaper.

Thank you, Lord!

-- Mahashunyam // 6:46 AM //


MercuryNews.com | 11/15/2004 | Akimbo breaks ground with Internet TV service

I've been watching them for a while as my buddies and I had the same idea a couple of years ago, but we never got around to building the box. The fundamental risk of running into legal troubles in the US was just too high. Let's see if Akimbo can survive the Anti-Innovationism of US lawmakers. For now, I find the stratgic implications of Akimbo's technology choices to be more interesting. I don't understand why they'd choose to build it on Microsoft platform.

Let's think about this. Akimbo may want to reassure the Hollywood mafia about the security provided by Windows DRM. However, barely ever has a DRM scheme survived contact with widespread adoption. Secondly, consumer electronics makers are too distrustful of Microsoft to let Windows DRM become industry standard. They do not want to meet the fate of PC manufactureres and let Microsoft become the de-facto platform, just as the cell phone makers have successfully resisted Microsoft so far. For example, Sony and Philips aquired significant DRM IP with the Intertrust acquisition. Perhaps Akimbo wants to enter into a technology licensing relationship with Microsoft. Fat chance of that happening : Microsoft has no incentive to do it. May be Akimbo wants to build upon "Network Effects" and "First Mover Advantage" to create buyer lock-in. Gawd, that's so 2000 that I don't even want to ponder upon the stupidity of that premise. Finally, even if Akimbo does become successful, what's there to prevent Microsoft from muscling into their market? Akimbo would've just succeeded in seeding the market for Microsoft, just like so many others did before. Microsoft can easily co-opt Akimbo into its ambitious IP-TV strategy, which seems to be gaining traction in the market. This leads me to believe that Akimbo is walking into a strategic minefield unless they are really positioning themselves as just an acquisition play. That is a very risky strategy, because their only potential buyer is Microsoft as nobody else in the industry would want to own a Windows based set-top box for the reasons outlined earlier.

I think the potential for radical disruption can only be unleashed by making a completely open platform based upon Linux and free (as in freedom) codec standards such as Ogg-Vorbis. Tivo has gone further along this model than anybody else, but I still don't think it has gone far enough, unless it's cooking up something with the Strangeberry acquisition. (Here's a cool account of how Tivo leveraged Linux to build its platform). Tivo just hasn't pushed for becoming a de-facto platform. I personally think that there is a real need for a radically open set-top box platform with a solid programming API that can allow people to freely share video content, and easily bridge the TV and IP networks. We've been waiting for just too bloody long to disrupt the media industry, and this will not happen until a dominant design emerges that completely re-writes the value equations for the media/CE/networking/software industries.

Today's value propositions are all wrong : RBOCs and Cable MSOs want to nickle and dime you to death by upselling you on "value-added" services like VOIP and digital TV, Hollywoods wants to keep churning out crap but charge you for accessing your own hard drive, sue your 12 year old daughter and prevent you from taping broadcast signals, Microsoft wants to get a piece of every CE device in your living room by co-opting it into the Windows platform and so on. None of that has any real value to Joe Consumer who hates getting locked in and could not care about the technologies used to serve him : all he really wants to pay for is a rapidly declining flat fee for accessing fat pipes in a dumb network, and get his voice, video and data service through unfettered access to any and all software or devices that he fully owns, and pays for just one time when he buys them outright. No nickle-and-diming, and definitely no bloody monthly bills. He wants to zap the annoying commercials through his Tivo as consumer marketers continue to remain intellectually bankrupt, can't wait for his RBOC to get skype'd and sent to hell, buy his music at ITMS in an open MP3 format, play it everywhere from his PC to IPod to MP3 player in his car as he damn-well pleases, share it with his friends and order his movies through an on-demand video service by clicking a button on his remote control that downloads HDTV quality video on his set-top box in mere seconds. The real value drivers have always been instant gratification and ever lower prices. The only new value driver introduced by the Internet is shareability, which BTW, adds value to Joe Consumer's social capital as well. As the gap between what an increasingly annoying and evil industry wants to sell and what Joe Consumer wants to buy continues to widen, the opportunity for a truly open and programmable set-top box platform still remains wide open.

-- Mahashunyam // 6:34 AM //


US vs. EU : an interesting take

Salon.com Books | Welcome to the new cold war

-- Mahashunyam // 4:24 AM //



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