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Saturday, August 19, 2006

Industry Note: Put Your 2.0 Where Your Mouth Is, Kiko Edition

Lots of buzz about Kiko going to eBay to sell - mostly disappointment and shock.

These sentiments surprise me. Let me try and explain why concisely.

0) Kiko didn't make billions, or disrupt a moribund industry. I feel your disappointment here. But the Kiko guys want to move on - that's their decision. There are still plenty of players in this space focusing on revolutionizing coordination, and doing fairly revolutionary things (Skobee, for example).

1) 2.0 is about making commerce better, cooler, more efficient - redefining economics by using markets, networks, and communities.

2) What could be more 2.0 than using a market - eBay - to sell a project you're tired of?

3) Would you prefer Kiko hired a boutique bank to shop it around (which they certainly could do, though any success is certainly debatable)? How 1.0 is that?

The point is that all the other alternatives are less efficient. By using a market, the Kiko guys can free up time for their next project, not pay the enormous fees an M&A shop might charge, etc, etc.

I fail to see anything at all wrong with this picture. I advise the Valley kru to chill out, stop obsessing, and go shopping or something like I did (and can I just say that I think these are the coolest shoes ever made - I always loved Memphis and esp the stupid bacterial pattern - but everyone I know hates them the way George Bush hates evil).

PS - No, despite what Paul Graham tells you, the moral of this story isn't about Google economies of scoping Kiko to death. It's that Kiko's innovation wasn't revolutionary or challenging enough.

If that doesn't make sense, think about it this way. There are costs to maintaining such a large service portfolio/such broad reach/etc for Google; not just scope economies. These costs are what they always are for larger firms - the loss of agility, speed, and innovative capacity.

-- umair // 2:08 PM //

Friday, August 18, 2006

Metcalfe's (and Everyone Else's) Law Redux

There's a conversation happening about Metcalfe's Law, Odlyzko's article, is it all valid, what does it all mean type of stuff.

My comments (this is a very old discussion) are here.

Basically (to be blunt), the problem in this conversation is that most investors (strategists, etc) are depending on guidance in how a network "scales" (is it Metcalfe!!? Is it Reed?!�%!) because most investors don't have much of an understanding of what network fx really are from an economic pov.

If you're interested in this discussion, I suggest you perhaps read the conversation I linked to, Seamus makes some really good points.

-- umair // 12:12 PM //

Thursday, August 17, 2006

Why The Venture Industry is Broken, pt 317174

Here's an analysis from a VC - like most others - looking to invest in Myspaceconomy plays (a la Photobucket).

Now, it's not a bad analysis in itself.

Until the point when he notes that:

"...I don't believe MySpace has shown investors a clear view of whether a company in it or dependent on it can every make a venture return."

lol - exactly.

All of which lends a great deal of support to the hypothesis that the venture industry is broken in no small part because, well, most VCs are out of their depth when it comes to investing in tomorrow's growth markets (in this case, the social/cultural).

Myspace widgets won't make huge $$$ - he's right. Not that that's stopped VCs from placing their bets anyways - witness the recent (and unfortunate) funding of Photobucket, for example.

But The whole point is that VCs missed the boat, and despite that, they continue to ask the wrong questions, and learn lessons from their big mistakes in 2.0.

The real play, of course, was Myspace itself - and the new breed of players that are taking deep lessons from it about the hypercultural and the hypersocial (and I distinctly don't mean lame imitators who don't get it, like Tagged and TagWorld).

These players get very little interest from venture guys, and so the result is a huge innovation gap.

Like I've pointed out, the real chasm these days is VCs themselves - here's very nice support for that thesis. Clearstone might be better off thinking about what made Myspace happen, instead of trying to eke out incremental returns from players attempting to parasitize Myspace.

-- umair // 1:23 PM //

Tuesday, August 15, 2006

The Problems With Gutopia, Pt 13412

When I'm in London, I spend a lot of time at the LBS library doing research.

Lately, I've noticed that when I do a Google search, I no longer have the option to see Google's cached version of a page/article/whatever.

Why not? Well, the reason's simple. Cached versions offer people like me in libraries free access to a lot of stuff that the library should otherwise pay for - at least in a Googleverse. In the Googleverse, I should only be able to access certain articles if the library has deals with the right publishers (for example, Reed's ScienceDirect).

Now, this is very interesting. Because it directly supports my old argument that Google is basically the next RIAA. It will increasingly face exactly the same tensions as any publisher does, because it hasn't innovated new kinds of property rights for a post-network economy.

The natural result will be a Googleverse where information is less and less free - not a Gutopia where info is universally accessible at the click of a mouse. Like the RIAA, the more deals Google strikes, the worse off consumers will be.

Don't buy the hype that comes from Google, the O'Reilly guys, Wired, etc - the truth is that Google is now heading down a path which has been well trodden in media history.

-- umair // 6:57 PM //


The Decay of the Core

Wal Mart mini case study.

-- umair // 4:50 PM //


The Real Problem With Islam

It's not any of the inanity you hear from our leaders ("fascism", etc).

The real problem with Islam is, in fact, very simple. It's imams/maulvis/etc - the guys that run mosques, the Islamic versions of priests/ministers/rabbis/etc.

Specifically, it's that there is NO requirement of any kind to actually become an imam. Anyone can be an imam - just add the title to your name, and off you go.

Now, every other religion in the world has pretty stringent requirements. Wanna be a priest? Go get a couple of degrees at a seminary. Wanna be a rabbi? Hit the Yeshiva.

It may seem tiny. But this simple requirement has a huge effect. It (unsurprisingly) ensures a certain degree of quality, and weeds out the inept, the incompetent, the radical, and the bloodthirsty. At a deeper level, it forces people to engage with the real meaning of religion - not the nostrums taught by fundamentalists.

The result is that any idiot - and there are many of them - can set up a mosque; and, further, he can preach pretty much whatever he likes.

Combine this with the fact that the wealthiest Islamic countries - Saudi Arabia and Iran - are also the most radical; and you have a recipe to take an entire religion off the rails.

That's because these players are more than happy to provide copious funding for "imams" who meet their political agenda; since there are no requirements to actually be an imam, nearly every lunatic in the world who has such a political agenda can very easily be an imam.

The result is that moderate mosques and imams are being replaced at an alarming rate with the more and more extreme. The very fabric of the religion is being warped by a broken institutional structure married to an explosion in capital.

Now, that's not to say that this trend isn't affecting other religions as well. The rise of Christian fundamentalism in the States can be traced back directly to "ministers" who've done little more than study the Bible with their buddies.

No matter how earnestly they may have done so, this is no substitute for real learning at the hands of the more learned. It is how fundamentalism is born.

The point is that if you really want to help tackle Islamic extremists - the answer is simple, not complicated. It has nothing to with bombs.

It has to do with encouraging institutional change within the religion itself. It means ending the funding of religious "schools" which do little more than indoctrinate kids into murder. It means engaging with Islamic insitutions of learning, to discover which ones are real (and accrediting them), and which ones are just simulations (and discrediting them).

More than anything, it means helping Muslims find out whether their imams actually know anything - or whether they're just extremists off the street, with no knowledge behind them, who've been lucky enough to get enough funding to start a congregation.

Me, I think religion is mostly awful and stupid. I have a hard time understanding how people can believe in fairy tales of a glorious afterlives and miracles that seem to vanish whenever you need them most.

I've long thought that there was an existence proof God couldn't exist - if he did, why did he have to speak through people/prophets? Occam's razor dictates that if there is a God, he wouldn't worry about prophets; he'd just *poof* a Bible (etc) directly into existence.

But most of the world's 6 billion people - including mental giants like Bush and Ahmadinejad - think religion is desperately important. Fine. The answer isn't in violence - that will only beget more and more extreme violence. It's a sad nostrum today that every "terrorist" killed just creates 2 (5? 10?) more. This is a major error in strategy.

The solution is in religion itself - helping religion play the role it's supposed to play, by mending it's long broken institutional structure.

Of course, given the fact that "ministers" who are one step shy of con artists can fill up stadiums in the States, I hold out little hope for this to happen - though, very interestingly, accrediting imams is an explicit plank in the British governments response to the recent scare.

In fact, one could even argue that what's long been true in the 3rd world is finally happening in the 1st - that there is no political tool so sharp, cutting, or efficient as religion; and so Bush, Ahmadinejad, and their pals have every incentive to let the world rip itself apart in the name of religion (while their portfolios skyrocket).

NB - Wierdly enough, the Bishop of Rochester makes almost exactly the same argument today in the Telegraph - recommended.

-- umair // 3:45 PM //


Racism of the Day


Sen. George Allen (Racist-VA) is the perfect example of the bumbling morons we keep electing: someone who's not even clever to couch his racism in rhetoric, but uses the most unexpectedly obnoxious kind of slur to let us know how he really feels about...uhhh...people who aren't white (if you don't already know, "macaque" is a very nice racial slur across French speaking Africa/Europe/etc).

Nice one George, way to vividly demonstrate my recent points about institutionalized racism.

-- umair // 1:26 PM //

Monday, August 14, 2006

Fooled By Economics

"...America put Japanese in concentration camps and confiscated their homes during WWII. Yet, Japenese Americans are some of the most assimilated and prosperous Americans in the nation today. History then does not demonstate that such actions are counterproductive."


A vivid demonstration of the overweening economistic emphasis dominating American society and culture. The dominant power in the world today isn't the States, or even corporation - unfortunately for 99% of the world's population, it's the economics cooked up by academics in ivory towers.

Consider the frame of this comment. The commenter makes a simple argument: the human costs paid yesterday are more than outbalanced by the financial benefits realized today.

In other words, the fact that today Japanese Americans are "prosperous" in any way erases the massive human costs paid by their parents and grandparents. It's the kind of naively simplistic accounting argument would-be economist (and even real ones) love to make: the "account" is in debit, not credit.

Should we balance today's prosperity against yesterday's suffering?

Of course, the most obvious flaw in the argument is that it is two different parties who bear costs and realize benefits. The second most obvious flaw is that the costs and benefits are different in kind - the gains are financial, the costs are human. The third most obvious flaw is that of the disproof of some kind nebulous causality. Should we then assume the same conclusion for Jews - Israel is a prosperous country, so the Holocuast doesn't matter?

Preposterous reasoning, to be sure.

Which brings us to the crux of the matter. The simplistic assumptions and conclusions economics leads us to make are helping make a world where human life only has value in aggregates and averages. But surely we can do better.

After all, this is just the same argument made at the dawn of insurance at Lloyd's. Then, it was revolutionary - because we couldn't assign a time value to life at all. Today, we can and should be doing so in many innovative ways. Why should war or internment camps happen when we can manipulate costs and benefits in such complex ways? Why can't I offset these risks (death, interment camps, etc) with a well placed hedge?

This is a huge market gap which the next wave of social entrepreneurs would do well to focus on.

-- umair // 1:09 PM //



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