Monthly Archives

December 2007

No predictions for 2008

By | Randomness, Venture Capital | No Comments

Samuel Brittan has a prominent article in the FT today entitled It is time to jettison the forecasts – and who am I to argue with that?

This chimes with Taleb‘s view of the world as expressed in Fooled by Randomness and more recently The Black Swan.  In a nutshell the idea is that events are far more random than we think they are.  In fact we are pre-programmed to see order where there is chaos.

The upshot of this is that predictions are pointless, and Taleb claims that analysis of the accuracy of economists predictions bears this out.  When you look at it, the things that catch them out are events that are extremely unlikely but have a huge impact.

So it seems that there is an emerging consensus that making predictions is a dangerous business and on that basis I will keep quiet on the subject of what I think will happen next year.  Much safer that way, and my last prediction is starting to look a bit dodgy.
There will be more on this subject next year, looking at how Taleb’s Black Swans tie in with Gladwell’s Tipping Points, but for now let me wish you all a Happy Christmas.  Thanks for reading, and a big thank you to everyone who commented.  See you all in the New Year.

VC value add

By | Entrepreneurs, Venture Capital | 3 Comments

I was ill yesterday and so had to dial in to a board meeting.  That is something I really try to avoid doing because I think it is much better to go in person.  That is partly because it is usually difficult to hear everything when you are on the speaker phone but it is more because you build much stronger relationships with the other board members if you see them in person every month.

Fred Wilson wrote the following yesterday in a great post entitled You Get What You Give (if you have time I really recommend the whole post):

Working with entrepreneurs is a lot like being a parent. If you are attentive, work hard to build a connection, if you are there when the entrepreneur needs you, then they’ll listen to you. Otherwise, they’ll just end up “managing you” and you’ll never have the impact you want to have on the company. You get what you give.

Turning up to board meetings in person is probably one of the most important ways to build that connection.

To believe in all this then you also have to believe in VC value add.  To state the obvious there is no point in either the entrepreneur or the VC spending time building the relationship if it doesn’t help the company.

I love to work closely with my companies (as do most VCs I know) but I have heard a few people recently casting doubt on the whole idea that you get much out of us beyond money.  And that has come from both VCs and entrepreneurs.

I don’t want to come across as some kind of maniac who has to get involved in everything and would actually rather be an entrepreneur – I am not that guy.  The amount of time I spend (and hopefully the value I add) with each of my portfolio companies goes up and down over time and I am always pleased when my time is freed up – but at all times I work hard to keep the relationship strong so it is easy for everyone when it makes sense for me to get more involved.  The times when that happens are usually in the first period after investment, when later rounds are raised, on exit, during senior management transitions and in the run up to big strategy shifts.  I’m a big believer in the fact that good VCs can add a lot to the value of their companies at these critical points.

Google accessing other parts of the social graph

By | Facebook, Google, Social software | One Comment

I’m getting increasingly interested in the notion of social graphs and how the concept extends beyond our friends list on Facebook.  The basic idea is that the list of who you communicate with and how frequently is an information set that can be mined to create valuable services.  Put that way your list of Facebook friends is actually pretty simple.  Potentially richer data sets include who you email and who you telephone.

On the email side check out Fred Wilson’s post on Outlook plugin Xobni and a month or two back he wrote about how he used an Outlook plugin which showed who he emailed most frequently to generate an invite list for a party (which I can’t find now).

On the telephone side, here in Europe, Zyb allows you to use your mobile phone call records to social network.

Then yesterday I used social graph based feedreader Blogfriends to navigate to a post about Google Profiles – a new service from Google that uses social graph data from Google services like Gmail, Google IM and Google Talk to try and offer you better services.  For example they have integrated with Google Reader to tell you which posts your friends have read.

This a good idea but the execution is really tricky.

There is valuable information in these communication tools that is simply not getting used at the moment – so anything that tries to rectify that situation is a good idea in my book.

But, once again, the execution is really tricky.  There are a couple of reasons for that – firstly it bumps up against privacy issues so you are in an area where it is really easy to screw up and put people off your service before they have even engaged, and secondly social graph information is really complicated.  There is no straightforward correlation between the volume and medium of my communications with someone and my relationship with them.  If you need any convincing on these points check out the negative reaction to Google’s profiles on Venturebeat – it is full of these sorts of concerns.  E.g. if you have frequent Gmail communication with a competitor this new service would infer that you are friends and tell her what posts you have read – information you might not want her to know.

To me this is all a question of service design and getting the defaults right.  Get it right and you will have a valuable and popular service.
That is easy to say, but difficult to do, particularly when designers will always be tempted to have automatic opt-in with voluntary opt-out as a way to quickly get traction on the service.  In an ideal world the default should be opt-out, but you have got to recognise that it might take forever to build traction that way.

It looks like Google has got the defaults wrong so far with Profiles, and getting the design and defaults wrong is why Facebook is struggling with Beacon.

Standards war for social networks? Facebook opens up its platform to compete with OpenSocial

By | Facebook, Google, Social networks | No Comments

With all the bruhaha going on about Facebook’s Beacon it is good to see them back in the headlines for positive reasons.  The news is that they are opening up the architecture of their platform, the impact of which, apparently, is that other social networks will be able to licence the code and update themselves to allow Facebook applications to run in their networks without modification.

From the Facebook developers blog:

In the next step of opening up Facebook Platform, Facebook is now making its platform architecture available as a model for other social sites. Facebook will even license the Facebook Platform methods and tags for use by other platforms, which means that the 100,000 developers currently building Facebook applications can make their applications available on other social sites with no extra work.

Google’s idea with OpenSocial was, of course, a very similar write-once-run-anywhere, which means we have an emerging standards war on our hands.  For me this is good news, in that competition will force both Google and Facebook to put less emphasis on their own interests and more on what application developers need – post this announcement I think there is a much greater chance that we will actually get to a situation where applications can genuinely run cross platform.  That said the fragmentation will be a bit of a bind as developers will be looking at write-twice-run-anywhere rather than write-once.

Bebo has already announced support for the Facebook platform.

There is more analysis here on Webwar.

Thanks to Jay for the tipoff.

Coming through the uncanny valley?

By | Identity, Privacy | No Comments

My daughter Eira was watching kids TV programme Ernie the Engine on Saturday and I was struck by how lifelike the faces on the animated characters are.  They were lifelike and not at all disconcerting – so much so that I was left wondering whether children’s TV characters are coming through the uncanny valley.

I had a look on YouTube and Daily Motion to find a clip for you – but all I could find was this Ernie video where somebody is shooting the TV – should be enough to give you an idea though.

The programme led to the following thought train:

  • Maybe kids have a different view to adults on the uncanny valley – when my wife saw the programme she thought the characters were a freaky – i.e. still firmly in the depths of the valley, and there was a scene where they were dancing which I also thought was definitely a bit odd
  • If different groups can think about these things differently then crossing the uncanny valley become much more feasible – you can do it by finding the group that will most easily accept your advanced product and build a business around them which funds the development which will make your robot/avatar super realistic and acceptable to everyone
  • Going back to the analogy with privacy and targeted advertising you might be able to apply the same logic – build a great service on which people willingly accept highly targeted advertising as the cost of free usage and build out from there – that might get through the current impasse where privacy is a very emotional all-or-nothing black and white issue

Reality check: maybe evil can still be successful after all

By | Business models, Facebook | 4 Comments

Every now and again I get a reminder that the world only changes very slowly.  I’ve had one this week.

On Tuesday I wrote a post entitled The user is in control where I talked about how social sites are becoming a bit like democracies and how to succeed they needed to do what their users wanted – sometimes in ways that hurt them in the short term.

I think that is right today for many of the services beloved by bloggers and the digerati (like Digg), but a lot of the world hasn’t yet woken up to the joys of participation, and the sites they use can still get away with doing pretty much whatever they want.

To stretch the democracy analogy a bit, these mainstream sites are like countries where people don’t understand or care enough about politics to bother to vote.  Unless users or voters participate and engage governments or site owners aren’t really accountable and will pursue their own interests.

In the case of site owners that will typically mean prioritising monetisation ahead of their users experience and/or right to privacy.

For those that haven’t guessed I am talking about Facebook more than anything else.

This post first started to form in my mind when Alan Patrick left the following comment to my user in control post:

The real lesson of Beacon is that you can be as big a b*stard as you like if the rank and file don’t understand what you are doing :-)

Then today I read Danah Boyd making the same point:

I kinda suspect that Facebook loses very little when there is public outrage. They gain a lot of free press and by taking a step back after taking 10 steps forward, they end up looking like the good guy, even when nine steps forward is still a dreadful end result.

As Umair has said, they have got to have evil DNA to act this way, but  if most of their users don’t understand or care then it won’t matter – and it looks like they don’t , again from Danah Boyd:

Given what I’ve learned from interviewing teens and college students over the years, they have *no* idea that these changes are taking place (until an incident occurs).

I still think that over time the ideas behind Cluetrain will become pervasive and good companies will win out over evil ones, but it will take time, probably a long time.  It is easy to forget that when you spend your life at the forefront of innovation and your main source of input is your friends in the blogcup.

Google doing too much?

By | From mobile | 6 Comments

Posted by mobile phone:
Today I received a reminder of the breadth of Google’s ambitions. I met two very different companies who both see Google playing an important role in their markets. One was an exchange for offline media and the other was a mobile handset manufacturer.

Ambitions in these two areas go alongside the huge number of other initiatives Google has – including OpenSocial, Google Earth, virtual worlds, Google Gadgets, etc etc

I am all for ambition, but for me it needs to be combined with focus. I love Google, and use a number of their products every day – but the strategy consultant inside me will be amazed if they can execute well on so many fronts. Just look at Yahoo! Over the last 5 years.

IMHO focus is always best. I would always make difficult choices and focus on only the most promising couple of initiatives.

Espescially in a start up.

Conversations to drive TV to the web

By | From mobile | No Comments

Posted by mobile phone:
Regular readers will know I have been wondering for a while now what it is that will get people watching TV via the web. The existing product is good, not perfect, but evidently good enough for an awful lot of people. To frame the question another way I have been wondering what will be powerful enough to get people to bother to wire up their TVs to the internet and switch away from their existing cable or satellite service provider.

The obvious answers are price and/or content – Skype did it in telephony with a free service and desirable content unavailable elsewhere would be pretty compelling.

The problem is that both of these are very hard to deliver on. The best content is expensive and it is tough for internet startups to compete with established providers who have much bigger balance sheets and can amortise the costs of programmes across a much larger customer base.

I’m gussing that this is partly why Joost raised so much money.

Little things like instant messaging and exclusive niche content will help as well, and these are also available on Joost, but somehow I don’t feel these will be enough.

Iheard a new answer to this question at LeWeb today (new for me anyway) was that it will be conversations. The idea is that much like blogs for text videos from outside the ‘fat head’ of content could be a force for change. The emphasis in these programmes is on content (message, meaning, viewing experience) over traditional production values. As such they are cheap to produce and can respond to each other in conversations, and even link to each other in video now with technology from Coull or Asterpix.

This sort of vibrant content is being produced in increasing volumes by the likes of Scoble (whose weapon of choice increasingly seems to be an N95) and Intruders.tv. It will only ever get a small percentage share of the market (although that could still be big in dollar terms) but it might be enough to kick off the behavioural change I was describing at the beginning of this post.

The user is in control

By | Consumer Internet, Facebook, Social networks | 5 Comments

One of the interesting things about social media is that consumers are party to key strategy decisions.  It used to be that senior management made their decisions and they played out over time as the market gave it’s verdict on the changes to the product, service or brand.  I remember first thinking this back during the AACS encryption row when Digg responded to it’s readers and changed strategy to allow articles showing how to break the DVD code, even though that meant they risked getting sued.  I think I even wrote about it at the time, although I can’t find the link now.

Today at LeWeb Tariq Krim of Netvibes took the point a step further and said (words to the effect of):

Facebook’s Beacon shows that social sites need to be democracies – they can’t do things that aren’t acceptable to their user base.  So they will need to find ways of testing things – analogous to primaries or elections.

This is true, although at the same time companies shouldn’t be afraid of taking bold decisions that may be unpopular in the short term.  People hate change and sometimes need a kick in the butt to accept something that is actually good for them.

In a similar point Hans Peter Brondmo of Plum said we need to get to a point where users own their data, control who can access it, can remove it at will, and have audit tools available to check compliance.  To play the democracy analogy out here – if strategy is like the laws of a nation here we are talking about the digital equivalent of your basic human rights – e.g. to control who comes into your house and ultimately to leave the country if you want to.
This is important because one of the big fears many people have about social sites is that stuff they put on their profiles might embarrass them later.  Take that away and you will remove a big blockage on usage.

Big personality helps a site

By | From mobile | No Comments

Posted by mobile phone:
I blogged a couple of weeks ago about how having a cool personality can really help a site. I gave a couple of examples but as I sit here at LeWeb listening to Kevin Rose I realise I forgot to mention Digg, which is possibly the best example of all.