Monthly Archive for January, 2009

Semanticising Twitter for a revenue model

Twitter It was interesting to read the 11 business models for Twitter. Here’s one that I rarely see ever get mentioned: semantic conversations.

The assumptions.
Before I jump into it, some context as to why I think this is a solid approach.

advertising sucks in the traditional sense. Showing ad’s blindly, is like throwing pamphlets over the Amazon hoping that your target market catches some of them. Or another example: if you’re looking for some relief, do you walk down the main street of your city with your pants down yelling out "I want sexy time"? Sure, some people will approach you – but it certainly is not the most efficient way.

search advertising is the window into the future of advertising. The reason why Google does so well is because when a user searches they are flagging their intent. No more blind guessing – now it’s just a matter of accurately matching that intent to something. To extend the analogy using sex, this is like going to a single swingers party – you know everyone there is hungry, so to speak.

Word of mouth marketing beats any other form. Imagine you’re at a nightclub with your best friend. A model stops in front of the two of you – looks at your friend – and asks what cologne he’s wearing. He replies, she smiles – and then walks off giving him a wink.
You tell your little brother the next day about the incident who’s just run out of cologne. Next thing you know, he’s at the department store calling you and asking what’s that cologne’s name. Unlikely story? Have a think about the last time you bought something – we tend to rely on people we trust to guide our decisions.

Affiliate marketing is one of the most successful ways of making money on the web. My friends at Tjoos.com, help people find coupons – and they make a stupid amount of money because of affiliate deals. Affiliate marketing is rooted in a traditional concept for selling – there are suppliers like a manufacturer, and there are the retailers who onsell the supply like we see with clothing shops. With affiliate marketing, you act as a store pushing a product – and you get a cut of the final transaction if successful.

On Twitter people talk and share The use cases of Twitter are a different topic in itself, but let’s think of one of the most common: people share links with other people. As a case in point, monitor this search query I just constructed. Within minutes, you will see hundreds of new results returned. That’s a lot of links been shared.

Semantic conversations explained
Let’s say I just suggested that people read the book "Growth Fetish". People that follow me know me well enough to look into it as a legit thing. Perhaps some even trust my judgement to blindly buy the book (like I do with some people I know).

Now imagine, if instead of just saying the name of the book or pointing to the authors website – I had an easy way to embed Amazon affiliates. When people read I liked a book or a product, and they see a link – two things happen: they likely will follow the link to see what the fuss is about, and after reading up they will potentially make a purchase depending on how impressed or how much they trust me. Because the link tracks that I was the person recommending it, it connects the sale of that product by that person to me. And they don’t need to make the purchase right there – it can happen up to 45 days later and I still get recognised for it (as is the case with most affiliate programs).

Twitter affiliated

Implementation
It’s going to take a bit of thinking on how to implement this easily. For example, it needs to be drop dead easy for people to find the correct link and embed it. Twitter should tweak its system so that it recognises true hyperlinks that have words aliased, rather than just raw addresses. A way of guessing what the person is promoting and matching it to a Amazon code would be ideal (ie, “findbook:growth fetish” will have Twitter make a suggestion to link it to).

It would have to be a revenue share program, meaning Twitter and the user get a cut. That’s a good thing, because everyone’s interests are aligned. But it also means it needs to be thought out as it’s an art to get the right progressive scale between motivating and killing.

Good luck Twitter: I’m counting on you and Facebook to work out a monetisation model, as you will drive the next wave of growth which builds the industry (like Google did post the dotcom years).

The change brought by the Internet is a correction

I was sitting at a restaurant with Mick Liubinskas of Pollenizer the other week, who I regard as one of the best minds in the Australian tech scene. Mick in a previous life used to run marketing at Kazaa, which was the music-industry’s anti-Christ during the early 2000s. Kazaa was one of the higher profile peer-to-peer technologies that made the distribution of music so widespread on the Internet.

I said to Mick how one of the things that plagues my thinking is trying to work out the future business models for content. Naturally, we ended up talking about the music industry and he explained to me the concept of Soft DRM which he thought was one avenue for the future but which the record labels rejected at the time.

DRM

DRM or Digital Rights Management is the attempt by companies to control the distribution of digital content. Hard DRM places control over access, copying and distribution Рwhile soft DRM does not prohibit unauthorised actions but merely monitors a user’s interaction with the content.

The basic difference, is that Hard DRM protects copyrights by preventing unauthorised actions before the fact, while Soft DRM protects copyrights by giving copyright owners information about infringing uses after the fact.

As I questioned Mick on this, he compared it to us sitting in that restaurant. What’s stopping either of us from getting up and not paying the bill? The restaurant let’s us sit, serves us food – and only at the end do we pay for the service.

Hard DRM is not congruent with our society
Part of the music industry’s problem is that they’ve focused too much on Hard DRM. And that’s wrong. They could get away with it in the past because that’s how the world worked with controlled distribution lines, but now that world no longer exists with the uncontrollable Internet.

In a restaurant, like any other service industry, the risk that you don’t get paid is real but not big enough to prevent it from operating. Our social conventions are what make us pay that bill, even though we have the ability to avoid it.

To insist on the Hard DRM approach, is going against how the rest of the western world works. Our society is philosophically based on the principle of innocent until proven guilty. Likewise, you pay after a service has been rendered – and you pay for something that has unique value (only scarcity is rewarded). What existed with the media world was unique over any other industry, but unique purely due to technological limitations, not because it was genuinely better.

The record companies (not the artists) are hurting
Artists practically sell their soul to get a record deal, and make little money from the actual albums themselves. This change for music is really a threat to the century-old record company model, of which the Internet has broken their distribution power and their marketing ability is now dwarfed by the potential of social media.

Instead of reinventing themselves, they wasted time by persisting with an old model that worked in the industrial age. They should have been reflecting on what value people will pay for, and working out the things that are better than free. Unfortunately, the entire content business – movies, television, radio, magazines, newspapers, books and the rest – have made similar mistakes.

The Internet is transforming our world and every object in our lives one day will be connected. In some ways, the great change brought about by the Internet is actually a step back to how things used to be (like it is for music where the record model was an anomaly in our history). Even the concept of a “nation state” is a 20th century experiment pushed after the first world war, where for our entire history prior to that, our world was governed by independent cities or empires that governed multiple ethnic nations – the Internet is breaking down the nation-state concept and good riddance because its complicated our lives.

Future

We need to clear the white board and start fresh. The Internet is only going to get more entrenched in our world, so we must re-engineer our views of the world to embrace it. With content, distribution was one of the biggest barriers to those industries to get into, and now it has been obliterated. Business models can no longer rely on that.

We should not let the old world drive our strategies for business because the dynamics have changed completely. If you are looking to defend yourself against an oncoming army – stop polishing the sword and start looking for the bullets to put in the machine gun.

Information age companies losing out due to industrial age thinking

Last weekend, I participated at the Sydney Startup camp Sydney II, which had been a straight 24 hour hackathon to build and launch a product (in my case Activity Horizon). Ross Dawson has written a good post about the camp you are interested in that.

activity horizon
It’s been a great experience (still going – send us your feedback!) and I’ve learned a lot. But something really strikes me which I think should be shared. It’s how little has changed since the last start-up camp and how stupid companies are – but first, some background.

The above mentioned product we launched, is a service that allows people to discover events and activities that they would be interested in. We have a lot of thoughts on how to grow this – and I know for a fact, finding new things to do in a complex city environment as time-poor adults, is a genuine issue people complain often about. As Mick Liubinskas said “Matching events with motivation is one of the Holy Grails of online businesses” and we’re building tools to allow people to filter events with minimal effort.

ActivityHorizon Team

So as “entrepreneurs” looking to create value under an artificial petri dish, we recognised that existing events services didn’t do enough to filter events with user experience in mind. By pulling data from other websites, we have created a derivative product that creates value without necessarily hurting anyone. Our value proposition comes from the user experience in simplicity (more in the works once the core technology is set-up) and we are more than happy to access data from other providers in the information value chain on the terms they want.

The problem is that they have no terms! The concept of an API is one of the core aspects of the mashup world we live in, firmly entrenched within the web’s culture and ecosystem. It’s something that I believe is a dramatic way forward for the evolution of the news media and it’s a complementary trend that is building the vision of the semantic web. However nearly all the data we have hasn’t been done through an API which can regulate the way we use the data; instead, we’ve had to scrape it.

Scraping is a method of telling a computer how data is structured on a web page, which you then ‘scape’ data from that template presentation on a website. A bit like highlighting words in a word document with a certain characteristic and pulling all the words you highlighted into your own database. Scraping has a negative connotation as people are perceived to be stealing content and re-using it as their own. The truth of the matter is, additional value gets generated when people ‘steal’ information products: data is an object, and by connecting it with other objects – those relationships – are what create information. The potential to created unique relationships with different data sets, means no two derivative information products are the same.

So why are companies stupid
Let’s take for example a site that sells tickets and lists information about them. If you are not versed in the economics of data portability (which we are trying to do with the DataPortability Project), you’d think that if Activity Horizon is scraping ‘their’ data, that’s a bad thing as we are stealing their value.

WRONG!

Their revenue model is based on people buying tickets through their site. So by us reusing their data and creating new information products, we are actually creating more traffic, more demand, more potential sales. By opening up their data silo, they’ve actually opened up more revenue for themselves. And by opening up their data silo, they not only control the derivatives better but they can reduce the overall cost of business for everyone.

Let’s use another example: a site that aggregates tickets and doesn’t actually sell them (ie, their revenue model isn’t through transactions but attention). Activity Horizon could appear to be a competitor right? Not really – because we are pulling information from them (like they are pulling information from the ticket providers). We’ve extracted and created a derivative product, that brings a potential audience to their own website. It’s repurposing information in another way, to a different audience.

The business case for open data is something I could spend hours talking about. But it all boils down to this: data are not like physical objects. Scarcity does not determine the value of data like it does with physical goods. Value out of data and information comes through reuse. The easier you make it for others to resuse your data, the more success you will have.

Phishing for fraud on Facebook

Wow – now that was interesting. I’ve received spam messages through Facebook, but never this before. A friend who I’ve barely spoken to since 2003 (we used to work together) sent me a Facebook IM and we had a long discussion. She apparently needed me to urgently send her $600 as she was held up at gun point and lost everything.

You can read the below. As an epilogue, I wrote the below message to her as well as posting it on her wall. The wall post was deleted within minutes and I was removed as a friend, which confirmed my suspicions.

I am an experienced traveler so could sympathise with the situation but was fully aware of how con men operate as I’ve been done over before – and I could easily see someone falling for it. I’m sharing the below because this is only going to be more common in our society, as people sign into things like Facebook at internet cafes and don’t log out properly. Use the below as a guide if you ever get into this situation.

Remember that nothing is that urgent that it requires you to send a bank transfer from your online banking facility right now. Only ever send money via Western Union, which costs $70 but it’s quick, secure and truly global. I would know as well – I was in Peru with not even enough money to pay for my accommodation that night and barely for lunch. Western Union can deliver money to post offices, pharmacy’s as well as banks in minutes – they are literally everywhere – and they only provide the money (up to $1000) if there is a passport to validate. It’s a much better way to help out someone in need, as it eliminates the potential for fraud.

———————————

Rhiannon,

We’ve been chatting on Facebook chat. You’ve got $800, so that means you are not in an immediate emergency of not having somewhere to eat, drink and sleep. So you’ve got a few days leeway, that’s good.

But it’s easy to hack a persons facebook account, and I won’t know if it is genuinely you until I speak to you on the phone.

I will help but other than calling family, you need to consider
– talking to the consular which has a 24 hour hotline. You won’t get money but they will help you
– calling your credit card company. They will issue you emergency cash and an emergency credit card.

I am not going to transfer money from my bank account and will only do it with Western Union – as they can confirm your identity with a passport. I am also not going to wire the money over until you’ve exausted the other options I’ve listed above as I’ve done it in the past before and it reduces scope for potential fraud and burden on other people.

I’m sorry if this is genuinely you reaching out, but I am advanced with my knowledge about internet security, and this could very typically be an example of some prick taking advantage of your account which you forgot to sign out from in an Internet cafe which quite frankly I am highly suspicious of because there is evidence to support that.

I am sending this message because you will get it through your e-mail account which is seperately secured. I am also posting on your wall so your other friends can see what we discussed. Hopefully you won’t delete it, because that will prove this is a phishing scam and I will monitor so as to inform Facebook what’s happening to prevent any fraud from happening.

———————————

8:38pm Rhiannon
Hi

8:38pm Elias
Hi!

8:39pm Rhiannon
I am stranded in london and i need your help

8:39pm Elias
ok, what can I do?

(and happy birthday :))

8:40pm Rhiannon
i was mugged at a gun point in Kentish town, it was a brutal experience, all cash i had on me were stolen and my credit card was collected too now i’m left with no money here. I need you to loan me some money to get a plane ticket

yea thanks

8:42pm Elias
How do I know this is Rhiannon?

It’s happened to me before and it sucks, so appreciate it if this is not a joke

8:43pm Rhiannon
what

Elias i would never you stranded in another country if you really needed my help

I am still in shock right now and i’ll apprecaite it if you can help me out

8:44pm Elias
call me on

or give me a number I can call you

8:45pm Elias
if you had a credit card, you are in luck because you can get emergency cash

8:45pm Rhiannon
i can’t make any calls right now

my phone was also stolen

8:46pm Elias
well give me a number to call you

8:46pm Rhiannon
I have been able to raise over $800 but i need $650 more to get the plane ticket back home,so please can you loan me some money till i get back home? i will pay you back as soon as i’m home..

8:47pm Elias
do you have your passport? and who is your credit card with?

8:50pm Rhiannon
yes i still have my passport but my creditcard was also stolen as well

8:50pm Elias
I understand that, but you can get $500 in emergency cash straight away and an amergecy card sent to you within 48 hours

8:50pm Rhiannon
I need you to loan me $650 to get the hell out of here

8:52pm Elias
ok, you are asking me to give you money despite me not speaking to you for over 4 years. but you are not answering any of my questions which could get you out of you situation without me having to give you money which I am not going to do because this is potentially someone that’s hacked into your account

8:53pm Rhiannon
wtf?

8:53pm Elias
who is your credit card with!

8:53pm Rhiannon
You work at Nick’s Seafood Restaurant from 2002 to 2003.

8:53pm Elias
what town are you in?

yes, my facebook profile says that

who was the manager at nicks?

8:55pm Rhiannon
i am in kentish town

9:11pm Elias
Rhiannon I want to help you, but need to speak on the phone. I can’t send money because it’s sunday night here, and I’m not confident about your identity right now. If you can find a number I will call you and see what I can do

9:14pm Rhiannon
Elias i don’t know what else you want me to tell you or how else you want me to prove myself to you

all i know is that if you were to be stranded in another country i wouldn’t even think of it twice before helping you out

Ofcourse you can have the money wired online .. you don’t have to fo to the bank

9:15pm Elias
Well I am still online talking to you, so clearly I’m not blowing you off. But I am not stupid either.

Find a phone, give me the number, and let’s chat

9:19pm Rhiannon
Hotel Manager’s # +447024019672

9:21pm Elias
the number is busy. I’ll keep trying

9:24pmRhiannon

ok

9:24pm Elias
what hotel? maybe i can call reception?

Facebook needs to be more like the Byzantines

Flickr graph Chris Saad wrote a good post on the DataPortability Project’s (DPP) blog about how the web works on a peering model. Something we do at the DPP is closely monitor the market’s evolution, and having done this actively for a year now as a formal organisation, I feel we are at the cusp of a lot more exciting times to come. These are my thoughts on why Facebook needs to alter their strategy to stay ahead of the game, and by implication, everyone else who is trying to innovate in this sphere.

Let’s start by describing the assertion that owning data is useless, but access is priceless.

It’s a bold statement that you might need to get some background reading to understand my point of view (link above). However once you understand it, all the debates about who “owns” what data, suddenly become irrelevant. Basically access, just like ownership, is possible due to a sophisticated society that recognises peoples rights. Our society has now got to the point where ownership matters less now for the realisation of value, as we now have things in place to do more, through access.

Accessonomics: where access drives value
Let’s use an example to illustrate the point with data. I am on Facebook, MySpace, Bebo, hi5, Orkut, and dozens of other social networking sites that have a profile of me. Now what happens if all of those social networking sites have different profiles of me? One when I was single, one when I was in a relationship, another engaged, and another “it’s complicated”.

If they are all different, who is correct? The profile I last updated of course. With the exception of your birthdate, any data about you will change in the future. There is nothing ‘fixed’ about someone and “owning” a snap shot of them at a particular point of time, is exactly that. Our interests change, as do our closest friends and our careers.

Recognising the time dimension of information means that unless a company has the most recent data about you, they are effectively carrying dead weight and giving themselves a false sense of security (and a false valuation). Facebook’s $3 billion market value is not the data they have in June 2008; but data of people they have access to, of which, that’s the latest version. Sure they can sell to advertisers specific information to target ads, but “single” in May is not as valuable as “single” in November (and even less valuable than single for May and November, but not the months in between).
Network cable

Facebook Connect and the peering network model
The announcement by Facebook in the last month has been nothing short of brilliant (and when its the CEO announcing, it clearly flags it’s a strategic move for their future, and not just some web developer fun). What they have created out of their Facebook Connect service is shaking up the industry as they do a dance with Google since the announcement of OpenSocial in November 2007. That’s because what they are doing is creating a permanent relationship with the user, following them around the web in their activities. This network business model means constant access to the user. But the mistake is equating access with the same way as you would with ownership: ownership is a permanent state, access is dependent on a positive relationship – the latter of course, being they are not permanent. When something is not permanent, you need strategies to ensure relevance.

When explaining data portability to people, I often use the example of data being like money. Storing your data in a bank allows you better security to house that data (as opposed to under your mattress) and better ability to reuse it (ie, with a theoretical debit card, you can use data about your friends for example, to filter content on a third party site). This Facebook Connect model very much appears to follow this line of thinking: you securely store your data in one place and then you can roam the web with the ability to tap into that data.

However there is a problem with this: data isn’t the same as money. Money is valuable because of scarcity in the supply system, whilst data becomes valuable from reusing and creating derivatives. We generate new information by connecting different types of data together (which by definition, is how information gets generated). Our information economy allows alchemists to thrive, who can generate value through their creativity of meshing different (data) objects.

By thinking about the information value chain, Facebook would benefit more by being connected to other hubs, than having all activity go through it. Instead of data being stored in the one bank, it’s actually stored across multiple banks (as a person, it probably scares you to store all your personal information with the one company: you’d split it if you could). What you want to do as a company is have access to this secure EFT ecosystem. Facebook can access data that occurs between other sites because they are party to the same secured transfer system, even though they had nothing to do with the information generation.

Facebook needs to remove itself from being a central node, and instead, a linked-up node. The node with the most relationships with other sites and hubs wins, because with the more data at your hands, the more potential you have of connecting dots to create unique information.

Facebook needs to think like the Byzantines
A lot more can be said on this and I’m sure the testosterone within Facebook thinks it can colonise the web. What I am going to conclude with is that that you can’t fight the inevitable and this EFT system is effectively being built around Facebook with OpenSocial. The networked peer model will trump – the short history and inherent nature of the Internet proves that. Don’t mistake short term success (ie, five years in the context of the Internet) with the long term trends.

Byzantine buildingThere was once a time where people thought MySpace was unstoppable. Microsoft unbeatable. IBM unbreakable. No empire in the history of the word has lasted forever. What we can do however, is learn the lessons of those that lasted longer than most, like the forgotten Byzantine empire.

Also known as the eastern Roman empire, its been given a separate name by historians because it outlived its western counterpart by over 1000 years. How did they last that long? Through diplomacy and avoiding war as much as possible. Rather than buying weapons, they bought friends, and ensured they had relationships with those around them who had it in their self-interest to keep the Byzantines in power.

Facebook needs to ensure it stays relevant in the entire ecosystem and not be a barrier. They are a cashed up business in growth mode with the potential to be the next Google in terms of impact – but let’s put emphasis on “potential”. Facebook has competitors that are cash flow positive, have billions in the bank, but most importantly of all are united in goals. They can’t afford to fight a colonial war of capturing people identity’s and they shouldn’t think they need to.

Trying to be the central node of the entire ecosystem, by implementing their own proprietary methods, is an expensive approach that will ultimately be beaten one day. However build a peered ecosystem where you can access all data is very powerful. Facebook just needs access, as they can create value through their sheer resources to generate innovative information products: that, not lock-in, is that will keep them up in front.

Just because it’s a decentralised system, doesn’t mean you can’t rule it. If all the kids on a track are wearing the same special shoes, that’s not going to mean everyone runs the same time on the 100 metre dash. They call the patriarch of Constantiniple even to this day “first among equals” – an important figure who worked in parallel to the emperor’s authority during the empire’s reign. And it’s no coincidence that the Byzantine’s outlived nearly all empires known to date, which even to this day, arguably still exists in spirit.

Facebook’s not going to change their strategy, because their short-term success and perception of dominance blinds their eyes. But that doesn’t mean the rest of us need to make that mistake. Pick your fights: realise the business strategy of being a central node will create more heart-ache than gain.

It may sound counter intuitive but less control can actually mean more benefit. The value comes not from having everyone walk through your door, but rather you having the keys to everyone else’s door. Follow the peered model, and the entity with the most linkages with other data nodes, will win.

Understanding entrepreneurs

Lachlan Hardy the other week was saying to Mick Liubinskas, myself, and others at the Sydney weekly Official Friday Drinks, that he doesn’t like “entrepreneurs” or at least people that call themselves that because he thinks it’s a silly term. We ended up having a lively debate and explored if there truly is value in an “entrepreneurs” degree. I thought I’d dig into what exactly an entrepreneur is because it’s an interesting term as Lachlan and the boys got me thinking.

Kid entrepreneur

I’ve had the label ‘entrepreneur’ slapped on me twice before without me even realising I was. The first time, I was 15 and lining up in the bank after school. The fat uniform shop lady from my school told me that she needed to get ahead of me, as she obviously had a lot more money to deposit over what she probably thought was me emptying out my piggy bank of $50 in coins. When it finally got to my turn, the bank teller remarked where did I manage to collect all that money (I think it was $5000). I told her I was organising my schools semi-formal, and I was collecting the ticket money. Just after I said that, the fat uniform shop lady waddled past me and quipped: “no – it’s because he’s an entrepreneur” and gave me a look and smile as if to say ‘you smart little bugger‘.

The second time I was called that was at work. In 2006 I pitched a proposal to have social media technologies implemented into the core operation of my rather large firm, which two years on, has successfully occurred. Early on, maybe six months into the roll-out, my home business unit (who would eventually use the technology but had no idea what I was doing behind the scenes in other parts of the firm) gave me an award in front of a few hundred people. As my skinny business unit leader described the story he said the “networking” award which I was being awarded is not appropriate, and instead should be regarded as an “entrepreneurs” award because that’s really what I am.

Weird eh? In the spirit of community, I organised a party for my school mates. Due to frustrations with my workflow, I attempted to make my workplace more efficient. Both those instances, were recognised as entrepreneurial. Fat lady called me an entrepreneur because I had a stack of cash in my hand; my stick-man boss’s boss called me an entrepreneur because I managed to convince senior management though contacts I developed to implement my idea.

What’s the common link?

What is this “Entrepreneur” that you speak of, sire?
According to WordNet, an entrepreneur is: “someone who organizes a business venture and assumes the risk for it“. Or the Oxford dictionary which states: “a person who sets up a business or businesses”.

This is very much in line with how people view the word – but there’s a problem with this definition. Let’s have a high-level look at the types of entrepreneurs.

Immrant entrepreneur

There’s the glorified king of them all – ‘The Entrepreneur’ – who starts a business and then lists on the stock exchange or gets bought out for one-hundred million dollars and makes it as Times person of the year. WordNet and Oxford definition’s through and through.

A second type, the intrapreneur, is an entrepreneur stuck in a big company but displays the same traits as a ‘real’ entrepreneur. The defining difference being they don’t take the same risk of capital loss as their ‘real’ buddies. And correspondingly, don’t get the same rewards.

A third type, is the social entrepreneur like my friend Donnie Maclurcan who started up Project Australia. This is an emerging type, but when people hear about them there’s a bit of confusion. I mean, how does a non-profit venture yield, um, profit – isn’t that what entrepreneurialism is about?

All the above are entrepreneurial, but they don’t match the definition because of a misguided understanding: we are using money to measure it.

Entrepreneurialism is more like a combination of a risk-taker (different from gambler) and passionate expert, who generates value in our society. It’s almost like a function in our society – some people are conductors, others are saxophonists, and others play the violin. Different people pick their specialty: the violinists are playing music according to their function and develop accordingly; the conductors similarly according to their function. Extend the definition with people that love to be employees, and others that love to be managers. There is a different skill class required, and quite often, people in one class don’t want to be in the other (like how some computer developers who love their trade, get pulled away from their passion into management which they call admin). An entrepreneur, like an bridge engineer, is someones who’s flagged ‘I’m on the lookout to build structures of value’ except the former is building structures for markets as opposed to the latter who is building structures for transportation.

The traditional definitions we use are inconsistent. How can you describe something using such a one-dimensional view as finance when really what we are describing are components to a job function or perhaps even a type of labour class. They are almost like an artist, trying to perfect the synthesis of the four factors of production: land, labour, capital, enterprise. With the rise of the corporation as the dominant institution in our society, we’ve forgotten that our society was built by individuals who would otherwise be called an entrepreneur: sole traders selling to a market. We now group ourselves in a collective (a company) for the apparent ‘economies of scale’, as we can minimise our transaction costs.

Here’s an illustration with how the definition is at conflict with how we use it from the “risk” point of view. Most family businesses, like the local fruit-shop when they started, raised capital in the form of a bank loan. They very much are taking a risk there (the risk of bankruptcy) – but we probably don’t spare a moment in thinking the risk they took makes them “entrepreneurs”.

Contrast that to people innovating in technology. Typically a college kid comes up with a great new idea, and he then goes and raises funding from angel investors and then venture capital. What’s the risk there? If the venture fails, the money does not get enforced on the entrepreneur to be paid. People simply pack up shop with low heads and that’s it. In the upside, sure the entrepreneur needs to share profits. But if the only loss they face is the feeling of disappointment and perhaps, the $2 in capital they contributed to start the company, does this mean they are not entrepreneurs?

A better definition
This definition is from my favourite Frenchman, or at least, the guy that made me stop hating the French – and that’s saying something! (Greek waiters and French chefs do not work well under the same roof!)
Twitter _ Loic Le Meur_ _entrepreneur_
Loic says it’s simply someone who moves resources from lower yield areas to higher yielding ones. The man that coined this was an admirer of Adam Smith’s “Wealth of Nations” but felt Smith underplayed the role of an entrepreneur in capitalism. So if you have a fan in your house cooling a room where no one is sitting, it’s moving that fan to the room where there are 20 people that are boiling hot due to the hot weather. It’s a person who has the initiative to reallocate a resource to where the demand and appreciation of that resource is. Bringing it back to economics, entrepreneurs are one of the major reasons our market economy works – and the market economy, despite it’s weaknesses in some areas, is a brilliant system at organising our society.

The WordNet definition is the typical interpretation of an entrepreneur in society, whilst the Loic interpretation is truer to the source of the word. Reconsidered in this light, I’ve now come to appreciate that as annoying entrepreneurs can be (it takes a certain kind- very much a me, me, me view on things; mavericks who upset the order – which sounds heroic but the reality is that they are a real pain in the arse; and the “shut-the-hell-up-Ive-already-heard-you-talk-about-that-idea-a-hundred-times” trait), we certainly shouldn’t diminish their role in society. And if someone identifies themselves as one, I would say they are simply flagging their place in the personality tree: don’t mock it, be aware of it.

Let’s kill the password anti-pattern before the next web cycle

Authenticity required: password?I’ve just posted an explanation on the DataPortability Blog about delegated authentication and the Open Standard OAuth. I give poor Twitter a bit of attention by calling them irresponsible (which their password anti-pattern is – a generic example being sites that force people to give up their passwords to their e-mail account, to get functionality like finding your friends on a social network) but with their leadership they will be a pin-up example which we can promote going forward and well placed in this rapidly evolving data portability world. I thought the news would have calmed down by now, but new issues have come to light further highlighting the importance of some security.

With the death of Web 2.0, the next wave of growth for the Web (other than ‘faster, better, cheaper’ tech for our existing communications infrastructure) will come from innovation on the data side. Heaven forbid another blanket term for this next period, which I believe we will see the rise of when Facebook starts monetising and preparing for an IPO, but all existing trends outside of devices (mobile) and visual rendering (3D Internet) seem to point to this. That is, innovation on machine-to-machine technologies, as opposed to the people-to-machine and people-to-people technologies that we have seen to date. The others have been done and are being refined: machine-to-machine is so big it’s a whole new world that we’ve barely scratched the surface of.

But enough about that because this isn’t a post on the future – it’s on the current – and how pathetic current practices are. I caught up with Carlee Potter yesterday – she’s a young Old Media veteran who inspired by the Huffington Post, wants to pioneer New Media (go support her!). Following on from our discussion, she writes in her post that she is pressured by her friends to add applications on services like Facebook. We started talking about this massive cultural issue that is now being exported to the mainstream, where people freely give up personal information – not just the apps accessing it under Facebook’s control, but their passwords to add friends.

I came to the realisation of how pathetic this password anti-pattern is. I am very aware that I don’t like the fact that various social networking sites ask me for private information like my e-mail account, but I had forgotten how used to the process I’ve become to this situation that’s forced on us (ie, giving up our e-mail account passsword to get functionality).

Argument’s that ‘make it ok’ are that these types of situations are low risk (ie, communication tools). I completely disagree, because reputational risk is not something easily measured (like financial risk which has money to quantify), but that’s not the point: it’s contributing to a broader cultural acceptance, that if we have some trust of a service, we will give them personal information (like passwords to other services) so we can get increased utility out of that service. That is just wrong, and whilst the data portability vision is about getting access to your data from other services, it needs to be done whilst respecting the privacy of yourself and others.

Inspired by Chris Messina, I would like to see us all agree on making 2009 the year we kill the password anti-pattern. Because as we now set the seeds for a new evolution of the web and Internet services, let’s ensure we’ve got things like this right. In a data web where everything is interoperable, something that’s a password anti-pattern is not a culture that bodes us well.

They say privacy is dead. Well it only is if we let it die – and this is certainly one simple thing we can do to control how our personal information about ourselves gets used by others. So here’s to 2009: where we seek the eradication of the password anti-pattern virus!

Blog posts on Liako.Biz for 2005

A series of posts that summarises content created on Liako.Biz

You can also read 2008 and 2007 summaries.

Like a good host should, I welcomed you to my new blog which was to document my travel experience. Writing in April 2005, I then proceeded to say how I landed in America (Ohio) and then Boston (with a cheeky review of Harvard ). I also managed to visit New York, before I made my way to Europe to Gallipoli for the 90th ANZAC Dawn services and one of my favourite cities Istanbul.

Similarly, May 2005 was a fairly lame month of blogging as I was still getting into the groove. I spent a month literally sleeping, and trying to create some sort of travel plans. I stayed with my cousins in Athens and managed a side-trip to Mykonos.

I finally got into the groove in June of being a blogger that engaged an audience. It started with my trip to Albania, which then progressed to Macedonia, Serbia, Bosnia and Herzegovina, Croatia and Slovenia.

My Balkan bash had to end there as the sisters in London called, so off I went to see them and the new baby. However I then had to go back to Greece, and what better way to do it than over land. Unfortunately, it meant I had go through the Nagging wife countries but it’s okay because I partied all the way.

I partied a little too hard and developed pneumonia, which was a bummer for my trip, but by late September I had enough and headed to Athens (from Athens via Moscow) starting with Bulgaria, then onto the long road to Iran via Turkey until I finally got to…Iran. Iran was cool to see but hot at the same time, so I opted for some cold in Russia. Seeing as Estonia, Latvia and Lithuania were just down the road from Russia, I also visited those countries. Oh and heck, since I was there, I went to Poland, Prague and Budapest until time ran out and my nine months away ended with a finale.

Blog posts on Liako.Biz for 2007

Continued on – a series of posts that summarises content created on Liako.Biz

You can also read 2008 and 2005 summaries.

December 2007

November 2007

October 2007

September 2007

August 2007

July 2007

June 2007

May 2007

April 2007

March 2007