Clearly one of the hotter social media sites right now is Pinterest. It's interesting, because my even keeled, accountant wife is actually in love with the site too. I asked her today to give me a tutorial and she got all excited and started showing me all the different options and how she keeps track of things.
The real question though, is this a viable business? I honestly think they will need to screw this up somehow for it not to be. Getting access to this demographic (women in their 20-40's) is a valuable segment. It helps them catalog their creative interests and provides an outlet for them to share their creative ideas. The real question is how to generate revenue off of this group without making them feel like they are being sold to. I think they will be able to do that by maintaining that focus of helping users to share and catalog their interests.
Facebook has done a great job starting to monetize their base. I am concerned though that users are getting ambivalent. I know personally, my group of friends gets bigger, I get more annoyed at those that make bizarre comments and I want to skinny down my usages and friends. That takes time, so I find myself using it less.
Saturday, August 24, 2013
week 6 - sorry, no interesting titles
To me, the most interesting read of the whole class was the the one on Googlenomics. Understanding the bidding process at Google seems to be the most important aspect of Google. As a securities analyst I watched the IPO giggling thinking that these guys were pushing the envelope. Don't get me wrong, I am not a huge fan of the IPO process, the banking industry and certain members of it's fraternity that seem to get away with and control most of the best deals. But, I also espoused at least to some degree that there was a level of them knowing what they are doing that made this a necessity. However, witnessing the debacle that was Facebook's IPO and then understanding that Google managed their own in their own way, you start to really have an appreciation for what it is they do.
I think the most interesting aspect and what makes it work is that there is a continuous bidding process. On top of that, you have the way in which the actual price is determined such that you pay a penny more than the bid lower than you. This is masterful. Having been stung in a dutch auction for a stock I can appreciate this method. We bid a price and initially were told we had been selected to sell our stock back to the company. GREAT!!! However, there was a mistake in the calculation and we didn't get to sell any of our stock. The stock went on a slide that ended down somewhere greater than 90 percent lower than we had thought we had agreed to sell our stock at. This was a frustrating experiment for our team that shed so much light on bidding processes, game theory etc... More recently we did much better buying stock in a company that was trading well below the upper end of their dutch auction range. All that to say, this topic is so interesting as a continuous bidding process would alleviate so much inefficiency in just about every market. As I mentioned last week I was bidding on a great property and waiting to hear what they bank would do. They have rejected both of our offers. I would be willing to go a little higher, but they don't seem to want to budge on their price. I have analyzed the property every which way I can, and I just don't think the bank has reasonable data on the market here. They are counting on value from property that may never be realized due to local laws. If there were more bidders, the bank would have better data to make a decision. Right now it's just me.
The most interesting part was that using the second bid and adding a penny actually drove up the offers. This makes sense because it takes fear out of the equation. The bottom line is you bid what you think and get a reasonable price. If you are high, your penalty is only one penny! Reducing that penalty literally changes the game!
Executive Summary for Pinterest
Value Proposition
Unlike all the other sites at the time, Pinterest was organized around images of things that interested you, not textual based comments like Facebook and Twitter. All of these other sites focused on connecting people and ideas, Pinterest focused on those ideas but as images.
Customer Relationships
There are really only two customers, users and advertisers of some sort. Right now, based on the yesterdays USA Today article Pinterest isn't really charging advertisers. However, the commentary about retailers providing data about products pinned and then allowing click through to their site to even buy the items leads me to the view that they will eventually need to and start charging for advertising.
http://www.usatoday.com/story/tech/columnist/talkingtech/2013/08/21/pinterest-building-audience-before-taking-ads/2678825/
Channels
The Channels I listed were direct and Indirect. Direct would be direct selling or advertising, but I could see a direct model where traffic might flow Pinterest to other sites and Pinterest might make money on click through.
Customer Segments
Segments I broke down to users (free and premium). Capping Pins or Pins per week, something like what LinkedIn would help drive a model that allows them to charge for premium users as well as still offer the site free and generate add revenue. Add revenue was my third segment and this is relatively straightforward. One thing I do believe that is important is not making the 46 million and growing users feel like they are being advertised too. I like the idea of retailers putting a certain level of background data out there that then allows them to have information on costs, dimensions, sizes, etc... This seems more like a value add than a hard sell. Finally, I have revenue share with customers as Pinterest users click through and purchase goods.
Key Partners
This is simple, you must keep the users pinning. If this tails off, there is no business. Second would be the advertisers, otherwise this isn't a business.
Key Resource
46 million users and growing. Again, this is nothing but an idea without the adoption that has been seen
Key Activities
Developing new and exciting ways for users to display their ideas.
Cost Structure
I used the Facebook model (rough) with cogs around 25%, then moved SG&A and R&D higher as they are trying to grow rapidly and don't have some of the scale benefit FB has. SG&A I modeled at 40% and R&D at 30%. This allows them about 5% operating margins and the ability to continue to invest to grow the business. The great part about Internet based businesses is the business scales very well.
Revenue model I did a build up on retail spending, premium users, and advertising of retailers. Because the model scales, you can maintain profitability at almost any level. This may be a gating factor for growth, but as of right now, the primary source of funding is raising money from venture funds. I think it's a great model and has the potential to be interesting. My wife has recently become an addict and is spending less time on Facebook because of it. She is also introducing my nine year old daughter to it and she loves it too.
Sunday, August 18, 2013
Business Model Canvas
Executive Summary of my business model canvas.
Value Proposition
The Value proposition is to offer above benchmark returns with below benchmark risk. This is what we strive for every day.
Customer Relationships
The institutional investment industry has really gone to a two tier model with consultants driving so much of the work. However, with key clients you have to go out and build those relationships regardless of the strength with the consultant.
Channels
Again, almost all money is placed via a third party search.
Customer Segments
I listed two segments for us as Small, Mid, and SMID and Large. These are how are teams are structured but for us, it's also a little different segment. There is more individual client money on the Large Cap side where as Small has very little individual money in the fund.
Key Partners
The big brokerage firms provide us research and trading and the technology providers enable our connectivity but also all of our data to do our analysis.
Key Activities
We research stocks and then we trade the ones we chose to buy. I should have included trading there as well.
Key Resources
The analysts and PM's in the firm drive the invest decisions and their collective knowledge and experience drive the performance.
From a cost and revenue side, it was a little different since we get paid monthly on assets under management. I just put in annual numbers to get a picture. Yes it a very profitable company as asset manages usually are. The biggest risk though is that one bad year and you could start losing clients. You have to keep doing the work!!!
update
So, right now I am waiting for the bank to respond to my offer. Interestingly, someone else decided they wanted to bid too. But not for the whole thing. They just want 2.5 acres. After a search of the property records on my counties website I agreed to let the agent present my second offer as if it were for 10 acres not 12. I was just going to sell the 2.5 anyway if they pushed me much higher on the price, and I don't have all the transaction costs, I can put less down on the property, and I don't have to deal with the subdivision process.
Before I was an investor I worked for large outsourcing firm and have heard all the Internet history. I have been on calls as IP network connections have been tested. But seriously, could I have done a third of what I did last week without the Internet? I still made a number of phone calls, and talked to a number of sources, but it was always an educated discussion versus just listening to them tell me what was needed.
Tick Tock, the bank is on the clock!!!
Before I was an investor I worked for large outsourcing firm and have heard all the Internet history. I have been on calls as IP network connections have been tested. But seriously, could I have done a third of what I did last week without the Internet? I still made a number of phone calls, and talked to a number of sources, but it was always an educated discussion versus just listening to them tell me what was needed.
Tick Tock, the bank is on the clock!!!
I wonder if the Numerati have figured out I am having a mid life crisis?
What a week. Last Friday I was checking the website remax.com to see if I could find a house with some property. I was so excited to see a property in the same school district we currently live in (same elementary school and everything) up for sale. It was even bank owned. I did some quick math and on a whim I decided to stop by Friday night.
WOW!!! What a property! And what a dump! The previous owners didn't believe in cleaning or caring for anything, EVER!!! I don't think the property had been cleaned since they moved in in 2007. I don't think they ever took care of the landscaping either. I asked the guy who was pumping out the pond... I mean pool... what was up with the property. He said he was just there doing some work to clean out the pool. No kidding, the pump was a dead give away! Anyway, he told me it was as big of a mess inside as it was outside. During our conversation, I found out he was a Realtor and would be more than happy to help me. I went home and did some quick research. Saturday I was back at the property looking with my wife and kids and Sunday with my contractor (aka brother-in-law). I did some research online and new what type of discount most foreclosures were going for. I therefore took that number and knocked off another 27% (don't judge, you should have seen the house!!!!). So, we waited. On Monday they countered. They pretty much told us to go pound sand.
Well, now I really took to the Internet. I reviewed more data on housing and was able to find an index for the exact zip code of the property. This allowed me to substantiate the price declines. I then found what the pumps for the pool would cost to replace online. Then I went and researched tractors to cut the grass. I would be going from a third of an acre lot to a 12.5 acre property. I had to know my cost to maintain it. I checked some pricing on line for landscapers and did the calculation on how long it would take to cut the property with a zero turn. Then I started thinking about all the landscaping and went and priced out a 1 series John Deere compact utility tractor (complete with front loader, backhoe, and post differ!) Back to remax.com as my wife side we hadn't looked at anything else. Ok honey, I found another property let's go see it. I have spent more time this week than I can even count researching the requirements to operate and pay for this property. I forgot to mention all the time on bankrate.com and talking to my buddy the mortgage broker. Add that to the searches on autotrader for pick-up trucks and Porsche's, I but the Numerati think I have multiple personalities!!!
WOW!!! What a property! And what a dump! The previous owners didn't believe in cleaning or caring for anything, EVER!!! I don't think the property had been cleaned since they moved in in 2007. I don't think they ever took care of the landscaping either. I asked the guy who was pumping out the pond... I mean pool... what was up with the property. He said he was just there doing some work to clean out the pool. No kidding, the pump was a dead give away! Anyway, he told me it was as big of a mess inside as it was outside. During our conversation, I found out he was a Realtor and would be more than happy to help me. I went home and did some quick research. Saturday I was back at the property looking with my wife and kids and Sunday with my contractor (aka brother-in-law). I did some research online and new what type of discount most foreclosures were going for. I therefore took that number and knocked off another 27% (don't judge, you should have seen the house!!!!). So, we waited. On Monday they countered. They pretty much told us to go pound sand.
Well, now I really took to the Internet. I reviewed more data on housing and was able to find an index for the exact zip code of the property. This allowed me to substantiate the price declines. I then found what the pumps for the pool would cost to replace online. Then I went and researched tractors to cut the grass. I would be going from a third of an acre lot to a 12.5 acre property. I had to know my cost to maintain it. I checked some pricing on line for landscapers and did the calculation on how long it would take to cut the property with a zero turn. Then I started thinking about all the landscaping and went and priced out a 1 series John Deere compact utility tractor (complete with front loader, backhoe, and post differ!) Back to remax.com as my wife side we hadn't looked at anything else. Ok honey, I found another property let's go see it. I have spent more time this week than I can even count researching the requirements to operate and pay for this property. I forgot to mention all the time on bankrate.com and talking to my buddy the mortgage broker. Add that to the searches on autotrader for pick-up trucks and Porsche's, I but the Numerati think I have multiple personalities!!!
Sunday, August 11, 2013
Warby
The Warby Parker articles were very interesting. I think there is a common problem when we look at "Internet Based" companies. Style is great, but it's personal. What looks good in a picture may not look right on you. When I was in middle school I saw a picture in a book at the place I went to get my hair cut. I decided I wanted it. My mom didn't try and talk me out of it, but did inform me that it would require me getting a perm. I thought, "that guy looks good with it, why won't I"? I looked like an IDIOT!!!! What was right for the 45 year old man in the picture looked remarkably stupid on my 13 year old head. Luckily I was captain of the football team or it could have gotten uglier than it already was. After the second person said, mam, what can I get for you while at a restaurant, I walked in and had them cut it REAL close to the skin. It's probably the closest I have ever had a hair cut and the happiest I have ever been to get my hair cut. Great lesson mom!
Seriously though, I go to Brooks Brothers, get measured, and wait for sales. I buy them shirts on sale and rarely go into the store. This strategy of show rooming will be vital. As we look at Best Buy struggling with becoming the showroom for Amazon and other Internet retailers you wonder what the right balance is between the virtual and brick and mortar? I would not want to run a REIT that focuses on retail space right now. As we see this show rooming continue, real estate will be less and less valuable. It's a very interesting problem. As far as Warby Parker is concerned, they have addressed the issue of not being able to touch, feel, and try on the product by shipping five options. They have taken the next step to open some show rooms. The Internet is great, and maybe one day it will work to virtually try product on, but right now we still need the bricks, just less of them.
Where I think there is almost more value is in a company like Hointer (I think of value in risk/reward). Everyone is trying to move to the Internet, but Hointer has figured out a way to make the shopping experience unique through technology. These types of businesses excite me. They are disruptive, but in a way that is more evolutionary vs revolutionary. I would love to spend some more time understanding businesses like this.
Seriously though, I go to Brooks Brothers, get measured, and wait for sales. I buy them shirts on sale and rarely go into the store. This strategy of show rooming will be vital. As we look at Best Buy struggling with becoming the showroom for Amazon and other Internet retailers you wonder what the right balance is between the virtual and brick and mortar? I would not want to run a REIT that focuses on retail space right now. As we see this show rooming continue, real estate will be less and less valuable. It's a very interesting problem. As far as Warby Parker is concerned, they have addressed the issue of not being able to touch, feel, and try on the product by shipping five options. They have taken the next step to open some show rooms. The Internet is great, and maybe one day it will work to virtually try product on, but right now we still need the bricks, just less of them.
Where I think there is almost more value is in a company like Hointer (I think of value in risk/reward). Everyone is trying to move to the Internet, but Hointer has figured out a way to make the shopping experience unique through technology. These types of businesses excite me. They are disruptive, but in a way that is more evolutionary vs revolutionary. I would love to spend some more time understanding businesses like this.
Interesting...
So as I mentioned in my previous post, I spent the week with 500 teens at a camp. It was an interesting week as far as social media was concerned. The kids tweeted, vined, snap chatted, instagram, and even facebooked a bit. What was bizarre to me was the lack of care regarding what they put on there. As we went through the week we learned more and more about the bizarre and inappropriate things the kids had posted in the past. I really don't think these kids get the impact that these things can have on them in the future. All the stupid things that I did, are stupid things I did. The stupid things these kids do get posted online and they create their own web persona. I wish they would listen, but it's quite intriguing about how little they care.
I have always tried to simplify the different Internet business models down to something like disruptive, purely online based, and something that was my hybrid based. These were very broad generalities, but I usually stack things in piles vs filing them and I like my "buckets" of stuff. It was interesting reading all the different nuances of Internet models. It's honestly so unique it becomes difficult to keep up with all of them. Because of that, the Business Model Generation text and the different patterns was intriguing to me. Talking about the five different patterns. Open business models and free are interesting to me. Free is not really free, it's about creating demand in an inexpensive low cost way. Then, you use that demand to sell product. The open model is interesting, but I have real issue with these models being sold as altruistic. The bottom line is Linux wouldn't have taken off without HPQ, IBM, and RHT getting behind the business. You can't have mission critical systems using software that is not in some way standardized and supported. The Long Tail was talked about in my last post, and though I don't like Netflix there is significant value in understanding what the Internet can do for you here.
The multi-sided Platform is interesting though. What used to be a sleepy business managing fleets is turning into a multi-sided platform with companies like FLT and WEX providing spending cards to fleets, but getting paid by the merchants. In addition they create value to the fleet managers by providing them all kind of management reports online. They are very interesting businesses growing rapidly with multiples expanding dramatically.
I have always tried to simplify the different Internet business models down to something like disruptive, purely online based, and something that was my hybrid based. These were very broad generalities, but I usually stack things in piles vs filing them and I like my "buckets" of stuff. It was interesting reading all the different nuances of Internet models. It's honestly so unique it becomes difficult to keep up with all of them. Because of that, the Business Model Generation text and the different patterns was intriguing to me. Talking about the five different patterns. Open business models and free are interesting to me. Free is not really free, it's about creating demand in an inexpensive low cost way. Then, you use that demand to sell product. The open model is interesting, but I have real issue with these models being sold as altruistic. The bottom line is Linux wouldn't have taken off without HPQ, IBM, and RHT getting behind the business. You can't have mission critical systems using software that is not in some way standardized and supported. The Long Tail was talked about in my last post, and though I don't like Netflix there is significant value in understanding what the Internet can do for you here.
The multi-sided Platform is interesting though. What used to be a sleepy business managing fleets is turning into a multi-sided platform with companies like FLT and WEX providing spending cards to fleets, but getting paid by the merchants. In addition they create value to the fleet managers by providing them all kind of management reports online. They are very interesting businesses growing rapidly with multiples expanding dramatically.
Saturday, August 10, 2013
What a week, and man am I behind
So, I spent the week with 500 teenagers at a camp on the Delaware River on the Pennsylvania Side. I saw tweeting, facebooking, snap chatting, Instagramming, vining, etc... I think I have determined what drives the constant innovation. As each platform becomes more known, more parents go and start joining that platform. Why, because they want to check in and see what their kids are doing? Well, you get busted on Facebook, you switch to Twitter, then you get busted there you go to Instagram. Finally, when you say screw it, I don't want to get caught doing anything, but I still wanna have some fun!!! So then you join snap chat and think you have the whole thing figured out... Then someone screen captures your stupid video clip. Oh well, looks like you can't escape technology. More to come!
Sunday, August 4, 2013
So, the Long Tail is why Netflix sucks!!!
Sorry, but it really does! I don't have time to watch an entire group of TV shows. I don't like searching for so so movies from 1984. Occasionally I will pop it up and find something I like. Tonight we watched the Lorax with the kids, it was good. It's probably the fourth time we have seen it. I didn't have to pay for it (other than my subscription I pay every month that I have forgotten about), it was relatively enjoyable. But to be honest, till tonight I didn't get it. I rationalized that parents kept it for their kids to watch cartoons. Or maybe people like really bad movies from the '80's and '90's. But, really what it boils down to is that it's cheap enough to not be a bill you are going to force out of your budget, the movies can be had for cheap enough, and the scale is large enough that they can generate a profit. And with the download service, they don't even have to send out the DVD or store it.
When I worked in the technology industry 11 years ago, I really got behind the Internet and it's disruptive effect on business. I kid you not, when I worked at a large IT firm, I recommended we start what would have been a similar business to freecreditreport.com. The problem was though that this wasn't what we did. We processed credit applications for banks. That was our model. We didn't capitalize on the disruption. I left there and went to work for an investment firm. There we had a gag order when it came to talking with reporters. One PM broke that and said some pretty stupid things to a reporter. He got fired faster than he could have yelled, "greed is good"!!! (He was a Gordon Gekko wannabe). The article was seen on the Internet by someone who got upset and he was gone. This strategy is basically sticking your head in the sand and acting like nothing is going on around you. Even if you are an early adopter, experiences can skew your view of how to use new technology. Situations like the Comcast service technician and the AOL call center rep mentioned in one of the readings can have a significant effect on organizations.
I think the thing that is so intriguing about the Internet is the change to business models. A family member wrote a book based on her experiences. She self published it, and has sold a couple thousand copies. While that is by no means a commercial success, the "Long Tail" reading and recording describe a business model that one is open to these small runs, but also has the potential to generate earnings down the road. This disruptive nature is interesting. But it isn't for every business. I think the thing to think about though is how an you harness the power of the Internet in your business. For example, though I don't talk about my current position extensively on LinkedIn, I have a significant amount of information about me and almost 750 connections. Me building my network there can only help in the long run. Even for the organization I currently work for.
The exciting thing I think I read about this time was the IBM VP talking about removing segmentation. As you think about this concept, it has a lot of exciting opportunities. For example, last January a number of retail customers really began complaining about show rooming and the effect Amazon and Ebay was having. At the same time, I covered a software company that focused on retail supply chains from warehouse to the shelf. They had issues in the March Qtr last year because customers quit buying software as they had to rethink this exact problem. How do we manage the data to work to keep customers in the store. The concept they gave was as your customer was standing in front of say a TV at Best Buy, if they went out to the Internet to check the price, you might flash a coupon or send them one to their phone. My first thought was I would leave the store and start to look to see who was watching me everywhere I went. The point is though, you can't market anymore to generations, male, female, working not. Everyone has their own desires and those that can put their message on point to that person has the potential to make a fortune. There is risk of course, but there is much opportunity if you can find that right balance.
When I worked in the technology industry 11 years ago, I really got behind the Internet and it's disruptive effect on business. I kid you not, when I worked at a large IT firm, I recommended we start what would have been a similar business to freecreditreport.com. The problem was though that this wasn't what we did. We processed credit applications for banks. That was our model. We didn't capitalize on the disruption. I left there and went to work for an investment firm. There we had a gag order when it came to talking with reporters. One PM broke that and said some pretty stupid things to a reporter. He got fired faster than he could have yelled, "greed is good"!!! (He was a Gordon Gekko wannabe). The article was seen on the Internet by someone who got upset and he was gone. This strategy is basically sticking your head in the sand and acting like nothing is going on around you. Even if you are an early adopter, experiences can skew your view of how to use new technology. Situations like the Comcast service technician and the AOL call center rep mentioned in one of the readings can have a significant effect on organizations.
I think the thing that is so intriguing about the Internet is the change to business models. A family member wrote a book based on her experiences. She self published it, and has sold a couple thousand copies. While that is by no means a commercial success, the "Long Tail" reading and recording describe a business model that one is open to these small runs, but also has the potential to generate earnings down the road. This disruptive nature is interesting. But it isn't for every business. I think the thing to think about though is how an you harness the power of the Internet in your business. For example, though I don't talk about my current position extensively on LinkedIn, I have a significant amount of information about me and almost 750 connections. Me building my network there can only help in the long run. Even for the organization I currently work for.
The exciting thing I think I read about this time was the IBM VP talking about removing segmentation. As you think about this concept, it has a lot of exciting opportunities. For example, last January a number of retail customers really began complaining about show rooming and the effect Amazon and Ebay was having. At the same time, I covered a software company that focused on retail supply chains from warehouse to the shelf. They had issues in the March Qtr last year because customers quit buying software as they had to rethink this exact problem. How do we manage the data to work to keep customers in the store. The concept they gave was as your customer was standing in front of say a TV at Best Buy, if they went out to the Internet to check the price, you might flash a coupon or send them one to their phone. My first thought was I would leave the store and start to look to see who was watching me everywhere I went. The point is though, you can't market anymore to generations, male, female, working not. Everyone has their own desires and those that can put their message on point to that person has the potential to make a fortune. There is risk of course, but there is much opportunity if you can find that right balance.
Saturday, August 3, 2013
What do I want to get done this week?
Honestly, my goal is just to keep my head above water this week. I am gone next week and will have very limited access to the Internet. So, I am trying to get ahead as well as deal with earnings season. Earnings season for an investor is like drinking through a fire hose. It can be intense. My goal is to read and listen to all the required readings for week three. In addition, I would like to at least skim or listen to a couple of the other readings/recordings/videos, we'll see.
It was interesting this week to be sitting at work and looking at a company that I had done some work on but decided not to invest. The company was Garmin. What struck me as add was Twitter posts were running through my news feeds at work. Garmin was tweeting their earnings call and Factset had picked it up as news and was running through my feed. So, looks like I am going to be doing Garmin for me Twitter assignment due tomorrow. Very interesting.
I have read some of the IBM reading on moving from segmenting customers into groups but now moving forward with a segment of one. This is very interesting to me and used to own a company that was in many ways trying to capitalize on that. I will expand on this in a later post.
It was interesting this week to be sitting at work and looking at a company that I had done some work on but decided not to invest. The company was Garmin. What struck me as add was Twitter posts were running through my news feeds at work. Garmin was tweeting their earnings call and Factset had picked it up as news and was running through my feed. So, looks like I am going to be doing Garmin for me Twitter assignment due tomorrow. Very interesting.
I have read some of the IBM reading on moving from segmenting customers into groups but now moving forward with a segment of one. This is very interesting to me and used to own a company that was in many ways trying to capitalize on that. I will expand on this in a later post.
Sunday, July 28, 2013
The rest of the readings and videos reminded me of the immense value that the Internet brings. It is here to stay and if we don't figure out ways to utilize it, many areas of the economy will be overrun by it. The dichotomy of risk is striking to me. If you are a start-up, there is nothing to lose, try what you would like, information flows like water, if it works great! If you are an incumbent and you do something wrong? WOW!!! The response can be destructive. Those with the least to risk have the highest potential gain and those with the most to risk, well hopefully they can maintain market share after the Internet runs over it's market. The star search clip was a great example of mistakes made and the pain caused by those missteps. It seems backward to be honest. But that's why its so disruptive.
On top of it, as talked about in "Building Your Business Without Building Code", you can start one of these businesses with a power point presentation. How does an old line company compete?
In reading some of the other articles we heard stories about blogs going viral, little people who evolve faster than regular humans and the values that creates till they take over, etc... But through it all I kept thinking about all the positive and negative impacts. Many impacts are unknown to be honest and we have to keep adopting.
For someone like me lists are one of the best ways I think about things. The Internet is here to stay, community is important to humans, we will continue to drive connectivity and if we don't engage we will be left behind. So, my lists on the Internet:
Positives:
On top of it, as talked about in "Building Your Business Without Building Code", you can start one of these businesses with a power point presentation. How does an old line company compete?
In reading some of the other articles we heard stories about blogs going viral, little people who evolve faster than regular humans and the values that creates till they take over, etc... But through it all I kept thinking about all the positive and negative impacts. Many impacts are unknown to be honest and we have to keep adopting.
For someone like me lists are one of the best ways I think about things. The Internet is here to stay, community is important to humans, we will continue to drive connectivity and if we don't engage we will be left behind. So, my lists on the Internet:
Positives:
- Breaks down the barriers to starting a new company
- Reduces existing friction in communication
- Can create great wealth rapidly (This is counter in my view to the idea that the Internet flattens the world economically. I believe it just shifts wealth)
- Potential to be ants following each other around till we die
- Can destroy your business if you don't understand it
- Limits independent views and forces individuals toward the consensus.
Crowdsourcing... or will be just crowd surfing in one generation?
So, I read and watched the required video and readings and the first 3 readings under optional and the social marketing playbook. I have emailed my team to talk about our approach to the team project, and watched most of the videos under the General information, video links tabs. There were some great videos there. More on that later.
The crowdsourcing reading was very interesting. I really enjoyed reading about threadless.com. I love the fact that they didn't start out to create a business, but just did something they thought would be cool. They didn't like the T-shirts they could get, so they decided to figure out a way to get cooler ones. The thing that was even more interesting was that they really understood how to create a business though once it was going. By understanding human nature they created demand, developed a process to pay designers, and developed a relatively low risk business model from the beginning. In many ways, this is what the Internet is about. Allowing someone with nothing to lose (cause they have nothing but an idea) develop something that has the potential to create real value. The iStockphoto.com company was almost even more exciting. When you think about threadless.com, they were just selling T-shirts, iStockphoto.com was taking on a giant. However, this business model created so much disruption, it forced the incumbent Getty to buy it. This is the disruption that is so compelling and valuable. I was also struck with the authors discussion on community. This is in short supply these days as we become more mobile. We keep in touch, with family, we communicate on the Internet, but community... That seems to be missing. That desire for connection is something innate in humans. We need it. If you can great a model that generates that it can be very powerful.
P&G's model was probably the most interesting to me as I work in and analyze old line companies. I follow the technology industry but most companies I follow are not internet based but sell products into the technology supply chain. There are some Internet names, but not many that fit our requirements. So to see the use of the Internet and Crowdsourcing to develop product was intriguing. It got me thinking about other ways my companies and others could develop ways to improve their uses of crowdsourcing. I wrote my previous blog this week on an idea that I think is somewhat scary. In addition, I liked Surowieki's comments and Keen's comments as well regarding the risk associated with social media, networks, and to some degree crowdsourcing. I loved Surowieki's view of the only way social networks can be more correct than an expert is when each individual is independent and by operating in a network, it compromises your independence.
I am thinking more and more about ways to use the Internet to drive our business, but it concerns me longer term what will happen to independent thought over time if we don't manage exposure to networks for our children.
The crowdsourcing reading was very interesting. I really enjoyed reading about threadless.com. I love the fact that they didn't start out to create a business, but just did something they thought would be cool. They didn't like the T-shirts they could get, so they decided to figure out a way to get cooler ones. The thing that was even more interesting was that they really understood how to create a business though once it was going. By understanding human nature they created demand, developed a process to pay designers, and developed a relatively low risk business model from the beginning. In many ways, this is what the Internet is about. Allowing someone with nothing to lose (cause they have nothing but an idea) develop something that has the potential to create real value. The iStockphoto.com company was almost even more exciting. When you think about threadless.com, they were just selling T-shirts, iStockphoto.com was taking on a giant. However, this business model created so much disruption, it forced the incumbent Getty to buy it. This is the disruption that is so compelling and valuable. I was also struck with the authors discussion on community. This is in short supply these days as we become more mobile. We keep in touch, with family, we communicate on the Internet, but community... That seems to be missing. That desire for connection is something innate in humans. We need it. If you can great a model that generates that it can be very powerful.
P&G's model was probably the most interesting to me as I work in and analyze old line companies. I follow the technology industry but most companies I follow are not internet based but sell products into the technology supply chain. There are some Internet names, but not many that fit our requirements. So to see the use of the Internet and Crowdsourcing to develop product was intriguing. It got me thinking about other ways my companies and others could develop ways to improve their uses of crowdsourcing. I wrote my previous blog this week on an idea that I think is somewhat scary. In addition, I liked Surowieki's comments and Keen's comments as well regarding the risk associated with social media, networks, and to some degree crowdsourcing. I loved Surowieki's view of the only way social networks can be more correct than an expert is when each individual is independent and by operating in a network, it compromises your independence.
I am thinking more and more about ways to use the Internet to drive our business, but it concerns me longer term what will happen to independent thought over time if we don't manage exposure to networks for our children.
So, I got all my reading and listening done... Now I need to go back and review to write my blog! Maybe I should take notes on what I read. I never used to have to, but with the likely hundreds if not a thousand or my pages on read weekly from research reports and school, I think I may have to start taking notes.
One thing I keep coming back to is the social aspect. The ability for anyone to come out and say or do just about anything they want on the Internet. I was thinking about it in relation to investing yesterday. As an active investor, I believe that through my research, I can actually beat the market over time. We won't do it every year but we can do it over time. Our clients believe that too and they stick with us when we have 6 months or a year below trend. Historically we have come roaring back in the next year or two and move back to top performing fund.
The question though that I am asking here is, could a crowd approach to investing be better? Seeking alpha is a way for investors on my levels to post research. I love the idea! Could I use it anonymously to develop some street cred as an activist (I do this quietly already with companies)? More thoughts to come on that. The problem I have is some of the research is just atrocious. Here is a perfect example!
http://seekingalpha.com/article/75121-add-some-power-to-your-portfolio-with-volterra-semiconductor
This "analyst" likes VLTR. He has 48 different articles, almost 60 followers. He is recommending buying VLTR. That isn't the problem, I know the CEO, CFO, CTO, CMO, and many others at VLTR, but by just doing a little research, like reading and listening to their calls, I can tell you that some of his comments particularly the ones on notebook recovering or stabilizing (it's likely going to zero based on changes INTC has made to their chips) are wrong. This is not to tell you to go long or short on VLTR but to point out that individuals doing research who don't know what they are doing (comments are basically positive on VLTR) shouldn't be doing it. Would you invest using these analyst or retail sentiment indicators like trending stocks on message boards etc...? Honestly, I would probably invest opposite those metrics. I don't have an answer yet, but I don't see these models adding much value to the individual investor. If the model over the long run only gives value to the owner, I believe it will fail. I don't see this working in the investing world. Maybe I could use it to launch an activist hedge fund though... Hhhhmmmm, something to think about.
One thing I keep coming back to is the social aspect. The ability for anyone to come out and say or do just about anything they want on the Internet. I was thinking about it in relation to investing yesterday. As an active investor, I believe that through my research, I can actually beat the market over time. We won't do it every year but we can do it over time. Our clients believe that too and they stick with us when we have 6 months or a year below trend. Historically we have come roaring back in the next year or two and move back to top performing fund.
The question though that I am asking here is, could a crowd approach to investing be better? Seeking alpha is a way for investors on my levels to post research. I love the idea! Could I use it anonymously to develop some street cred as an activist (I do this quietly already with companies)? More thoughts to come on that. The problem I have is some of the research is just atrocious. Here is a perfect example!
http://seekingalpha.com/article/75121-add-some-power-to-your-portfolio-with-volterra-semiconductor
This "analyst" likes VLTR. He has 48 different articles, almost 60 followers. He is recommending buying VLTR. That isn't the problem, I know the CEO, CFO, CTO, CMO, and many others at VLTR, but by just doing a little research, like reading and listening to their calls, I can tell you that some of his comments particularly the ones on notebook recovering or stabilizing (it's likely going to zero based on changes INTC has made to their chips) are wrong. This is not to tell you to go long or short on VLTR but to point out that individuals doing research who don't know what they are doing (comments are basically positive on VLTR) shouldn't be doing it. Would you invest using these analyst or retail sentiment indicators like trending stocks on message boards etc...? Honestly, I would probably invest opposite those metrics. I don't have an answer yet, but I don't see these models adding much value to the individual investor. If the model over the long run only gives value to the owner, I believe it will fail. I don't see this working in the investing world. Maybe I could use it to launch an activist hedge fund though... Hhhhmmmm, something to think about.
Thursday, July 25, 2013
Goals for this week...
Below are the readings required and suggested for this week from Angel. I plan to read and watch the required readings and at least 4 of the 6 suggested readings etc...
I also plan to go back clear up some of my comments from last week. I didn't really give clear comments on a couple of the topics.
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Required reading
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"Introduction: The
Dawn of the Human Network" in Crowdsourcing, pp. 1-19. (Download content.)
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Required
viewing
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Podcast: Information Liquidity with slides and
audio;
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Suggested
readings, podcasts, Camtasia presentations. These continue to help you see how
the use of the internet has changed over what has been a very short time. Pick a
few and write about them in your Learning Journal.
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Chapter 1: "Why
the Groundswell and Why Now?" in Groundswell, pp.3-15. (Download content.)
The Internet
Before Search Engines : from the 1990’s point of
view.
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Chapter 6: "Web
Video: The New, New Thing," in Digital Engagement, pp. 112-13. (Download content.)
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"Star Search" (from NPR's "On the Media" program
of October 9, 2009; 7 minutes; discusses consumer ratings of products on the
web)
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Crowdsourcing
Evolution from YouTube 5 minutes by "the blogtv".
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Security is interesting and has many issues regarding the business models, but more important for me is how and why these businesses are funded and what the sustainability of some of the startups are. When you consider valuations of the companies, the longevity of the business model should have significant impact on the valuations. However, right now, the most important part of the businesses are short term revenue growth relative to expectations. I want to try and understand the expectations up front and then think about how the models evolve.
Sunday, July 21, 2013
Reflections on my first group of readings...
I was able to read and listen to a number of the articles and presentations/interviews. Below is the list of media I reviewed
I think the thing that struck me most was the comment made by Peter Hirshberg when he compared technology companies to religion or politics. In summary, he said that tech entrepreneurs tell us what they are going to do and then in many ways convince us that we need their product and then go build it. As a buy side analyst that invests in technology companies for a living, I can totally relate to this comment. I have sat with many a CEO and wondered what in the world they were thinking giving their pitch. I must admit, I even once told a CEO "either you are lying to me or you are an idiot, either way I don't plan to invest in your company". I got up and walked out after fifteen minutes. I don't say that to tell you how great of a one liner I had in ripping a CEO (I was right by the way!), but to give another example of an executive in this case selling his vision to me when it wasn't fully vetted. That being said, I have seen and made a lot of money in companies that enable the Internet and social media. Companies like Digitas, aQuantive, and Macromedia I owned when they were bought by larger tech and media companies (I thought the CEO at Adobe was going to lose his lunch when I asked him when they would buy Macromedia. Three months later the press release came out). I have made a lot of money investing in RedHat, Arm, and Macrovision and many many more. That being said, I remember sitting with Marc Andreesen over desert and thinking he was crazy as he was espousing the virtues of Twitter. I couldn't figure out the business model! Oh well, you can't be right on them all. That being said, I have had similar thoughts that Mr. Carr presented in his article. I work with the youth at our church in my free time (no I don't have any, but my wife and I still enjoy working with them), I have seen the inability to focus, thoughts that sputter, the need for instant gratification. I do believe there are great efficiency being created, buy I worry about deep thought. Will it happen, can it happen? Can we focus long enough to develop a full thought? Do we need to anymore? We "joke" about this at the investment firm I work at. We have morphed into such an egalitarian society, we don't believe in the excellence that one human being can create. Exceptional-ism is viewed negatively now. Some of the commentary around social media talks about the benefit of the collective individual. Each person adding their part to the collective work. We have always seen and benefited from collective work of individuals. I firmly believe that. But are we losing the desire to have an exceptional individual drive change? Some would say we are making it easier. My concern though is that if you look at the things that generate the most traffic, they aren't exceptional works. They are things like Gangnam Style. So, I see the huge benefits in connectivity. But my biggest concern is are we getting dumber as we move further and further into a post paper culture. Can we think? Really think? Will the collective really build better "things" than an exceptional thinker. If I look at Apple, it doesn't happen without Steve Jobs. If you consider Facebook (probably the greatest example of social media), it doesn't happen without Zuckerberg. So, I will end with a few questions, not an answer, do we still need exceptional human beings who are deep thinkers, does social media allow those individuals to still develop, and are the benefits of social media worth the risk? Don't be confused, my nine year old uses Instagram, and she is already complaining her friends have moved on... but I still have my reservations. |
Friday, July 19, 2013
Reservations, and not to a hotel...
Well, I have created my first Blog. This is honestly a little uncomfortable for me. I have my Facebook page for my personal stuff, my LinkedIn account for my corporate connects, I have played around with Twitter (really questioned the business model there initially, but starting to get it). However, I am concerned a little bit about the interaction of the Internet and my work life. I try and separate it. I am a securities analyst, so by nature I am not trusting and highly secretive of my actual thoughts. Not sure I like this...
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