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Strategies for a discontinuous future.










Friday, December 02, 2005
 


Snowball Effect

"...Jarvis wrote about a bad experience he had with computer giant Dell's customer service, creating an avalanche of negative comments about Dell and bringing to light hundreds of bad consumer experiences with Dell's support staff."

Link - bolding's mine, to help explain the Snowball Effect. It's viral, yes - but it's not about "viral marketing". It's about very real value creation through viral dynamics - value that would otherwise never be created.

Read the quote again - it should be clear that this is the case. Jarvis's story caused new information (not just marketing blurbs) to be revealed and to snowball - information that effectively transferred value from Dell to consumers, and to it's competitors.

So the Snowball Effect is not not about Blair Witch (etc) style buzz - it's about value itself snowballing. In fact, Snowballs are a hyperefficient strategy for value creation in a world of connected consumers, but we won't get into the how and why here.

The point I want to make is simple: the Dell case is a very nice example for incumbents across industries that this is binary choice, a zero sum game: either you leverage Snowball dynamics, or you get commoditized by them.

-- umair // 11:26 PM //


 


Massively Distributed Hysteria and the Future of Reputation

An article by someone upset that their bio was faked on Wikipedia.

Is this really an issue? Economically, no. What it means is actually something pretty cool - that in the future, everyone will be responsible for their own decentralized info. You'll have to check your reputation, because the network has a long memory.

That, in turn, will create new markets and new sources of value.

But far more importantly, it sets (huge) incentives, just like Clarke argued in The Light of Other Days, for people to be much cooler to each other than they are now.

-- umair // 10:57 AM //


 


Edge Platforms

AggregateKnowledge (possibly). Note, like TIOTI, Last.fm, etc these guys are making resources liquid - the resources, largely, of the media industry; not their own.

In economic terms, that's pretty amazing; to be so deep in strategy decay that others can capture the lion's share of value from your resources.

-- umair // 10:52 AM //


 


Cheap Coordination

What do I mean when I say the fundamental economic shift of the post-network economy is to cheap coordination?

Here's a mini case study.

-- umair // 10:43 AM //


Wednesday, November 30, 2005
 


qwning the Googleplex, Pt 1

I've been meaning to wite a series of quick notes outlining how to (really) compete against Google, since it's something I'm asked all the time lately.

Since John Battelle has kicked off a discussion about whether Google's hitting a turning point, here's a quick part one.

One way to qwn Google is through connected consumption. Google has proven time and time again that it doesn't have a real competence in community. Most of it's community-based initiatives are also-rans (Orkut, News, etc).

But communities are huge sources of value creation in a post-network economy - especially when they scale. That is, they realize increasing returns via viral and network economies of scale. So, for example, rather than Yahoo (etc) trying to roll it's own communities, a much smarter play would be to begin acquiring vertical communities and build nonlinear returns to scale, because each acquisition price won't reflect network benefits.

Vertical communities create value in two ways. First, they're hyperefficient attention allocators. Second, that's because they've built huge knowledge pools about their verticals. Check out Basenotes for a quick example. The trick is that few of them realize much value now, because their networks haven't reached scale.

But the economics are clear: both of these sources of value creation are deeply disruptive to traditional consumer-facing industries. Where newspapers are today because of micromedia and ambient media, so tomorrow most consumer-facing industries will be because of communities - think magazines, department stores, and other mass players. And that means that a community roll-up player can exert huge market power over complementors - like Google - because it will own the edge of the value chain.

Of course, looking at communities this way means disregarding the standard corporate notion of communities as "consumer-generated content" or basically, just resources to be exploited/cashflows to be discounted, which is how suits usually think about communities today - and which is why they fail to realize much value from them.

-- umair // 11:30 PM //


 


Core vs Edge, Pt 2

MS Classifieds - link. Too little, too late, too lame.

Honestly, if there's one company in the world that has no hope of developing edge competencies, it's MS; because edge competencies are about the very things MS is not - openness, transparency, anarchy, fuzziness, sharing.

Guys, I think you're better off sticking with the core (aka being evil).

-- umair // 11:22 PM //


 


Core vs Edge

Yahoo Mail incorporates an RSS reader. While I think the product itself is certainly cool, I'm not so sure about the strategy.

I think Yahoo has been struggling with the issue of what to do with an RSS reader for quite a while. And I think this is not the best way to leverage such a valuable resource.

Here's why: Yahoo should be building edge competencies. Not focusing on features and products. That is, they should be focusing on learning how to leverage cheap coordination to create economic value through, for example, plasticity, liquidity, or newer sources.

I'm not sure that simply bundling products is the way to do this - in fact, if anything, it's a core product focused move, to drive mass market adoption, and generate switching costs via scope economies = very 1999. IMHO, it would be smarter to focus on thinking about the RSS reader in the context of an edge platform.

How do we know that Yahoo's fumbling edge competencies? Stories like this are pretty compelling evidence:

"...One of the things that troubles me the most about this situation is that I found this retailer through Yahoo! shopping and they were perceived to have positive feedback. Is the feedback mechanism for Yahoo! Shopping broken? How could this horrible retailer have a four star rating with 858 ratings?

I'm convinced that there is a possibility that many of the "reviews" for this company could be fake. I should though have sorted through the reviews to the worst to see that many others had fallen prey to similar fraud by this company."


Which are what ultimately translate into an order of magnitude difference in market cap compared to Goog.

-- umair // 10:34 PM //


 


Dear Google

How are you going to qwn the world if you can't even fix my Gmail account in the last 3 hours?

Luv,

Umair

-- umair // 10:16 PM //


Sunday, November 27, 2005
 


Weekend Reading: Media 2.0

A killer two part series at NYBooks about the problems facing the news market. Essential - do not miss.

-- umair // 1:58 AM //


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