I found this on Singularity and wanted to share it. This is Diego-san, a new humanoid robot who will be developed to help researchers better understand child development and motor skills.With 27 moving parts in its face and cameras in its eyes, Diego-san is able to produce a range of infant-like facial expressions. Pretty amazing work:
I just finished reading Future Perfect by Steven Johnson and wanted o recommend it, as well as get the salient points across in words to help me better understand the reading.
Johnson takes the reader through vignettes in history, and describes various social structures to make the point that decentralized, or distributed networks of decision-making are generally superior to what he refers to as centralized, top-down decision-making structures.
The most visual representation of the dichotomy that Johnson creates is the story of the evolution of the rail systems in France and Germany. Referred to as the Legrand Star, the French developed a rail system in the 1800’s that focused most of its traffic on main lines, all of which ran through Paris. The entire system was designed from start to finished and was highly centralized. This made a train system that could reach very high speeds, and get people in and out of Paris from all over the country. The Germans, on the other side of the Rhine, developed their system with no centralized design, the final product was mostly a messy network of small linkages. When the French and Germans went to war in the late 1800’s, however, the German rail system ended up being the better solution because it was more flexible, while the French had to move all of their soldiers through Paris before getting to the front on the eastern border. Because the germans could get more troops to the line faster, they ended up winning the war.
The book has so many great, optimistic ideas about how distributed networks can make a better future. I think we’ve seen some of this at work with Kickstarter, SOPA’s defeat and a thousand amazing geopolitical events that have been amplified through social media. While some of his vision is a bit too optimistic for me, I agree that we’re at the dawn of a new way of interacting and connecting with one another. While the growth of distributed communication platforms has amplified certain risks (the new borderless terrorist organizations, for example, thrive in distributed networks). The benefits are only beginning to become evident.
Future perfect is a great read, check it out if you have the chance.
I am a very happy Spotify Premium customer.
Everyone talks about Spotify like it’s some type of new social media driven discovery engine, spreading new music through our networks like a happy virus of connectedness. I think that description hurts them because that’s not what makes Spotify great and it’s not what’s innovative.
I keep my account unhooked from my social profiles and I pay them ten bucks a month. In exchange, I get cross-platform access to almost every song I want to hear, whenever I want to hear it. As my friend Aaron Mandelbaum will confirm, I’ve been searching for this product for years but the previous attempts never quite got it right. There’s not really any secret sauce here – what makes Spotify great is the same thing that makes Dropbox and Evernote great. It just works every time across every device.
People talk about how the iPod and iTunes changed the music industry forever. That’s true, but I believe that Spotify is the future of the music industry – the newly connected consumer doesn’t even think about ‘buying’ music. The game is over, and ubiquitous access [and maybe curation] is the product when it comes to recorded music, the rest is just window dressing.
I started my career in the music industry and I can say that the oligopoly of record companies, despite having every opportunity to do so, could never have created Spotify. It’s almost tragic. On demand, cloud-based music’s inevitable success can be explained with Clayton Christesen’s framework in The Innovator’s Dilema.
The industry machine was able to keep up with sustaining technologies. For the changes from the vinyl record -> the 8-track -> the cassette tape -> CD, the industry had no problem keeping up because the product and the economics were still the same: a bundle of tracks [and a small market for singles], delivered as a compliment to a device [e.g. a record player]. Sure, there was a little shakeup with cassette tapes because you could record with them, but that was a little bump in the road. For the most part, the same players were able to keep up and drove innovation that improved the quality of the listening experience.
The first bullet wound came in the form of the iPod. MP3 players had been around for a while before the iPod [I had an Archos Jukebox in college], but it was a fringe market because they all sucked. They truly sucked. The main market was still rocking CDs, buying them at Tower Records and playing them in their Sony CD players and discmen.
The iPod took MP3 player technology to the next level and it captured the market, but the really disruptive innovation of the iPod was the integrated delivery system. There was an ecosystem in place before Apple came into the picture. There were record labels [content creators and marketers], cd manufacturers, distributors, retailers and device manufacturers. Apple wiped everyone off the map with the iPod /iTunes system except the labels, who had to play ball or risk being shut out of the consumer market. Only an outsider could have done this.
The second bullet, cloud-based music delivery systems, came in a similar fashion, albeit faster. For a few years, there were products like LaLa and Rhapsody, but all of these services were a pain to use or lacked content. The tipping point, in my opinion, came with the penetration of mobile smartphones. As soon as we had phones that acted like computers, we started to want to access our content across devices and Spotify built a great product to do it. They beat out Apple for the U.S. market and they’re continuing to innovate [their iPad app is just awesome]. I can’t envision another disruption in the recorded music part of the industry, but who knows?
It’s been interesting thinking about how the music industry has evolved. When I read Mary Meeker’s 2012 Internet Trends Report, I became inspired to think about how other disruptions are going to play out, and which companies are at the greatest risk. I’m going to try to post a few predictions in the coming weeks.
I’m very excited to announce that I’ll be joining the team at K2 Media Labs on a full-time basis in the coming weeks. K2 is an early stage private equity fund that invests in startups focused on the connected consumer.
The Company is a bit of a hybrid, in that it makes early-stage investments and also incubates companies in-house. My day-to-day job will include working with CEO Daniel Klaus and Chairman Kevin Wendle on due diligence, planning and implementing strategies around new startup investments, as well as working in a supporting role with the current portfolio companies. On the investing side I hope to build on what I’ve learned from Joe, Nikhil and the rest of the team at Softbank Capital, and from my time learning from Jerry Neumann at NEU VC. From an operations perspective, I’m hoping my time in business development, social marketing, product development, and my background in media & entertainment has given me a foundation of experience to be a value add to the incredibly talented group of entrepreneurs at K2. I’ve spent lots of time selling services to businesses, and building in mobile and on Facebook. While I still have limited knowledge and tons to learn, I hope that the skill set and network that I’ve built will be helpful to the entrepreneurs I will work with.
Aside from the in-house team at K2 , the fund has a phenomenal group of investors and advisors. Overall, I could not be more excited by the opportunity to learn from this team. There aren’t many opportunities to work on both the investment and operations sides of early stage businesses, so I feel incredibly lucky to be here and I can’t wait to hit the ground running.
I plan to invest more time and energy into this blog, posting more often on topics covering startup operations and early stage investing. If you ever want to connect, you can find me at christian[at]k2medialabs.com, or on twitter @nycsteady.
I started to write a retrospective on 2010, but decided that we all lived through the year and there are some great photo essays that are much more interesting than my thoughts. Instead, I’m going to make five predictions on tech, social and digital media trends in 2011.
1. Exponential growth in the U.S. smartphone market
Mobile is my current fascination, and the growth that we’ll see in 2011 in the U.S. market promises to make it the rest of the country’s fascination as well. I wrote a post about this recently, and recognize that people have been predicting the year of mobile for a long time. But looking at the current environment makes it easy to see, from my perspective, that 2011 (or 2012 at the latest) will be the year that mobile will start to compete with the web for most relevant technological innovation (read Fred Wilson’s post to get the pro’s perspective) in the world.
Right now the early adoption is complete. The iPhone skimmed the market for the high-end tech enthusiasts and the coastal hipsters. The people who want the next thing have it, but they had to buy AT&T contracts in order to get it and, overall, the iPhone is an expensive investment when you start looking at the data plans. Broader market penetration will happen with the growth of the Android platform; which will become the device- and service provider-agnostic operating system that will allow low-cost producers to offer smartphones to the price-sensitive consumer. The increase in availability of these phones, I predict, will actually lower the cost of data plans as well. This is a trend that is bound to continue as the fixed costs of building data delivery infrastructure is recouped and competition brings the supply of data networks up and the cost of the service down.
2. An increase in mobile gaming, but a decrease in pay-for-app models
Angry Birds was worth $20 million to EA, and for good reason. Electronic Arts currently owns over half of the top 10 spots in the itunes App store and Angry Birds alone has sold over 6.5 million copies. Mobile gaming is going to continue to grow, and it’s going to pull in a much broader audience in 2011 (see prediction #1). With the growth of the category, however, I’m not confident that we will continue to see the pay model that currently exists in the itunes store , and I’m not entirely convinced that social currency will support the marketplace either. I’ve been in the app marketplace for a while now and I’m surprised at how few apps have really embraced the ad-supported model that has driven the web economy for so many years now. It’s possible that mobile advertising simply hasn’t developed enough to sell performance, but on a CPM level, I’m surprised that more advertisers aren’t clamoring to get into people’s smartphones. If this changes with the broadening of the market, I think we’ll start to see more social gaming on mobile devices, and gaming publishers similar to Zynga and RockYou on mobile devices.
3. Continued adoption of web-based productivity apps by businesses
Google is going to take a few more swipes at Microsoft in 2011, and they will continue to pull share from the leader with the improvement of Google Apps for business and education. Cloud-based apps just make sense for most people, who really don’t use much processing power to accomplish the majority of their tasks. It’s also far easier to synchronize email, calendar, contacts and documents when they’re in the cloud. Based on prediction #1 (above), it makes sense that more and more companies will move to the cloud for their business application needs because people are going to increase the number of screens that they use, and hence have a greater demand for easily synched solutions. Google Apps are the best cloud-based productivity applications in the market. Microsoft Live is a few years too late and a few features too underwhelming to be particularly useful.
4. Fragmented social networks
Facebook is now the place where you have the most connections that have the highest variance in value (mom, girlfriend, junior high-school acquaintance). Facebook is now sort of a mashed up wall of brands, bands, friends, frenemies, places and games. While Facebook continues to do a amazing job at delivering a platform that can be customized and controlled by its users, I believe 2011 will be the year that people start signing up for smaller communities and networks that are relevant to a particular passion or activity. Path is trying to fill this gap with a social network that only allows you to share photos with 50 people , and Instagr.am is filling in a void for hipsters and the visually curious to filter their photos with lo-fi effects. These communities are built on top of the Facebook platform, but a different a slightly different value proposition and will start to syphon off some user attention.
I believe that music isn’t getting a fair shake in Facebook and that money is being left on the table in that space. We’re going to be releasing a product in 2011 that will try to fill in some of the holes that Facebook misses in the music business and I’m looking forward to seeing entrepreneurs take on similar strategies.
5. Flat adoption of mobile coupons, despite the inevitable heavyweight user war.
Mobile coupons seem to be the trend that just won’t stick…yet. I believe it’s going to take a little more time than people are hoping for consumers to start really using mobile coupon offers. Media agencies are starting to experiment with QR codes and companies like Foursquare continue to make the push for location-based discounts (although I’ve struggled to find a relevant advertisement in my experiences with the platform thus far). Facebook Places, Hotpot and Google Places are also diving into this space head first. While Google, Facebook and Foursquare will trade punches like heavyweights in a royal rumble this year, I suspect that users will be decidedly absent from the fight. 2012 will be the year of mobile coupons, 2011 will still be the year of the Groupon.
With all of the recent discussion about civil charges being brought by the SEC against Goldman Sachs, I got into a discussion with some friends about innovation, technology development and its abuse by people who either don’t understand the technology they are using, know but do not care about the risks involved, or knowingly behave unethically in an effort to leverage short-term gains. After reading a blog post by Bill Taylor on the subject, I thought I’d chime in from a technology standpoint (although Bill does a much better job than I do at explaining my own thoughts on the subject– you should definitely read his post).
Bill points out two blatant misuses of recent innovations developed by really smart people and abused by the financial services industry: collateralized debt obligations and micro-lending. These are both somewhat complicated technologies, and I think it’s safe to say that the U.S. housing market collapse was pretty clear evidence that the technology was egregiously abused. The micro-lending conversation is perhaps a bit more ambiguous (it could be posited that the rejection of certain micro-lending offers are a natural piece of the economic puzzle, and will soon drive rates back down). My position in the conversation my friends and I were having , which I still maintain, is that blaming technology is pointless and mis-guided.
People innovate. It’s a natural thing for humans to do and should never be discouraged. The idea that the innovation is the culprit is a dangerous position to take when situations like this arise because innovation is absolutely a net positive endeavor. Technological gains are part of what has made the U.S. economy surge in the past century, and it will unquestionably be the source of our economic growth in the future. We live longer, happier lives as a result of technological innovation.
I think problems start to arise because of a lack of transparency and asymmetric information problems. As Americans, we consume too much health care, we take out lousy mortgages and loans and we tend to make foolish financial decisions as consumers. American consumerism is generally an impulsive phenomenon– or, we know we’re making bad decisions, but everyone around us is making them to so we fall in line with the behavior. The solution to bad decision-making is more education and greater transparency. The solution is not to halt efforts to innovate from fear that innovation will be abused.
According to TechCrunch, peer lending site the Lending Club, secured $24.5 million in Series C financing, led by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.
Peer lending companies like Lending Club and Prosper are sites that connect lenders and borrowers in a transparent, social network style environment. While certainly not risk free investments, I believe these sites allow for a free-market solution to small-to-medium sized loans in an efficient way. Through this direct approach, these sites have the ability to eliminate layers of cost and bureaucracy that surround loans which, in theory, allows for lower rates for borrowers and higher returns for lenders.
While I do not believe that peer-to-peer lending will ever replace traditional loans, credit cards and big banks, it’s inspiring to see a new asset class emerge that, one day, could compete with Wall Street, or at least influence the price of this amount of money. When you consider the scalability of this model (assuming transparent information on borrowers remains available) and the extremely high APRs that credit cards can charge for small amounts of money, this outlet could potentially become a real resource for consumers trying to lower their interest expense, or make small investments in their businesses. If these sites reach their potential, they will become a natural anchor to credit card rates. Additionally, with annualized returns over 9.5%, it’s not impossible for places like the Lending Club to pull in a large investment pool from a large group of small investors looking to diversify from the market and avoid paying management fees.
According to their blog, the Lending Club has issued a little over $100 million in loans since it’s inception and currently controls about 75% of the peer lending industry. This is an extremely small piece of the lending pie, but I’m hopeful that this industry wil continue to grow. The real challenges that peer lending sites face is (again) one of network effects. As a market making site, it’s important that borrowers and lenders can connect with similar risk profiles (lenders that are willing to accept risk for higher returns, and borrowers who are willing to pay higher rates with relatively low default risk). I plan to open a (very) small account this month to get an idea of the lending process and I’ll post again on this topic soon.
On another note, the Lending Club website is a great example of what a startup site should look like. The value proposition for lenders and borrowers is clear & upfront; there’s very little potential for anyone visiting the site for the first time to be confused.
I’ve been trying to identify a trend I’ve seen this week in my RSS feeds, told through the story of Apple changing rules on iPhone application analytics (Venture Beat), the much-discussed HTML5 vs. Adobe battle (I like this Scobleizer read which discusses it) and Twitter developing 3rd party applications for mobile applications and acquiring Tweetie (I downloaded the Twitter application for Blackberry yesterday and it’s excellent). It seems that the biggest innovators in technology are integrating and consolidating their channels.
It’s been interesting watching these companies shift strategies and jockey for space. Apple has always kept a somewhat closed shop. The recent exclusion of Adobe Flash from the iPad was a bold move on Apple’s part, but not entirely surprising considering the company’s history of being a vertically integrated firm that does not like becoming dependent on channel partners.
Watching Twitter and Facebook move around has been the more interesting story. For the past year, Facebook has been redesigning it’s user experience to mimic Twitter’s model. Status updates and tweets are a very similar now, and this is most likely the result of these platforms focusing exclusively on gaining advantage through network effects. Twitter and Facebook have been dependent on content and users first, revenue second. Now that they have both gained massive user bases and rapid adoption growth; the focus is turning towards revenue generation.
Facebook generated over $500 million in 2009 revenue, which came thorough display and performance-based advertising. Let’s assume that Twitter is moving into third party applications in order to serve up mobile ads; is it enough to match the revenue levels that Facebook has generated? The picture gets cloudier when you consider the fact that Facebook made the majority of their ad revenue through 3rd party application advertisiers like Zynga. The platform has already chalked up some revenue by licensing their search results to Bing & Google, and I believe there is more revenue down this path in the form of brands looking for in-depth market research along the lines of what BuzzMetrics offers.
Another route is the sponsored tweet. I’m not a huge fan of this model as a user or as a marketer– I just think earned media should stay earned and buying people’s twitter feeds doesn’t seem like a scalable, sustainable model to me. The fact is that Twitter is an unbelievably useful, intriguing and transformative technology. While I’m not certain what their revenue model is going to ultimately be, I imagine it will be a combination of the revenue models that we’re seeing now (some search, some mobile ads, some sponsored tweets). Regardless what their ultimate revenue solution is, the platform is undeniably here to stay.
UPDATE: Twitter announced it’s model for rolling out sponsored tweets yesterday , and will discuss them in greater detail ad the AdAge Digital Conference, here in New York, next week. I’m looking forward to seeing how these perform. Clearly, opening a channel for more mobile advertising is a big opportunity.
I really enjoyed checking out this writeup on Silicon Alley Insider about the media habits of 8-18 year-old American kids. The study was released a few months ago by the Kaiser Family Foundation (you can see the full study here).
There are a few choice statistics in this report. The most interesting piece to me is the amount of media exposure that tweens are exposed to today, and the exponential growth rate that they’ve experienced. At 10.5 hours in 2009, kids are essentially spending every waking moment consuming media. What’s more, this represents an increase of 43% from media consumption levels from just ten years ago. I’m unsure how kids can find this kind of time in their days. It would seem to leave little time for anything else.
Studying is wasting XBox time (teen interviewee)
In most interviews taken, kids are talking about texting, listening to iPods, watching TV and playing video games, often at the same time. Social networking takes up over 2.5 hours per day. Other top time-consuming activities include playing video games and watching online videos:
I propose that this level of media exposure greatly lowers the value of advertising, in general. Let’s look a t a 30 second television advertisement. In a 10.5 hours media consumption day, that’s 1/1,260th of the media “real estate” that a kid is consuming today; is that worth the price of admission?
Additionally, it seems that kids are multitasking more than ever; which lowers the amount of attention an advertiser gets with their spot. I believe this is why media buying will move further towards measuring interactions instead of impressions. The value of simple impressions has dropped significantly in the past few years, and probably with good reason (CPMs can be purchased for less than $2 in some networks). How can advertisers be certain anyone is even exposed to their ads if they take up such a small piece of the attention pie? The only answer seems to be inserting an interaction qualifier: using QR codes, measuring clicks, using tracking URLS and other interaction-based measurements are going to increasingly become the standard. The downside of this, as Chris Dixon points out, is that buying performance tends to rewards content light sites where users go often, and click through quickly (at least for any cost-per-click or affiliate marketing programs). This creates new challenges for the media industry as a whole, as advertisers will continue to search for ways to become signal in an increasingly noisy environment.
I’ve been reading Fred Wilson’s numerous posts on the startup visa andthought I’d chime in with some context that’s currently relevant to me. I fully share Fred’s views on this topic, and I think it’s important to discuss the relevance this has on the future growth of our economy.
I’m currently taking a global markets class at Stern where we’re reviewing and analyzing Ricardo’s theory of comparative advantage. This is an economic theory that’s often used to support globalization, because it generally lowers the cost of goods for all consumers. I’m not going to get into the theory on this post, because the information on the theory is well written in Wikipedia (above link). I do want to mention it in the context of the startup visa, because I think this theory and the current startup visa debate tied together.
Remember when NAFTA was under debate and everyone was talking about that giant vacuum sucking manufacturing jobs into Mexico? Well, that didn’t happen. What did happen is that some manufacturing business went south of the border (where labor was less expensive), and other industries in the U.S., like corn production, thrived in the new marketplace. Additionally, goods became less expensive for both Mexicans and Americans.
I mention this because I believe globalization is inevitable. I also believe it’s a generally good thing for the world, but only if our country is strategic in its approach to maintaining competitive advantages in industries that are important and relevant. Allowing entrepreneurs into our country to start new businesses is good for everyone and it doesn’t threaten anyone. It’s only a net-positive benefit to GDP to have new value-generating firms in our country; I simply do not understand the counter argument.