Wither Social Networks, Arise Communities

A community is an assemblage of people around a common interest. What Hugh MacLeod calls a social object. Social Networks, like Facebook, are glorified contact books. And as Facebook is finding out, people get stroppy when you get between them and their contact books.

A community, on the other hand, behaves differently. The members of a community are there because of the shared interest or bond, the social object. Consider the rise of communities around particular diseases as highlighted in this week’s NewScientist (vol 198, issue 2656). These communities are generating a wealth of data about these diseases that would otherwise be expensive or impossible to obtain. Communities tend to generate data around the particular shared interest beyond simply demographics that you get in a Social Network.

The data is hugely important. As Tim O’Reilly is fond of saying, “data inside” is the new “Intel Inside” (between time point 2.15 to 3:20 in the presentation). The value of web companies is entirely determined by the data they can aggregate and turn into new knowledge. Communities generate large amounts of data by harnessing the network effect. As each member adds more data around the shared interest this creates a positive feedback loop encouraging more people to add more data and so on in a virtuous cycle. A good example of this principle in action is the company Wesabe (also discussed by Tim O’Reilly in his keynote at 2008 Web2.0 Expo).

Social Networks don’t have this positive feedback loop that generates great swathes of data. While they do have network effects this is merely increasing the size social network by members rather than adding large amounts of data. We are even seeing indications now of limits to how far network effects work in maintaining growth of membership. The amount of data in social networks is relatively limited and most of this information is limited to who knows who and simple demographic data.

Social advertising is the “next big thing” in advertising. However, achieving this on a social network has not been easy. An outcome that is not surprising. The effectiveness of advertising comes down to two things: attention and intent. Attention being what is the person doing at the moment. Intent being why are they doing what they are doing at this time. The more closely you can determine the attention and intent of the user the better the advertising can be made to be of interest to the user.

Social Networks do not offer great data to determine attention and intent. Just because you are a 46 year-old climate researcher, does that determine why you are looking for a holiday? An advertiser could assume you are looking for a holiday for yourself but there is no evidence for this. Nor can a social network really say whether you are looking for holiday in the first place. There is little data to indicate attention and intent. Communities on the other hand do offer good data for determining attention and intent. Consider the climate researcher. He joins a community around travel and holidays and asks the question of the community “what is a good holiday as a birthday present for my 16 year old daughter?” Now we know attention (searching for a holiday) and intent (as a present for his 16 year old daughter). Having this data allows the advertiser to very accurately target with information about holidays suitable for a 16-year old girl.

People like being part of a community. We are tribal at heart. A social network is a mathematical abstraction that merely indicates a connection. The tribe will always win over the maths. Communities will win over social networks.

Tags: Tim O'Reilly, Social Networks, Hugh Macleod, Social Object, Community, Data Inside, Attention and Intent, Facebook, Wesabe

The Best Regulation is Information

With the recent upheavals in the world financial markets there has already been calls to regulate. Arguably these calls are not wrong. The question, rather than should we regulate, is how and what do we regulate?

The financial crisis is one of market failure due to the lack of accurate and timely information about risk. The regulation needs to focus on correcting the issue of the markets providing accurate and timely information about risk.

The regulation needs to ensure that everyone involved in the market has knowledge of the real risk that various instruments and securities have. This will require the regulation of the ratings agencies as they failed to properly provide information on the risk involved in various securities. Or the rating of securities is handled by an independent body charged only with ensuring the risk of a security is accurately measured and information provided to the market.

The second bit of information is where the risk is. Here the accounting rules need to be change to ensure that risk cannot be shifted off-balance sheet so the risk "disappears". Essentially, if there is control and/or liability those risks need to show up on the balance sheet.

Mobilty, Facebook, Twitter and Social Cohesion

The Economist has an interesting article about mobility and its effect on society. In particular one anecdote of a plumber and a sociologist had a strong resonance.

"Richard Ling, a sociologist at Telenor, the largest Norwegian telephone company, and author of “New Tech, New Ties: How Mobile Communication Is Reshaping Social Cohesion”, was standing on his porch in Oslo one day, saying farewell to a few guests, when a plumber walked around the corner, talking on his mobile phone to what appeared to be his wife. Mr Ling, who had a leak in the kitchen, was expecting him. But the plumber took Mr Ling and his guests aback by walking right past them and into the house, where he took off his shoes and headed for the kitchen, chattering into his handset all the while."

The article goes on to talk about weak and strong social interactions. In this case the plumbers weak social interaction with the sociologist was overcome by the stronger interaction between the plumber and his wife. Or it could easily be the girl at the checkout counter chatting away to someone on their mobile phone while barely paying attention to the task of paying for their shopping. The anecdotes are there and very strong.

Now that strong social interactions are rarely limited by distance, they are easily overwhelming weak social interactions. But is this a problem? I think so. The weak social interactions are often with random people in every day life - bus drivers, commuters, shop assistants, doctors, police, people on the street, customers in a cafe - rather than with people we've selected as being a part of our "tribe". They are unlikely to be similar to us and this variety of social interaction helps us be less insular. In reading the article I was strongly reminded of one of my favourite quotes from Terry Pratchett.

"Individuals aren’t naturally paid-up members of the human race, except biologically. They need to be bounced around by the Brownian motion of society, which is a mechanism by which human beings constantly remind one another that they are... well....human beings."

The dominance of the stronger ties reduces the "Brownian" motion needed to make us human. This loss is what is disturbing about the "mobility" society. We are rapidly shutting out random acts of chance, of serendipity. Nor is it simply mobile phones. Social Networks such as Facebook also produce the same effect. Anything that promotes strong social interactions at the expense of weak ones are culpable.

Services such as Twitter and FriendFeed go towards promoting weak social interactions as a tweeter will not always "know" or have a previous strong social interaction with a follower. I do wonder, however, whether these virtual weak social interactions will again come to dominate over the face-to-face weak social interactions of every day lives.

Banning mobile phones, Facebook and Twitter is not an answer. These services and devices serve a strong purpose of facilitating communication and strengthening social ties. What we need to be aware of is the here and now. To recognise that at certain points the here and now of weak social interactions out weights strong social interactions.

Tags: Social Interactions, Mobile, The Economist, Facebook, Twitter, FriendFeed

Amazon to buy a CDN?

Amazon is beefing up its AWS offerings. In the end making the menu of services much more enticing. Amazon's has reached a point that a whole startup can be cheaply and easily hosted with robust and reliable services. But that isn't the point of the post.

With S3 video startup's can store and transmit their video. Which if you take off like YouTube quickly becomes costly (for both Amazon and the startup). So how to address this issue? One method would be to use a CDN like system to distribute content to the edge. Amazon has several options 1) build its own, 2) buy an existing CDN or 3) partner with CDNs.

The structure of Amazon's computation infrastructure (particularly with the Zoning) could already allow for CDN like behaviour. The question is whether this is enough. I expect that it would require more development to get a proper CDN like behaviour working.

The second option buy an existing CDN would allow Amazon to avoid having to complicate S3 storage to give it behaviour like a CDN. Rather Amazon would like S3 to the CDN's existing infrastructure. Here I think Akamai is probably the best target for purchase. Allthough Limelight Networks is a possibility as well.

The third option partnerting with CDNs would provide AWS customers with the most choice. They get to choose which CDN they use and AWS makes the link between the S3 and the CDN very straight forward.

Dealing with the video/rich content distribution to the masses is something that Amazon is going to have to work on. It will be interesting to see the finial solution Amazon chooses to pursue.

Tags: Amazon, Amazon Web Services, CDN, Akamai, Limelight Networks

Google App Engine is final leg of the strategy to disrupt social networks

With the announcement of Google App Engine and the resulting symphony (or cacophony) of conversation a lot has been said about cloud computing and Amazon's Web Services. For all the conversation not much has looked at the Facebook angel in detail.

Google App Engine strikes me less as a competitor to Amazon Web Services and more as the finial piece in the puzzle for creating a web-spanning social network. Google App Engine provides a place for applications to be built and hosted external to any social network. Coupled with Google's APIs for a users social network (the contact API), an identity mechanism (Google Accounts) and the OpenSocial APIs, everything that can be done in Facebook or any other social network can now be done by any application without having to be internal to any social network.

It is an innovative way of dealing with the issues of social networks by explicitly turning the web into a giant social network without walls.

Of course this will mean the very act of surfing could see you have a sheep tossed at you!

Tags: Google, Facebook, Google App Engine, Amazon,Amazon Web Services, Social Network, OpenSocial

Web2 Finance, Mobiles and Two Factor Authentication

A friend has just had problems with fraud and it got me thinking about two factor authentication and how web2 finance sites such as Mint.com and Wesabe can play a role in making online fraud harder.

The Web2 Financial sites could Email and sms the individual whenever a payment or transaction is done to confirm the transaction before it is committed. Essentially the mobile phone (or email) becomes the second factor of authentication. No need to carry around a separate dongle or bit of hardware in order to make a transaction.

Implementation of this would require the companies to partner with the banks or online payment processors to get the realtime-ness need for the second means of authentication to be effective.

Banks and the payment processors could also do this as well and probably should. I would like to be able to receive an SMS to authorise ATM transactions or when paying by card at a shop prior to being the money being handed over. Not the ultimate solution to card cloning and pin card issues but it would certainly put a crimp in that type of fraud.

Web2 financial services have an advantage over the banks, credit cards and payment processors for the following reasons:

• Online banking sites suck - badly
• People often have many bank accounts, credit cards and setting them all up is likely to miss something. As the financial sites already aggregate this information they can act as single point for passing transactions through to authenticate
• Many online payment processors are merchant focused and never have a relationship with user so can't really send an SMS or email
• The financial sites are focused on the user while banks, credit cards and payment processors lack this focus
  

In the end the more services that offer this type of two factor authentication the better for reducing fraud. It isn't going to make it go away (phone and wallet stolen etc) but it can be reduced without having to roll out great numbers of bits of hardware.

Tags: Mint.com, Wesabe, Two Factor Authentication, Mobile, Fraud, Online Payments, Web2

Transparency and Morality in Business

Ross Gittins has an interesting article about the importance or requirement for moral values for a market to function properly. What struck me as interesting was the idea that markets function better when participants are able to judge the actions of other participants against social standards. This jives with what Umair Haque has written about numerous times around the DNA of businesses and the edge economy.

In previous posts, I've talked about the use of transparency of businesses to improve the DNA or the behaviour of businesses. The concept of being able to judge participants against social standards for honesty, trustworthiness etc. provide a strong foundation for judging what information participants need to provide about themselves.

By focusing on the information that allows judgments to be made about a company's behaviour meeting moral standards, we can avoid being inundated with information that is irrelevant and frankly unhelpful in creating better businesses and markets. Businesses are only as amoral as we allow them to be and there is no reason why a business has to amoral.

Tags: Transparency, Finance, Ross Gittins, Policy

iPhone Reverberations

It is now several days pass the announcement of Apple’s iPhone software roadmap. We are now firmly far enough away from the reality distortion field we can take stock of what it means and the possible ramifications. John Doerr certainly thinks that the iPhone is the next coming. And I am inclined to agree but I shall come back to my reasoning later on in the post.

The presentation came in two parts; the enterprise features and the SDK. I’ll consider each as both have different effects.

RIM

The enterprise features are aimed at the heart of RIM. Not only has Apple targeted the BlackBerry handsets but RIM’s whole push technology revenue. It is a classic pincer strategy and strangely enough not one that I’ve seen discussed much. By using ActiveSync Apple removes the intermediate steps of the RIM server and NOC. This will be cheaper for enterprises wanting to deploy push email and potentially more reliable, an issue that RIM has struggled with in the last 6 months.

Apple has created a viable alternative to RIM push email technology that is going to have a lower total cost of ownership. The software update is not going to be deployed until June 2008 so I expect that the update will include many other improvements to the iPhone that will make it even harder for RIM. I am interested in whether Apple will work with Google and Yahoo to bring push to the companies’ webmail. In particular push integration of Google Apps would almost make the iPhone a no-brainer for small to medium enterprises.

RIM has six months in which to respond and come up with a strategy to counter Apple. Steady as she goes is not a viable long term strategy. One possible idea is to give the RIM server software away for free/open source it and focus on providing maintenance contracts to enterprises looking for them. But it is not all plain sailing for RIM (and all the other handset manufacturers) as Apple not only announced the enterprise features but more importantly announced the SDK.

SDK

The enterprise features were about selling more iPhones and increasing access to the enterprise. The SDK is about changing the world. The SDK unlocks the power of the iPhone and turns it into a comprehensive mobile computing platform. John Doerr stated it was the third platform and I agree. Does it replace the other two platforms? Not at all. Instead it complements the other two platforms to create ubiquitous computing. Now we have the mobile platform with the computing platform and the cloud platform.

The SDK provides a little something for everyone. For enterprises it allows mobile versions of enterprise applications (ERP, CRM, SCM etc). More importantly the native applications will support offline processing allowing users to continue using the applications when not in range of large of large bandwidth connections. It also allows the applications to send only the necessary data (sync) between the central application and the iPhone version increasing the essential mobility of the platform.

For games developers it provides a mobile gaming console that with the mult-touch interface and 3D accelerometer and high resolution screen offers new gaming styles and game play. The Wii is a demonstration of how a change in interacting with a game opens up new game play. Perhaps the largest stumbling block will be Apple’s historical indifference to games on their platforms. Take a logical step further the iPhone could become a very interesting Wii-like controller for Mac based games. Imagine playing id’s Rage using the iPhone to steer and fire.

Application developers will be able to create applications and mobile versions of their applications that address specific computing needs when mobile. These applications will often be compliments of desktop and web applications. The inclusion of SQLite will do a lot to reduce the issues surrounding EDGE and intermittent connection.

In Conclusion

Like a butterfly flapping their wings only to create a storm, the true impact of the iPhone mobile computing platform is unpredictable. Like Jason said, this will play out over the next two decades. Not having “social” mentioned is hardly a reason to doubt the impact of the iPhone as Fred Wilson does. The point is the SDK is about the how of mobile computing not the what. The what is left up to the developers and users.

All that can be said for sure is how we think about computing and its involvement in our lives is going to radically change just as the PC platform and the Internet Platform changed computing before.

Tags: iPhone, iPhone SDK, Mobile Computing, Apple, RIM

Improving Transparency to Improve DNA (Umair's type)

The FT has an article today on Institute of Credit Management releasing tables on the payment performance of listed companies. This again follows the idea of using transparency to reform and improve the performance of businesses.

But it is not enough to have someone comb through annual reports to find this information. In the world of the web, this type of information should be provided in XML form on every companies website. Companies will scream that it is a bureaucratic hurdle but that isn't true. There will be an initial pain as companies adjust their systems to publish this information but then that only creates opportunities for new business to streamline the process.

Publishing information as XML is a trivial exercise and cannot be considered a viable argument. What most companies are really objecting to is the changes that this transparency will require them to make. To borrow Umair is terminology, the transparency will necesscitate a change to businesses DNA. Those that don't change will die.

tags: FT, Disruption, Business, Transparency

When Humans are Removed

Ars Technica has an interesting report on a recent music industry conference. What struck me as interesting was an exec of a music label on a panel justifying their existence of labels by the work of "finding" music. To quote:

"anyone who has spent an hour or a day listening to demos understands the labels' place in the food chain"

The iLike CEO pointed out that this is no longer the case. That a label only need to look for musicians with 50,000 friends on MySpace.

What is interesting is how MySpace, iLike et al have turned finding new music from a costly human based activity to a software program. I'm not sure many people in the industry (whether the labels or companies like iLike) realise what is happening. The best analog is what Google did with advertising as Chris Anderson pointed out in his recent article in Wired:

"When Google turned advertising into a software application, a classic services business formerly based on human economics (things get more expensive each year) switched to software economics (things get cheaper)"

Did Google realise what would happen by turning advertising in a software application? Probably not. Just as Google unleashed value that was otherwise tied up as costs, so to will a software application(s) for finding new music unleash value otherwise tied up as costs. Music is going to shift back from being a package product to being an experience.

Tags: freenomics, Google, disruption, economics, iLike, chris+anderson, music

Use a Time Slot Method for Train Travel

News comes today about First Great Western agreeing to a remedial plan to, well, operate a dependable train service. Rail franchises create a government granted monopoly on a rail line in exchange for meeting certain conditions. It is how the UK government decide to privatise rail travel.

I think rail franchises are the wrong way to organise the delivery of train services. Instead rail lines should be divided into time slots that a company bid for. Obviously lucrative spots would be bid higher and less lucrative spots would be less expensive. The idea is to create system like landing slots at airports. This would allow various train companies to compete on the same line which would drive prices lower and also increase the number of services.

Part of rail franchises sometimes includes revamping railway stations. This could still be done using with time slots by directing the money from the auction of the slots into track and station improvements and/or also charge a "standing fee" for each train.

Monopolies are a bad way to deliver a service. Competition will do more to improve train service particularly if the slots are auction for periods of between 1 to 5 years and any single company cannot by two (three?) consecutive slots so that a user has a choice of waiting for the next train.

The main hurdle to slot base method is the management of arrivals. Systems will need to be in place for dealing with late trains - perhaps by moving them off into holding points until a slot is free.

Tags: Rail Franchise, Rail, UK, Transport

Google's achillies heel - Customer Service

Google's rise and rise has created a continued air breathless wonder that can the company do no wrong? Google smacks the ball well and even if their products don't always rocket to a six they rarely have a dot ball. Microhoo! is a reactive move against Google's strength.

But is that really necessary. Time and again customer service keeps coming back to haunt Google. Take Christopher Dawson's attempts to reactive his Gmail account. The action was neither prompt nor informative as to what happened. Nor was Google forth coming about providing basic information on the Christopher's account usage. Information provided by many other service providers.

So is this Google's Achillies heel? It could be. Customer service is going to be more and more important as Google's products move beyond mainstream. So too will be letting users access their own service and usage information. Of course both issues are fixable. The question is will Google put the effort into backing up their services with proper conversation with their users and decent customer service or will the continue to use a man behind a curtin and hope no one pulls the curtin back?

Tags: Google, Gmail

Using transparency to regulate business

For a while I've regarded the use of transparency as a better way to regulate than brute force of law. In an interesting piece on lateral thinking in economics Ross Gittins, discusses the work of Dr Guren of Lateral Economics.

Many of the ideas proposed by Dr. Guren are not really new or innovative, if you've been following economics and the open movement. Taxing "bads" as opposed to "goods" are known as Pigovian Taxes. What I did find interesting was Dr. Guren's idea around improving health & safety in the workplace by this method:

Most workers care about workplace safety, but typically lack information about it when applying for a job. Yet the workers' compensation premiums paid by firms provide a good proxy for their past occupational health and safety performance.

We should publish them, Dr Gruen says, and require that existing and prospective employees are provided with information on how they compare with economy-wide and industry-wide average performance.

I already think that salaries should be published by each company. Publishing the salaries and benefits across the organisation, will promote competition between companies for labour. One of the key problems with the labour market has moved beyond flexibility, to information asymmetry. A real market can't exist with this asymmetry whether a market is flexible or not.

But the idea of publishing H&S premiums has got me wondering what other internal information should be published to make companies more transparent and so reduce the amount of regulation and enforcement action needed in the economy?

Off the top of my head I can think of:

• Number of harassment claims filed
• Amount of energy KWh used by the company

The more simple and available the information the easier it is to counter arguments about cost and burden. The use of open information would have a profound effect on the economy and the regulation of business.

Tags: Open Source, Policy

What will be the effect of an Open Xohm platform?

Sprint has announced the opening of the Xohm as a platform through APIs and an SDK. Ostensibly it will allow device manufacturers, application developers and 3rd party service providers to build items which take advantage of the Xohm networks in ways that are difficult and expensive currently.

It is, perhaps, the first example of a telco taking advantage of it's relationship with it's customers or put another way following the Telco2 strategy. It will also allow applications and services to be developed that are mere dreams (if they have been drempt at all) currently. Think games or VoIP services that ask for better quality service for the duration of usage rather than all the time or buying or buying something by snapping a barcode where the bill is attached to your access bill and delivered to your address by Amazon's fulfilment service from an address supplied by Sprint.

It is the next logical step from Google's push for open access to devices and applications for 700Mhz. This could have a rather interesting effect on wireless/mobile market direction. It is hard to compete against open with closed.

I foresee this changing the dynamics of the 700Mhz spectrum usage as well. The 700Mhz was important as it was nationwide and provided better in-door coverage. The in-door coverage, I think, is really a non-starter as by the time the 700Mhz network is established, short range WiMax access points will be fairly well distributed and many in-door areas will be able to roam from WiFi to WiMax. Femtocells and devices that can roam across different wireless networks will also be in abundance.

Sprint's move has made it very likely that who ever the owner of the 700Mhz spectrum is, they are going to have to follow the open access provisions and even go the same distanced to providing an open platform. Now wouldn't it be interesting if Google has won and decided to use the 700Mhz for a WiMax network that follows the Sprint Xohm platform strategy? Makes Sprint a likely candidate for building out Google's network if they have won.

Tags: Sprint, Xohm, Google, 700Mhz, Wireless, WiMax, Disruption, Telco2

Meddling polies should focus on what matters

I understand the need for regulation and laws, but it annoys me when polies meddle in areas for the sake of being seen to do some thing. The UK government is threatening legislation to penalise ISPs for not blocking privacy. The really idiotic thing is the UK government has already said their idea falls afoul of UK and EU data privacy laws. So what's going to happen? The government will pass the law, the ISPs will challenge in the UK and EU and the law will be rule illegal. So back to drawing board with the only accomplished is a lot of money spent on lawyers and the government been seen to do something.

Beyond the technical hurdles, there is also the political fallout from the law being overturned plus the damage this will do to a government tettering on the brink. I wonder if this new push has arisen when someone pointed out wholesale kicking off of downloaders is likely to lose Labour votes.

To me, this is massive over-reaction to a relative minor problem. Stopping downloading of content is not going to be a saviour of society nor cure its ills. There are far more pressing problems in the economy that WILL do massive amount of damage to peoples lives - credit crisis, stagflation, deep recession - that the government should be worrying about. Protecting an outdated business model is NOT the governments job.

This legislation has the air of desperation. Of a government looking down a yawing canyon of irrelevance and trying deperately to be seen to be doing something, anything.

Fiddling while Rome(London) burns.

Tags: UK Government, UK, ISPs, Policy

Driving Real Change at Microsoft - Get Rid of Win32

Microsoft announced yesterday that it was releasing API and Client/Server interoperability details. Coming on the heals of the Microhoo! deal and Bill Gates publicly saying Microsoft is after the Yahoo engineers it must seem like Microsoft is going all open and friendly. But that misses a big point. Changing culture, particularly one ingrained and strong as Microsoft's, is not going to be as easy as publishing specs and adding a load of Yahoo engineers.

It is possible to change the culture for the better and the Yahoo engineers can play a big role, but they can't do it on their own.

The catalyst for the change is dropping the Win32 kernal and going with a Linux/BSD kernal. The Yahoo engineers then become evanglists and mentors for the adoption of the open-source kernal. The combination of the two provides a greater probability for success than either on its own. In a previous post I looked at why using a Linux/BSD kernal was a good idea so I won't go into the details. The difference between now and then is that having the Yahoo engineers makes the probabilty of sucess so much greater and faster.

Dropping the W32 kernal would be at least as radical shift in corporate strategy as Microsoft's turn around in the late 1990s to the web. We know the company can do radical strategy shifts and this would be the most radical and risky. But without doing something like this Microsoft is always going to struggle in a networked world.

I would honestly like to see this happen. It would be the single biggest threat to Google's dominance by stripping away the competitive advantage that open source provides the company.

Tags: Microsoft, Google, Yahoo, OS, Open Source, Strategy, Disruption

Fighting Inflation in Australia using Super

Australia is one of the few nations in the world where the interest rates are rising and rising hard. Commodities boom, over indulgent consumption and 35 year lows in employment have pushed the economy to the limits of capacity.

The debate in Australia is about how to fight the inflation and the recurrent need for the RBA to raise interest rates to combat inflation now outside its 2-3% band. The Rudd Government has brought back fiscal policy to try and help fight inflation by aiming for a surplus of 1.5 to 2% and avoid the RBA rasing interest rates further (unlikely). Although given that for the past 5 years or so the budget surplus has always come in higher that the forecasted 1% its hard to see how a measly 1.5 to 2% is going to make much of difference. It probably needs to be 2.5 to 3%.

The otherside of the debate is how raising interest rates is a blunt policy instrument for fighting inflation, only effects third of households etc. What is missing from the debate is discussion on what other levers that could be provided to the RBA to manage the economy. In many economies there probably aren't many other levers that central banks could use. But Australia has compulsory super for a majority of employed people. The issue is to remove spending from the economy or put another way to increase savings and reducing consumption. Giving the RBA the ability to manage the percentage of income that is paid into super would give the RBA another lever to pull.

The advantages I see in using super contributions this way are;

• It increases the savings rate across a very large majority of households
• It does not directly effect the price of business investment the way interest rates do
• It is spread more evenly across the economy rather than concetrated in the 1/3 of households with morgages
• Individuals don't lose the money, it is simply redistribute to return in the future

The biggest problem I see is the mechanics of actually performing the changes. However, this is a solvable problem as it could rolled into financial packages that most if not all businesses use.

Another possible lever is to allow the RBA to change tax percentages about a median point. But I see that being an even tougher operation and also more politically hazardous. It could be a rather useful tool to have in the back pocket though.

Tags: Superannuation, Inflation, Australia

Incentives cause the [financial] rot

Umair has a new post about the financial meltdown and in particular how the very people at the centre of the meltdown are walking away with massive payments. I think there is a lot about how the very incentive system used by financial institutions are at the very core of the problem.

The incentive systems are probably the single biggest cause of the problems. These systems are designed to maximise profit - which is not the same as wealth creation. The assumption that serves as the foundation of incentive systems is that the "agents" interests need to be aligned with the "owners". An assumption that I now believe is totally invalid.

The incentive systems need to promote wealth creation and not alignment of the interests. Otherwise why will an executive take a risk that has a long term payoff but will hit short-term profitability?

So how do you fix something so broken. The first is to ditch the assumption of aligning the "agents" interest with the "owners" interest. The second is to ditch the idea that a single person at the level of CEO has much effect on the overall profitability of a company. Suddenly it gets hard to justify paying ANYONE 100m salary. Indeed, CEOs make a mockery of their own job - if the share price goes down its due to the market, but if it goes up its due to the skill of the CEO. Spot the paradox?

Can the market sort this out itself? Probably not. Too much self-interest. This leads to the requirement of regulation. The key is to regulate well but lightly. Some regulation will require the out-right banning of current practices, while others are about increasing transparancy and market efficiency.

Golden parachutes need to be banned. Why a CEO should receive money to leave a job is beyond me. The sub-prime crisis has shown this for the rort it is. Which does lead to the second requirement of having all senior management and possibly contracts above a certain value requiring the agreement of a quorum of shareholders. The current negogiation world is far to cosy.

In terms of increasing transparancy, the renumeration and contracts of senior management should be published. This works fine but it helps to have this put in perspective of the how well the company is paying its employees. So companies should be required to publish the various renumeration bands, the requirements for bonuses at these bands and the number of employees per band.

But perhaps the biggest change is to remove incentive schemes that promote short-term profit over long-term wealth creation. Most of the current methods can and are easily gamed. Whether it is EPS, dividends, profit, revenue or share price increase. Most of these items are reflective of things beyond the senior managements control. So the first step is to only use measures that are effected by senior management actions. More important is only use actions that promote wealth creation (as opposed to profit).

So what measures could be used?

• Employee productivity per unit cost
• Throughput per unit cost
• Employee statisfaction
• Revenue growth per unit of productivty
• Productivity growth per employee

And there are more. Most of these measures are harder to game but they are all measuring changes that change the long term wealth creation of the company. Funnily enough, most of these would reduce the awards of financial executives.

Incentive systems and the spiralling cost of financial executives is something that needs to be addressed. Otherwise you run the risk of societal unrest. Perhaps more importantly these spiralling costs are also a distortion of the market causing the mis-allocation of resources and dragging down GDP growth.

Throwing money at problems

One of my bug bears is people insisting that throwing money at a problem will solve it. Health is a big example. Well want to know what happens when you throw pots of cash at a problem? Just look at the outcomes of the NHS. Despite all the money thrown at the NHS in recent years there has not been a corresponding significant improvement in quality or delivery of care.

There is no point in throwing pots of money at a system until you know that its processes are correct. To steal Umair's terminology, the DNA of the system has to be right. In the case of the NHS, its not. Which simply results in the money going into the system going to waste. This is not an argument about whether health care should be funded publicly or privately, only in how health care is delivered. The processes required to deliver health care. How its funded is a very small secondary issue that is more philosophical than anything else.

You have to fix the fundamental processes, the DNA, of a system before there is any hope of making improvements. This goes for companies, software or government services. In fact every system. Throwing money does little to do this.

And in the case of health care, to re-write the DNA we have to question the basic principles of health care delivery. Is the concept of Doctors, Nurses and health centres really the best method for delivering health care? Do we need Doctors? What for? Should they be the only ones to do diagnosis? Should health care rely on God-like pronouncements of what is wrong. What about Nurses? Could paramedics be made more useful?

Everything we know about health care needs to be questioned. Only then can we begin to build the framework for the effective delivery of health care.

Tags: Health, Operations, Bubblegeneration

Risk modeling in Financial Markets

Bloomberg has an interesting article exploring how the banks are changing their risk models. Roger Ehrenberg adds some insight to the article. To me the most fundamental question that needs to be asked isn't what is the best model, but can risk even been modelled?

In all the discussion about risk and its modelling, there is always the underlying assumption that the risk can be modelled. I'm not so sure you can really model the risk. Time and again in financial markets past performance has been shown to not be a predictor of future performance (all the managed funds have that explicit on their brochures) and yet the assumption is that past risk can be used to model future risk. See the incongruence?

The market looks to be an indeterminate, chaotic system. Which to me makes the assumption of normal distribution of risk a little suspect. Being an indeterminate system, it may very well be impossible to model risk using the standard statistical methods.

Tags: Risk, Finance, Credit Crisis

EU energy plan aims to stop carbon exporting

The EU has announced its climate change policy. What struck me most is the move to stop the exporting of carbon production to other countries. As I have previously posted this is crucial requirement for carbon trading to actual work in reducing carbon emissions.

Implementing carbon trading without something to address the issue of out-sourcing carbon, the price of goods and services in Europe would have gone up without the beneficial reduction in carbon. As many have pointed out, there is no way of making sure carbon stays on the other side of the planet.

This also changes the dynamics of the up-coming discussions on the next climate change treaty. For one, it does reduce the negotiating strength of the BRIC nations against mandatory caps. It also precedes an alliance of OECD nations which go it alone to implement mandatory emission caps and via the mechanism proposed by the EU in effect force mandatory caps on emissions on the rest of the world as the OECD still make up the bulk of the worlds affluent consumers.

I wonder if this announcement signals the tipping point to worldwide mandatory emissions caps whether BRIC nations want it or not.

Tags: Climate Change

Language and problem solving

In the most recent New Scientist (Vol 197 No 2637) there is an interesting article discussing the issue of language and how it frames problems. The perspective of the article was that English's newtonian way of describing the world failed to frame questions properly for quantum and other similar non-newtonian physics. The article even goes so far to say that the lack of progress in non-newtonian physics is because problems are framed via the language with a newtonian world view.

Does the same problem exist in the world of the internet? While I realise the Internet world is great at creating new words, these are still framed by the overall language. A language that is "newtonian". As Internet shifts to flows and systems as opposed to objects and links, do we need to look at how we frame the discussion via language to open up the problem solving juices of the internet community? New next wave of innovation will be less around nouns towards verbs, the doing rather than the being and yet we still primarily use nouns in discussing the web and its evolution. Should verbs that describe process, systems and flow be the primary descriptors of the next web?

The article describes an example of Montagnais phrase "Hipiskapigoka iagusit". It very, very roughly translates to "singing health", a process, within which a medicine man and sick person exist. However, a dictionary written in 1729 translated into something that emphasised the objects and not the process. The web is shifting to loosely coupled processes as opposed to objects. I wonder whether the discussion of Robert Scoble's recent tiff with Facebook, would have evolved differently if the language emphasised process (say maintaining contacts) as opposed to data (the contacts themselves). The discussion was about who owned what objects (the contact data) rather than what the ins and outs of maintaining contacts. Another example is the current discussion going on about whether data is a commodity or not. Again the language is of objects rather than flow. How would this discussion evolve if it was frame by a language of flow (verbs) as opposed to objects (nouns)?

The same questions can be asked of programming. Everyone expresses the need to ramp up parallel programming to take advantage of the distributed nature of the internet and multi-core processes. However, can any real problem be solve properly while the language used to frame the problem is based on objects rather than flow? Does the conceptual framework that underpins object orientated programming preclude successful problem solving in the parallel world? Yes there are languages that focus specifically on parallel programming but I am also talking about the language used to describe and communicate the problem. These will need to respond to the requirements of a parallel world for people to solve problems and communicate solutions.

A lot of questions asked. I don't have the answers and I expect no one will for a while. It is interesting to step away from objects and consider things from a flow perspective. I even think I need to re-visit my recent post of Data Ecosystems and look at it from the perspective of flow rather than objects

Tags: Data, Language, Programming, Internet, Physics, Data Ecosystems

YouTube on Vodafone

photo
Originally uploaded by Simon Cast

Hmmm...are you hurting Vodafone? Maybe there was value in the iPhone? Trying to play catchup?


Tags: Vodafone, iPhone

How not to force people to unsubscribe (This means you Spock)

Today I received an email from Spock for someone trying to add the company recruitment email to his "Web of Trust". Fine people harvest email address all the time. What annoyed me is that it required two entries of the email address and clicking on a link in an email.

Not good. Made the job of unsubscribing time consuming. And it wasn't like I was a registered and the email was from someone who had found me but rather spam contacts email. Long story short, do not use Spock. If this what the company puts you through just to unsubscribe from contact spam then I hate to think how annoying the service would be if you are a registered user.

Point to all companies. Unsubsribe must be a single action on the part of the user. Double, triple, quadruple actions are a no-no. And it musn't take 10 days to filter through your system. That is a load bullshit. All it means is that you can't be arsed to fix you email marketing system and you are going to try to spam me as much as possible in that 10 days.

Tags: Spock, Email Marketing,, Email

Eclipse, Python & SAGE

Several fair comments on from my previous post on using Eclipse/Python so I think I should elaborate on what I see as problematic with Sage. Bearing in mind that I have used Matlab primarily and I am looking for a reasonably priced math program for non-technical users.

Lets first consider what Matlab and its ilk are. They are IDEs for development mathematical-based programs. Most include interactive UI for doing simple calculations. They also provide a large collection of common numerical computations that the user can string together into a larger program for completing analysis of information. So in all there are three elements: an IDE, a math engine and an interactive environment.

Sage is not a very good IDE (actually, I'll re-state that, it doesn't have an IDE). It strikes me as a good program for doing math but it really falls down without an IDE. Given how iuseful IDEs are for writing programs, this is surprising. Particularly when the program is pushed as an open-source replacement for Matlab et al., which do have useful IDEs.

One commentator asked what I found problematic. Well, you know the first one, No IDE. The second was after downloading SAGE, I found I then had to down VMWare, which I could only get after jumping through hoops at VMWare (not particularly happy about that). Third, the notebook interactive UI in the browser is a neat idea but ultimately, it left me underwhelmed.

Now I freely admit part of the problem was that I was expecting an IDE, with an interactive mode and a wonderful math engine. Unfortunately, that was not what I got but that was how it was marketed specifically "a viable open source alternative to Magma, Maple, Mathematica, and MATLAB". It is not an alternative to those programs while it lacks an IDE. The reason people use Matlab is it is easy to use. I really think this is a case of failing to see the forest for the trees. Matlab et al provide more than simply a math engine.

My suggestion to the SAGE team is to ditch the current UI method and use Eclipse. Build a wonderful math engine that uses the Eclipse to provide both a wonderful IDE and an interactive UI. The advantage for the SAGE team is they get to focus on creating an excellent math engine that is open source, while leveraging the work of other teams making Eclipse the best IDE around. Isn't that one of the key advantages of Open Source?

Short term, make it easy or at least write a very good explanation of how to call the SAGE engine from Eclipse.

Granted, I may not understand what SAGE is for, but when presented with marketing "viable open source alternative to Magma, Maple, Mathematica, and MATLAB" I certainly expect something that matches Matlab, if not exceeds it. SAGE does not achieve this.

Tags: Matlab, Mathematica, Eclipse IDE, Open Source, Sage Math, Python

Matlab Competitor? How about Eclipse & Python

Recently Sage was release to compete against Matlab, Mathematica et al. I had a quick try of it but back out. It quickly became difficult to do much. While I am sure it is very powerful math program, its got a long, long way to go before it offers serious competition to Matlab.

I think a better Matlab-killer is the combination of Eclipse & Python. Eclipse provides the visual IDE of Matlab and Python is an excellent scripting language that can easily replace m.files. All that needs to be done is bundle plotting into Eclipse (something it should have anyway), toss in a large library of numerical and symbolic python functions (complied or C) and you have a program that can successfully compete against Matlab and Mathematica.

Having been essentially using Eclipse and Python this way for the last few days I am convinced it is a very workable solution. Why re-invent the wheel?

Tags: Matlab, Mathematica, Eclipse IDE, Open Source, Sage Math, Python

Web Next & Data Ecosystems

Web Next is not some quantum leap in reality but rather the culmination of several long term trends. Web 1.0 was the translation of real world services (e.g. Amazon) onto the Internet and Web 2.0 is Darwinian evolution of UI and social media tools and technologies. Web Next is exploiting of information to achieve new products and services with no direct analog in the real world. Some will call this Web 3.0 but I prefer the simpler moniker Web Next.

Web Next is about the creation of value not through the control of information but via the creation of synergies and knowledge through combining information and functionality. There already exists the primitive examples in the Web2 world, those such as the map-based mash-ups. Essentially value is derived via the showing a spatial relationship between data. However, these mash-ups are relatively primitive. They rely on a users existing knowledge of the spatial area in question. I personally have no appreciation of the real layout of New York City having never been there. Consequently, the value I gain from viewing or using a mash-up consisting of crime statistics plotted on a map of NYC is less than someone who has visited which will be less than a resident of NYC.

The synergy of information and functionality is created through Data Ecosystems.

Data Ecosystems

A Data Ecosystem is two or more different data sets that when combined with complementary functionality produce multiplicative effect in usefulness. Or put another way, a Data Ecosystem contains more than one source of data (a data set) (e.g. temperatures and rainfall) that can be combined, analysed and processed with the overall Data Ecosystem being more valuable than data or functionality on its own. Importantly, having more than one data set is not sufficient on its own. Rather you need various tools and functions that allow the user to act on the data. An example will help to clarify.

Take an individual piece of data, say a series of temperatures measurements. On its own you can't do much with those temperature measurements but combined with rainfall measures, annual growth rates and a map, those temperature measurements suddenly have a lot of value. Now a farmer can research and plan when to plant his crops or adjust his crop forecasts based on historical growth rates versus temperature and rainfall. To be able to make the forecast of crop tonnage the farmer needs a series of tools that allow him to find correlation factors and extrapolate the growth trends based on rainfall and temperatures. Without those functions having the data is not particularly useful. There is no use in having gobs and gobs of data if there is poor functionality in the Data Ecosystem.

Data Ecosystems highlight a very interesting point about data. One that I find is continually ignored or not understood by most data companies (including web companies). Data on its own has little intrinsic value. Data only has value with what you can do with it and what you can do with it is determined by what other data you have along with the functionality you can apply to the data.

Like a biological ecosystem, a data ecosystem must mesh together. A Data Ecosystem needs to be internally consistent. If a Data Ecosystem is not consistent then it will not generate value for the user. There is no point in trying to create a Data Ecosystem that has rainfall patterns from Australia and crime statistics in New York City. Designers of Data Ecosystems must not design the systems so they become inconsistent. Consistency is crucial. But given human nature I fully expect consistency will be ignored.

"And there's the sign, Ridcully," said the Dean. "You have read it, I assume. You know? The sign which says 'Do not, under any circumstances, open this door'?"
"Of course I've read it," said Ridcully. "Why d'yer think I want it opened?"
"Er...why?" said the Lecturer in Recent Runes.
"To see why they wanted it shut, of course."
-Terry Pratchett, Hogfather

At this point I expect some readers will be thinking that Data Ecosystems is simply the Semantic Web. Data Ecosystems is not the Semantic Web. Semantic Web technologies will be a part of Data Ecosystems, but Semantic Web is neither a precondition for nor sufficient on its own in order to build Data Ecosystems. Semantic Web helps by automating building the relationships between bits of information. In the temperature example above Semantic Web would have provide information such as the lat/long of the measurements, how it was measured, the accuracy of the measurement, the date and times of the measurement etc. This would then allow a computer to match the data automatically with rainfall data from the same location and time and plot together on a map. Semantic Web makes building Data Ecosystems easier and like objects in programming will allow Data Ecosystem platforms to increase the ease the deployment of Data Ecosystems.

Data Ecosystems can also be built of other Data Ecosystems. The output of several Data Ecosystems can be used as the sources for another Data Ecosystem and so on. Each step creating more value by allowing an individual to achieve more. Data Ecosystems will in effect create an L-space

Why are Data Ecosystems Important?

Data Ecosystems are important for one very, very crucial reason. Data Ecosystems allow people to achieve things effectively. Unlike Web 1.0 which was essentially removing transaction costs from existing real-world processes, Data Ecosystems unlock the potential for new services that are impossible in the real world.

Consider a Data Ecosystem based travel service. Such a service will allow you to research a holiday; book all transport, accommodation and activities; create a comprehensive itinerary of the holiday, send alerts at key points along the trip; calculate how much money you'll spend on the holiday; help you automatically tag video, audio and photos from the holiday and create holiday memorabilia from the items you have uploaded. All through a single Data Ecosystem.

And there are hundreds, thousands, millions of probable Data Ecosystems that have no analog in today's web.

How Things are Already Changing

To close out I want to consider something that has been banging its way around the blog-sphere and offline world: the fate of journalism. Without re-hashing the debate you can read Bill Keller's speech with Jeff Jarvis's responses here and here as background.

If everyone is a citizen journalist, then what is the point of professional journalist? A seemingly valid question but one that has the implicit assumption that both are or will be doing the same process. From the perspective of Data Ecosystems the job of a professional journalist becomes very different from a citizen journalist. The citizen journalist is a source of data. They will most likely only provide a very narrow bit of data on any particular story. Put another way, the citizen journalist becomes a source like the news wires.

The professional journalist moves on from being the source of the story to gathering all the disparate bits of information about a story and then assembling into a consistent and cohesive context around the core story. Professional journalists go form being the gate keepers to information to value builders by creating context to stories. The role of a newspaper/media company is to provide or create a Data Ecosystem within which the professional journalist can assemble, create and publish the context to stories. Within Data Ecosystems, professional journalists, news agencies and citizen journalists will co-exist and combine to produce a more valuable service than either would on their own or exists today.

The media world is already going through pain as it is forced to adjust to the realities of an information economy. Data Ecosystems provide a means to effectively adapt to the information economy. But Data Ecosystems are not limited to media. Data Ecosystems will exist right across the information world. In fact they will reach into material world as L-space is linked into materials at the molecular level. This is the true revolution of Data Ecosystems, they facilitate the merger of L-space and Real Space.

Tags: Web Next, Data Ecosystems, Web 3.0, Web Services, Semantic Web, Web 2.0, L-Space

A mandate for change or steady as she goes?

Reading the recent commentary in the Australian newspapers about the results of the recent election, I am struck by how many of the journalists and opinion columns along with a majority of the ALP and unions believe they have been handed a mandate for change.

But has Kevin Rudd* really receive a mandate for change?

Remember that Rudd campaigned on being just as safe as the Howard government. That does not speak to me as a mandate for change but rather a steady as she goes. The Australian population expect that employment will remain at 30+ year lows, that inflation won't get out of hand and in general things will keep ticking over nicely forever. Rudd will need to be extremely wary about making and changes that upset the apple cart. The voters are going to hold him to the being fiscally conservative.

This includes WorkChoices.

What the voters voted for is more of the same but with a spit and polish of the government. They did not vote for radically change.

The advantage is Kevin Rudd does have the personal power having dragged the ALP into the centre and one an eletion to resist the more strident and economically irresponsible ideas of the unions.

* Yes Australian electorate voted for Kevin Rudd and not the ALP.

Update: Paul Sheehan of the SMH has in interesting article that supports my point although he goes into more depth and draws a longer bow than I am willing.

While Google passes USD600 could its market cap be higher?

Google has passed USD600 overnight. Various analysts are predicting higher. Paul Kedrosky has predicted USD1000 by the end of the year. Which at this time is not as far fetched as many think. What interests me is a USD600 per share gives Google a market cap of USD190.28bn, but with a USD29.84 per share provides a market cap of USD280.55bn. Almost USD90bn more in market cap.

This leads to the question. If Google split its stock, how fast would the share price then rise and what would the market cap become? Could it pass Microsoft. Splitting the stock would initial reduce the share price and make more shares available for trading.

My guess is that the increase in share price after the split would be very rapid as many traders increase their existing holding and new traders create a holding. All in all an interesting thought experiment.

Update: Quick thought. Given that stock options are one of the key parts of Google compensation, I would think that as the stock price rises closer to USD1000 it will make these options less attractive for new employees. One way to address the issue would be to split the stock and give more room for faster growth for new employees. Nor would this harm existing employees. In fact it would allow them to realise some of their "wealth" without massively changing their share ownership.

How to be A lister Blogger part XXCXIVX

Quote Hitchhikers Guide to the Galaxy at least once a quarter in your posts. In context.

The Sustainable Economy and Economies of Scale

In much of the discussion on sustainable economy has been focused around energy and carbon. One aspect I find missing from the debate is how the wider shift to sustainable development will effect the fundamentals of economic development that have been the guiding forces since the time of the industrial revolution.

One key economic concept is Economies of Scale. Essentially, building lots of things in one place in order to produce each individual thing cheaper. One of the key determinates of economies of scale is transport costs. The shift to sustainable economy is going to bring in what is currently an externality (carbon) to the equation that determines the economies of scale. As carbon is priced into transport (and to the price of energy) building widgets in massive factory in China (for example) and shipping it to the rest of the world is going to loose economy.

The reduction in the economies of scale will see two major effects. The first is a shift to more factories building the same product as opposed to one big factory shipping to the world. These smaller factories will serve a particular region. The size of the region that the factory supplies will be determined by transport costs. The second shift is that many economies will see a broadening of the manufacturing base. There is likely to be a growth in both the number of jobs in manufacturing and also the diversity of manufacturing operations.

Not only will carbon transport costs effect the location of factories but so will access to low carbon energy. In effect, countries with good internal and regional transport links that are not carbon intensive and have ready access to low carbon energy will greatly benefit from the shift to a sustainable economy. Which leads to the conclusion that China is likely to see its global dominance of manufacturing eroded if it is unable to reduce the carbon intensiveness of is energy and transport. It is China's self interest to reduce the carbon intensiveness of its economy now.

Google and Apple: Joint bid for 700Mhz?

Rumours are circulating that Apple is going to bid for the 700 Mhz spectrum that the FCC is auctioning off. Various speculations over what it could be used for (iPhone MVNO, nation wide hotspot are possibilities) abound. What interests me more is if Google and Apple partnered to bid nation wide.

A partnership between the two would be hugely disruptive to the existing wireless companies. A Google and Apple partnership would bring together Google's information and infrastructure strengths with Apples consumer hardware and design strengths. A complete mobile office and internet access service based around Google Apps and Apple's iPhone and iPod Touch is a compelling combination.

The iPhone/Touch would provide the device that allows the user to access the cloud using the 700 Mhz spectrum. Google would then provide the cloud based services: push email, storage, applications, search, internet access etc. It would become a highly useful enterprise mobility platform while providing the first true wireless, ubiquitous internet platform.

Tags: Google, Apple, Wireless, 700Mhz

StrategyEye beta is now avaliable

Here at MarketClusters we have just launched StrategyEye. The service is still in beta and any feedback is very welcome.

What is StrategyEye I here asked? Well to quote Nick Gregg, MarketClusters CEO, it is

"a real-time intelligence platform designed to track the explosive changes in the Internet, Media and Telecoms marketplace. The dashboard gives a highly contextual view of M&A, VC and partnership deals globably, all linked to expert blog and news opinion - and our own proprietary analysis"

Its pretty cool for those trying to track deals and the commentary made by bloggers and journalists surrounding the deals. Who is it aimed at? Well anyone with an interest in digital media, telecoms or the internet. We already have a range of clients from small startups to large corporates and even one or two consultancies. Have a look at the client page. I don't feel like name dropping.

But what if you aren't interested in DM? Never fear, we will be adding further sectors with CleanTech a sector high on our list of cool.

If you want to sign up for a trial and/or the newsletter just follow the prompts on the main page.

Tags: Marketclusters, StrategyEye, StrategyWire, CleanTech

Housing and the Debt Pool

Both Australian and the UK are facing a housing bubble with panicy headlines about housing affordability. Fingers are being brazenly pointed at governments and builders. While the actual cause is best described by Ross Gittins of the SMH in his recent article "Housing Crisis: We Did It Ourselves". Summary: greed of current house owners has pushed up the prices.

Various proposals have been made about "fixing" the problem. However, one fact is conveniently ignored. To "fix" the problem, house prices will have to fall. Not really a politicians greatest wish. Releasing more land, re-developing brown sites (particularly in London), reducing the bureaucracy for planning permission, cutting various taxes and changing tax treatment of investments will help the issue. The single biggest problem for politicians is managing the process that will see house prices stall or fall. House prices are invariable driven by demand, if supply meets demand prices won't rise as quickly.

Is that all that can be done? The fixes proposed will do a lot to alleviate the problem in the short to medium term. It will not fix the debt problem that is tied up into the "housing crisis." Instead, we need to look at how debt is managed for consumers. The debt repayments related to buying a house is what causes the stress. Dealing with this requires more than just lowering interest rates.

So how do we deal with the easy debt problem that leads to the payment stress? The total debt any individual needs to be capped based on their cashflow and the interest rates. This includes store cards, car loans, credit cards and all the other methods of debt.

It works by working out a total debt pool of an individual. The individual then gets to choose who and how much debt an individual provider extends to the consumer. The debt pool is calculated from cashflow and the inverse of the interest rate. This way the debt pool enlarges when the interest rate drops and falls when it increases. This will reduce the opportunity for individuals to fall into repayment stress. A buffer between theoretical debt pool and actual available is use to ensure that the individual never progresses beyond the debt pool.

A side effect of this will be that each individual interest rate change will have more effect as not only does it change the repayments an individual has to make it also changes the amount they can borrow.

tags: Housing, Ross Gittins, Debt Management

Perpetual Analytics and policing Social Networks

In what is likely to create a MSM storm, MySpace has deleted profiles of 29,000 convicted sex offenders. As noted by Michael in his post the whole process is complicated by having the data stored in multiple databases. Which will lead louder calls to make on massive DB.

But is one massive DB (and all the problems this may entail) the only effective answer. No, I don't believe so. I think judicious use of perpetual analytics will deliver a more effective solution thatis better at respecting privacy than having one massive DB. The other advantage is that each social network could build on and contribute to the policing of SNS for sex offenders.

tags: Perpetual Analytics, Social Networks, MySpace

Facebook - the next x?

The blogsphere has oscillated between hysteria and backlash against Facebook since the release of the Facebook platform. Some have asked, what is so special about Facebook while others have breathlesssly compared Facebook to Google, Apple & Microsoft.

Now, I personally think the underlying value of Facebook is enormous. However, capturing that value or more accurately realising that value for both the company and users is going to be difficult. More importantly, this will be massively more difficult while people keep talking about Facebook being the next "wunderkin."

Put another way, Facebook is not and never will be Google or Apple or Microsoft or any other wunderkin company. It will be its own wunderkin company that charts a new direction for the industry just as the others have before it. Any punter that talks about Facebook being the next x, will completely and thoroughly miss what Facebook is and will achieve. Do not trust them. These punters are still stuck in the old world and will fail to see the new world.

Truth in advertising - beauty addition

I've wondered for a while whether many beauty magazines and advertisements for beauty products could fall foul of the truth in advertising standards.

The logic is as follows.

Take an image of normal woman. Touch it up and the image is no longer a real representation of the individual. It is no longer true. It is false advertising. The implicit message, particularly of beauty products, is you could look like this if you used the particular product. However, the image is not true. Does this make the advertising untrue?

It would be interesting for such as case to go to Advertising Standards Authority or court.

Tags: Advertising, Policy

The Multi-Touch Revolution

What this video and think about interfaces.

The revolution that the iPhone introduces is not about features and, to a degree, Leopard as well, is around how we interact with information. This is arguer of the coming revolution in IT/internet. The services that win will be the ones that provide the most effective interaction for the user with masses of information.

Remember we are in an age of information. Getting information is not a problem. The problem lies with how we interact with information. How can I, as a user, interact with the information in a way that makes me most effective in achieving my aims, whether it is finding something or manipulating the information.

The multi-touch screen is going to be a huge part of this revolution. Multi-touch opens the door to truly effective manipulation and navigation through complex information environments. That is not to say that the keyboard will die. The keyboard still remains a very effective input device for certain tasks (i.e. word processing). But for other tasks, touch is the way to go. Multi-touch will have more effect on mouse usage as it can directly replace most if not all mouse input functions.

The companies that succeed in this new environment will be ones that make the new input devices and the ones that create software programs or services that most effectively utilise the power of multi-touch. As a thought experiment imagine Google Earth on a large multi-touch screen or Microsoft's Sea Dragon/PhotoSynth combination.

Tags: multitouch, iPhone, UI

Facebook as a market

I'm just reading Fred Wilson's recent post about Facebook. Essentially, Facebook has created a stock market-like entity for web apps. Which validates my point underlying my previous post on Facebook and micro web apps.

Extending the concept of the market and micro web apps logically leads to some interesting conclusions. A stock exchange like market could be created that allows micro web app designers another method for monetising their creation. The market would track some combination of the number of users (number of shares) and the value per user (stock price). The movement in the value of the apps would be fascinating to watch.

I wonder if you could create a Stock Exchange app using the Facebook platform?

Apart from the intellectual interest of the Facebook Stock Exchange, does it have any value? Yes. The exchange offers an interesting way of trialling new applications for possible future investment. If an application within Facebook takes off, this is a reasonable indicator that this application will a good candidate for full blown development. Facebook becomes a rapid prototyping and marketing testing platform for the internet.

Facebook Exchange also offers a Darwinian environment to develop and trial new features for existing Web companies. The features to develop out are the ones that gain widespread tracking amongst a target demographic. This will allow web companies to focus their development resources on features that will be worthwhile to their users.

The developments going on around Facebook is fascinating. Where it will end is unknown, but the ride getting there is going to be fun.

Tags: Fred Wilson, Micro Web Apps, VC, Facebook

Facebook a Platform for Micro-Apps

Just as eBay prompted the rise of the micro-retailers, the Facebook Platform has the potential to prompt the rise of micro-web apps. Facebook Platform provides a range of infrastructure services necessary for these micro-web apps to survive and thrive. Social networking, network distribution and hosting are all provided.

Just like the micro-retailers on eBay it is only with the environment of Facebook can these micro-web apps exist.

For search startups the real barrier to entry is the index

I was drawing up a brief document for my CEO yesterday around search, the developing technologies and the startups in the space. What caught my attention was the number of starts calling themselves "Google-Killers". It took me a while to put my finger on it but I just didn't agree no matter how cool/ground breaking/esoteric their technology was.

Why don't I see these companies such as Powerset or Hakia as "google-killers"? Index. The simple fact is that unless the company has an index that is significant percentage of the Google or Yahoo or Microsoft search index's they can't compete. Early on the size of the web was such that a new search engine could easily develop a useable index. Now it is orders of magnitude harder to not only develop the index but also make it fast, reliable and generally useful.

There is a way to mitigate this barrier to entry and that is to pick a vertical and index that. Indexing a vertical is a much easier that trying to index usable portion of the internet. Given the nature of the technologies that Powerset, Hakia et al are deploying I think health (which is also relatively open and new) would be good fit for them.

[I had included Yedda as a Google-Killer but as Yaniv Golan pointed out in the comments, Yedda is along the lines of Yahoo Answers with knowledge ranking.]

Tags: Search, Google, Startups, Powerset, Yedda, Hakia

A human experience

I have found it fascinating to watch the every widening ripples that the Kathy Sierra et al saga has unleashed.  Tom O'reilly has just posted the basics of a code of conduct, which continues the expanding ripples.



Even more fascinating is how entirely human the whole issue is.  How entirely human the responses and counter responses, the alliances and friendships are.  All in all, I found it demonstrates one very, very important fact: geeks, techs are as irrational and human as the rest of the population.  They are as likely to get angry, to be mean as anyone.



What concerns me most is the seeming wide acceptance of meaness not only in Tech based blogs but also in political blogs as well, even across the whole blogsphere.  The acceptance of meaness hidden behind freedom of speech. Does this not de-value the concept and importance of freedom of speech when it becomes something to prop up an individuals own pettiness and anger? If I remember my history lessons correctly, freedom of speech is about disagreeing with government.  It was never there to protect some one from the consequences of every thing they say.  Something a long history of court decisions has upheld.



The web and internet has grown since the early days.  The norms that arose in those days hung together as a majority of the users belong to the same community and with that community came limits on behaviour.  Now that the majority of users do not come from the same community the norms of behaviour to a greater or less extent do not have the weight or power they use to.  The internet has descended into a "Lord of the Flies".

Blogsphere Civil War

"And no practical definition of freedom would be complete without the freedom to take the consequences. Indeed, it is the freedom upon which all the other are based."
- Lord Vetinari

Background: Blogsphere Civil War

At what point do the cries for Freedom of Speech, Liberty become hollow when we stop taking the consequences of our actions?

We like our freedom, so long as we don't have to accept any unpleasant consequences. We want to be able to say what we want, without accepting condemnation by others. We want the ability to do what we want, without accepting responsibility when our actions hurt other people.

If you build a site like mean kids or write a blog, you have to accept the consequences of that action.

True freedom is the freedom to take the consequences. Strength of character comes from accepting the consequences of your actions.

Kathy Sierra, Anonymity, Internet

Liability in the age of targeted ads

Every so often you here about the latest advertising based scam. An ad is located somewhere in magazine or newspaper and this leads the un-suspecting off in a merry dance that sees them loose some or all their life savings.

Generally the service (magazine, newspaper etc) are not held liable for this type of scam. Which is fair enough because the service is not targeting ads at specific people.

But...

What happens when a service is predicated (Blyk) on delivering very target ads to a specific demographic delivers advertising that is the start point of a scam? It could be very easily argued that the scam would not have been successful without the targeting provided by the service. Which of course opens the service to liability.

Liability for scams is something that does need to be considered with highly targeted advertising. Particularly, where the targeting focuses on populations known to be (more) prone to duping by scams.

Tag: Blky, Mobiles, Targeted Advertising

Rant: Playing Music on a Mobile Speaker Phone

I've been meaning to say something for a while but today on the bus into work was the last straw.

What idiotic engineer or marketeer decided that it would be cool to allow people play music stored on a mobile on it's speaker? The only time that is going to happen is when the person is in a crowded bus/train/building where is going to piss people off.

Now, to those people who do this. STOP. I don't care what music you like but I don't want to have to listen to it. I have my own favourite music and I don't want to have to listen to yours because you are too selfish to not use headphones. You are intruding on my personal space.

Strangely enough it always seems to be teenagers who insist on playing music on the speaker. Some people would say I could simply ask them to turn it down. Yes I could, BUT, they should never have turned it on in the first place. Why can't people think of those around them?