So here it is. . . the inspiration for social advertising platform released by Facebook. . .

As facetious I’m about that statement, if you think about it . . . what was pitched in the video are really no different than “SocialAds“. . . the absolute bluring of line between

advertising & relationships

privacy & knowledge

conversion & engagement

Again, as much as I think this is frightening as a consumer. I give them credit for truly examining what is going on with their community and understanding how third parties (as “controversial” as they may be) are monetizing their participation in that platform . . . AND finally building these models DIRECTLY into their product.

Fuck do no evil . . . everything is relative. If consumers are already adopting an advertising medium, it must be A.O.K.

My daily traffic all of sudden up up to over 2,000 uniques a day yesterday. This is ridiculous. . . 5-10x of what I usually get, especially since I blog at most once a week now. . . (yap, I’m getting a little bored of spouting my opinion on any random thing).

Of course this is due to the new PageRank update . . . mostly to penalize companies that sell links or does reciprocal linking. My PageRank stayed the same, but a lot of top publishers got their pagerank demoted. For example, the Washington Post. Thus comparatively, I just got more “authoritative” overnight!

( I wonder what this is doing to glam.com ’s link scheme and if their investors are now a little worried )

Anyways, the point of this post is that by no mean am I more important than Washington Post . . . and if Google’s PageRank starts diverging from the reality of the offline world (thinking that I am as important as Washington Post), its relevance will slowly but surely disappear as well. I applaud its efforts to fight search engine spam, but it seemed to me a little reactive, short sighted, not mentioning vindictive to go to this length - burning the forest just to punish off a few sick trees.

Its probably obvious now that Google believes it is the ultimate arbiter of relevance online AND offline . . . and thus regardless of what I might think. . . overnight. . . Washington Post is (or is about to be) as important and relevant as little ole me.

The horror . . .

Pligg is for sale on sedo.com of all places. I didnt even know you can actually “sell” an open source project/community. What if Linus decides one day to “sell” Linux? Can he even do that? This selling of an open source project is NOT a good trend to start but I do understand that someone (who?) deserves to make some money from the value generated from Pligg. Maybe there should be otherways to get to the same objective?

Before I jump in, a little background on pligg. Pligg is a popular open source software project that allows anyone to create a clone to Digg. John Battelle’s SearchMob is an good example of what Pligg is capable of. Its highly popular and I would estimate that over 5K websites run a version of Pligg.

Sedo seems like such a wierd place to sale a website/company/project too but, if I think about it; the main asset for sale is really just the domain & its associated website more than anything else. According to the listing, the following assets are for sell

- Domain name, Pligg.com
- Website sofware on Pligg.com (not the source code)
- Users on Pligg.com (around 10K)
- Admin Account to Pligg’s Sourceforge project area

Whats not for sale

- The source code
- The “trademark” Pligg

Which begs the following questions

- Who is actually selling these “Pligg related assets” ?
- Whose pocket is this going to?
- Does the contributors to the open source project deserve to get some of that cash?
- How about the contributors to the forum?
- Can “Pligg” the non-profit org sue the “owner” of Pligg.com for trademark infringement in the future?
- Does the new “owner” get to keep the donations coming to the site? (see the donate link on Pligg.com)
- Will the contributing community sit idlely while this new “owner” mucks with Pligg.com and try to make an extra buck? (more ads? consulting services? commercial version?)
- Will there be a showdown between those that made off with the dough and those who did not?
- Is this even “legally” possible? (ie sure those assets are “sellable” but can it be debundled? )
- How is this different than some user from Digg selling his or her account?
- Can the community block the sell? Esp with regard to the source forge account? (just like Digg can block a sell of an username)

In the end, the bigger question is. . . what is an open source community really worth? Who (which individual) has the right to sell an opensource community? If this becomes popular, one day, will Linus sell his “position” as the ultimate arbiter of Linux releases to Novell? Why wouldn’t someone like MSFT go out and just “buy up” an open source community to either control it or to kill it through random muddling thus forcing the code and community to splinter and fork?

I don’t have the answers, but I don’t see this ending up well if this trend moves beyond Pligg (which in the grand theme of things, is not that important of a open source project).

P.S. Lets not forget Source Forge is run by a for profit company while lots of “open source” projects are really controlled by private enterprises. So maybe this is not that out of the norm?

Lots of questions, but no answers . . .

Analysts in the advertising industry have been debating for ages why it was critical for Google to build out its non–search properties. One of the most commonly stated reason has been that these additional products can help Google improve its search engine AND its advertising network (both via personalization) by creating a deeper and more consistent behavioral profile of its users (via a login + cookie rather than cookie alone back in the age of Google search)

Well, 3+ years later, Google is seen marching towards that vision pretty unapologetically and brilliantly.

In the mean time, Yahoo sat on its ass and squandered the goldmine of data that it has gathered from its users since 1996. For whatever reason (panama? privacy concerns?), Yahoo not only did not build out its off site ad network, it also failed to leverage those user data to do a better job for its internal display ad targeting. Obviously, simply using SmartAd within Yahoo is a no brainer, the real power would only come after Yahoo has successfully build out its network and Yahoo could track user behavior across the web.

Man, what a waste.

(BTW, the real-time generation of display ad copy and design for targeting purposes is actually pretty cool)

Lost in the hype that is Facebook platform launch seems to be the immense implication of the platform on the evolution of the “widget” economy/ecosystem. In the past, widgets are mostly written once, and deploy everywhere applications. They are simple applications which does little data sharing with the host system . . . the integration is mostly at the user interface level (and also defined by the end user). What this architecture lacks in sophistication it makes up in its openness and simplicity which inturn drives it proliferation.

The Facebook platform (I refuse to call it an OS) is only similar to the last generation of widgets in spirit but not in practice. In fact, it is really an entirely different animal. (It has its own markup & query language! ). What facebook has built is a somewhat closed a platform. (Yes, it is more open than other websites in that anyone can get access to the facebook user base, but from a platform perspective no one has every called Windows “open” for let allowing developers to write an app without getting their permission) Developers must now choose to develop for facebook consciously and allocate resources accordingly. (Not disimilar to developers choosing windows over mac, and game developers choosing PS2 over gamecube). Given the lock-in Facebook will likely create, other social networking ( I mean “utility” ) sites will be forced to walk down a similar path and create proprietary API’s for deeply integrating platform specific widgets onto their own website. . . . and thus the ecosystem will likely become closed and the battle for platform lock-in begins.

You can certainly infer from my tone that I’m somewhat ambivalent about the the Facebook platform. Deep integration is certainly good thing. Proprietary is not. If I were Facebook, this is exactly the path I would have taken. Cisco, MSFT, and most recently, Apple all created huge businesses executing toward this strategy. (and ofcourse enabled many beneficial applications for the end user.) I have incredible admiration for the facebook platform from a technological AND business perspective. But as an end user and sometimes participant in the ecosystem, I’m highly aware of the long term cost of facebook’s eventual (inevitible?) domination.

Do I see somesort of redemption? Of course! I would love to see Facebook open source the api’s and create an inclusive standards body to manage the canonicalization of how widgets can be deployed and integrated into a host application. BUT, I’m not naive. To gain competitive advantages, each social network WILL create additional proprietary API’s to leverage the uniqueness of its platform as well as create differentiated user experience. For very good business reasons, I would not expect them to do anything but exactly that. And thus, forking and divergence will be inevitable . . .

Edit: Actually found someone that somewhat agrees with me! scott heiferman and Ash (who BTW made a hugely precient call on aQuantive + MSFT)

The blogosphere likes to report rumors as facts and edit post title accodingly in real-time as information changes. Om has some coverage (with the required hedging) while techcrunch is not hedging at all.

I have some random thoughts, not very coherent at all, but all pertaining to the transaction.

First of all, I love stumbleupon. I installed it about 4 years ago when I read about it in PC Mag, and I sincerely believe “browsing” is beginning to take shares away from search (more here and here) as a discovery methodology. So I say this is a smart move.

However, I did hear from my Yahoo buddies that they took a look at StumbleUpon (for an acquisition) and found that the active user base to be much lower than downloads. (sour grapes? ) For whatever its worth, I would think 3-6M users would be a $xxxM transaction but the rumored price is a little bit lower.

I also talked to some smaller websites and they have been telling me that StumbleUpon has been increasingly becoming a major source of traffic. (biggest ramp was 6 month ago, and now its a little flat). However, the traffic themselves are not very sticky (just stumbling through).

As Om mentioned, eBay beat out Google for the the acquisition. I wasnt surprised at all. Josh K. of First Round Capital is an eBay alumni (Half.com founder) and the driving force behind StumbleUpon’s board. David Feller (co-worker and friend from eBay) is StumbleUpon’s VP of Marketing and is also an eBay & Half alumni. Josh and Dave knows eBay inside out and have access to the very top of the company as well as the very buttom. Transaction among friends are usually more honest and straight forward . . . who wants to deal with Google’s cocksure M&A team? and un-certain integration strategy?

Ok so lastly, what can eBay do with StumbleUpon . . .

- eBay auction toolbar is one of the stickiest applications eBay has. This could potentially give the functionalities in the eBay toolbar some distribution on the SU toolbar. (wanna stumble on some auctions?)

- Phishing is THE reason user trust on eBay and PayPal is so hard to improve. Paypal and eBay are working overtime on creating industry working groups and blacklist databases to solve this problem. SU is the missing link to the end user to allow for distribution of the warning systems to the browser.

- Skype + SU toolbar are ways with which Paypal can creat a persistent wallet on the “browser-top” which would be significantly more convinient than hunting down the wallet. (as always I believe Paypal is the main benefitiary of most eBay acquistions)

- eBay can exert more leverage in the search game . Firefox generates $100M+ in revenue a year simply because google is the default homepage. Having the search box on the toolbar makes eBay in control of the user relationship while making search engines depend on it (for once!) for traffic. (there is some HBS case study on this. . . I think its called the “judo strategy”)

- I wonder how the Skype ToolBar is doing. Maybe its doing really well and StumbleUpon would be a good source of distribution for its functionalities too.

- I’m unsure what eBay is planning to do with SU’s small but growing advertising inventory. But maybe eBay does have grand ambitions on running its own ad network.

I dont write about payments much since lots of my work and research are somewhat confidential (for my job) and; more importantly, I’m really a student of the industry than a guru (not that it ever stopped me from BS’ing before) . . . However as I read and talked more to people in the industry it was clear to me that the future of mobile payments in the US is in somewhat of a holding pattern.

There are several architectural issues that needs to be resolved before wide spread adoption by consumers can take place. Even more importantly, without the emergence of a dominant architecture, the current consumer experience for mobile payments is not a marked improvement over what is the current “NON-MOBILE” payment experience . . . without a magnitude imrpovement in convenience or a catalyst (aka killer app), mobile payment adoption will be hard to realize.

What many entrepreneurs and VC’s fail to realize is that EXISTING payment methods are already “mobile.” What Mobile Payments really should stand for is MOBILE PHONE PAYMENTS as well as what happens to digital payments when ubiquitous real-time connectivity becomes a reality. IP connection and the browser used to tether computer users to the desktop, but not anymore with advent of IP/browser/applications on mobile phone. This is a quantum leap improvement in accessibility and context. However, cold hard cash as well as the good old Visa/MasterCard never tethered the end user to anything in the first place. The wallet is as mobile as it get! . . . Mobile payment’s value proposition will never be mobility, but the increase value through better acceptance, authentication, and control.

There are really two major mobile payment architectures in competition for the future. (Hybrids are possible but harder analyze.)

Scenario One

NFC technology matures (its very close). The payment card (Visa/Master) merges into the cell phone at the physical layer - ie your payment card sim chip is in the mobile phone.

1. Customers buys something
2. Customer “waves” his phone at a terminal
3. terminal asks customer to type in PIN at terminal (or not)
4. terminal uses its existing connection to association rails to authenticate and authorize payment
5. payment complete/fail

This is almost embarassingly simple. Besides step 2, there is almost no difference between this use case and the existing use case for payment cards. And there lies why this architecture will gain the most traction DESPITE the fact that it got a late start. The incremental value proposition is simply speed . . . and the incremental disruption to existing pratices & infrastructure are almost none. And thus the barrier to adoption are the lowest - new terminals and new cards needs to be distributed but the associations have allocated huge budgets to make this happen. Under this architecture, the opportunity for startups to disrupt incumbents are low. The banks, associations, and merchant networks will retain most of the value created.

The only evolution I can see is that Carriers gets in the game and create applications and sofwares that integrate the sim chip at the system and application layer, not just the physical layer. Thus, you can check your balance/credit limit in real time, keep a history of your transactions, etc.

Scenario Two

Almost all independent mobile payment companies are taking this route (Paypal, OboPay, MobileLime etc). Instead of relying on merchants, their terminals, and thus the existing VISA/MC association rails for authentication and payment, they route the transaction through the mobile phone, OTA IP connection, and the Carrier back onto their own merchant processing network (circumventing the association).

Here is the customer experience

1. Customer buys something
2. Phone recieves merchant ID via a few possible methods
- text message using merchant phone # as ID
- NFC gathers merchant ID from a passive terminal (no connectivity whatsoever)
- customer enters ID via an application interface
3. Phone requests/customer PIN
- dial back
- text message
- application prompt
4. The mobile uses its IP connection to authenticate and process the transaction

There are a huge amount of infrastructure that needs to built here. BUT even more important, the change in customer behavior is HUGE. . . . The odds of this architecture winning in the short term are low . . .

BUT I can see why this is a much more exciting vision of the future and a broader set of value can be created. For one, payment connectivity is no longer enaslaved to the merchant. Anyone with a mobile phone can accept payments. ACCEPTANCE (not payment) mobililty for digital money moves from “store to store” to “people to people” (Its like payment cards finally became like cash , ie it is fungible at the people level) Furthermore, the integration of the authentication through the phone opens up creative applications for controling spending, savings, and any financial activities.

EVEN MORE IMPORTANTLY from the business model perspective, this architecture gives startups an opportunity to disrupt the incumbents and create/launch their own merchant network where they can make 50-200bps on the transaction volume. Who wouldnt want to be the Visa/MC/Amex of the next millennium?

Eventhough the 2nd architecture has gain a lot of funding and publicity, I believe the first architecture will be the first to gain adoption. It is certainly not ground breaking, but its the neccessary next step. A version 2nd architecture (which enables breakthrough accpetance and ubiquity) will come but only with the blessing of the existing payment associations and not in its current form as implemented by the existing slew of startups. Paypal is the only player with an outside shot of pulling this off because of their existing merchant relationships and consumer adoption. All others needs to revaluate their architecture and give up the hope to create a merchant network. (atleast not in the first 5 years). Instead, they need to learn to play better with the payment associations, embrace NFC, focus on building mobile applications, and earn the trust of carriers. They need to learn to leverage the hundreds of millions Visa/MC/Amex have earmarked to upgrade its terminal, network, and cards instead of fighting an uphill battle.

In that model, a modified scenerio 2. Mobile phone will become payment as well as a acceptance tool . . . it will be able to act as a terminal as well as a authorization ID. (through NFC/RFID/Infared/bluetooth or whatever communication device method is out there between two phones). Visa/MC/Amex etal will not go away, but a startup might gain enough traction (Paypal) to join them. Their rails/processing systems will migrate to the handset with the help of Carriers who controls the physical layer (mobile phone hardware + airwaves). Applications will be written for the mobile phone to transform “mobile phone + payments cards” beyond simple identification tools (what is a credit card if you take out the plastic?) into innovative method for controlling spend, evaluating credit, managing savings, and whatever entrepreneurs can think of next. . .

Yesterday, Amazon launched endless.com (coverage at techcrunch and techbeat). Obstensibly its an obvious response to the $1B that Zappos.com is taking in a year (close to 35% of the total shoe market) . But even more strategically, its an increasing sign that the first generation internet giants has reached some sort maturity and limits to scale that traditional marketing techniques like brand extensions (ie, Coke -> Diet Coke) are beginning to become popular if not standard strategic growth options.

Furthermore, as much as the web 2.0 crowd (we? me?) would like to believe, mashups are not invented by the internet generation. Using internal assets and re-aligning them to create new products our services was invented when Henry Ford (finally) launched Model A.. And continutes today, the Chrysler Crossfire uses the same chasis as the Mercedes SLK, another example. (What is interesting is that mashups has moved form assembling internal assets to mixing external and internal assets through loose couplings and arms length relationships). For endless and ebayexpress, the main assets that are being leveraged are the inventory (both share a subset of inventory from the mother site).

I blogged about this a few month back and it appears to me that Amazon is hitting the same scalability issues.

For giants like eBay, Yahoo, Google, and even Facebook and Myspace (today). . . the MARKETING FACT OF LIFE - SEGMENTATION has slowly reduced the value of network effects. By definition, network effects is a mass market play. It is in opposition to the concept of niche marketing, niche product, for niche segments - ie the better you can target your product or service to a particular niche the more likely he or her will chose your product over a competing generic solution. These giants cant no longer band-aide new site wide features and functionalities hoping to attract new segments to their website as USAGE TIME, SCREEN REAL-ESTATE, USABILITY limits the feature creep. This admission that network effects is no longer the dominant driver of their business - that segmentation is - is widely seen but rarely discussed . .

It further amazes me how the mentalities of a startup can blind someone from making the right business decisions (better, faster, cheaper /= better for the customer). For some reason, the “why’s” of endless and ebayexpress were not obvious to the pundits of the tech world. . . but for someone that works at Gap, P&G, or a HomeDepot it must seem very obvious.

Every brand has its limits, even Amazon and ebay. Ofcourse, Amazon decided to completely remove itself from the endless brand while ebay tried an extension to target new segments of users.

One size fits all is only true for baseball caps (and even that is questionable). Beyond the brand, the flexibility to create custom search/discovery experience within a category can create a significantly better conversion rate AS WELL AS re-enforce the brand itself. In the physical world, the Apple Stores and its shopping experience are a clear extention of the Apple brand.

“Enhancements” are not always better. Ajax might be cool, you might love all the drag and drop functionality of the latest website profiled on TechCrunch. But you and I are a sample size of one. For incumbent companies, by definition through the size of its userbase, late adoptors are the largest segment. In the end, the feature needs to be rigorously tested with a large enough sample size to really know if “enhancements” are good for the bottom line. . . not just kinda cool.

SAN FRANCISCO - Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three U.S. presidents, died Thursday at age 94.

Friedman died in San Francisco, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis. He did not know the cause of death.

“Milton’s passion for freedom and liberty has influenced more lives than he ever could possibly know,” said Gordon St. Angelo, the foundation’s president and CEO, in a statement. “His writings and ideas have transformed the minds of U.S. presidents, world leaders, entrepreneurs and freshmen economic majors alike.”

From the AP press.

When I was an undergrad at Stanford, Milton Friedman came to speak on campus. Of all my 4 years there only Jesse Jackson (at the peak of his popularity) out drew Milton. At an ultra liberal (which college is not?) campus like Stanford, this is a feat in of itself.

To me, he is the progenitor of “market-based socialism” (I’ll get hanged by Friedman scholars for this) . . . and direct influencer of the current community driven web 2.0 vision. Essentially, he argued that personal choice (include greed) will drive toward a better society. That there is nothing in conflict between capitalism, self preservation and public good. . . (how 2.0!) Far from a Reagan apologist, he argued for those on the wrong end of the bell curve as much as he did for the middle class. He is the greatest economist of our times; if not, the most influential to the cause . . .

A few months ago, Dare Obasanjo ripped me a new one for praising Meebo in Meebo and the Coming Battle For the Software Long Tail

People don’t have enough imagination? At the end of the day, it is an AJAX version of Trillian. That’s probably one of the most unimaginative applications I could come up with.

Where are the competitors?

Lack of competitors usually shows a business is a bad idea. That’s the first lesson of starting a business. The reason it is a bad idea is the same reason building an AJAX site that shows you Google and Yahoo!’s search results is a bad idea. And if you can’t figure out why that’s a bad idea…I can’t help you there.

Apparently Dare has changed his mind. Not trying to pick fight (ok, maybe to gloat a little bit?)

I’m a loyal reader, in fact, I find his blog insightful and thought provoking. And in this case, I can see why he didnt really change his mind. It is MeeboMe that he found “fucking cool” not Meebo itself.

Meebo in its first incarnation is not that innovative of an idea . . . that I have to agree with. However, it is offering a sizable value proposition as proven by its near instaneous scale. As a result, Meebo was able to leverage that traction into new products such as MeeboMe that IS INNOVATIVE and ground breaking. . .AND popularly recieved.

As an optimist, I was focused on Meebo’s potentials (read multistep strategies) and opportunities while Dare focuse on its current product & execution. Nothing wrong with either approach really. And ofcourse, in the end, bloggers always reserve the right to change our mind . . . we write posts in matter of minutes; more often than not, a stream of conciousness post rather than a cogent essay . . . this is the beauty of the blogosphere, its a conversation rather than a publication . . . Next time, when I change my mind (almost every week) I hope someone goes easy on me