Ross Mayfield's Weblog

Paths of Resistance

This image has been in my investor presentation for over a year.

Hrm. That seems like an odd place to put a barrier. It's not like there's a cliff to fall over.

It's from Peter Merholz, who also coined the word blog, about IA in at the turn of the century.

In a presentation I gave a long time ago on emergent information architecture, I used the first birdseye photo to demonstrate how people will take a planned design and modify it to fit their needs. In the face of this, designers have two choices -- allow the modification, or throw up obstacles...

In the 17th Century the streets of Boston were paved where cows worn trails.

Today, Peter points out that shit is too hard.

Objects aren't simple any more. They don't just turn or push. They behave. And these behaviors are often played out over many steps, in particular orders. And each step is an opportunity for failure. Through the work that my colleagues conducted on business value and user experience, I learned the six sigma concept of "rolled throughput yield."

The probability of being able to pass a unit of product or service through the entire process defect-free.

At the beginning of Peter's post I thought he was making a point against iteration. As each step that involves a person is prone to error. But he is making an argument for simplicity.

...Anyway, the nub of this wee rant is, of course, simplify. It feels like we're reaching a breaking point with new technologies -- if we thought the blinking "12:00" on the VCR was sad, what terrors can we expect? Think about the lesson of rolled throughput yield -- how can we minimize the steps involved? How can we enable people to plug something in and *just have it work*? How can we do a little more work on the design and engineering, so the customer has to do none on their own?

As tool makers, I'll assert there are five bad decisions we can make:

• Create false barriers
  
• Don't trust users to create
  
• Keep it complex and smart
  
• Pretend you are objective and don't make a statement
  
• Apply scorecards to your work instead of providing experiences
  

Wikiland News

Socialtext was featured in the Wall Street Journal today in an article by Kara Swisher on wikis at work.

What's really interesting is what's happening in the Kwiki developer community -- new SubEthaEdit and Technorati plugins. Plugins on the open source Kwiki framework also run on Socialtext.

There's also an interesting thread on wiki implementation failures on Many-to-Many, where Adina provides a great comment, which I share in full:

A wiki without social conventions for organization is like a meeting without an agenda.

If you gather a group of people together around a table, they will have an unfocused conversation, unless someone has thought through and communicated the topics and goals for the meeting.

The agenda is not a "feature" of the table (!) Yet people know to create an agenda, because that is a social norm for an effective meeting.

The table does not enforce the agenda -- chairs doen't give shocks to people who speak out of turn. The meeting agenda is carried out, with some flexibility, by the meeting facilitator and participants.

When people are looking for wikis to "be organized" by themselves they are looking to the wrong place. People plan meetings, and people organize wikis.

There are social practices for organizing wikis, just like there are social practices for organizing meetings.

Most business software is like a table with a built-in set of agendas that are generic for a few kinds of meetings, and chairs that shock a speaker if she talks out of turn. The agenda designer is invisible, and long gone.

A wiki is more like a normal meeting room, which you can use for any kind of meeting. But the participants need to do the organizing and facilitating.

Implementation takes experience and understanding.

Credentiality

[Daryl Cagle via CNN Blog Roundup]

Elsewhere: OSCON & DNC

Places I wish I was.

If you are at OSCON, do meet Brian Ingerson, our lead developer. He's there contributing all kinds of things and also talking about something he created, Kiwki. Socialtext adopted Kwiki as an open source platform and we rearchitected our product to share its plugin architecture. O'Reilly adopted it too, for such things as a conference wiki.

If you are at the DNC today, do meet Rick Klau, our VP of Business Development. Besides doing a great job with Socialtext customers and partners, he makes his own contributions to his passion. You may know him as the guy that set up Dean's blog. He happens to have done the same for someone you are just beginning to know, Barack Obama.

The rest of us are following along at work.

Political in Business

Political bias in media is a big topic, especially in blogging, but what about political bias in business? We pretend to be objective and for business and government to be as seperate as church and state. Executives are people too (boo hoo) and have political views, but they rarely make it past the political filter. Basically because we are afraid of loosing customers.

But the two are inexorably tied. We often don't recongize business ties to government until special prosecutors and boycotts are invoked. Somehow I think that's starting to change. As more executives and employees blog publicly, their views are going to come out. And its time we start accepting it and even celebrating differences and debate.

Most successful people in business have a political bent that comes with thinking through decisions and leadership. They are also adept at working through differences. I'm left leaning, but I worked for a conservative foreign President and also a former Special Advisor to Reagan. My company has served companies from the left and the right and I have a fiduciary responsibility to act like a phone company (as in neutrality, not monopoly) for the benefit of shareholders. When we worked with Dean and now Kerry, I of course was enthused and passionate, I am for most customers, but to say that serving Bush would be more than doing the work would be a lie.

When David Weinberger says "Objectivity is a worthwhile objective, but it needs to be recognized that it can't be reached," this is true for more than the press.

When giving my little stump speech on Social Media, I drifted into politics. Saying something to the effect that its ironic that we are having a conference about tools to build relationships while our nation is dismantling them. What I meant to also say is that people are dying right now to protect another important part of Social Media -- freedom of speech. I care a great deal about what's right about politics and business. You can care about both and you can take stands.

What's more, if you don't act with this care, especially with the social goods and costs of your company, your corporation will be a bad citizen. And that's bad business.

Related: Joi's research topic, Socially Responsible Investing I and II, role of government (.pdf) in advancing corporate sustainability.

IT Heavies Lifting Dollars for Wikis

Time together is too important to spend working

-- Pete Kaminski (via Adina)

Michael Singer of Internet.com covers an enterprise view of the BlogOn event: The industry itself has shifted from its early adopter stage to an "awkward adolescence," according to experts attending last Friday's BlogOn 2004 conference here. But major IT players like Microsoft, IBM, and others are finding that they can embrace blogs instead of fearing them and transition the communication platform from a technical tool to an enterprise goldmine.

Socialtext CEO Ross Mayfield attributes much of the recent explosion in blogs to a ease of use and the relatively low cost aspects of the technology built on top of a Linux, Apache, MySQL, and Perl stack.

"Social media builds relationships. Connection happens before conversation, but still, this is business," Mayfield said. "What you will not find on your balance sheet is an underlying value proposition of enhancing social capital."

To clarify, there are a couple of points I believe I said. Social media puts emphasis on participatory publishing within the Social Software space. With Social Media and Social Software, conversation comes before connection. The relationship remains implicit with initial interactions (first comes the posts then explicit linking in blogrolls). With Social Networking, connection comes before conversation. The former is closer to how relationships form in real life. The latter is networking on steroids. Business has always been about relationships, Social Software is creating a business of relationsips.

The article mentions Microsoft's use of wikis in their developer community, "Whoever thought that people would want to help us edit Microsoft.com?" Jeff Sandquist said. And captures part of the conversation on Enterprise Social Software from my panel:

Jim Spohrer, IBM venture capital relations group CTO, said the company is seeing a lot of value that can be created inside organizations with tools like RSS, Atom and XML.

"Businesses can be more efficient in tapping into their internal IQ," Spohrer said. "I'm on calls every day with people all over the world, and it appears that there's a lot of value that could be captured instantly. There's a thing called Coase's Law that touches on transaction costs inside a firm versus transaction costs outside the firm. The point is to have the internal transaction costs as low as possible. This first hit home with me at a recent meeting. We went out to dinner, we're sitting around a table, and there were 15 people other than myself. There was a sense of discomfort I hadn't felt for a while, and I realized that I wished I was on a teleconference with these people. I couldn't use my tools to learn more about them and their work, their goals, their achievements. I felt I was in the Stone Age. I'd have to be very slow to get information and rely on conversation.

While this comment only covers meeting augmentation, syndication offers a great proposition for reducing transaction and total costs of ownership, a major proposition for Enterprise Social Software.

Jerry Michalski comments on the discomfort of not having meetings augmented by Social Software:

It's a slightly spooky scenario, but I'll confess to having wished for a heads-up display that projects inside a pair of glasses who's who at a cocktail party, including who used to work with whom, who's friends with whom (hey, orkut) and who's dating whom.

At Socialtext, our meetings are augmented by voice, IRC (with a bot to post to the wiki) and Workspace. By the end of each meeting, enough artifacts are captured in a social context to enable group memory. Similar to using an Eventspace at a conference. When we meet in person we find it to be terribly inefficient. But that said, there is no such thing as virtual beer, the kind of schmooze we go to events for anyway.

Blogger on the Bus

The first day of the Democratic Convention has left bloggers with little to cover. Its a shame that the greatest test of blogs alongside journalism is in covering a non-event (so far).

How brilliant would it be for the Kerry Campaign to grab a blogger or two to join them on the tour after the convention? To pick up (and drop off) a blogger for different legs of the campaign? Give them equal access to the press corp.

Now that would give us something to follow.

On second thought, this thing is getting kind of interesting. Carter slammed Bush when nobody is supposed to go negative. Clinton is pissed off at what Bush did to his decisions. Bloggers are the one new thing for the memory mechanism.

Something wonderful about the simple redesign of Technorati and how the Politics section is helping me listen to different sides. Wonder what happens to the center column items when the convention is over.

AO Video

Always On has posted the video archive from their Innovation Summit. All events should share like this. Of note is the Closing Blogger Panel. Skip the first half hour, listen in. At the end of it, you will hear me chiming in on Cost Per Influence (something I keep playing with).

July 15th, Thursday

Windows Media

RealPlayer

Bloggers vs. "Big" Media Competition Host: Peter Hirshberg, Cofounder, GoodMail Systems Dan Gillmor, Columnist & Blogger, San Jose Mercury News Blaise Zerega, Managing Editor, Wired Doc Searls, Senior Editor, Linux Journal Chris Nolan, chrisnolan.com David Sifry, CEO, Technorati.com Host: Tony Perkins, Creator and Editor in Chief, AlwaysOn

56k 220k

56k 220k

BlogOff

Since the conference blogging zen master is covering BlogOn and all the other usual suspects, I'm taking a break. Believe my panel wen't well and now its time to sit back and enjoy company.

The panel on Metrics of Influence was perhaps my favorite. Interesting to see Technorati, Slashdot, eBay and SAP approaches to reputation intertwingled for discussion. One thing that wasn't said is that explicit reputation doesn't belong everywhere (e.g. ranking friends) and the most elegant solutions don't use it at all.

Here's some local and trade coverage.

Discussing Social Media

This post is in lieu of Powerpoint to introduce the Defining Social Media panel at BlogOn tomorrow with Dan Gillmor, James Currier, Reid Hoffman, Michael Sikillian and Jim Spohrer.

How We Got Here

The Internet has always facilitated conversations and augmented relationships. When a critical mass of participation is gained, cooperation ensues and simple tools have complex results. The earliest innovators in this adoption lifecycle were geeks and hackers. Put enough of them together and you get a new mode of production to disrupt the software industry and enable a new phase of growth -- open source.

What we are witnessing is segments of early providers and early adopters form previously unrepresented networks and apply participatory technologies to disrupt industries. Earlier adoption segments include software, media, advertising, entertainment, politics, dating, recruiting, consumer electronics, sales, management, the list goes on. All these segments are information intensive and rely on relationships. And as Doc says, its a revolution in demand-based supply:

Social media are another example of the demand side supplying itself. We're seeing this with open source software, with new standards like RSS, and with the new media we call blogs. We're even seeing it in movies such as Outfoxed, and with Internet radio (in spite of destructive fear-based regulation). None of these things came from the Big Boys. They came from you and me and the rest of us here.

Landscape

There is little point in defining Social Software, Media, Search, Computing or Networking, except that new language parallels innovation. Here's my way of mapping the space, feel free to modify and make your own.

Social Software, a term coined by Clay Shirky, is the design of systems that supports groups with an underlying value proposition of building social capital...

A rather long post continues at Many-to-Many...

Unstick the World

David Hornik:

blah blah blah

Indeed. Actually, David is more than a talker about social software.

Without exaggeration, I think that blogging software is revolutionizing the way people communicate--whether to share pictures with family members or distribute a product spec to an engineering team. And I think that RSS (Really Simple Syndication) will enable one-to-one communication of content, pricing, trends, etc., in such a simple fashion that all information will ultimately have an associated data feed.

What's more, I believe that our social networks will one day be superimposed on top of practically all our online interactions (search, recruiting, dating, fundraising) to help tailor them to our specific experiences, interests and associates.

He raises a serious point about the build to noise ratio and suggests its bad strategy to wake giants. But social software, social media, social computing, social networking, whatever you want to call it, is as much about a social movement as it is about code. If we didn't eat our own dog food and act with the very transparency we seek to foster, we wouldn't have credibility.

Successful startups in social software released early and often and engaged communities. Unlike Incumbents, they have bottom-up support, organic growth and innovate within an ecosystem larger than one player. Unlike a stealth mode copycats, they built networks, learned more and have products that match real requirements. Market risk has to be addressed head on, secrets leak anyway so you might as well predict the future by inventing it openly. The greatest market risk in social software is not engaging the network early.

That said, what we blog about and talk about isn't just forward looking statements. We all have editorial judgement and don't talk about everything we do (especially because we have customer privacy to maintain). Somedays we blog about our pets or someone else's business or politics or stupid stuff we find funny. It helps that we love what we do, but helps even more that we keep it in balance.

Countinuous Spousal Attention

The art of blogging while maintaining a relationship.

See Also: take out the trash.

[via Jim via Dina]

Unconventional

Fantastic news that social media is getting its day in tube. A very big deal.

I attended the democratic convention where Clinton was nominated. Conventions are 1/2 party and 1/2 CSPANing speeches. I used to be a speechwriter, amazing words will be said and blogging will amplify the best passions. Not much happens on the floor. Most of the action is in private parties and the real stories are real people.

I want to hear what an unknown Mayor with liquid courage says at a National League of Cities shindig has to say about the state of the nation.

Then again, leave it to the pros.

Cooperation and Commoditization

Before I get down to business on Social Media, I thought I would further bind the thread of commoditization, and include a shmoo monster. The thread runs from how Sun montetizes Java, my capture of the Commoditization Panel at AO, Dan Farber, Tech Commodities 101 and Jonathan Schwarts' response.

Jonathan and Dan fisk my 5 Requirements for a Commodity Market. But to clarify, when these conditions are met, the market moves from physical to financial commoditization. In other words, it marks the creation of a derivative market (from a spot market to a forward market to a futures market to trading options and derivatives) can be created to manage risk, when any of these requirements are met its a sign that commoditization is progressing.

A natural stage in commoditization is when market players shift from competition to cooperation. The acknowledge shared risks and cooperate to pool them. This process happens faster with networked goods. If there is one point I would like to get across it is that if an industry embraces physical or financial commoditization early by pooling risks, volume and innovation grows.

Dan Farber discounts commoditization in favor of innovation over complexity:

The constant innovation and competitive forces that have propelled the industry forward will continue inhibit commoditization in many parts of the software stack. However, standards will continue to evolve and take root, and the cost of continued innovation or differentiation at some parts of the stack won't be worthwhile. Don't expect a commodity data center that you can buy from a vending machine soon, but there is at least recognition that part of reducing the complexity and cost of IT is based on substitution and competition.

Its even better than that, beyond bandwidth as a commodity (heard today that Arbinet was readying for IPO), utility computing is precisely about the physical commoditization of MIPS, Mbs & Mbps. Virtualization first resolves complexity and then distributes the commodity.

Steve Gillmor interviews Jonathan Schwartz in a conversation is very different from the Nicolas Carr thread of IT Doesn't Matter, because commoditization of vendor offerings can actually help differentiation in deployment. Efficient procurement of technology affords greater options for applying it, productivity stems from implementation with the workforce and unique combinations are gained from portfolio synergy of technology assets. There are lots of reasons why Carr is wrong, commoditization isn't one where he is right.

David Stutz chimes in with a related point:

In line with Christensen's theory ("the conservation of attractive profits" or "the conservation of modularity"), I would assert that every "pure software" company that has had large-scale success first offered their customers enhanced productivity in the form of packaged proprietary software, followed later by a redefinition of that software as a platform to be used by customers for rapid customization and their extensibility needs.

David is right. Products evolve from feature to application to platform. The transition from application to platform is an inevitable action of physical commoditization, where the provider shares risk and reward with partners.

Now back to the shmoo monster. Or if you prefer something more interesting, a bonus link on competing against a social movement.

BlogOn Dinner

Looking forward to BlogOn later this week in Berkeley. There is an open blogger dinner Friday night you can sign up for, should be a blast.

Here's a nice article on Social Media as a Wave that interviews Mary Hodder and Jerry Michalski.

UPDATE: The event is SOLD OUT

Blog Reading Factoid

This is USA today...

[via Joi via Smart Mobs via Blogads]

Tech Commodities 101

The tech industry has been obsessed with commoditization as a market trend since the crash. For most, its simply a chicken littlish "my prices are falling!" But I know a little too much about commoditization from a former life, co-founding a commodity exchange for bandwidth and leading a risk management software company for a time. My company moved out of the telecom market when it crashed into equities, but others remain. While building an exchange, we had to work with energy and other commodity traders to understand their fundamentals and apply them to markets otherwise driven by innovation. Some of the research we did back then can be found at Oncept, including how we identified market characteristics unique to telecom such as temporal and geographic arbitrage. So before I moved up the stack, I learned just enough to be dangerous.

Let me provide some definitions and then apply them to the commoditization of software.

First, a commodity market exists when:

• There is a common definition of the good and standardized contract. This includes its quality or service level and keep in mind there are over 100 gradients of West Texas Intermediate Crude, the most liquid oil contract.
  
• There is enough liquidity, or volume of trading in the market
  
• There is no concentration in supply
  
• There is no concentration in demand
  
• Pricing is volitile and indexed
  

Second, the Internet is a force for commoditization. It aggregates liquidity in otherwise fragmented markets, make pricing transparent and reduces transaction costs.

Third, all markets trend towards commoditization and prices decline. A market where prices have a rising trend is in contango, when prices trend to zero the market is in backwardation. Innovation creates new products and bundles that are initially in contango, but backwardation raises its ugly head at increasing speed with competition.

Fourth, when commoditization occurs the market grows in volume. Inflection points usually happen when there is a market failure that identifies new risks. When new risks are factored into models, the new risk management practice enables greater liquidity.

Fifth, there are four outstanding risks to manage:

• Market risk -- price volatility
  
• Technology risk -- obsolescence
  
• Operational risk -- execution
  
• Credit risk -- counterparties and exposure
  

There is little doubt that MIPS, Mbs, Mbps and Mhz meet the criteria for commoditization. If you are a player in a Datacommodity market, here's some ways you can make money:

• Volume, through realizing economies of scale and speed
  
• Trading, through arbitrage
  
• Bundling, through realizing economies of scope and span with an adaptive infrastructure
  
• Risk Management, through offering your customers bundles that shield them from volatility. Above all, this is managing complexity
  

Common wisdom in the valley is that when commoditization occurs in your market, you have to move up the stack. This is partially true, but forces some companies to move into services too early or without a competitive advantage. Instead, the first step is to address risks and inefficiencies -- to innovate in marketing, not as in spin, but value chain orchestration and commercial configuration. Embrace commoditization, since it is inevitable. One positive trend is companies already up the stack now take commodity managment as a core competency (e.g. Google's hosting complex) or are addressing it with partners that offer Grid Services.

Now on to software. This week, Jonathan Schwartz commented:

For software to be a commodity, intellectual property is a commodity, and I'm not buying that.

Unfortunately, the vast majority of commodities are intellectual property, not physical goods. They are derivatives. When someone writes an option, the intellectual property is rights afforded in the agreement. Currency, the largest market of a good, is also an information good. But Jonathan's point may be that IP goods are so maliable its hard to see them as fungible.

The software industry was due for commoditization, but something disruptive happened -- the rise of open source. At the time when competition would usually prompt the creation of a standardized commercial agreement, open source agreements like GPL were created. In other words, monopoly positioning commercial competition prevent necessary cooperation to pool risks and grow the market profitably. This could not have happened if the Internet didn't allow open source advocates to find each other in numbers and collaborate, not just in commons-based peer production of goods, but the commercial rights to them.

Now the industry is pooling risk in two areas: technical standards and open source. Standards are not about a common definition of a good for trading, they are interfaces for interop, which reduces transaction and switching costs (reduced lock-in and ability to bundle for customers). Besides the economic efficiencies gained, they enable easy combinations, or bundling, which drives innovation up the stack.

Open source reduces risk for participants of competing in markets where they don't have advantage. They contribute to the pool and benefit. Current open source agreements are awash with free options that could be seperate agreements. Their constraints on commercial use do not serve many markets. A standardized agreement reduces transaction costs and attracts liquidity. Especially when this contract has no competition. I have to wonder how long it will take for existing players to wake up and standardize a commercial agreement. The market has room for both open and commercial agreements and all software business models will trend towards hybrid (e.g. Socialtext has a hybrid open source business model that provides both open source, hosted service and appliance options to customers). I'll take the ASP Geneva Agreement with service schedule five, please.

A commodity market exists for software, primarily in components under open source agreements. In most commercial markets for software, there is too much concentration in supply and lack of standardized agreements for there to be a commodity market. Instead, commercial markets are using open source inputs. Witness the raft of startups building upon the LAMP stack.

But there will always be innovation in software and not all software will be a commodity. The trend is more software being built upon commodity inputs, mostly open source. While software that automates business process have grow into largely mature saturated markets, there is room for innovation. Much of the low hanging fruit is in managing the complexity we have created or orchestrating new elements of the network. But software for people goes largely unserved. The vast majority of employees are not engaged in process, they manage exceptions to process. Each wave of innovation leads to standardization which begets innovation again.

What's interesting is how players like MySQL are fostering a commodity market of open source derivatives while de-commoditizing with commercial services. They manage risk, complexity and quality for customers. As a vendor, they benefit from innovation in a liquid open market to reduce their own technology risk. Their pricing is disruptive and their role in orchestrating the value chain allows them to mitigate market risk.

Embracing commoditization doesn't just have to happen in areas where the software is core infastucture or the market player arose from open source. Its a simple acknowledgement of risk and the foresight to cooperate with erstwhile competitors.

Related posts:

• collapse of information markets
  
• 
  profiting in a datacommodity industry
  
• functional commoditization
  
• Timing Your Business Case with the Technology Valuation Lifecycle (pdf)
  
• Economies of Speed, Scale, Scope & Span

Commoditization of Software

Impressionistic transcript of a session from Always On on the Commoditization of Software hosted by Jonathan Schwartz, President & COO, Sun Microsystems. Jonathan has a related post on his blog.

* Rod Smith, VP, Emerging Technologies, Software Group IBM
* Marten Mickos, CEO, MySQL
* Miguel de Icaza, CTO, Novell (didn't make it, but this is an interesting article)
* Roman Stanek, Founder & CEO, Systinet
* Zach Nelson, President & CEO, NetSuite

Roman: People confuse commoditization with standards. Standards and APIs create a famework for innovation, it helps us built something competitive with larger players. Software is commoditized and innovation happens.

Rod: Happens in different places in the software stack. For customers, they want the function with value on top if it. Building on top of open source for another value proposition. Customers get confused with interop and commodity. What functions do we build upon and provide greater value propositions?

Jon: Commodities are the products you don't ship and your competitors do.

Marten: We look at it from the customer perspective. They want something that is quality, standardized, so we don't have to spent our time on that component. Within the company, trying to make it so easy the customer can see it as a commodity -- usable.

Jon: Useful as a marketing utility, but not a recruiting utility?

Marten:Last few years, no problem with either. Making things simple is the commoditization process.

Zach: Ubiquity does not mean commoditization. We are also an ASP, so everything we do is not a commodity, managing software is a commodity. Building our application is not a commodity. IBM Global Services has the infrastructure to operate commodities. Applying applications is not a commodity, managing them is.

Rod: Its good for us to have some things commoditized, it opens things up and drives down the cost of intergration. Doesn't mean free, there are business models to build upon.

Jon: Commodities means a product or service for which there is a universal or perpetual demand. Double edge sword, marketing benefit, but loose focus on innovation.

Rod: Linux early on was a fairly large affinity with developers externally. Helped grow the market. You can look at utilities differently.

Jon: We moved to a pricing model on a per employee basis to subscribe to the market structure. The danger is that there are still differences between products. In open source, can you can move from one product to a next -- substitution.

Marten: Comparing to other industries, e.g. Beer -- some people are selective, some people drink any beer that's cold. Software industry will go through similar phases. For many users they don't care so long as its easy, others need differentiation.

Roman: How well the tech supports changing your business model is left to innovative products.

Marc asks about DIYIT

Zach: From a focus group of CEOs we asked what worried them: everyone knew their infrastructure, the n ightmare of integration, biggest problem was fragmentation of databases. Every CEO is a software CEO because of integration and complexity. We try to reduce that complexity.

Rod: Entering an age when IT doesn't decide what the user will use. Cost reduction benefits.

Jon: If a customer believes its a commodity they buy it. If rocket science they run away into the hills.

Marten: Customer standpoint, mother told me that's what I have to focus on. For them, innovation for the customer, going beyond ERP, focus on new applications. Explaining this internally is the seeing simplicity on the far side of complexity.

Nicolas Carr has either done us a huge favor or the opposite. Entering a mode where network and bandwidth is a commodity with wide deployment. Opportunity is managing the resulting complexity.

Zach: Web services will not commoditize applications. In Siebel's UAN, their diagram is so complex, its amazing customers believe it can work.

Rod: Easy to go to a vendor and ask if you can support XML, its lowering a barrier. Provide an overall service and a bigger value proposition. I can integrate common functions without risking my whole business.

Jon: ASCII is a commodity.

Q: Internal tension between interop and innovation?

Jon: Standards are a double edge soward, a new company can say they support J2EE and be credible, larger companies are tougher. They provide a platform for innovation.

Roman: IT moves in steps. People interoperate, then innovate, then tension increases and then a new level of interop. Next couple of years there will be another standard to bring vendors together.

Jon: Software is subject to network effects and tipping. Do the service models break apart the tipping? Things tip to the lowest common denominator. Moving to models that break the ability to lock in and enable more transparency and substitution.

Rod: Virtualization and other approaches have different interpretations by different customers. Tipping points start to happen and customers pull in new directions. 3-prong works in the US, but not abroad.

Zach: BI take extracts from Siebel and SAP, put it in a database and run reports. SarBox combines up to 50 databases. Multiple datastores in decline.

Jon: Sarbox is Y2K in perpetuity, the biggest boom for the industry. Now I have a great threat called a 404 authorization to drive spending. As network commodities, vulnerabilities are exposed and architecture starts to have new concepts like security from day one.

Rod: We treated security as a baseline requirement.

Jon: Marten looking to shrink the size of an industry or looking to expand it to other parts of the world.

Marten: You must be able to abandon something old. I do it arrogantly to evoke emotions for change. We are expanding the market. Tipping point when you have volume.

Roman: Google is interesting because there is such a better enabling technology that they can provide applications on top of.

Marten: They use commodity components to be more competitive.

Jon: They created their own disk drive.

Roman: The innovation is how they combine inputs

Rod: But the underlying commodities are opaque to users.

Jon: SWT and Eclipse is choice, competition, its good. Absent of choice, you have a problem. None of us believe markets are shrinking.

Rod: Continue to be innovation on the client side. Microsoft has created barriers

Jon: That's our partner you are talking about Rod.

Rod: We will have innovation and the heterogenerity on the client

Jon: Lock in is as misused a term as commodity. Locking in is qualifying to specific set of ingredients. We have concens that Java will tip the same way Linux will tip. Free software, but are they locked in? Great theater and rhetoric, a problem of our industry.

Rod: Innovation is good, how do we harvest that and make it something they can integrate.

Jon: MySQL is an open source database, but customers qualify for a specific release and specific patch.

Marten: You need stuardship of a product. Licensing and standards manage risk.

Jon: Software is subject to tipping effects and the focus is on the evolution of standards that enable competition and substitution. I want to ensure that people in innovation are not shuttered away from Commoditization as a term. You can make money and innovate.

I defined what commodity means and pointed out that we don't have cooperation on commercial standards, only technical standards.

Marten: There are commercial standards and cooperation, but only in open source licensing like GPL.

Right, that's a part of why there is so much innovation in open source, there is room for more commercial standards to foster innovation

Jon: As moderator, I get the last say: For software to be a commodity, intellectual property is a commodity, and I'm not buying that.

Entrepreneurship and Innovation Education

Notes from a Always On session on Entrepreneurship and Innovation Education with Professors Tom Byers and Bob Sutton of the Stanford Technology Ventures Program. One of my favorite topics and perhaps the best session at the event.

Tom Byers:

Can entrepreneurship (defined as a process, a way of leading and managing, a way of siezing opportunity without regard to available resources. More than a set of characteristics.

Polled the audience on when they went to school. Odds are, I'm one of a handful to have studied entrepreneurship.

Most technology schools teach entrepreneurship now. Teaching it aids tech transfer. Leading schools prompt competitive response to offer it by other schools. At Stanford 40 courses, 3k students, 25% MBA students, most of the rest are engineers. Its about skill development, turning people into leaders. Real-time decision making skills, comfort with change, basic fields like selling and evangelism. They share their curriculm (shows Educator's Corner).

Bob Sutton, author of Weird Ideas That Work:

Like Physicians who study bloodletting in the 16th century, over focus on success stories. The AO 100 isn't what its about. Successes and failures share predictable plot lines (before and after with Enron). People worship CEOs, the degrees in which CEOs don't matter is the biggest CEOs matter at the beginning, and the very end of a company, the team is more important. CEO worship is irrational..

In the valley, on average, you are going to fail. Entrepreneurship is a Ponzi scheme, with the one that succeeds in a portfolio is held up by VCs, saying "this could be you." Students need to know these risks. 1:10 odds.

Companies take a bunch of old ideas, tweak them slightly and boom they Take elements that are proven and can be done quickly. iPod done in 8 months, because aside from ID and interface, everything else was off the shelf. iPod wasn't a radical innovation, optimized what they were good at and otherwise went with other's stuff.

One of the best ways to increase your success rate is to lie to others about the odds of success. Certain delisuional quality (Steve Jobs, Coppola). Confidence and irrationality as key to success. Blind faith towards a goal. Makes the Lemmings run faster to the sea.

Technology brokering, an IDEO approach.

I asked: Does the valley still reward failure? Valley still rewards failure, better than anywhere else (save maybe Shanghai). Rewards failure, but only if entreprenuers go through it gracefully.

This is a key point, graceful transitions benefit all.

Kathy Eisenhardt, success of teams that worked together before.

Get it out, fail and fail faster.

I posted the chat transcript from during the session (most of it).

The Original Blogg

[via Shellen (who is sitting in front of me)]

New Joiwiki

Joi Ito:

I'm at Brainstorm 2004 which should be fun. It's my favorite conference of each year. I'm going to be taking notes and will encourage anyone else here wants to use the space to put notes on the Brainstorms 2004 page my new public Socialtext wiki. I'll also be hanging out on #brainstorm on Freenode on IRC.

Blogging AlwaysOn?

Lots of people here on blogger passes, hard to tell who is here. If you are blogging at AlwaysOn, add your URL to this wiki page.

My Networks

Bill Gurley, the guy who really needs an RSS feed, hosted a great panel (videopost, .rm 220k) on wireless at AO2004. Key takeaway was the role of the consumer driving service offerings. There was a debate about technologies and business models between wireless and wireless vs. terrestrial.

But one model is increasingly clear -- smarter mobile devices negotiating across wireless networks for access and services. In the end, the business models an technologies that compete will be unified and adaptive. Far cry from our terrestrial grounding of copper vs. cable.

The seamless user experience is not just about people-centric social software, but arbitraging networks. Competition does actually work.

Can Michael Powell Take a Compliment?

Really interesting session with FCC Chairman Michael Powell, Steve Jurveston and Lawrence Lessig at Always On tonight. Follow along with a live webcast.

While Powell has carved out an area of thought leading regulation, open spectrum, perhaps to keep thought leaders complacent, it could be said nothing else is moving forward. That said, he handled well prepared questions and public comment admirably. The issues of the day are silos of regulation and indecency.

The problem with indecency is that its entirely subjective. All rational arguments fall into the categories of fact, value or policy. This one should be about policy, but its about values. The FCC Commission is complaint driven. Complaints prompt inquiry and action, leaving Powell powerless unless he moves congress into action. He did say that it makes no sense for one channel to have first amendment protection and others not. Lessig pointed out what should be obvious -- code changes and regulation must be rethought.

So I say, can you take a compliment? Why doesn't a single opinion on the decency of Howard Stern count?

I also got to ask my dangerous question: So communications is a commodity. Why not regulate it like one, like energy or financial services? Why not mark-to-market the value of underlying assets for carriers. Have competition be based on market value and mechanisms? Incent investment into innovation. Make the Baby Bells grow up?

Of course, he couldn't answer the question, and instead explained how change is slow. Can't blame him. He isn't in a position to answer a question that implies restructuring for incumbents. The world isn't ready without such strong leadership, but at least it turns.

UPDATE: Videopost (.ram 220k)

Genuine Voice

I've really enjoyed Jonathan Schwartz's blog, not just because he is a CXO blogger and what he has to say, but because he makes mistakes:

...No, because when rail guages gauges were finally standardized new traffic flourished, resulting in extraordinarily successful locomotive suppliers...

This was picked up in my newsreader with track changes on. To err is more than human in this case, its A human. Not a committee, not vetted by lawyers and PR reps. Its Wabi-sabi and its beautiful -- someone speaking their mind.

I'll report back as soon as Gates makes his first spelling errorr.

On the other hand, choose your words carefully in these interesting times.

Google Buys Picassa

Google just bet on photo sharing by acquiring Picassa. Blogger integrated their Hello service at the time they did their re-design, so they have been working together for a couple of months now. The acquisition makes sense to me:

• Photos are inherently social, people use them to tell stories and share experiences
  
• Photoblogs and Moblogs are the fastest growing segments of consumer blogging right now
  
• Camera phones will outpace the sales of cameras and phones combined within five years
  
• Partnering with a printing provider like ofoto provides a direct and immeadiate revenue stream
  
• Picassa gives them a client to ease upload and provide organization
  
• It gives Google a new area of expertise and technology beyond Images
  

Blogspace just got richer, as in social media. Keep in mind that Picassa on its own isn't social software (especially compared to Flickr), but in combination with Blogger it can be.

[via Adam]

UPDATE: John Battelle: So now let me state the obvious: Google will compete in the photo management/storage/search/untangle-the-shoebox market. And by extension, let me state the not so obvious: I think travel is next.

Global PR Blog Week

Global PR Blog Week is underway. A great stream of posts, including Steve Rubel interviewing Jay Rosen on participatory journalism and the need for transparency in PR.

Dan Forbush of Profnet is discussing Blogs, Wikis & Expert Networks:

A technology like Socialtext intrigues us at ProfNet because it offers a new and powerful way to aggregate expert content. It enables us to easily envision the day, for example, when we use a collaborative environment to develop ProfNet Round-ups -- enabling reporters, PR officers and experts to meet in Web "rooms" where they can interact more powerfully than by email, phone or video alone.

Personally, I'm watching how PR people handle a conversation on transparency. For every PR Wiki fostered by professionals there is a Disinfopedia with amateurs scrutinizing practices.

As a CEO, I have grown to distrust outsourcing PR beyond coordination, especially when we can extend our reach by ourselves authentically and the strategy is core. Oursource your PR and you may find they jump ship to share your ideas with competitors the very next day. A discussion on transparency needs to be complimented by one on ethics. If both are not addressed, sunshine is the best disinfectant and disintermediation is inevitable.

Guestblogging at The Industry Standard

I'll be guestblogging at The Industry Standard this week.

Also hope to see you at Always On 2004 this week at Stanford and BlogOn next week in Berkeley.

The Other CPI

Maybe I'm just trying to Googlebomb the out-dated word Consumer, but I posted a longer piece on M2M on Cost Per Influence. It follows two recent posts on advertising.

Not So Oddpost

The Oddpost acquisition by Yahoo (at pretty handsome terms) has been announced. Oddpost provides web-based email and RSS aggregation, funded by Venture Strategy Partners and Draper Associates just months before.

Dave has a decent rationale for the acquisition:

Oddpost turned the idea of what you could do with a browser upside down, by producing a clone of Microsoft Outlook in JavaScript and DHTML running in MSIE. Since then, they have labored in relative obscurity, growing a customer base, raising VC money, adding people, and staying out of the way. Then Google launches Gmail, with a very Oddpostish interface, and someone at Yahoo says "Hmmm, I've seen that somewhere," calls up Ethan and Iain and their new VCs and asks "Are you for sale?" and the rest is history.

With Technorati, Newsgator, Feedbuner, etc., get ready for the Social Software bubblet meme. Or at least some interesting Pops.

The Killer App

[Frank via Jim]

Connections are Options

Tim Oren reacts to my last post and rants on Reed's Law:

But, I'm going to call foul on Ross' handwaving citation of Reed's Law as an antidote to Sarnoff's broadcasting formulations. Let's get one thing straight: Reed's Law is obviously, trivially, and blatantly false. It posits that the utility of a (human) network always grows as its membership grows. In fact, the utility is not just O(N^2), but is instead O(2^N). Umm, hello? If there aren't any negative terms here, then all groups naturally grow without bounds. That obviously flies in the face of both common experience and common sense. There is a conserved item in this game - time and attention. That's the basis of competition between old and new media, and among new media forms. A 'Law' that can't even model that fact is a bit of a waste, IMO. Try again.

I'm not one to quibble with Tim's not-so-humble opinion, and this is the kind of post that wakes the trolls, but consider this -- each connection isn't solid state, its an option within a network that changes over time. Under Sarnoff's Law, the value of the network is the number of subscribers. Even subscribers have scarce time and attention. When I subscribe to your feed its no guarantee that I will actually read your mind-bending drivel. But I always have the option to consume what you produce.

To me, Reed's Law is a measure of the connections between groups with each connection being a real option. People exercize options when its worth paying the price, sometimes in time and attention. People who span or bridge groups are extremely valuable in this regard. They serve as a proxy for groups to save them time and attention, but often out of the self-interest of information arbitrage benefits. If the arbitrage spread grows, other members of the group will invoke their options for more direct connection. Now groups come and go, but the latent potential of some of those connections remain. Kerry and Spirit of America stands to benefit from ties created by the Dean Campaign.

Now I'm not suggesting that the model to replace CPM is a combination of Black Scholes and Reed's Law. Too complex, and they are models, not measures. What's different with new media is simply that its not the number of impressions you make, but who you impress.

In other words, instead of subscription counts, its the number of subscribers my subscribers have, discounted by the probability of my memes getting through. Cost Per Influence.

Ratified Metrics

As Technorati surpasses 3 milion blogs ratified, Dave Sifry talks of substituting TV:

A Forrester Research report asked Internet users which activities they were spending less time doing in order to spend time at their computers. 78% of the people polled said that they gave up television viewing. A study from The Georgia Institute of Technology's Graphic, Visualization and Usability Center showed a clear shift in media habits with more than one third of respondents saying that they "use the Web instead of watching TV on a daily basis."

Similar to Tim Oren's point on cannibalization. Reminds me of an enlightened admission Doc picked up from a TV guy:

...The broadcast metrics of reach and frequency are bound for the grave. A study released this week by InsightExpress finds that people (with DVRs) are most inclined to view ads they have not seen before, and consequently are most likely to zap ads they've already seen. Joe Mandese of MediaDailyNews wrote, "it suggests that the economics of a business based on serving redundant commercial impressions to a mass audience in order to reach an impressionable few will no longer work in the future."..

With Technorati's new Ad Mission, you have to wonder if Cosmos' substitute Reach and Authority replaces Frequency. A shift from Sarnoff's Law to Reed's Law of group forming. Jeff Jarvis talks of the need for auditable metrics like CPM for blogs all the time. But perhaps different metrics are called for with a different process of ratification.

Related: Wikipedia surpasses 300,000 articles.

Open Administration

Further evidence that the parties are at odds -- the Republicans are running Microsoft and Democrats open source. When the technocrats of either party get elected, they will bring their tools and practices with them. You have to wonder how the first open source administration would work.

Big Bird

I was taught that dinosaurs were green and lizard-like. Nowadays, the common theory is they were colorful and related to birds. Makes for better childrens books and wilds the imagination.

But is it a coincidence that these theories emerged shortly after Big Bird?

Standard Weblog Employee Policy

Yesterday I had the opportunity to participate in a community meeting of a very large tech company. They have begun to experiment with external blogging under their rubric and have lots of individuals blogging on their own. Inevitably, the topic of weblog policy came up. These conversations have matured lately, as there are clearer benefits for the risk of exposure. But it still boils down to policy and education vs. complete risk avoidance.

What's missing is a standardized weblog employee policy. Today, major tech companies like Microsoft and Sun are embracing external blogging and beginning to realize its benefits. Right now many companies are considering similar moves, but are held back by what they see as a legal grey area. We have been through most all of these issues before, as the web publishing, newsgroups and email are a virtual sieve. But blogs are newer every day and with all the hype its hard for people to get that they are simple tools.

Think of blogging as a market. In general, the greater the standardization and management of risk, the greater the liquidity. Enterprises as potentially important participants that are largely waiting to trade. To enhance liquidity, one step is a common definition of the commodity, something that standards work for RSS & Atom has largely achieved at the atomic level of a post. There are other mechanisms like indexes that help companies understand relative value (Blogdex), but the next step is a standardized agreement. In this case, the counterparties are writers and readers. In effect, writers have guidelines/policies for the goods they produce and readers have rights for what they can do with it.

Enter the lawyers. The problem is most lawyers didn't study under Lawrence Lessig or Jochai Benkler, read Cluetrain and Gonzo, and are card carrying members of the EFF. They come from the school of fear and greed. Just think of the billable hours possible for surveying every risk, asserting control and property and taking what they can from the market. They will come up with their own agreement, backed by their opinions. The human voice of the company will be muffled and the enterprise gains little benefit.

Enter the employees. They have a keen sense of the market and how to arbitrage around these constraints. They set up their own blogs, even anonymously, and benefit personally from the market of conversations.

Employees what to do the right thing. They want to have a voice, get approval and use it for the benefit of their company. Right now, they can point to the Sun Policy on Public Discourse, Groove Weblog Policy and the evolving Corporate Weblogger Manifesto as examples. They can talk their executives into considering it by pointing to Jonathan Schwartz, me (heh) and Bill Gates any day now. But its still an emerging issue.

When an employee proposes external enterprise blogging, she needs to kill off policy debate by pointing to an open and accepted agreement. Either that or wait until a court decision on corporate exposure.

So here we have this little industry, known for its technical and cultural cooperation. To open up the floodgates, lets encourage enterprises to share the process and result of discovery, much like Sun has done. When Microsoft sets their policy, its time for them to leverage their newfound cooperation to define what they have in common, and perhaps in collaboration with Creative Commons set a standard for openness.