One of the best articles I've read on Web 2.0 - the best comment is right at the very end...
"And in the end, it's innovation that wins. Always."
Yep... innovate, build a business that earns money with each customer... then the only limitation is customers.
Found this great quote on the web from a Google employee (no name given)...
“It is not so much about the next killer app but about offering a continuum of experience to users whether they are used to the PC environment, phone etc and also ensuring value added services are localized to meet user needs (this will vary country to country)- this will be the key to success”
Bingo... it's all about customer experience. Keep it simple, make it work and reduce the friction in the transaction. Oh yes, one more thing, make it local.
This is exactly where we are focused at 5o9. We call it "Who, What, Where and it's right in alignment with the Google quote above:
One thing that's missing in the above quote... respect the customers privacy and give them control over what they are willing to share and what (content) they are willing to receive. We call that "Pushing with Permission™).
WWW used to stand for World Wide Web... now it's going to get a Make Over... and will stand for Who, What and Where. The Web is still global, it's just not about one device anymore, and it's going to be localized.
For those who are interested Microsoft has a document which outlines their customer privacy guidelines. (link)
The core principle driving these guidelines is:
Customers will be empowered to control the collection, use, and distribution of their personal information.
For customers to have control over their personal information, they need to know what personal information will be collected, with whom it will be shared, and how it will be used. In addition:
Now as a web server admin/content provider where do I get the tools to enable this? On the client side the tools are even harder to find… Cookies don’t cut the mustard when it comes to empowering customer privacy. However life without them is almost unbearable as I have to keep typing in data.
What’s needed is a simple mechanism that allows the customer to control what he shares. This should be available to the web server at any time it’s needed. It should never be stored on the server. Where this mechanism/tool will be vital is mobile (off-deck) solutions where data entry is a real hassle.
Web sites that abuse customer privacy do so at their own peril. It’s time to get serious about the customer.
Here’s the headline from Reuters (link)
AMSTERDAM/LONDON, Nov 20 (Reuters) - Technology companies and mobile operators joined forces on Monday to plan a global standard for electronic wallets in mobile phones. Developers described a future where consumers around the world touch a terminal with a mobile phone and access a range of services. "Consumers will be able to enjoy multiple applications such as payment and transport ticketing from various service providers on one device," they said.
The idea is actually pretty simple, create an electronic wallet which resides on a secure chip inside the mobile device. As soon as it comes into the proximity of a terminal you can access a range of services securely.
The problem is going to be in the execution of this idea. They are talking about getting 14 mobile operators to all agree on a standard. Imagine getting together with 14 of your favorite competitors and then all agreeing on something. This is not going to happen overnight. It’s going to take years to deploy the mobile infrastructure let alone the terminals to support this.
So how about an alternative idea… an electronic wallet that resides on the mobile device, without the need for a costly chip and can access any web server and transmit the relevant data securely and efficiently. The wallet needs to be able to understand three things…
That’s it. A little piece of software that sits on disk and secures my valuable data. It’s controlled by me, I can transmit what data I chose and I can also select whether or not I want the web or my friends to know my current GPS location. All of this data can be transmitted to any standard web server (101 million and climbing).
Oh yes… it’s available now for any Windows Mobile 5.0 phone and can be ported to any Symbian or Linux phone.
NFC communications is a big idea, the key like all ideas is “execution”. It’s one thing to make it work on the phone, it’s another thing entirely to make it work with a standard Web server.
101 million – 500 million – 1 million
Netcraft just released it’s latest web site survey (link) “In the November 2006 survey we received responses from 101,435,253 sites”. That’s right – there are now more than 101 million web sites on the Internet. Apache has 60% and Microsoft IIS has 31%.
Back in October of 2000 when we released mod_gzip there were 20 million web sites. The Web is on average adding 1 million web sites a month. Here’s another stat from Wireless Web – they predict that by 2008 there will be 500 million Smartphone's with a GPS chip onboard. By then there will be 124 million web sites.
The current HTTP 1.1 spec does not support real time GPS lat/long data. Neither do those 101 million web servers. If they did then it would be possible to greatly improve local search, local advertising, proximity marketing and other location based services.
Search on the desktop is about browsing – Search on Mobile is about finding(location). The more information you are willing to share with a search engine the more relevant the results. Search is going to depend on real time lat/long in the next few years.
Between the top 4 search engines I would guesstimate that they already have over 1 million servers right now. This will double in the next two years. Everyone of them will be able to process real time lat/long coming from a mobile device.
The total market is huge – the addressable market is also equally huge. Between 4 search engines there are over a million servers all waiting to become GPS enabled.
On the desktop location has never mattered – on mobile it’s location, location, location.
The next advertising battleground is shaping up on the mobile device. Currently there are two ecosystems or as I call them “Planets” in play.
On Desktop Planet you have Google, Yahoo, & Microsoft (GYM) as the big three gorilla’s. Everyone of them is focused on delivering the most relevant ads to the consumers desktop. To understand more about this “Channel” head over to my partners blog – she really understands what’s going on and has some great thoughts on it. (Link)
On Mobile Planet you don’t really have any established players. However the goal is the same as Planet Desktop. Deliver relevant ads to a mobile device. However in this market things are a little different. The device is not the same as the desktop – you have a small screen, limited processing, no keyboard to talk of and certainly no mouse (Candy bar phone).
If the goal is the same on both planets then what’s the differentiator between the two? Well from my vantage point, not a lot in terms of backend computing infrastructure. GYM all have mobile initiatives. G and M are better positioned than Y (more of a media portal) to leverage all of their current relationships with advertisers who wish to move over to mobile. Everything is in place on the backend to track ads and make payments.
So why haven’t the big guys moved into this space?
Here’s my best guess – they don’t want to piss off the mobile customer. The third screen is not like the desktop screen. It’s tiny and if the ads not relevant then it’s an interruption. The holy grail is to deliver the most relevant ad possible. To do that you really have to know three things about the mobile customer… Who they are (male/female/interests), What device they are using (terminal capabilities) and Where they are (Location).
Right now Planet Mobile advertisers are making some pretty accurate assumptions about Who and What…. As the mobile device changes and transitions into the Smartphone form factor with an onboard GPS then “What” will be harder to resolve (screen size changes along with resolution). Doesn’t matter much as they will solider on and annoy the customer anyway with ads.
Which all boils down to resolving the final differentiator which will cement the winner of the Planet Desktop and Planet Mobile advertising wars.
It’s all going to be about location…. The most relevant ad is always the one that’s personal, fits on the target device and is local to me. Both Planets can do Who and What (to some degree). What neither Planet can do is “Where”.
And there’s a technical reason for this – all advertising is done using JavaScript to deliver the payload to the browser. JavaScript has a design flaw – it can’t read from disk or I/O port. GPS and Smartphone capabilities need to be discovered by reading from the OS API’s. JavaScript can’t do that.
The prize goes to the person who solves that problem – because once you do – Who, What and Where now become incredibly relevant – and that’s what advertising is all about.
As predicted location based services are now coming into vogue. Helio just announced their latest “Drift” phone which incorporates location based services.
It uses something called A-GPS to support Google Maps. Here’s how it works in a nutshell. The user, standing on the corner of 8th and Nowhere, needs to go “somewhere”. He hits the location button on the phone and it sends a signal to the satellite and gets what’s known as “reference data”.
This reference data which is not accurate enough to compute lat/long is packed into an SMS message and sent to an assistance server. The assistance server uses it to download something known as the ephemeris data which is accurate enough to compute lat/long.
This information along with the address of “somewhere” is passed to Google which then computes directions for us and downloads the appropriate map. Pretty cool stuff. Only one issue is that it’s not real time lat/long so each time an update is required the user needs to start all over again.
A-GPS is just one step away from real time GPS data being available to the search engines and anyone else who wants it.
When you step up to real time GPS data it opens a whole new slew of business opportunities such as local advertising, local search, pay-per-action advertising with a closed loop system such as a mobile coupon.
How could local advertising/local search on Mobile become a reality?
Why it’s elementary Dear Watson – it’s all about the data. All search engines rely on information to make the ads as relevant as possible. The current method of transferring that information from the device is JavaScript. As you all know JavaScript on the desktop is very powerful and refined. Why we’re not seeing advertising on mobile is because JavaScript is nowhere near as capable on this device as its desktop brethren.
So imagine this. Tomorrow morning the search admins wake up and look at their log files.
Normally they see something like this (there’s actually lots more data)
search_engine_ad_client = "pub-1741931290943325";
search_engine_ad_width = 180;
search_engine_ad_height = 60;
search_engine_ad_format = "180x60_as_rimg";
search_engine_cpa_choice = "CAAQkMikgwIaCD31z";
Now in addition to the above what if they could see something like this…
search_engine_ad_country………USA
search_engine_ad_city……………Denver
search_engine_ad_region………Western
search_engine_ad_hints…………Local
search_engine_ad_zipcode……80304
search_engine_ad_areacode……303
search_engine_ad_longitude……4001.1551,N (updated in real time)search_engine_ad_latitude………10516.3587W (updated in real time)
Two important things to note here.
As I said at the beginning of the post – it’s all about the data. Local advertising and local search means that the search engine has to know more information. On mobile it’s tough to get that information. Our company (link) solves that problem – now the Internet can become location aware at the customers discretion.
Couldn’t resist this… First of all congratulations to Zvents getting $7 million in funding. So I hit their site for a look at what they do. Below is a snapshot in FireFox 2.0 Pay close attention to the red arrow. In the desktop browser they did a pretty good job. I live in Littleton, CO
Next I hit the same site with Pocket Internet Explorer on my mobile device. (I was sitting at my desk both times). Same site shows me in Bedminster NJ That’s approximately 1769 miles due west of me.
Now I have a GPS attached to my Mobile phone…. Why can’t Zvents hook into that data feed and use that to provide me with a really accurate location… (I’ve tested it and it’s accurate to within about 100’)The desktop is local and fixed…. The mobile phone is truly local and mobile. The Web needs to be location aware if local search/events is to really be of use.
Robert Cringely has a great post (link) on IPv6 – here’s a snip….
Future Combat Systems (FCS), the $125 billion (or $300 billion, depending whether oil changes are included) U.S. Army of the near future will absolutely rely on IPv6. FCS wants to make addressable over the Internet anything with an electrical system -- every flashlight, walkie-talkie, and Humvee. The FCS mantra is that everything that has electricity is a sensor, a node, an effector, or all of the above. That's a LOT of IP addresses. The same force is moving the civilian market, too, with RFID tags on everything.
Now lets think about this in context of my last post on the physical attributes of the “desktop web”. Well folks get ready for mayhem. Imagine now if my flashlight has an IP address – how is the web going to know “what it’s terminal capabilities?” and you don’t think that the military won’t want to “know the location of that device? (assuming it has an onboard GPS)”
For the techies out there the answer of course is “user_agent”… not this time around. You’re not going to come up with a user_agent for every Tom, Dick and Harry device that connects to the Web. You’re going to need something a whole lot better.
IPv6 is a great idea – lots of good stuff. Only one problem – now everything is connected to the Web how do we figure out whose calling…. Is that a flashlight on Port 80 or are you just pleased to see me.
Today the word is that YouTube will be on mobile by the end of 2007 or roughly 14 months away. Now lets think about this for a moment. The YouTube founders built and sold the company in 21 months for $1.65b (less $500m for © issues). My hats off to them. So why then is it going to take “nearly” as long to put something on mobile?
Because all the assumptions you make on the desktop are invalid for the mobile device. The “channel” is segmented. Let me explain. On the desktop you have a fast processor, big screen, mouse, keyboard and in most cases high speed connectivity (without which 5 years ago YouTube could not have happened).
Now lets move to the mobile planet… things get radically different. It’s still a “PC” – however the attributes are no longer there. There is no large screen, the resolution is different, there is a very limited input device, in most cases there is no mouse and bandwidth is expensive and almost out of the reach for most (until the data plans come down).
Finally of course there’s the advertising model which no one has figured out. And they can’t figure it out because of what I call “insufficient data”. The web knows me when I connect on the desktop (well it has a good idea of who I am). On mobile it’s much, much harder to know me.
And as for asking me to type in anything, forget it. it’s a huge pain. On top of this the device is not fixed like on the desktop (where it’s ok’ish to interrupt me with ads (because I have a large screen)) – on mobile the real estate is like Malibu beach front – it’s darn expensive so you better get it right because if you don’t I’m outta here.
If your serious about building an application that supports BOTH the desktop and mobile attributes then my advice is to start on the mobile device and then scale to the desktop. It’s incredibly hard to go the other way. You Tube and Skype can get there, however it’s the attributes of the devices that will slow them down. They simply don’t map to the desktop world. You have to solve that problem first and then the other is a little easier.
The talk of the town (blogging world) right now is the latest from the Charles River Fund… how they are going to seed more companies. One of the VC’s posted this analysis behind a $400m dollar fund which has to earn a 20% IRR (Investors Rate of Return)
Take a hypothetical traditional $400M VC firm. In order to achieve a 20% IRR, the fund must return 3x their initial capital over a 7 year term — or $1.2B. Now say this hypothetical VC firm typically owns 20% of their portfolio companies at exit (an industry average). That means that at exit their portfolio needs to create $6 Billion dollars worth of market value (i.e., $1.2B / 20%). Assuming that their average investment size is $20M, that means that they invest in 20 companies — this assumes an average exit valuation of $300M PER COMPANY. Given the tight IPO Market and an average M&A exit value of less approximately $150M, this math creates some real challenges.
So lets think about this for a moment and add a little more context.
$400m to invest over 7 years - or about 20 companies. That’s 3 companies a year! They review roughly 800 business plans to get those three. Talk about looking for a needle in a haystack. At the end of the 7 years everyone of their 20 companies is supposed to have exited, and done so at $300m per company.
Name one VC that has achieved this? There are probably one or two, but not many. On average the VC’s will have one home run per year – that’s one out of three. So of their 20 investments - 7 will hit. Of those one will be a monster and the others will be OK. The monsters only come from IPO’s – as we all know that market is closed off right now. So what are the chances that the VC’s will really return an IRR of 20% on their funds in the next seven years?
I don’t know because they don’t publish their figures – what I do know is that being a VC is just as tough as being an entrepreneur. The only difference is that they get a paycheck from day one and even if a deal fails they still get a paycheck.
Guess we should spare a penny for the entrepreneur instead.
