Gizmodo reports RIM has plans for a keyboardless Blackberry called Thunder. Apart from having a silly name it will fail for the reason I gave in my earlier berry post: play someone else’s game and you are dead. Why buy this (admittedly a mock up):
When you can buy this:
I was reading a post from Fake Steve outlining how new facebook COO Sheryl Sandberg is getting rid of the early employees. It begs the question of where Mark Zuckerberg fits in, FSJ speculates:
After I read this I looked up Sandberg, what struck me was that she was overqualified to be a COO. In fact at 38 the only post someone who was Chief of Staff to the Secretary of the Treasury before they hit 30 would be interested in is CEO. It doesn’t make any sense that someone of that calibre would leave Google for anything else.
I’m not one of those people who thinks any new startup in search is bound to be beaten by Google. It can’t be done by playing Google at their own game but it can be done by using a different approach. Search startup Persai falls into that category. What struck me was this description from co-founder Ted Dziuba:
I like the basic idea but there is one problem: I don’t really want to tell yet another site what I’m interested in. I’ve told delicious and Digg what links I like. I’ve told facebook what films and books I like. Why should I tell Persai all over again? If Persai could work out a way to yank all this stuff from the other sites automatically and knit it altogether then serve relevant results that would be a fantastic tool, unfortunately:
This is a mistake. I’ve said before the key to next generation search is analysing the links between users as well as Google analyses the links between pages. Persai seems to have it half right in that I can tell it what I like but I think they need to rethink their approach on other users’ contributions.
There are a few startups looking to revolutionise search for a second time. I met the founders of another new search engine Piins a few weeks ago, they are still in private beta so I can’t go into specifics but they also have a very interesting concept which has a good chance of success. Both Persai and Piins come into the “companies I would definitely invest in” category, if I were a VC.
I was watching the FA Cup final, before the game started a soldier brought the trophy out and placed it on a stand. What came to my mind immediately was this:
Just reminded me of the power of a simple, striking image.
This week Research in Motion announced the Blackberry Bold. I don’t really care too much about the specs, I assume smartphones pretty much do the same thing on top of the basics - email, music, photos, web browsing etc. The two things which count the most for me are design and battery life. I don’t know anything about its battery but this thing looks good:
The early Blackberries did not. I’m sure they functioned perfectly well but it is clear nobody really cared what they looked like. And in the early days it didn’t matter as Blackberries were the only show in town when it came to portable email. More genrally mobile device design has been absolutely shocking. Motorola phones looked ok but the UI is awful, at least it was when I had one and I never went back. Nokia are getting better but still put out some terrible looking devices like the E61 and Prism range.
There is one simple reason for the recent focus on better mobile design: Apple. Jobs-era products are always beautiful and when Apple entered the market they set an exceptionally high standard with the iPhone. People can harp on the lack of 3G which is a dealbreaker for most people in Europe. I would never buy a non-3G smartphone, in fact I doubt whether a smartphone lacking 3G can be described as such but this is a temporary problem. In his keynote announcing the original iPhone Jobs said the stumbling block with 3G was battery life and once they had sorted that out the iPhone would have 3G.
RIM had already started tidying up their act in anticipation of Apple’s entry with the Pearl and Curve. With the Bold they have opted to stick with the keyboard which is the Blackberry’s main distinguishing feature. I think this is a good call, RIM have managed to evolve the design of the Blackberry in a way which has struck a good balance between capturing the sleekness of an iPhone in a device which is still recognisably a Blackberry. If they had gone the whole way to a iPhone style touchscreen they would have lost. When you start to play your opponent’s game you are dead because you can never be the original. A Blackberry without a dinky keyboard is not a Blackberry. The name itself comes from the way the keys make the device look which underlines the importance of design.
Everything flows from good design. The reason facebook is better than MySpace is that it has far superior design. Pages on facebook are clean and uniform whereas MySpace is an eye popping mess. Facebook has deteriorated with the proliferation of external apps leading to attempts by the company to simplify things again. I don’t think there is much mileage in being ‘the new facebook’ but it would be inetresting to see what would happened if someone launched a new social network with a simple design and minimal features.
On our statup we hired a designer before even a developer. When the developers did come on board I emphasised the importance of our design. I wanted it to be stark and different as I think there is no value looking similar to every other website, in startups if you are not radical you are dead. Why would anyone switch to something that is 5% better than the incumbent? Design is not all of this but it is part of it.
The Modernism exhibition at the V&A had a big influence on me, in particular the work of Ladislav Sutnar. When I wrote the design spec for our site it was Sutnar’s influence that I emphasised, in particular the simple shapes and the almost monochrome, sixties look - the banner for this blog is a Sutnar design. The V&A summed up Modernist philosophy as:
Modernists had a utopian desire to create a better world. They believed in technology as the key means to achieve social improvement and in the machine as a symbol of that aspiration. All of these principles were frequently combined with social and political beliefs (largely left-leaning) which held that design and art could, and should, transform society.
I am struck by the paralells between Modernism and web startups. I recognise the tendency of startup founders to proclaim their companies as changing the world. This is rarely true on an individual company level but together we are all part of the patchwork of ideas which make up the web and put together the impact is undeniable both in commerce and beyond.
Barack Obama is rasing more small donations than any other candidate in history to the extent that this is now his main source of funding. This is a far better way than reliance on large corporate donors or state funding. Another example is Kiva which has used the web to connect people in the first world directly to those in the third world. Microfinance is a much more efficent way of redistributing wealth as it makes a direct connection between people and ultimately it is trade, not aid, which will bring an end to poverty. And it is the web which is helping make it happen.
I was in Australia a few months ago learning how to surf. One day while I was lolling around in the Hunter Valley reading the paper I saw an article about a new chip being developed by NICTA which can shift large amounts of data wirelessly. This is exactly the type of technology which will be needed for the next generation of STBs and if I was a VC I would rush to give them the $10m they need to bring it to market. Stan Skafidis, the project director, said:
The hard yards ahead of the spin-off venture will not be in securing funding but in convincing the market.
Convincing the market means explaining how this new wireless chip will revolutionise the delivery of video. The reason wireless is important is because it is easy. People want don’t want to fiddle around with Ethernet cables on an STB, they want to plug it in and for it to work - wireless is the only way to achieve this. On top of this the wireless connection has to be blindingly fast, 802.11g won’t cut it for a mainstream consumer device - downloading high quality video takes too long. At 5 gigabits per second the NICTA chip fits the bill.
People won’t wait 40 minutes to download a movie even though that is far quicker than waiting for a disc to come from Netflix. Until these speeds come down to under five minutes video downloads won’t take off. One option is to develop software which can start playing the video while it is still downloading but the real answer is radically improving download speeds and that what will convince the market of NICTA’s value. I expect every single next generation STB will need this chip which is what gets VCs excited. I don’t think they will have any trouble getting the cash.
Improving the speed from the wireless router to STB is only one half of the equation. There is not much use in developing a blazing wireless connection if Internet connections are still chugging along at under 10Mbps. In the UK this means a complete infrastructure upgrade, fortunately this seems to be going ahead with a project to lay fibre optics in the sewer system. Once complete the UK will be able to get speeds of up to 100Mbps so props to H20 for pioneering this. I’ll certainly be one of their first customers when they reach London. Another benefit is they won’t have to dig up any roads to do this which I am delighted about since at any one time Thames Water seem intent on digging up at least two sections of my bus route to work. This is an entirely mysterious process as there never appear to be any workers around - just fences, holes and exposed pipework.
I recently bought a Humax Set Top Box following the demise of my Freesat STB. Apart from Citylink Beckenham making me wait an hour to collect it I am delighted all round. These things are pure genius and I have no doubt Humax will take over the world while bigger companies are fannying around with things like DVD recorders and Blu Ray. The real breakthrough will come when STBs get wifi and can connect directly to the Internet.
This is something we are ultimately planning towards with our startup. TV and film services on the desktop will never make any real money as most people aren’t prepared to sit at their computer to watch TV. Now I know what you are thinking ‘I watch TV on my computer all the time’, my point is that you are not ‘most people’. First of all you are reading a technology blog, secondly to get your desktop TV you are willing to monkey around with uTorrent, Mininova, Bitmetv or whatever which most people are not prepared to do. They just want to point a remote at their TV and go.
At the moment we are in the (very) early days but the destination is increasingly clear: smart STBs. Until Toshiba folded recently there was a great debate over whether HD DVD or Blu Ray would triumph, my prediction is they will both lose. This situation is reminiscent of the mid-nineties when a debate raged over what would replace the CD, the two contenders were DAT by Philips and MiniDisc by Sony. Ten years later who has either? Hard disk based players came along, Steve Jobs spotted the trend and the rest is history.
Smart companies like Apple are not even involved in the next-gen DVD market, focusing instead on smart STBs. That said the iPod prospered long before the iTunes Store because of the explosion of filesharing when Napster launched in 1999. The iPod arrived two years later and was built to capitalise on this content explosion. This time Apple is building the device and tying it to the store. The problem with this approach is that people generally won’t pay $1.99 per episode (or more in HBO’s case) for content they can record to their STBs or get from Mininova for nothing.
To me a far more interesting development is BitTorrent’s move into STB software and the emergence of the Myka STB. This is the future. I expect over the next few years for something similar to happen with video as did with music. In the early days content owners will be determined to use DRM to tie down consumers before realising there is no future in restricted services and opening up. It will need a compelling argument for content owners to do this - in particular how any service can beat piracy. That’s where we come in.
Facebook CFO Gideon Yu has just announced a $100m loan from TriplePointCapital which is bad news and good news.
The bad news is if FB was able to sustain a $15bn valuation you would always go for the tiny dilution that would represent rather than saddle the company with debt of any kind. It suggests to me that nobody was willing to pony up $100m for 0.67% of the share capital, not even investors who had previously invested at that level. To that extent I agree with Primack that the high valuation has hurt FB. With equity funds apparently cut off without climbing down from the big 15 it is now effectively forced into borrowing until it finds a viable revenue model and even then they are relying on a fairly small pool of potential creditors. With the credit crunch few banks would lend to FB at all and those that did would only do so at a punishing interest rate - perhaps calculating that if the worst came to the worst Microsoft would ride to the rescue and pump in more cash having shown considerable willingness to do so in the past. I don’t think TriplePoint is being any more generous.
This adds to speculation that FB is overvalued and the feeling that MS, Li Ka Shing and the Samwers will be left with with red faces. Maybe, maybe not. For MS it was a strategic investment. The stake was less important than the exclusivity deal which would keep FB banner advertising away from Google until at least 2011. For the others, who are rumoured by Blodget to have had a different deal to MS, it was essentially a bet that either FB would devise its Adwords or one of the outside developers would. As I said in my earlier post I think if FB or one of its outside devs works this out both will be in the money. This is why FB opened their platform in the first place and why VCs would be wise to continue throwing money at, or making strategic investments in (for any VCs reading), FB app developers even if not now FB itself.
What they are all aiming for is showing companies that FB can revolutionise advertising as much as Google did. Ultimately, all companies want to know is who is likely to be interested in buying their products. In the pre-Google days advertisers would blast adverts at everyone watching a particular TV show or reading a particular paper on the basis that some small proportion of those watching would be receptive to the message. There was some scope for demographic targeting but it was relatively crude. Google revolutionised advertising by showing companies they knew more precisely who was interested in buying what. FB has a chance of repeating this success because of the vast amount of information it holds on its users.
This brings us to the good news: the $100m will be spent on expanding server capacity. Now $100 is a lot to spend on servers but FB can fill it with some very valuable information that Google doesn’t have. Whereas Google gets a snapshot of what is on someones mind then serves ads relevant to that FB has much more depth, of course Google is not taking this lying down but FB is still in the box seat as it holds the data. Not only does FB know what an individual person is interested in it also knows what all their friends like and, most importantly in my view, it can link otherwise unconnected users through their stated interests. Put together, all of these patterns are fantastically valuable if they can be analysed correctly. Beacon was clumsy and met with outcry from FB users but that failure does not mean all attempts at analysing the user data FB holds to serve contextual ads will automatically meet with the same response.
People are perfectly happy to look at relevant, helpful ads if it’s done in the right way. Google proved this by separating its organic search results from its sponsored links, this is the reason why we are talking about Larry, Sergey and Google today, not Bill Gross and Overture (see Ch 5 of The Search by Battelle). I’m always interested in finding interesting, new films that I would not have come across otherwise. One way is to read niche sites like Ruthless Reviews but another is for FB to help me out. It already knows what my favourite films are and also who else on FB likes the same stuff: Moodysson, Clarke, Greengrass, Stone, etc.
Why not analyse my connections with other users through those lists and serve me suggestions of interesting new stuff which is on other users’ lists but not mine? I would be interested to see suggestions based on the favourites of other users with similar tastes, it worked for Last.fm so why not FB? I buy DVDs all the time, link me to a store and I’ll probably buy, FB takes a cut of the sale et voilà! A business model for facebook! I bought Sophie Scholl the other day on the basis of an Amazon reccomendation and a glance at the synopsis. It turned out I loved it. Amazon knew from my previous purchases that I was into modern German film, served up an approproate ad and made a sale. Once I had watched it I dutifuly added it to my favourite films on FB and yet the only ads I get is for stuff I have almost no interest in.
Why do you treat me this way Mr Zuckerberg? I have told you everything you need to know - give me relevant ads!
This point is similar to the one I was making about delicious in my On Yahoo post. Google was so sucessful at analysing the web 1.0 world because it had the best way to analyse the connections between pages. The Google sized spot for web 2.0 is still open and it will be filled by the company which can analyse links between people as well as PageRank does links between pages. It is that propsect which makes investors pay $15bn for facebook, it may not be FB which ultimately wins the prize but some company will.
On Wednesday one of my favourite non-technology blogs, Arseblog, was acquired by OleOle, the football centric social network. I’m not even an Arsenal fan but Arseblogger is one of the best writers around and I always enjoy reading his entertaining posts on the ups and downs of the Flamster et al. He’s there 7 days per week come rain or shine with something interesting to read, even for the general football fan and this has led to the acquisition by OleOle.
OleOle is a football social network. I know that niche social networks are the new thing and I can sort of see the value in one based around the worlds biggest sport. That said I started out as a social network sceptic and I am not totally cured. Any new venture, OleOle included, faces the facebook dilemmas - Why can’t I do this on facebook? and Why should I be arsed to set up another account somewhere else?
Also facebook, brilliant though it is, still has the feel of a Google looking for its Adwords. There is no doubt that facebook can sell things, I’ve bought stuff after seeing updates from my friends and I can begin to understand the $15bn valuation since FB will be worth a lot more if they crack it. I have no idea what is going on inside facebook but from the outside it looks like a fair amount of stumbling around. As far as I understand it most of their cash comes from a big ad deal with MS which is not really a good basis for an independent business.
I see the merit in opening up the platform to developers - if even a tiny percentage manage to develop a money generating widget facebook is in the hay without having to do anything. The problem is that none of the widgets make any money (please correct me if I’m wrong) not even Slide with its pedigree. Levchin himself recently conceded that startups had to look beyond advertising but that $80bn by 2010 pie which drew MS to Yahoo looks mighty inviting and most people can’t take their eyes off it even though they know Google will eat most of it.
FB has a chance too but it needs to make it far easier to buy straight from the site then take a cut from the sale. I’ve already told FB what my favourite films are and through that it can link to other like minded people and recommend me things I might be interested in. FB doesn’t do this right now - at least not in any way I notice when I’m using it.
Ultimately that’s all advertising is - getting people you trust to recommend things you like. One of my favourite film reviwers is Matt Cale, every time he releases his top 10 films of the year I buy the number one sight unseen and I’m never disappointed. I never would have bought Cocaine Cowboys were it not for his review but he doesn’t see any cut from the sale. And I won’t see any cut when you rush to Amazon to buy it either, but you will buy it.
From the outside Yahoo looks like a vessel slowly listing into the sea. Inexplicably, it still makes a lot of money but it is ultimately doomed as nobody really knows what Yahoo is for, Microsoft included. Its shareholders are furious with Jerry Yang for spurning the $33 per share offer and threatening action as Yang backpedals. Commentators are speculating whether Ballmer is playing a game and wondering if he will be back to the table, the answer is yes - after Yang & Co have twisted in the wind for a while.
Unfortunately when Microsoft get their hands on Yahoo all they will be able to do is manage its descent more efficiently. Yahoo’s real problem is search, being number two to Google is an uncomfortable position as Yahoo has spent a lot of time discovering. Why would anyone use Yahoo search when Google is around?
The reason Google succeeded is because Larry Page saw search differently than everything around at the time and the result was a search engine a hundred times better than anything else. Being 5% better than Google won’t cut it (assuming Yahoo could even get there) and being 5% worse, which more accurately describes Yahoo search, certainly won’t. The good news for Yahoo is that they already own the company which could save them.
Page’s great insight was that the links between pages mattered more than what was on them. He noticed that, in effect, website creators were peer reviewing each others’ sites and built a machine which could analyse that peer review to produce radically better search results. To outdo Google you would have to rank the internet in a completely new way. This may be needed anyway, as a recent post on TechCrunch speculated, the Internet is getting too big even for Google. Schonfeld said:
At a certain point, with billions and billions of Web pages to sift through, keyword search just won’t cut it anymore. It’s a needle-in-the-haystack problem, with the haystacks just getting bigger and bigger every second.
I don’t agree with him that keyword search is necessarily doomed but I think that more human interaction is required to sort the wheat from the chaff. This is the basic reason why even terrible ideas like Mahalo and ChaCha continue to attract funds. They should give up because the best human powered search engine in existence was invented by Joshua Schachter in 2003 and Yahoo already owns delicious.
Michael Arrington has already described delicious as his favourite search engine after Google and I think with some tweaking it could go one better. I am interested in the music business so I have tagged a number of stories on EMI. When I search for EMI on delicious I see all my own stories plus other users’ stories. Search results for the second group are not particularly great but delicious has all the raw information to make them much better. Through tagging I have already told delicious what stories I am interested in and it knows who else has tagged the same stories.
The beauty of delicious is that it can look into the mind of other people with similar interests to me, see what they have tagged and return more relevant results. Another advantage it has over Google is that delicious can also assess the strength of a link between me and another user by seeing how many times we have tagged the same page with the same tag.
All Yahoo has to do is analyse these links between users in the same way Google analyses links between pages and it will have a search engine which thinks differently and gives people a real reason to use Yahoo search over Google. If they crack it Yahoo will be worth far more than the $37 per share Yang wanted and they won’t need Microsoft.
