Greek Complexity

Social Networking 2.0

An article on AlwaysOn on LinkedIn's prospects makes some interesting points that I'm going to summarise and generalise to social networks in general:

• Niche-ification If I may coin a term, Social Networking 1.0 is now progressing to Social Networking 2.0. Broad-based networks such as LinkedIn and Friendster will gradually move towards providing functions for more niche community interactions. (LinkedIn already does this to an extent with its groups feature.) In a sense, this is merely the culmination of a trend of convergence. Groups features from Yahoo!, MSN and Google have long provided people the ability to pursue niche interests (anyone for "Self-Reference Paradoxes & Incompleteness in Logic & Computer Science"?). What could be more obvious than adding such functionality to social networking services?
  
• Revenue! Social networking sites making money? Glory be! What started off as mere hobbies or side businesses for some (YouTube, Flickr, Facebook...) actually make money today.
• Member services It seems LinkedIn is planning to provide member services that go beyond finding jobs or new employees. Great idea, IMO, and one that goes back to their roots in helping entrepreneurs and VCs connect. This ties in somewhat with niche-ification. Services = higher margins and niches ≈ services, arguably, so the trend towards niches should reinforce the growth of services.
• Aiming to be acquired No surprise here. Exit strategies are centred around being acquired. Makes sense. A social network may make money on its own but the big bucks are more likely to be in cross-promotions, up-selling and all those other evil, evil things marketing guys dream up. :) Which means living inside media houses (Newscorp/MySpace), telecom firms (Verizon/Good Call Bad Call) and perhaps even consumer goods companies (P&G/Tremor).

Technorati Tags: media, social networks, c2c, internet

Minnows begin to hunt whales

It was only a matter of time and the planets aligning in the correct configuration.

Credit markets are buoyant, private equity's techniques look increasingly attractive to and imitable by corporations, structured finance is scaling new heights of innovation each day, and aspiring giants want to make their presence felt outside their traditional markets. What more could one expect but this? Onward ho, I say.

Link: FT.com / In depth - Small fry stir corporate waters (subscription may be required)

Chief executives are increasingly inclined to plot bids for companies that are far bigger than their own, thanks to the availability of cheap debt and creative structures devised by investment banks.

In recent weeks smaller companies in several sectors, surprising many investors with their audacity, have made bids for larger rivals that they could not have pursued in earlier times.

The moves, mainly made in the US, highlight how the world of debt-fuelled deal-making has expanded from its traditional practitioners in the private equity industry.

Now it also includes publicly traded companies with aggressive mergers and acquisitions strategies.

Technorati Tags: banking, structured finance, private equity, finance, M&A

Private equity = conglomerates?

The Economist has an interesting article pointing out that calling today's biggest private equity firms conglomerates isn't too far a stretch, notwithstanding firms' aversion to the appellation. The distaste comes from the conglomerate structure not being in fashion for the past 25 years (in the US, not Asia; large Asian companies are often byzantine setups) but looking at the question purely from a linguistic point of view, it would seem that private equity firms are conglomerates. There really isn't too much more to say on the topic but it's an interesting read with some notable titbits, so go take a look.

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An aside: I usually put links like this on my radar, and my radar gets spliced into my main RSS feed. So I'm in the funny position of having a richer RSS feed than a website. The bottom line is that you should probably use my RSS feed or my email newsletter to get updates :)

Singapore's government 'gets' consumer power -- at first sight

Singapore's government launches a lot of websites. One of their latest is 10 TouchPoints. On November 27, one of Singapore's ministers introduced the concept as follows:

The creative cluster helps improve our quality of life.  To this end, we launched 10 TouchPoints, an initiative which encourages the general public to identify 10 everyday things to be redesigned with a more user-centric focus. It could be ideas to improve our bus shelters or our currency notes which we use everyday without paying much attention to it.  The response to this initiative has been very encouraging.  Within two weeks, we have already received over 70 nominations of what need to be redesigned.  Such ideas could lead to better appreciation of good design and enhance our public service and lifestyle.

(The site today has 124 nominations, one of which is mine. Go and vote!)

But what is this website? Some Singaporean bureaucrat has cleverly realised that the culture of participation and user-generated content that has quickly become a way of life for many consumers could be harnessed to good effect by the government to improve design in public services. (See the website for more information.)

What this initiative does is to not only get suggestions from the public (something the government already does via various media) but also allow people to vote. Voting is crucial, IMO, because this harnesses collective intelligence, which is the key strength of large groups of reasonably informed people thinking and acting independently. In the ideal scenario, you would get zillions of ideas, the 'best' of which would bubble up to the top (however you define 'best').

What remains to be seen now is whether this initiative really takes off and what comes of it in the end. I think that will depend to an extent on the the number of ideas they receive but, more importantly, on how actively people search for and vote for their favourite suggestions. I think it is a fair assumption given Singapore's reputation that the best suggestions will make it to implementation, so I don't think implementation is a concern. It seems to me that publicising the initiative and making it easy for people to vote should be the key areas to focus on.

I guess the last word on this subject --at least for now-- should go to someone called Chris (bottom of this page):

Fantastic concept of asking people's opinion for free R+D btw. Innovative

Technorati Tags: C2C, innovation, government, social networks, social software, internet, media, collective intelligence, singapore

Why MySpace’s legality matters

Are MySpace, YouTube and their cousins illegal? This article in the Financial Times shows why the law has not kept pace with technology and changing consumer behaviour. Any business that gives users the power to express themselves online with music, videos, pictures and the like is potentially breaking the law. And what's more, what of businesses that operate across borders?

Here’s a snippet from the FT article:

Since the dawn of time, technology has constantly outpaced the law – but never quite as fast as in the digital age. Some of the most profitable and popular places on the internet today – from MySpace, to YouTube and beyond – exist in legal limbo. Every day, MySpacers and YouTubers commit millions of arguably unlawful acts. But what about the websites that provide a venue for all this new-age lawlessness? That remains a remarkably open question.

[…]

Copyright owners should get some of the profits generated by MySpace and YouTube – but they would be foolish to try to shut them down entirely. The US Supreme Court made clear last year, in the landmark Grokster case, that it will stand for quite a lot of copytheft, rather than impede innovation. The music and film industries can try to strangle the new sites with litigation, but they will probably not win in the end. Now is the time to let the market fix this problem, before any more harm is done.

Can someone tell me what it means to let the market fix the problem?

And when it comes to companies operating in multiple markets, think about this scenario: Imagine a company that is built around user-generated content and based in Iceland. Say some of their users upload copyrighted or otherwise disputed content belonging to an American media firm. Let's say these users are based in France, and let's also say that the content is physically hosted in Ireland. (Let's not even begin talking about mash-ups.) Even if this company managed to extract itself from legal hassles in the US arising from the DMCA (pdf), it would still be left wide open to challenges elsewhere. What a nightmare! Have VCs thought about how to mitigate this?

Technorati Tags: C2C, internet, innovation, law, c2c, technology, business models, venture capital