Strategies for a discontinuous future.

Thursday, April 20, 2006

Macropocalypse, Rubber Meets Road Edition

"...US manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job.

The declines in some manufacturing sectors have more in common with a country undergoing saturation bombing during war than with a super-economy that is �the envy of the world.� Communications equipment lost 43% of its workforce. Semiconductors and electronic components lost 37% of its workforce. The workforce in computers and electronic products declined 30%. Electrical equipment and appliances lost 25% of its employees. The workforce in motor vehicles and parts declined 12%. Furniture and related products lost 17% of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43%. Paper and paper products lost one-fifth of its jobs. The work force in plastics and rubber products declined by 15%. Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs.

The knowledge jobs that were supposed to take the place of lost manufacturing jobs in the globalized �new economy� never appeared. The information sector lost 17% of its jobs, with the telecommunications work force declining by 25%. Even wholesale and retail trade lost jobs. Despite massive new accounting burdens imposed by Sarbanes-Oxley, accounting and bookkeeping employment shrank by 4%. Computer systems design and related lost 9% of its jobs. Today there are 209,000 fewer managerial and supervisory jobs than 5 years ago.

In five years the US economy only created 70,000 jobs in architecture and engineering, many of which are clerical. Little wonder engineering enrollments are shrinking. There are no jobs for graduates. The talk about engineering shortages is absolute ignorance. There are several hundred thousand American engineers who are unemployed and have been for years. No student wants a degree that is nothing but a ticket to a soup line. Many engineers have written to me that they cannot even get Wal-Mart jobs because their education makes them over-qualified.

Offshore outsourcing and offshore production have left the US awash with unemployment among the highly educated. The low measured rate of unemployment does not include discouraged workers. Labor arbitrage has made the unemployment rate less and less a meaningful indicator. In the past unemployment resulted mainly from turnover in the labor force and recession. Recoveries pulled people back into jobs."

The end of America? It's difficult to see a future for the middle and working classes.

Note that most of this is a classic case of saving capitalism from the capitalists. The gains in this case (as has been very nicely documented in the last year or so) are being appropriated not just by capital, but by the few at the very top of the capital food chain - most of whom see absolutely nothing wrong with this picture.

-- umair // 5:52 PM //


Funny of the Day

"...The MSN team is working on a new Windows Live service, code-named Live Drive, that will provide users with a virtual hard drive for storing hosted personal data."

What a great idea! I can think of so many people who just can't wait to trust MS with their lives.

I'm being facetious. The point is that Microsoft would be better off investing in strategy before services - edge strategy, of which a vital component is trust.

-- umair // 4:16 PM //



Gets another round, total in = $40m, the Herring says the current valuation is near $500mish.

That's all well and good, supported (allowing for a bit of 2.0 inflation) by market and transaction comps.

My question is: how does Facebook exit? I think Viacom has passed, and so who does that leave (barring the incredible - a public Facebook)?

The window for a Facebook exit is 2006. In a few months, I'm not sure whether valuations in this space will be able to maintain discipline, given the explosion in new - and this time serious - entrants, like Cyworld, etc.

Now, by all means, have at it in the comments - but please don't throw traffic numbers at me to prove how r0xx0r Facebook is. Let's try and talk a bit more strategically.

-- umair // 4:10 PM //


The Neverending Lameness of Yahoo

Helping squelch free speech in cities across the globe.

In fact, like I keep pointing out, the Free Culturites should be the ones writing these posts - not me; because it ain't just Yahoo, it's nearly every net player with any kind of scale, from Skype to Goog. But they're more interested (unfortunately) in small beans - like DRM. Come on, guys.

-- umair // 4:07 PM //



"...First, the aforementioned user, GoatMonkey2112, initially blamed GoDaddy for swiping his prospective domain name from him."

Just wanted to point out that GoatMonkey2112 may be the most retardedly awesome name in the history of the intarnets.

-- umair // 4:05 PM //


More (Less) 2.0 Than 2.0

For some time now, the usual suspects have been abuzz about PhotoBucket. The usual argument is what this TechCrunch post says - it hinges on Photobucket's enormous traffic.

Nearly every VC I've chatted with in the last few weeks has PB on the top of their list, and they make a point of trying to be offhand when they ask me about it, but it's clear the numbers make them kind of breathless ("x% of all traffic!").

Should they? I think PhotoBucket is a nice example of strategy trumping spreadsheets.

Let me explain simply. Though it has a ton of traffic, Photobucket will always be at the mercy of players at the edges of the value chain - like MySpace, Xanga, etc. These are the players who will be able to exert market power over PB, because they will control the redistribution of revenues further down the value chain.

That PhotoBucket's got traffic isn't so surprising - unsurprisingly there is a huge demand for free stuff, especially bandwidth intensive (read: more costly) free stuff. I don't see how PhotoBucket is positioned to profit in any defensible or privileged supernormally from that (ever-present) demand.

From the pov of a spreadsheet and simple assumptions, PB might look like a world-beating play; from a strategic pov, IMHO, it is less of one.

-- umair // 3:58 PM //

Tuesday, April 18, 2006

Thinking Strategically About the Edge

So what, exactly, happens to a business model like this in a 2.0 world?

Let me know what you think.

-- umair // 3:13 PM //



Forthcoming - a bunch of papers explaining the edge, edge competencies, strategy at the edge, etc, etc. I'm deciding whether to publish these as an ebook, individually, whatever - comment if you have a preference/idea/etc.

-- umair // 2:06 PM //


The Next Great Game (and Why Google Can't Play It)

Sorry, but this Da Vinci code thing - I wanted to write about it last week because I was shocked - is very bad news.

It's not just that it is Google essentially selling out. In fact, it's a very telling symptom of a buried disorder.

Why would Google do this? It goes against every principle that made Google great. It is Google stepping backwards in time, rewinding the clock to 1.0, essentially because old media is throwing money at it to do so.

Let me explain.

The next great business game is going to be about ripping branding apart and making it hyperefficient, hypercultural, hypersocial. This is the game MySpace is playing. This is the game Google wants to play.

But brands are about what make us human: the cultural and the social. Google, as we know, is deeply algorithmic. It is like HAL 9000.

Now, this is a problem. A big one.

Why? Because Google can't play this game. It has very different competencies - in my language, it doesn't understand subduction and the commoditization of meaning. But more on that later.

This move is very important because it's a tell: buried deep within this move are the seeds of Google's strategy decay.

Consider the difference between buying profiles on MySpace - a deeply cultural and social move, which is exactly why it's revolutionizing branding; versus solving puzzles on Google.

It's not just hilariously ironic that brand revolution a la Google is, well, the strangely robotic move you'd expect from HAL 9000 - solving puzzles, no less - it's also deeply out of sync with the social capital that is brands (much less amplifying it, like MySpace does).

Google is forced to do transparently backwards-looking things like this because, like a mouse in a trap, it can see the cheese - it just can't get there. It doesn't know what to with the social and the cultural to redefine branding (hence it's Joga experiment a few weeks back).

This is lame - because rather than try and build competencies in the social and cultural, Google is just choosing to rewind. And that is very Yahoo - a player who is playing the game more for the media industry than for consumers. When Google chooses to flip it's equation to match Yahoo's, we will have the same old media all over again.

Except this time, it will be folks like MySpace + Fox who are the disruptors. Funny how the great wheel turns.

-- umair // 1:42 PM //


Is 2.0 Over?

I've been quiet for a few days, because I've been working on a few papers. While I was writing, the question occurred to me: is 2.0 over?

I mean that in the sense of: has most of the radical innovation from 2.0 already happened? I don't mean: can we still make $$? Clearly, the answer to that question is yes. Put another way: does 2.0 still have structural shifts to yield?

I could rehash the evidence, but I think most of you know it:

1) Yahoo and Google snapping up the potential competition before it grows to anything.

2) Not that there was much potential competition to begin with - VCs aren't exactly knocking it out of the park 2.0wise.

3) Accelerating imitation - nearly every new play these days is a simple rehash of old ideas (which is fine), or they miss the point entirely (hi brightcove).

4) Lack of vision. You know the innumerable debates about "what is 2.0"? Perhaps the reason we keep having them is because no one really has a vision - you know, the grand, game-changing, next big thing vision. Maybe it's not helpful that everyone's stuck fast to their ideas (hi, Free Culture guys, hi O'Reilly guys, hi VCs, hi media guys) and seems unwilling to consider anyone else's position.

5) TechCrunch talks more about Yahoo + Google than anything else :)

I'm playing devil's advocate, to be sure. But perhaps there is a grain of truth to what I'm saying. What do you guys think?

-- umair // 1:30 PM //


The Problems With 2.0

2.0 is supposed to be a deeply humanizing thing. Is it?

"...Day realized the value of focus after a misguided mashup of his politics and business.

''I used to have liberal politics on my website as well, but my mentor said, 'Dude, you gotta trim that off.' Which was fine because in the world of liberal politics I was just another piece of noise."

I face this tension all the time. Last week, after I responded to Steve Gillmor's idiotic attack one me, I received a ton of mail basically saying "dude, we're interested in your insights, not this nonsense".

In both cases, the problem is the same: blogs are reinforcing old divisions, not breaking them down. Will the same hold for the rest of 2.0? I think it is a very big question.

-- umair // 1:23 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