Future of Web Apps, Miami, 2009

Back last semester, I decided to pony up the resources to travel to Miami to attend the Future of Web Apps conference run by Ryan Carson’s Carsonified.  The ticket cost $200 for just the conference day (the workshop day was on the prior day but cost quite a bit).  It ended up that I had to skip two classes in order to arrive on Monday, get settled in, and make it in time the next morning on Tuesday for the lectures to begin.

So I decided to book a night at South Beach hostel, having learned from my Australia trip never to stay in a hotel if I’m by myself or with a buddy.  It cost only $15/night in Miami Beach, which was across the causeway from where the conference venue was.

Took a shuttle from MIA airport (which is nowhere near as cool as Ft. Lauderdale).  I’m sure there’s a cheaper way to get into town but it sure is a pain in the ass.  Nothing like going to Reagan National from Georgetown…which is a shuttle and a metro ride away, very conveniently.

The hostel was awesome.  Reviews on online hostel sites complained about the recent construction but I didn’t think it was as bad by the time I got there.  I had an 8-person co-ed dorm room.  There were only like 5 of us in there though.

The great thing about hostels is that everyone’s there to hang out and they’re from all over.  One person I met is a forensic linguist in grad school.  His friend is a masseuse from up north.  Another roommate didn’t speak English and I can only assume she was shy and Scandinavian.

I ended up only checking the beach nearby out for a little bit since it was overcast and a little chilly.  Met up with a friend of mine and ate at a cool Cuban joint down the street called Puerto Sagua, a low-key, family-style place with great food that a Miamian at Georgetown recommended to me.  I got the bistec de Palomilla, also on her recommendation, to go with plantains.

After that, I went back to the hostel and ended up hanging out the rest of the night in the lounge/bar area that had a pool table and a great vibe.  My roommates and I played pool and shot the shit until late.

So much more value in a $15 hostel than in a $100+ hotel room, for sure.  If you don’t mind communal bathrooms and bunk beds.

The next morning I checked out and took the public bus across the causeway.  Checked in.

Jason Fried began the day.  He heads up 37signals, a cool company that sells project management web app services like Basecamp and Backpack.

This company is interesting because they keep a small staff and have varied ways of distributing and charging for their products.  Their book, “Getting Real”, is excellent and is available to read free online, but pay if you want a PDF or physical book.  Basecamp lets you run a small project off it but for more features and access, you subscribe.

Fried set the tone early in his talk by contradicting popular startup notions.  For one, he said startups should not see failure as something to be proud of, as many entrepreneurs do.  You should learn from all the small successes you make, not the big failure or big successes.  That is, how did you win these clients?  How did you identify this target base to go after, leading to increased sales?  The small things you learn through experience and not through books or blogs.

Fried said that the oil and lumber industries learned to turn their waste into more successful products.  Sawing wood produced sawdust and wood chips, that became marketable.  Oil by-products allowed for plastics.  So startups should find ways to use the by-products and waste of their main projects to see if they can turn in to products of their own.  I think Basecamp was a result of 37signals needed a project management suite to run their interior operations, for example.

Fried also said he doesn’t believe in giving your service away.  The relationship between a company and a paying customer is key — Fried noted examples of companies that got bought out and then ceased to operate, partially because they had no more responsibility for their users.  This contradicts the belief in advertising and radical freemiumism that is popular now among startups.  Fried believes people will pay for a product they love.

And finally Fried said that if you’re going to hire for a position, you need to know how to do that position in some capacity first.  Else, how would you know what to hire for and who to get?  Are you going to just let HR take over?  What does your business need?  How can you give orders to someone if you don’t know what he does?

So I really liked Fried’s lecture.  He tells you what you don’t want to hear:  charge for your product instead of try to build users first.  He questions assumptions.  He has a good product.

Ben Galbraith of Mozilla and Dion Almaer formerly of Google spoke about four changes coming down the pipe for browsers.  They likened the switch to when AJAX came out in terms of how our web site experience changed.

They talked about Web Workers, which is similar to Google Gears in that it takes scripts out of the browser, which can only really handle one script at a time, and can poll them when needed.  This allows for thread-like browser operation.

They also extolled the virtues of Canvas, which lets you (I assume) create in-browser Javascriptish 3D interfaces using the HTML standard.  So, think gaming. (what is Quake Live using?)

Then they talked about increased rendering capability in the browsers due to optimization, which will mean web apps will respond far faster and allow for things like Photoshop through the web.  And finally they brought up how something like Ubiquity can make browsing a more natural experience for you than “click to go to destination” and have content that doesn’t ever match you.   It’s somewhat like a command line for the web.  An implication of all this is that web apps will be readily converted into native apps as needed.  As Al3x of Twitter said, “They could rename the “Future of Web Apps” conference to “Past of Desktop Apps”. I still wouldn’t go, but they could.”

So our user experience with the web is going to fundamentally change yet again.

Joe Stump of Digg was interesting because he talked about keeping his developer teams small enough in essentially military-squad sizes of 5-6, even if there are far more developers than that.  It keeps them in the loop with each other.  Stump also advocated any project using a code repository and keeping a consistent documentation style, along with e-mail addresses to claim blocks of code.  Stump says developers are meant to be lazy…they know they can automate something with code so they don’t have to worry about it anymore.

Aza Raskin talked about Mozilla Weave — your “state” follows you from desktop to cellphone, as an example.  He calls for Tabs 2.0, a breakthrough in our still clunky tab management as many of us keep 10+ tabs open in our browsers now.

Dave Morin and Josh Elman promoted their company, Facebook, with Facebook Connect, which looks like Facebook is now allowing you to link any site to your vast (hopefully) Facebook friend network/social graph, thus immediately populating a new account with any of your friends also on the service.  This is a great change from the past where friend networks on each site take ages to develop.

The implications for what Facebook is doing are staggering.  They are creating a massive data feed of your social graph so you can employ your friends in participating in your life, your causes, etc.  At the same time, Facebook will eventually start letting you promote products to your friends (Beacon) across various networks, bringing in serious cash.  All this while we spend hours doing social grooming on Facebook with our friends, sharing more and more content with less and less concern about privacy.

It’s no wonder Facebook is taking over in countries all over the world, even against steadfast competition.

FOWA did this lameass panel on diversity on the speaker tour at one point.  It was good to see Chris Messina up there, a huge advocate for OpenID and also pushing for co-worker, providing shared spaces for people to be creative…  Kristina Halverson was also on the panel, after giving what was really a pretty boring speech on creating good copy.  Halverson was complaining about the lack of women at the conference and speaking on stage.  Wow, really?  You mean at a coder/developer conference, there aren’t many women?

I agree that there are awesome female coders and women working in Web 2.0.  Fine, great.  And to be honest some of them are more famous than most of the men…  So why aren’t they speaking?

Maybe specifically finding women to speak is something to keep in mind for the conference, but how about just finding entertaining, informative people?  It’s only a day of talks.

If you want to talk about gender equality and inclusivity, the conversation should be around earlier programs to get kids into engineering and math and science.  The rest of the fucking argument is moot.  Coders don’t disrespect women…they want to work with whomever can get the job done.

After a brief lunch there was a Phizzpop contest.  The first team of three guys created a Kiva-like funding site for space research.  It had a great Flash interface, funny video, good presentation.  These guys couldn’t have been very old.  The second team was made up of these old guys and their presentation was flat.  Wiry, blocky graphics, no coherent business strategy or model, trying to get astronauts and Twitterers to talk and share photos in space?  The presenter was horrible and said nothing of value.  The first team won, no contest!

One thing I think is interesting is how pro the web community is with slideshows.  If you’ve ever seen a military PPT or business PPT, you know how BORING they are.  300 slides of 100 words per slide.  Miserable…no fun.

But you get startup and web people, who are so used to pitching ideas and having fun, and you get these slick, fast-moving presentations that are engaging and interesting.  Something cool I noticed.

Joel Spoelsky gave a great talk on how he thinks attracting talent is the main aspect you should focus on.  Don’t skimp on the code or you’ll get a skimpy product.  To get great talent, pay up for it.  And buy good equipment for them, like adjustable desks and Herman Miller chairs.  Give the developers private offices around the business floor so they minimize distractions.  Developers die with every interruption; they need privacy to store lots of variables and thoughts in their short-term memory while coding.  Leave them be.  Only have meetings right after lunch to minimize distraction periods.  Coders only need to feed once a workday.  Closed door means no talkie.  Have a team lunch every day in the office’s kitchen at long tables to promote a good work atmosphere.

Alex Hunter from Virgin gave my favorite talk of the day about Brand 2.0.  You could tell he’s been talking with Gary Vaynerchuk a lot because both of them are always going on about going out there and ripping it and killing it when it comes to promoting your business and engaging your customers and fans.  They’re so animated when talking about ways to engage and interact.  How do you get a consumer to love you?  Then Hunter previewed the new Virgin web site that will affect all of Richard Branson’s properties.  The site has a sort of reputation system and virtual currency and rewards you for contributing to it.  Pretty cool!  I love to see that level of interaction with the customer…  He announced that Richard Branson and Ryan Carson and Gary Vaynerchuk would be blogging on the new Virgin site.  That’s a LOT of passion right there in those names.

Makes me desire even more to have my own web startup and spend much of my day engaging customers!  That was the goal of this conference, for myself:  to get myself totally psyched to work.  As if I weren’t enough already…

After Hunter finished his great talk, I had to leave.  I caught a cab to the airport and suffered a gate change and muzak.  MIA airport really is bad.  And I missed the launch of 280atlas (interface to quickly make web apps) and Gary Vaynerchuk, who’s always hyper and always awesome.  He finished off the day and judging by the FOWA tweets, everyone was loving what he had to say.  [edit:  here’s his video] But I had a great (but brief) time, even missing all that.

Bottom line, I learned a hell of a lot, and seeing these people in person made it more personal to me.  Seth Godin would call it seeking to be part of the tribe.  I can’t afford to go to any more of these things, and I am not friends with any of the people involved yet, but perhaps that will change.  For now, though, I felt it was an awesome, informative trip for a multi-disciplinarian who’s studying international affairs and international development.  It was invaluable to see where the future of things is going.

Mash-Up Culture is Still Young

A buddy of mine on IRC posted a YouTube video that mashes up (a phrase meaning to mix up different sources of music and video and other media into one product) drum n’ bass (dnb) music with footage from church sermons with people dancing and being overcome by religious experience and priests giving emotional sermons.  I used to listen to a lot of dnb so I enjoyed the video a lot.

These particular videos below are 3 parts of “Baptazia” called “Super Sunday”, posted on YouTube by a user named airloaf.  I don’t know much about him except for what’s on his profile.

Watch the three below:

Well done, dude! Indeed, there’s a whole slew of related videos that mash up gospel stuff with dnb. airloaf calls it “speedgospel”, but I guess it could be dnb gospel too.

It’s funny posting so many YouTube links; the “other” founder of YouTube, Jawed Karim, used to be in the IRC channel I still use to this day.

One of the more well-known mash-up artists right now is Girl Talk. The guy behind Girl Talk is mentioned quite a bit in Lawrence Lessig‘s new book about remix culture, entitled “Remix”.

Girl Talk, coincidentally, has a similar video for the new single off his album “Feed the Animals”; “Play Your Part” also uses church footage:

http://www.youtube.com/watch?v=cYhgU4b_JZ8

I don’t know who thought to put the two together, but obviously mash-up artists like using the crazy dancing in church sermons for their video bases.

Intellectual Property Law Hurting Innovation

In Lessig’s “Remix”, he talks about how intellectual property law is constricting innovation in video and music at a time when it’s possible for any individual to mash stuff up easily on their computers. The freedom we have to mash-up and remix text is what needs to happen for video and music next, but we’re a long way from that both in terms of technology and of legal protection.

The Concept of the Screen

Kevin Kelly, former editor of Wired Magazine and well-known internet visionary, recently published an article in the New York Times Magazine about “screen literacy”. Kelly makes similar points to Lessig, saying that we have already achieved “text literacy”, freely cutting and pasting text and bookmarking and Kindle-ing and quoting and referencing in papers freely. Both Lessig and Kelly point out that no one has any problem or legal disagreement with being able to quote someone else’s text without their permission, as long as attribution is made.

Kelly then goes on to say that video sharing is still in its infancy. We can’t yet really link an article about a scene from a movie to the actual scene from a high-quality feed of that movie. Says Kelly:

“With true screen fluency, I’d be able to cite specific frames of a film, or specific items in a frame. Perhaps I am a historian interested in oriental dress, and I want to refer to a fez worn by someone in the movie “Casablanca.” I should be able to refer to the fez itself (and not the head it is on) by linking to its image as it “moves” across many frames, just as I can easily link to a printed reference of the fez in text. Or even better, I’d like to annotate the fez in the film with other film clips of fezzes as references.”

Kelly then closes his article as follows:

“With our fingers we will drag objects out of films and cast them in our own movies. A click of our phone camera will capture a landscape, then display its history, which we can use to annotate the image. Text, sound, motion will continue to merge into a single intermedia as they flow through the always-on network. With the assistance of screen fluency tools we might even be able to summon up realistic fantasies spontaneously. Standing before a screen, we could create the visual image of a turquoise rose, glistening with dew, poised in a trim ruby vase, as fast as we could write these words. If we were truly screen literate, maybe even faster. And that is just the opening scene.”

The Four Screens

Interestingly, Nokia has been doing a lot of hardcore research into the future.  It employs the now well-known (as the result of an inspiring NYTimes article from April of this year) Jan Chipchase as an anthropologist who goes out and studies how people use cellphones or how they build solutions to everyday problems.

Nokia also published a video called “The Fourth Screen”, about how cell phones are a fourth screen of history that are just beginning to revolutionize our world:

Nokia argues that the moving picture or movie was the first screen we ever used.  It was a public meeting place-type viewing experience.  The second screen was the TV, which allowed us to stay in our homes.  The third screen was the computer screen and internet, which let us share with each other again, but still from our homes.

And now there’s the fourth screen, the mobile phone, that lets us go out and be social again, while still having the power of the internet and digital communication with us.

It is interesting to think about this only being the beginning.  In many ways we consider technology to have a predictable path now.  We have cellphones, and okay, maybe they will be a little faster on the internet and have better cameras soon.  But do we really imagine much more?

Nokia and more international development-oriented organizations (Grameenphone, etc.) think that cellphones can do a lot for poor people.  A lot’s been written on the topic.  But how will humankind interact and mash things up once technology is freed from the tyranny of the literate towards video and music, which even the illiterate and uneducated can relate with?  What will happen when we can search videos with the same relative ease as we can with text on Google?

It’s still too difficult.  I’ve been messing with ACID (audio editing) and Final Cut Pro (movie editing) and it takes a long time and it’s hard to get all the different file formats from different media under one roof.  You have to use the tools a lot to learn how to mix up the content well.  I just made a mixtape for a Christmas gift, under a silly pseudonym I like to use, DJ Industrial Average (for DJIA, the acronym for the Dow Jones index), and the quality of my mixing was poor, given especially that it took me many hours to do it.

So there’s still lots of work to be done before everyone can use this stuff.  But the flood is coming.

More on Girl Talk

To conclude this post, I’ll leave you with some more mashed up YouTube videos, this time using Girl Talk’s blend of 80’s, 90’s, and 2000’s music with their accompanying music videos.  Make sure to watch all 14 parts, which are not all from one user as YouTube is probably removing them gradually for copyright infringement (sadly).

My Tech Policy Memo to President-Elect Obama

For my excellent “What’s Shaping the Internet?” class with Professor Michael Nelson, we had to write a 6-page memorandum to either President-Elect Obama, Google CEO Eric Schmidt, or some other organization head, using three main policy points.

I chose to advocate for an innovation commons, a push for open-source government interfaces, and a national identity system.

I posted the memo online at Scribd, which hosts my other academic papers as well.  Scribd is awesome — it embeds papers within Flash so you can see the original format, and also export to PDF or crowdshare it. I would embed it here but WordPress.com doesn’t let you embed most content. =(

Again, READ THE MEMO HERE.

I know that my memo does not have a conclusion. =)  I opted to leave the explanation to the executive summary, so it’s not a proper structure…  Memorandums are sometimes the hardest papers to write, because they need to be very brief, concise, and appealing.  That’s why our program stresses it so much.  But I strayed from it here.  Hopefully the content carries the weak structure.

What the Memo Said

My logic in the memo was that the government should create an innovation- and business- enabling environment by ensuring universal broadband access, net neutrality, a hybrid public commons/privately auctioned spectrum, and increased R&D with clustering through universities and companies.

After we get more people online and collaborating, we can call upon them to help build and inspect open-source applications to allow everyone to interface with the government more efficiently as befitting a digital 21st century.

And finally I called for a national ID system to help unify all the databases, ensure personal privacy and access controls, and allow us to fix our own information and use it better within the government.

The national ID system would use a social reputation system, part of which I’m hoping to create through my start-up, Galapag.us — see the research blog if you haven’t already.

Hawai'i Trying to Be a Better Place

[NOTE:  Some of the stats used in this article are outdated but I think they still capture the depth of Hawai’i’s energy risks.]

Hawai’i wants greater energy independence and is taking active steps and forming policies to do so.

This has fascinated me since this summer when I went to visit my brother on O’ahu.  I stayed with him for a few days in Honolulu and we got a good chance to catch up, since Hawai’i and DC are quite far apart.  I went to Hawai’i to attend the International Achievement Summit on the Big Island (my write-up here).

My brother, who is a programmer for a project for NOAA, is always particularly well-informed.

We were driving to the airport and he was telling me how much the oil price crisis was hurting Hawai’i, back when oil was heading for $140/barrel.  The impact of higher oil prices is particularly significant to Hawai’i, since most of its imports must be petroleum from Alaska and the Pacific Rim to support its own economy (I was unable to find the exact percentage of the total trade balance spent on petroleum imports, but oil costs them $7bil/year to import).  My brother told me the taxi drivers were hurting in particular, but also anyone in the logistics and transportation sectors.  Even here in DC, there was a $1 surcharge on all cab rides to account for higher gas prices — they only recently removed it again after oil prices dipped into the $40’s.

Hawai’i in other words is highly dependent on energy imports, moreso than any other state in the union.  Petroleum in particular takes up 90% of all energy usage, 40% being imported from Alaska.  Hawai’i’s demand is highly inelastic for energy since it is a basic requirement for economic operations there.  However, in looking at the stats in depth, most of that oil demand comes from jet fuel and military operations.  Around 60% is used for transportation purposes, and about 1/3 of that oil is used on jet fuel alone, according to some sources.

A Better Place?

So when I read an article yesterday in the NYTimes describing Hawai’i’s electric company and government endorsements (whatever that means) of Better Place (press release here), a new automotive energy infrastructure start-up, I was excited but skeptical.

Better Place is a company started by an amazing salesman, Shai Agassi.  He recently had a long write-up in Wired Magazine (which, I should add, should be a must-read for anyone — it posts all its magazine articles online for free, but subscriptions run super-cheap).  And I saw Mr. Agassi speak on a panel for an electric car conference in downtown DC over the summer, featuring a Tesla Roadster and Jim Woolsey.  Agassi is considered to be (fairly over-optimistically) the leader in pushing for the future of automotive energy.

His plan for Better Place is to build an infrastructure of charge-up stations and battery-swapping stations using existing gas station infrastructure.  Combined with electric cars, which he sees as appealing to car companies because his company can separate the battery and energy production from the car design itself (which will allow car companies to execute on what they know (or should know) best), people will be able to drive longer distances and just swap out batteries interchangeably with ones at the stations.

“Agassi dealt with the battery issue by simply swatting it away. Previous approaches relied on a traditional manufacturing formula: We make the cars, you buy them. Agassi reimagined the entire automotive ecosystem by proposing a new concept he called the Electric Recharge Grid Operator. It was an unorthodox mashup of the automotive and mobile phone industries. Instead of gas stations on every corner, the ERGO would blanket a country with a network of “smart” charge spots. Drivers could plug in anywhere, anytime, and would subscribe to a specific plan—unlimited miles, a maximum number of miles each month, or pay as you go—all for less than the equivalent cost for gas. They’d buy their car from the operator, who would offer steep discounts, perhaps even give the cars away. The profit would come from selling electricity—the minutes.” (Daniel Roth, Wired)

Very ambitious.  And hard to get off the ground, apparently.

Electric Cars in Hawai’i:  The Holy Grail and a Prototype?

But Hawai’i poses a unique environment that might be perfect as an Agassi prototype.  This is the sort of shit that an international affairs grad student such as myself really enjoys analyzing.

It is a small collection of islands with a diverse ethnic composition of mainlanders and haolis, native Hawai’ians, and many Japanese and other Pacific Islanders.  It is one of the most progressive states in the union (probably second only to DC in unanimity in voting for Barack Obama in 2008’s election).  It is a major hub for civilian and military travel.  It has the largest protected natural reserve under monument status in the country, which is what my brother is working on for NOAA.  As said before, it is highly dependent on energy imports.

So it is a highly progressive state that exists somewhat outside of the rest of US politics, its budget made frail by reliance on energy imports, and is geographically suited for not only a small-scale electric car prototype project and to rid itself of continued energy dependence.

Caveats

Interestingly, Agassi’s first attempt to install a Better Place infrastructure has been Israel.  It also has interesting characteristics, being a highly-modernized nation dependent on oil, which it imports from its “enemies” (although it cuts deals with them all the time, normally) in surrounding Muslim countries.  It is essentially isolated by geography, and is small enough for electric cars’ limited ranges.

But in Hawai’i’s case, if much of its actual oil consumption is constituted by jet fuel, then Hawai’i is ages away from ridding itself of that energy hurdle.  Electric car models cannot be transferred to airplane models yet.  We won’t have “green planes” for a while.

So one has to be realistic about the ultimate impact switching to electric cars would provide to Hawai’i.  The other component is that electric cars will increase the demand for electricity production, which is also to some degree reliant on energy imports.

Hawai’i Policy

Hopefully the Hawai’ian government understands this with its more holistic solution for electric cars within a broader energy policy (read about it here).  It instituted the Hawai’i Clean Energy Initiative (HCEI) recently as an agreement with the local utilities as of October 20, 2008, to end up receiving 70% of its energy needs from clean alternatives by 2030 as opposed to the 92-95% dependence on petroleum as of now.

So there seems to be a lot of political traction right now.  My brother informed me that Lanai is trying to build large wind and photovoltaic farms and the islands are trying to unify their electricity grids, hopefully towards the smart grid that Agassi would like in order to distribute power and conserve it during peak times versus inactive times.  So the increase in demand for electricity could be off-set by a shift from dirty energy to clean, alternative energies, facilitated by Hawai’i’s policies and initiatives.

[My buddy Monkey Pope (just returning from O’ahu) in his comment below rightly pointed out that I left out the rail transit plan in Honolulu.  My brother mentioned this to me and said it was a highly-contested debate between people concerned about budget and environmental damage and people who want to remove the burden of cars on the gridlocked roads.  As it turned out, the last election day found that the rail plan passed a vote.  So this new railway may assist in removing pollution and energy burdens too.]

Politics

All of this is also interesting within the context of the automotive industry lobbying for a government bailout in DC.  Better Place and Tesla Motors are two companies started out of Silicon Valley circles of entrepreneurs and not out of Detroit.  Hawai’i and San Francisco have signed on to the Better Place project.  Tesla’s popular among the rich investors in California.  These projects may fail, but it’s sad that they receive so little support; in fact, the tech sector seems to be the only thriving source of innovation within the US right now save for its university research (pharma, auto, media, etc. are crumbling and are full of old minds that don’t understand why they’re losing) and if the US loses that, then we’re fucked.  On top of that, the Republican party and its masters and lapdogs make fun of the fags in San Francisco and Massachusetts and the cocktail-drinking elite in DC…all the people who are busy creating real value in this country instead of peddling old garbage in strip malls that no one wants to buy now that they’re having to pay off their overpriced mortgages and credit card bills.

Here’s hoping for an innovation commons promoted by Barack Obama (a Hawai’ian) that leads to more of these companies!

Thanks to my bro for getting me to think about this stuff.

The Digital Africa Surprise

For my African Development class, I was required to write a 15-page paper on some aspect of African economic development. I chose to write about converging factors, such as the east coast Africa backbone coming online, the cloud, and cheap online tools, contributing to a surprising boom in African digital connectedness to occur in the next decade. Will people be paying attention?

Read my INAF-450 Paper 1:  “The Digital Africa Surprise”.

[I’ve also converted the paper to Google Docs if you’d like to read it. (and here’s the .doc format).]

Optimism

So the G7 is meeting up with Dubya this weekend and so far nothing substantial has been announced. These people are useless. Dubya gets wheeled out to give a clueless speech that inspires no confidence. If anything, it encourages fear. Fear that we have no leadership to help us fix these problems. McCain for his part offers this fucking stupid platitude that Americans are the hardest-working people in the world, EVER. How banal.

Last week’s stock market action was unlike anything I’ve ever seen — relentless selling every day for the last few months. This made 2001 look like a cakewalk.

This in turn caused the web crowd to froth itself into a tizzy talking about the coming Silicon Valley slowdown. Led by Sequoia Capital, the clarion call is for cutting costs, firing employees, reducing burn rate, and trying to extend runway.

I guess my question is: if you’re a start-up, you’re already concerned about bootstrapping every nickel. Why wouldn’t you be relentlessly cutting costs before this crisis even started? Doesn’t this suggest there’s some bloat in the web space right now, a lot of people who are just dragging down companies with salary, ideas that don’t add value to the value chain, etc.?

So isn’t this a good thing?

I tend to be optimistic about this downturn, personally. Then again, I’m a wannabe entrepreneur who is still safe within the confines of grad school. I have less than a year now before I’ll be looking for a job so this will directly impact me.

There’s reason to be optimistic. Check out what Gary Vaynerchuk says about advertising, for example, in this totally awesome video:

“ROI. I am talking about Return on the Investment of your advertising dollar. Traditional media advertising is incredibly expensive and doesn’t provide nearly the rate of return you can derive from intelligent web-based marketing campaigns in 2008 and beyond.”

His point is that those who will be truly hurt by the downturn will be newspaper, magazine, and TV advertisers. Smart advertisers will move more and more towards Google Adsense and online marketing. It’s a lot cheaper and you’ll get a lot more bang for your buck.

The underlying point is that there’s still a lot going on on the internet. There’s projects created by love and collaboration that will continue to grow while the economy reorients itself towards the internet model. The shakeup in the workforce will reorient workers towards better ideas, letting bad ideas die. I still think good ideas will be funded by angels since the startup costs are so low.

Even if the good ideas aren’t profitable, they’ll still thrive through word of mouth and love online. At least in this way, the downturn will resemble 2001’s bubble burst: the internet will continue to evolve.

The good news for me I think is that layoffs might make it easier for me to find coders who want to help me build a reputation management platform for persistent identities. So far I haven’t had much luck.

The only thing I’m really looking for in terms of something negative looking forward is policy or legislative change. In the same way that we need structural changes worldwide to fix the financial system, Congress or the EU or the incoming president (doubtful if it’s Obama since he has a great tech policy lined up) could pass laws that fuck things up for the internet.

Amazon as an Investment

Back in 1999 I bought a lot of AMD on the basis of their developing a chip, popular among overclockers and DIY builders, that would be superior to Intel’s. The market hadn’t picked up on this superior product yet. Later, when the market finally got wise, AMD stock went from something like $10 to $60, before the bubble popped; eventually of course Intel’s superior warchest of resources punished AMD again, and almost a decade later, AMD stock is under $5.

In 2006 I invested my Iraq blood money into Nintendo on the basis of the new Wii being a sleeper hit with gamers. I was right. Its stock went from the low teens to $77, so I made a killing.

After I sold my Nintendo, I looked for another stock to invest in and couldn’t find anything. Apple had already made its run, and Google’s stock had been stagnating for a year.

The IPO market is pretty dry and there’s not really any web companies that are currently private that would be screamers if they IPO’d. I mean, would Facebook be able to justify a high valuation?

That should have been a sign to me that a bull market was taking a break…   I love to study tech and web stuff and I couldn’t find a single stock worth investing in with expectation of a large gain. There are great tech companies of course but they’ve matured to the point where they won’t have screaming stock prices.

The closest contender I can find is Amazon. Even the daytraders right now are not clued in to what Amazon is doing these days. Most think Amazon is just selling books and CDs online still. But they’re doing so much more.

It’s not just the Kindle, which is the first of the gadgets that will end up turning books into nostalgia purchases. It’s also the massive cloud of computers Amazon, using Amazon Web Services, built in order to handle their order processing and database calls so that you get pages of books displayed on your screen.

Now they are letting other companies buy time on their cloud or grid to borrow process time for their own web sites, database queries, and sales. Imagine you have an online retail company: you can use Mechanical Turk to get bored programmers to construct parts of your site for you. You can use Amazon’s database format to save some of your inventory list of stock. You can use Amazon’s front-end order processing system so that people can easily buy your goods.

In other words, Amazon is making money multiple times off the same hardware and software that it runs to manage its own inventory system. They make money off you vacuuming up books and magazines into your Kindle (since it’s so easy for you to acquire new reading through the Kindle now).

And there is a perception gap: most people do not know Amazon is doing this, even though they are by far the leaders in providing cloud services. Most people doubt the Kindle will succeed also, even though the paper book is doomed once e-readers can add more utility like pull out your favorite quotes and publish them online, fully search books on the fly, etc.

An e-reader will be a killer app one day. (but probably as part of a multi-use device)  The Kindle will take off in its next iteration or two, if Amazon can improve the look and versatility of the device (although this potential re-design for Kindle 2.0 isn’t what I was hoping for…).

I’m not naive enough to think Amazon will do well in the current environment. Both weakness in retail (consumer confidence is low and there’s less perception of disposable income) and stock market pressure on tech stocks will drive (and have driven) AMZN down. Here’s a chart:

Costs are also dropping so fast that margins will decrease on sales of media as well as on processor time.

But if I had to bet on any stock out there to be low risk, high reward, I think Amazon is the play. I haven’t bought it yet, for full disclosure.  Given that the market is in danger of crashing, AMZN’s stock could very well get crushed as well.  If macroeconomic factors take precedence, stock price means nothing.  So I’m watching, but wary.

Amazon is one of the nimblest companies out there right now and Jeff Bezos knows how to manage his resources. He’s at the forefront of the companies exploring the future of the Internet.  He has a good architecture in place; certainly we do not know what the future will look like, but the companies with the smartest people and the best tools will be the ones who will recognize it before the rest.

That’s my best bet right now.  What do you think?

Tom Friedman

Every week in my internet class, we have to post a reading reaction.  Here’s my post this week from the class blog:

“My problem is that he takes those metaphors too far at the expense of painting an accurate picture of what’s going on.  Friedman notices the right things but often simplifies everything else to make his metaphors work.”

https://digitalcommons.georgetown.edu/blogs/cctp-732-fall2008/2008/09/09/reading-response-week-3-world-is-flat-wsis/

Walled Communities

I’m currently reading Fareed Zakaria’s “The Post-American World”, which is an excellent book about the future of international relations. It does focus on the US, China, and India most, perhaps overlooking Russia which is of course rivaling China in the news right now.

But what strikes me about the future is the opening up of connections between organizations worldwide. Apparently Google and Estonia are relocating Georgia’s web sites to keep them online while denial-of-service attacks are being levied against Georgia. At the Achievement Summit I attended, the three mayors Willie Brown, Richard Daley, and Antonio Villaraigosa seemed to be saying that the federal government was not working with them, so they’ve had to take matters into their own hands on international trade and education — their megaregions are becoming entities to themselves.

PirateBay is circumventing local copyright laws by spreading itself out over the Internet. Organizations are blending themselves with international coalitions and Clay Shirky talks of American churches aligning with Nigerian ones.

What seems to be coming closer is the Metaverse as Neal Stephenson envisions it. Nation-states have lost the organizing role for most people, and instead there are city-states with walled communities within them that are quite tough to enter without permission (which resembles the walling off of Baghdad and the Palestine). But there’s a robust online world which can be dangerous but remains amorphous — a world which will probably be truly enabled by the efforts to create an online cloud currently. This large web of servers capable of massive processing power will enable us to create a real-time, highly detailed and intricate virtual world. Second Life is a fucking disaster if you ask me, and the cloud will put it out of its disgusting misery.

It remains to be seen how national governments will fit into this mix, but I guess they could still maintain their role by crushing the interoperability and accessibility of the Internet now. But it’s clear to me that people even now are becoming far less loyal to specific countries and more to organizations, ideas, and theories. For Americans, it is getting almost to the point where they will seriously consider moving to a great city in another country…but that point has not arrived yet. There are still a few regions that are still innovating and modernizing.

Anyway. Random thoughts. I don’t have anything to tie it all together with.

Some Thoughts

Solar for Developmental Planning

I read this story about Baghdad installing solar panels for streetlamps.

I’m a little skeptical. Are there materials that people would want to strip these devices for? How durable would they be? And, well, do they actually work?

But I think it shows the potential of solar power. In the same way that cellphone networks have succeeded in areas with no infrastructure, solar paneling will be a quick way to leapfrog the energy infrastructure. It’s interesting that solar power, which no company can really control the usage of, will defeat a natural monopoly in a lot of energy-dependent areas. That’s an ultimate effect we can’t even guarantee for the Internet anymore!

The problems are: the technology isn’t efficient enough, costs are still prohibitive, and you can’t secure solar paneling in the same way that you can a cell tower.

Kleptocracy

It really does feel in the US, at least at a national level, that you’re on your own. If you have money, you’ll be able to get good health coverage, get yourself out of tight squeezes, pay for the rising costs of food and rent. If you don’t have money, you’re completely screwed, and not only that, your children will be even more screwed.

The infrastructure is weakening, social safety nets are disintegrating, and all this after the cultural networks have been torn apart by suburban lifestyle and high mobility. Where we’re left is alone, living life precariously above a pit of uncertainty.

Only way to survive in the US now is to make lots of money. Very Machiavellian.