Archive for the 'Uncategorized' Category

How to become a global innovation centre

In May 2009, the Australian government asked me what should they be doing to build Australia’s technology sector. I responded by asking the 600 people who have self-identified themselves as technology entrepreneurs in Australia, and over several months wrote a paper in a crowd-sourced way, to send this formal submission to the government. Later this week Senator Kate Lundy will be hosting a public sphere event, which will be an influential event that could change Australia’s direction and government policy in technology.

Here is a video I was asked to do explaining the paper.

You can read the submission here, which I’m sure other countries may find useful – it may not be right, but it’s what a portion of Australia’s entrepreneurial community thinks.

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.

Liako is everywhere…but not here

Life’s been busy, and this blog has been neglected. Not a bad thing – a bit of life-living, work-smacking, exposure to new experiences, and active osmosis from the things I am involved in – is what makes me generate the original perspectives I try to create on this blog.

However to my subscribers (Hi Dad!), let this post make it up to you with some content I’ve created elsewhere.

You already know about the first podcast I did with the Perth baroness Bronwen Clune and the only guy I know who can pull off a mullet Mike Cannon-Brookes of Atlassian . Here’s a recap of some other episodes I’ve done:

  • Episode two: ex-PwC boy Matthew Macfarlane talks to current PwC boy myself and Bronwen, in his new role as partner of a newly created investment fund Yuuwa Capital. He joined us and told us about what he’s looking for in startups, as he’s about to spend $40million on innovative startups!
  • Episode three: marketing guru Steve Sammartino , tells us about building a business and his current startup Rentoid.com
  • Episode four: experienced entrepreneur Martin Hosking shares us lessons and insight, whilst talking about his social commerce art service Red Bubble .
  • Episode five: “oh-my-God-that-dude-from-TV!” Mark Pesce joins us in discussing that filthy government filter to censor the Internet
  • Episode six: ex-Fairfax Media strategist Rob Antulov tells us about 3eep – a social networking solution for the amateur and semi-professional sports world.

I’ve also put my data portability hat on beyond mailing list arguments and helped out a new social media service called SNOBS – a Social Network for Opportunistic Business women – with a beginners guide to RSS . You might see me contribute there in future, because I love seeing people pioneer New Media and think Carlee Potter is doing an awesome job – so go support her!

Over and out -regular scheduling to resume after this…

The Rudd Filter

This poor blog of mine has been neglected. So let me do some catchup with some of the things I’ve been doing.

Below is a letter I sent to every senator of the Australian government several weeks ago. Two key groups responded: the Greens (one of the parties to hold the balance of power) who were encouraged by my letter, and the Independent Nick Xenophon (who is one of the two key senators that will have an impact) had his office respond in a very positive way .

It relates to the Government’s attempt to censor the Internet for Australians.

Subject: The Rudd Filter

Attention: Senators of the Australian parliament

With all due respect, I believe my elected representatives as well as my fellow Australians misunderstand the issue of Internet censorship. Below I offer my perspective, which I hope can re-position the debate with a more complete understanding of the issues.

Background

The policy of the Australian Labor Party on its Internet filter was in reaction to the Howard Government’s family-based approach which Labor said was a failure. Then leader of the Opposition, Kim Beazley, announced in March 2006 (Internet archive ) that under Labor “all Internet Service Providers will be required to offer a filtered ‘clean feed’ Internet service to all households, and to schools and other public internet points accessible by kids.” The same press release states “Through an opt-out system, adults who still want to view currently legal content would advise their Internet Service Provider (ISP) that they want to opt out of the “clean feed”, and would then face the same regulations which currently apply.”

The 2007 Federal election, which was led by Kevin Rudd, announced the election pledge that “a Rudd Labor Government will require ISPs to offer a ‚Äòclean feed‚Äô Internet service to all homes, schools and public Internet points accessible by children, such as public libraries. Labor‚Äôs ISP policy will prevent Australian children from accessing any content that has been identified as prohibited by ACMA, including sites such as those containing child pornography and X-rated material.”

Following the election, the Minister for Broadband, Communications and Digital Economy Senator Stephen Conroy in December 2007 clarified that anyone wanting uncensored access to the Internet will have to opt-out of the service .

In October 2008, the policy had another subtle yet dramatic shift. When examined by a Senate Estimates committee, Senator Conroy stated that “we are looking at two tiers – mandatory of illegal material and an option for families to get a clean feed service if they wish.” Further, Conroy mentioned “We would be enforcing the existing laws. If investigated material is found to be prohibited content then ACMA may order it to be taken down if it is hosted in Australia. They are the existing laws at the moment.”

The interpretation of this, which has motivated this paper as well as sparked outrage by Australians nation-wide, is that all Internet connection points in Australia will be subjected to the filter, with only the option to opt-out of the Family tier but not the tier that classifies ‘illegal material’. While the term “mandatory” has been used as part of the policy in the past, it has always been used in the context of making it mandatory for ISP’s to offer such as service. It was never used in the context of it being mandatory for Australians on the Internet, to use it.

Not only is this a departure from the Rudd government’s election pledge, but there is little evidence to suggest that it is truly being representative of the requests from the Australian community. Senator Conroy has shown evidence of the previous NetAlert policy by the previous government falling far below expectations. According to Conroy, 1.4 million families were expected to download the filter, but many less actually did . The estimated end usage according to Conroy is just 30,000 – despite a $22 million advertising campaign. The attempt by this government to pursue this policy therefore, is for its own ideological or political benefit . The Australian people never gave the mandate nor is there evidence to indicate majority support to pursue this agenda. Further, the government trials to date have shown the technology to be ineffective.

On the 27th of October, some 9,000 people had signed a petition to deny support of a government filter. At the time of writing this letter on the 2 November, this has now climbed to 13,655 people. The government’s moves are being closely watched by the community and activities are being planned to respond to the government should this policy continue in its current direction.

I write this to describe the impact such a policy will have if it goes ahead, to educate the government and the public.

Impacts on Australia

Context

The approach of the government to filtering is one dimensional and does not take into account the converged world of the Internet. The Internet has – and will continue to – transform our world. It has become a utility, to form the backbone of our economy and communications. Fast and wide-spread access to the Internet has been recognised globally as a priority policy for political and business leaders of the world.

The Internet typically allows three broad types of activities. The first is that of facilitating the exchange of goods and services. The Internet has become a means of creating a more efficient marketplace, and is well known to have driven demand in offline selling as well , as it creates better informed consumers to reach richer decision making. On the other hand, online market places can exist with considerable less overhead – creating a more efficient marketplace than in the physical world, enabling stronger niche markets through greater connections between buyers and sellers.

The second activity is that of communications. This has enabled a New Media or Hypermedia of many-to-many communications, with people now having a new way to communicate and propagate information. The core value of the World Wide Web can be realised from its founding purpose: created by CERN , it was meant to be a hypertext implementation that would allow better knowledge sharing of its global network of scientists. It was such a transformative thing, that the role of the media has forever changed. For example, newspapers that thrived as businesses in the Industrial Age, now face challenges to their business models, as younger generations are preferring to access their information over Internet services which objectively is a more effective way to do so .
A third activity is that of utility. This is a growing area of the Internet, where it is creating new industries and better ways of doings, now that we have a global community of people connected to share information. The traditional software industry is being changed into a service model where instead of paying a license, companies offer an annual subscription to use the software via the browser as platform (as opposed to a PC’s Window’s installation as the platform). Cloud computing is a trend pioneered by Google, and now an area of innovation by other major Internet companies like Amazon and Microsoft, that will allow people to have their data portable and accessible anywhere in the world. These are disruptive trends, that will further embed the Internet into our world.

The Internet will be unnecessarily restricted

All three of the broad activities described above, will be affected by a filter.
The impact on Markets with analysis-based filters, is that it will likely block access to sites due to a description used in selling items. Suggestions by Senators have been that hardcore and fetish pornography be blocked – content that may be illegal for minors to view, but certainly not illegal for consenting adults. For example, legitimate businesses that used the web as their shopfront (such as adultshop.com.au), will be restricted from the general population in their pursuit of recreational activities. The filter’s restriction on information for Australians is thus a restriction on trade and will impact individuals and their freedoms in their personal lives.
The impact on communications is large. The Internet has created a new form of media called “social media”. Weblogs, wiki’s, micro-blogging services like Twitter, forums like Australian start-up business Tangler and other forms of social media are likely to have their content – and thus service – restricted. The free commentary of individuals on these services, will lead to a censoring and a restriction in the ability to use the services. “User generated content” is considered a central tenet in the proliferation of web2.0, yet the application of industrial area controls on the content businesses now runs into a clash with people’s public speech as the two concepts that were previously distinct in that era, have now merged.
Further more, legitimate information services will be blocked with analysis-based filtering due to language that would trigger filtering. As noted in the ACMA report , “the filters performed significantly better when blocking pornography and other adult content but performed less well when blocking other types of content”. As a case in point, a site containing the word “breast”, would be filtered despite it having legitimate value in providing breast cancer awareness.
Utility services could be adversely affected. The increasing trend of computing ‘in the cloud’ means that our computing infrastructure will require an efficient and open Internet. A filter will do nothing but disrupt this, with little ability to achieve the policy goal of preventing illegal material. As consumers and businesses move to the cloud, critical functions will be relied on, and any threat in the distribution and under-realisation of potential speeds, will be a burden on the economy.
Common to all three classes above, is the degradation of speeds and access. The ACMA report claims that all six filters tested scored an 88% effectiveness rate in terms of blocking the content that the government was hoping would be blocked. It also claims that over-blocking of acceptable content was 8% for all filters tested, with network degradation not nearly as big of a problem during these tests as it was during previous previous trials, when performance degradation ranged from 75-98%. In this latest test, the ACMA said degradation was down, but still varied widely‚Äîfrom a low of just 2% for one product to a high of 87% for another. The fact that there is a degradation of even 0.1% is in my eyes, a major concern.The Government has recognised with the legislation it bases its regulatory authority from, that “whilst it takes seriously its responsibility to provide an effective regime to address the publication of illegal and offensive material online, it wishes to ensure that regulation does not place onerous or unjustifiable burdens on industry and inhibit the development of the online economy.”

The compliance costs alone will hinder the online economy. ISP’s will need to constantly maintain the latest filtering technologies, businesses will need to monitor user generated content to ensure their web services are not automatically filtered and administrative delays to unblock legal sites will hurt profitability and for some start-up businesses may even kill them.

And that’s just for compliance, lets not forget the actual impact on users. As Crikey has reported (Internet filters a success, if success = failure ), even the best filter has a false-positive rate of 3% under ideal lab conditions. Mark Newton (the network engineer who Senator Conroy’s office attacked recently ) reckons that for a medium-sized ISP that‚Äôs 3000 incorrect blocks every second . Another maths-heavy analysis says that every time that filter blocks something there‚Äôs an 80% chance it was wrong.

The Policy goal will not be met & will be costly through this approach

The Labor party’s election policy document states that Labor‚Äôs ISP policy will prevent Australian children from accessing any content that has been identified as prohibited by ACMA, including sites such as those containing child pornography and X-rated material. Other than being a useful propaganda device, to my knowledge children and people generally don’t actively seek child pornography, and a filter does nothing to prevent these offline real-world social networks of paedophiles to restrict their activities.

What the government seems to misunderstand, is that a filter regime will prove inadequate in achieving any of this, due to the reality of how information gets distributed on the Internet.
Composition of Internet traffic by you.

Source: http://www.ipoque.com/userfiles/file/internet_study_2007.pdf
Peer-to-peer networks (P2P), a legal technology that also proves itself impossible to control or filter, accounts for the majority of Internet traffic, with figures of between 48% in the Middle East and 80% in Eastern Europe . As noted earlier, the ACMA trials have confirmed that although they can block P2P, they cannot actually analyse the content as being illegal. This is because P2P technologies like torrents are completely decentralised. Individual torrents cannot be identified, and along with encryption technologies, make this type of content impossible to filter or identify what it is.
However, whether blocked or filtered, this is ignoring the fact that access can be bypassed by individuals who wish to do so. Tor is a network of virtual tunnels, used by people under authoritarian governments in the world – you can install the free software on a USB stick to have it working immediately. It is a sophisticated technology that allows people to bypass restrictions. More significantly, I wish to highlight that some Tor servers have been used for illegal purposes, including child pornography and p2p sharing of copyrighted files using the bit torrent protocol. In September 2006, German authorities seized data center equipment running Tor software during a child pornography crackdown, although the TOR network managed to reassemble itself with no impact to its network . This technology is but one of many available options for people to overcome a ISP-level filter.
For a filtering approach to be appropriate, it will require not just automated analysis based technology, but human effort to maintain the censorship of the content. An expatriate Australian in China claims that a staff of 30,000 are employed by the Golden Shield Project (the official name for the Great Firewall) to select what to block along with whatever algorithm they use to automatically block sites. With legitimate online activities being blocked through automated software, it will require a beefed up ACMA to handle support from the public to investigate and unblock websites that are legitimate. Given the amount of false positives proven in the ACMA trials, this is not to be taken likely, and could cost hundreds of millions of dollars in direct taxpayers money and billions in opportunity cost for the online economy.

Inappropriate government regulation

The governments approach to regulating the Internet has been one dimensional, by regarding content online with the same type that was produced by the mass media in the Industrial Era. The Information Age recognises content not as a one-to-many broadcast, but individuals communicating. Applying these previous-era provisions is actually a restraint beyond traditional publishing.
Regulation of the Internet is provided under the Broadcasting Services Amendment (Online Services) Act 1999 (Commonwealth) . Schedule Five and seven of the amendment claim the goal is to:

  • Provide a means of addressing complaints about certain Internet content
  • Restrict access to certain Internet content that is likely to cause offense to a reasonable adult
  • Protect children from exposure to Internet content that is unsuitable for them

Mandatory restricting access can disrupt freedom of expression under Article 19 of the International Covenant on Civil and Political Rights and disrupt fair trade of services under the Trade Practices Act.

It is wrong for the government to take the view of mandating restricted access, but instead should allow consumers that option to participate in a system that protects them. To allow a government to interpret what a “reasonable adult” would think is too subjective for it to be appropriate that a faceless authority regulates, over the ability for an individual adult to determine for themselves.

The Internet is not just content in the communications sense, but also in the market and utility sense. Restricting access to services, which may be done inappropriately due to proven weaknesses in filtering technology, would result in

  • reduced consumer information about goods and services. Consumers will have less information due to sites incorrectly blocked
  • violation of the WTO’s cardinal principles – the “national treatment” principle , which requires that imported goods and services be treated the same as those produced locally.
  • preventing or hindering competition under the interpretation of section 4G of the Trade Practices Act . This means online businesses will be disadvantaged from physical world shops, even if they create more accountability by allowing consumer discussion on forums that may trigger the filter due to consumers freedom of expression.

Solution: an opt-in ISP filter that is optional for Australians

Senator Conroy’s crusade in the name of child pornography is not the issue. The issue, in addition to the points raised above, is that mandatory restricting access to information, is by nature a political process. If the Australian Family Association writes an article criticising homosexuals , is this grounds to have the content illegal to access and communicate as it incites discrimination ? Perhaps the Catholic Church should have its website banned because of their stance on homosexuality?

If the Liberals win the next election because the Rudd government was voted out due to pushing ahead with this filtering policy, and the Coalition repeat recent history by controlling both houses of government – what will stop them from banning access to the Labor party’s website?

Of course, these examples sound far fetched but they also sounded far fetched in another vibrant democracy called the Weimar Republic . What I wish to highlight is that pushing ahead with this approach to regulating the Internet is a dangerous precedent that cannot be downplayed. Australians should have the ability to access the Internet with government warnings and guidance on content that may cause offence to the reasonable person. The government should also persecute people creating and distributing information like child pornography that universally is agreed by society as a bad thing. But to mandate restricted access to information on the Internet, based on expensive imperfect technology that can be routed around, is a Brave New World that will not be tolerated by the broader electorate once they realise their individual freedoms are being restricted.

This system of ISP filtering should not be mandatory for all Australians to use. Neither should it be an opt-out system by default. Individuals should have the right to opt-into a system like this, if there are children using the Internet connection or a household wishes to censor their Internet experience. To mandatory force all Australians to experience the Internet only if under Government sanction, is a mistake of the highest levels. It technologically cannot be assured, and it poses a genuine threat to our democracy.

If the Ministry under Senator Conroy does not understand my concerns by responding with a template answer six months later , and clearly showing inadequate industry consultation despite my request, perhaps Chairman Rudd can step in. I recognise with the looming financial recession, we need to look for ways to prop up our export markets. However developing in-house expertise at restricting the population that would set precedent to the rest of the Western world, is something that’s funny in a nervous type of laughter kind of way.

Like many others in the industry, I wish to help the government to develop a solution that protects children. But ultimately, I hope our elected representatives can understand the importance of this potential policy. I also hope they are aware anger exists in the governments’ actions to date, and whilst democracy can be slow to act, when it hits, it hits hard.
Kind regards,
Elias Bizannes
—-
Elias Bizannes works for a professional services firm and is a Chartered Accountant. He is a champion of the Australian Internet industry through the Silicon Beach Australia community and also currently serves as Vice-Chair of the DataPortability Project. The opinions of this letter reflect his own as an individual (and not his employer) with perspective developed in consultation with the Australian industry.
This letter may be redistributed freely. HTML version and PDF version.

Silicon Beach Australia podcast #1

Looks like I am now venturing into the world of podcasting!

Its been a great learning experience in creating this form of media, and I look forward to doing more. In this first episode, my co-host Bronwen Clune and yours truly interview CEO of Atlassian Mike Cannon-Brookes .

We are doing it with Australian start-up The Podcast Network . Why? Because the first rule Bronwen and I agreed on, was that if we are going to be promoting Aussie innovation, we might as well eat our own dog food do it whilst using Aussie innovation where possible. Certainly, the experience has given me a great insight into the value of such a service, which I am sure I will write about in future. Its been excellent working with Cam and team at TPN.

For now, here is the link – I hope you enjoy it! Silicon Beach Australia podcast – Episode one

Link to the podcast blog: http://siliconbeachpodcast.com

It’s the experience that matters

One of the great things about working on the DataPortability Project, is the exposure to some amazing thinking. Today alone, I stumped on this great piece questioning the point of a music label (via Crosbie Fitch ). Separately, I also came across this interesting bit of thinking about imagining what a world would look like without copyright . Those pieces helped give me more solid arguments with something that’s been on my mind a lot. That being, consumers don’t pay for content’s representation per se. Instead, they pay for the associated experience.

With the digital age, we have seen an uprooting of these traditional industries that operate in the content industries as we have seen with the recording & publishing industries. Our traditional approaches to managing content are being challenged, because we (or rather, they) grew complacent on the technological limitations of content distribution. However, now that we have a new type of technology to distribute content (due to computing, the Internet and the web), we are seeing greater potential for content to be consumed – and it’s also exposing something we have forgotten. The digital revolution is changing business practices but it highlights the true nature of content: it’s about the experience.

To illustrate what I mean, let’s define content as being products like music and books.

When you buy a album, you are not buying it for the physical CD or the plastic casing. The reason you are buying it, is so you can get access to the music. This access entitles you to experiencing the music. On a similar note, when you go to a concert to hear a band, you are not paying to stand in a concert hall. You are paying for the experience of hearing the music live, which also incorporates the associated experience of being a part of a crowd. Both those experiences trigger an emotional reaction – which can be positive or negative, but regardless, is what makes us feel alive. Humans pay for music, because the emotions being triggered by that content, helps them feel like humans.

beyonce

Beyonce’s movements: something you pay to experience

With books, what you are purchasing is knowledge. The paper that you read the novel on, which although can sometimes been done up nicely, isn’t why you buy it. What you are buying, is an experience to consume that knowledge. Some books offer intellectual stimulation; other books offer excitement through a riveting storyline. Regardless, the experience of the book reading is what you are purchasing.

It’s about the experience, stupid
Talking about cultural artifacts like music and books is one thing. But there is no reason why we can’t consider this with information in a generic sense – as the initial data is simply a stage earlier in the value chain . In the context of my personal data, this is something that I have generated. Nothing really special about it. But it becomes special, when a web application can do interesting things with that data. That meaning, when a application can process my data in such a way that gives me a new experience.

For example, there are certain Facebook applications that reveal some interesting information about my friends, by generating insight. Knowing that 58% of my friends are male is useful when I’m considering a party (more beer and Beam; less wine and champagne). Knowing that some of my friends are traveling or living in a certain country, is useful because it gives me awareness that I can meet up with them. By Facebook allowing applications to process my data in the context of my friends, the information they can generate is a lot more valuable if Facebook locked this down. The experience of having access to this information, is not as emotionally driven as a Jane Austen book; but the experience of insight is still something I get out of it.

The ability to offer a unique experience to a consumer, is what is key to any information-based products. Triggering emotions is a powerful thing about humanity, and a consumer when consuming information is looking to get an experience which in reality can only be captured in their memory. Of course, content in the form of entertainment is more about the emotion, whilst news is more about the access , but that doesn’t take away from the inherent characteristics of information.

Recognising that information-products are an experience, should give a better understanding about what we do with them. For example, writing this blog I don’t get any monetary benefit from it. However, the more people that want to copy my "original work", the better. Whilst that may sound contrary to smart business sense, it’s because I recognise the benefit I get from blogging is reputation (well one of them at least). And despite the fact people can ‘steal’ my content, doesn’t mean they can steal my brain. As a content creator, I am being rewarded with the associated benefits of a good reputation, despite the fact I cannot assert ownership over my words.

permission

"If you put that picture on the Internet I’ll call my lawyer"

So why do we obsess over control?
If you are a web application, a book author, or a musician – the way you make money isn’t through the information you generate. Instead, what you are being rewarded with is with a brand; a relationship with your consumer of trust; or just simply attention. Open source developers can appear to be like some hippies helping the world. But look closely at how they make a living, and it’s on the associated expertise that has been recognised onto them through their brand, which allows them to charge for consulting.

If you operate in the information industry, the way you make money is on the experience you create for the consumer – and by generating that experience, you can then create a monetary stream off it. For example, a band that no one knows about has no demand for their music. A cult following, because people get obsessed over their songs played freely everywhere, allows them to make buckets of money on merchandise and concerts. Twitter is a web application, that when I first heard about it, I would never have used it. Now that I use it, I am willing to pay for certain benefits that make my experience more enjoyable (ie, profiling of tweets, etc). Twitter has an opportunity to make money because I value the experience they offer me, and I’m willing to pay to make it a better experience.

In the information business, experience is ultimately your product. Ignore that, and you will be making decisions that at best, will amount to a huge amount of opportunity cost. Here’s hoping that as we move forward with DataPortability, the thinking of businesses can change. Locking down data is not how you make money; it’s the compelling experience you offer your consumers that is the true source of competitive advantage and ultimately, revenues.

Climate change: forget the science, it’s real for the market

I recently sat through a two hour presentation on climate change at work. My employer this year (a big four firm) has been mobilising to respond to the market with a climate change solution for our clients – and the things happening are amazing. They want to be first-movers in what is a huge business opportunity. Even through I have had dealings with people on the climate change team, it wasn’t until I sat through this presentation that a few things clicked for me: climate change is real. And I am not talking about the science – it’s real for the market economy.

I wouldn’t be doing any justice if I attempted to explain what I learned, however I will explain something that was a big realisation for me. This guy that spoke is a world expert, and he reckons more has happened in the last eight months of his career regarding climate change than it has in 25 years of his career. To understand why, is to understand the realisation of the markets.

Increasing shareholder value

If it’s one phrase that sums up corporations working within the framework of capitalism, it’s about “increasing shareholder value”. It’s a term that is mocked because we are sick of hearing it, but it essentially explains the market: investors make money by putting their money where they can generate more value for their buck. Value creation is the centre of everything – a start-up company generates value through innovative new products that people buy; a tax agent generates value by reducing your tax expense; a real estate agent generates value because they can sell your property at a higher valuation. In the context of corporations, people make money in companies through returns: a higher share price means a higher value of that share or piece of property. Companies are judged on their profits because more profits reflect a higher return an investor gets from that entity; just like a home being sold, it reflects the additional value they can generate from that piece of property they own.

Profits reflect shareholder returns, which come in two forms.

1) dividends, which are cash payouts from profit distributions to shareholders. An investor wants higher profits, because it means more cash for them on their existing shareholding – it reflects a better return on their investment.

2) retained earnings, which is when a company doesn’t pay the dividend but holds it so they can fund future growth. More profits, means extra cash to invest to generate more growth in the entity, which ultimately means more value. If you buy a share for $1, and the company grows and your share is now $2 – you are a happy chappy because you’ve effectively doubled your money.

How climate change now has a price

Lets say we generate x amount of carbon tons a year. The objective of climate change, is that we can reduce the amount of x with time, and then get to the stage where we can grow sustainably, which means for every x we generate, we can offset that bit of carbon so as to to generate a net of zero on the environment. That’s called sustainable economic growth.

Lets say y is the amount it costs to remove a ton of carbon dioxide. Meaning y represents the expense of generating carbon. So if you times x with y – that equals the amount it will costs to remove the carbon dioxide we generate so that we have a net impact of zero on the environment (or at least, the cost to reduce emissions). If the government forces you to reduce your emissions, like they force you to pay taxes, that expense has now become very real.

How much a ton of Carbon Dioxide will cost is a big issue yet to be settled, but as you can tell y is an important number because it determines how much it costs for you to reduce your carbon footprint. A very conservative estimate is that it costs 25 US dollars to remove 1,000 tonnes of carbon. The reason I say conservative is because more recent evidence suggests it is actually a lot more than that (I think he quoted 40 euros). Using the $25 figure, he said that it will cost us $15 trillion to remove carbon dioxide. There is so much pressure on governments from voters, lobby groups and the like, that governments (like here in Australia) are going to mandate that you offset your carbon emissions each year. The Kyoto agreement is saying a 60% reduction from 1990 levels by 2050 for example.

Now as an investor, I am thinking my investments have a share of the pie of a $15 trillion expense that they have to pay each year. That’s expensive. Expensive stuff reduces my profit. Reducing my profit means lower returns for my investments (ie, lower dividends, lower retained earnings to fund growth). Holy crap – this climate change thing is eroding shareholder value. Crap crap crap – I want to start knowing what my investments are doing to tackle this future expense. I want more accountability, alongside the financial reports that companies are mandated to provide (and which tells us about profit).

And that is exactly what the investors that control $41 trillion dollars – one third of the worlds money -are currently saying.

So much more to say, but I just want to share that point: climate is real economically and the environmental cost is being built into the market mechanism. There are a lot of issues that are yet to be resolved, but you’d be stupid to start ignoring the massive developments occuring, because its getting nearer to an agreement where it will affect every transaction we make in our economies.

Finale!

I’m back! After 35 weeks of backpacking, partying, and avoiding reality – I’ve returned back home, surprising nearly everyone. (My parents answered the door 12.30 at night – only 24 hours earlier, I had an argument with them on the phone that I was determined to fly to Syria – they nearly had a heartattack. On both counts!) The reason I am back is because my employer, well, said so. Unfortunately, it meant I had to change my trip quite drastically (no Middle East, and not the rest of Eastern Europe). Fortunately, I was dying to come back home – I was very much over travelling, and was counting down the days I would end the trip. Travel is a life-long thing, not a “lets-see-everything-now-before-I-have-the-2.4 kids- and-a-mortage”. Just in case you were wondering, after Budapest I caught a train to Belgrade to see some friends, and then flew to Athens to catch up with family.

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My new car – seriously. Bank loan was approved today, I pick up this 2004 Jeep wrangler next Wednesday.

Five days after I arrived, I started full-time work in a Graduate-entry position at PwC – where for an intense two weeks, we were being trained on things I already knew as I have previously worked at the firm (it was still tiring though). Now, I am on my first week of three weeks of holiday (it’s a hard life!), and I am busy catching up with friends, and organising myself for what is literaly a new stage of my life. Oh, and recovering – I think my pneumonia is trying to make a comeback because I am so exausted – I probably have bronchitis. Doctor said I was fine when I first arrived, but the PwC training really took it out of me when I should have been relaxing.

…Jesus, I just did some quick arithmetic, and over my 35 weeks, I visitied about 25 countries and twice as many cities, villages, and islands! Talking about my trip has become tedious, and I am finding it difficult to tell people things – partially because, I don’t know where to start.

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After my work’s Christmas Party (theme was “Bollywood” by the way), I went out to the city, and as I had my camera on me, I could not resist taking this photo. I found this guy on the streets of Sydney. I reckon he had a good night.

The travel bug in me is completely dead. But like Lazarus – expect it to come back one day. It won’t happen overnight, but it will happen. Merry Christmas!

Poland, Prague and Budapest

When it comes to my blog, I love using regions. Updating it, whilst is valuable in retrospect, is an absolute pain in the arse when I have to write them. For that reason, I have created a new region of the last three countries on my trip. Poland, Czech Republic, and Hungary – I dub thee the "Visegr?ɬ°d Three" (Slovakia, you be quiet now). Thinking back on those nearly three weeks, the memory is a bit scant, as it was just one big drinking binge. But it turns out I have an audience on this blog, so I’ll pretend I learnt something. I spent about 11 days in Poland ?¢‚Ǩ‚Äú although I regard three of those days as ‘bad hangover’ days so I don’t think they should count. Of those 11 days, four were in the capital Warsaw, four in Krakow (with a day trip to Auschwitz-Birkenau), and another three days in Wroclaw (pronounced VROTZ-wahf). In the Czech Republic, I spent four days in Prague, and in Hungary about three days in Budapest.

All three of these countries are very different from each other: the Hungarians are descendants of the Magyar tribes that swept across Europe terrorising the continent until they settled there, and later ?¢‚Ǩ‚Äú the Hapsburg Empire (which became the Austro-Hungarian Empire), a dominant force in central Europe during the late Middle Ages that lasted until WWI. The Poles are Western Slavs, and together with the Lithuanians after a Royal marriage that sealed the deal, had an empire that stretched from the Baltic and Black seas. The people of the Czech Republic, inhabiting the ancient lands of Bohemia and Moravia, are linguistically and to a lesser extent ethnically related to the Poles. The Czech people have been invaded by Hapsburg’s, Nazis, Soviets and tour groups. They may not have dominated Europe like Hungary or Poland, but they have always been valuable territory for the empires that held them.

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Corner of a building in Prague

What makes these three very different countries so similar however, is their location. The Czech Republic is smack-bang in the middle of Europe, and together with Hungary and Poland, are a large component of Central Europe. The significance of this is that Europe has a very rich history, and heck, if you are in the middle, it means you’ve been involved in almost everything that has touched the continent. For example, their locations has meant that none of the local problems have remained local: when Czechs rejection of the Roman Catholic Church in 1418 resulted in the Hussite Wars; the revolt against the Hapsburg’s in 1618 started the horrible Thirty Years’ War; the annexation of the Sudetenland in 1938 was the opening scene to WWII; the reforms of the 1968 Prague Spring, led to tanks and soldiers from all over the Eastern Bloc to suppress it; and the peaceful overthrow of the government during the Velvet revolution stands as a model for freedom-seekers, such as the recent revolutions of Georgia, Ukraine, and Armenia. Lets also not forget that before Franz Ferdinand was the name of a band, it was also the name of the Hungarian prince that was assassinated by a Bosnian-Serb in Sarajevo – and is what sparked World War I; whilst Poland experienced the brunt of one of the greatest and most horrific wars of our history (WWII) – evident to the modern traveller by visiting Warsaw and Auschwitz-Birkenau . These three countries play no small role in the European story.

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"The one who does not remember history is bound to live it through again" – George Santayana

Something that striked me about Poland was the law enforcement, and the observance of the law. A simple example is the pedestrian crossings ?¢‚Ǩ‚Äú in most cities I have visited, you get either one of three types of driver attitude towards them: the type that will stop once you have started crossing (Sydney); the type that won’t stop, but swerve around you as you cross (Tehran) and the type that make you wet your pants, as you run across like a headless chicken to avoid being hit (Athens ?¢‚Ǩ‚Äú with the complimentary verbal abuse whilst you run). In Poland however, I merely had to look at a crossing, and a car would slam on the breaks! Another example was when I visited the Russian markets in Warsaw, and my friends and I were going through some pirated CD’s to buy (which may I add, looked more professional than a CD in a record store). As we were looking, the men and women quickly hustled us, and in two seconds, had the CD’s completely out of view. A few seconds later, a police officer strolled by. When he was out of sight, we were able to resume our commerce. Turns out, as they showed us later, they have a sophisticated monitoring network, where they know the exact movements of police near them so they won’t get in trouble. Whilst the funky headsets and organisational skills impressed my two companion friends, I was more stunned by the event itself: copyright enforcement to me is a sign that a country is very well developed. For these guys to sweat when the police officer walked by, tells me you’ve got a very well functioning government enforcing the law. That is the basis for a strong economy ?¢‚Ǩ‚Äú especially for something as abstract as intellectual property, which is the basis of a certain buzz word that will solve all our problems like your paycheck and grandpa’s erectile problems.

On the right bank, the Red army stood there, as the Nazis demolished Warsaw

On the right bank, the Soviet army sat there at they watched the Nazi’s burn Warsaw to the ground – the Soviet’s were meant to be on the same side as the Poles. People speculate that Stalin let the Nazi’s do all the hard work, and crush any resistance, so that he would have a clean slate when he occupied the city.

Unfortunately the only "New Economy" thing about Poland, is that they actual have a free market now. And it’s not going down to well: unemployment is high. One of the most talked about backpacker stories, is the Krakow-Prague overnight train ride, where you get gassed while you sleep, only to find all your valuables missing in the morning. A Polish guy in Wroclaw, told me that the worst line of them all, was the Wroclaw-Prague line I was about to get on in one hour (needless to say, I didn’t get much sleep that night). The theft of course, is because of the high unemployment ?¢‚Ǩ‚Äú estimated at 18 percent by this guy I talked to.

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Right next to the Warsaw train station: a funky new building

I found Polish people to be one of the highlights of my trip there. Watching the people in a Polish nightclub became one of my favourite pastimes, as the way Poles dance amused me. I am not saying they are bad dancers, but simply, different from other places. Women for example, seem to have an inbuilt hip-shaking movement which is incredibly sexy, but also seems just a natural as someone breathing. The men on the other hand, are so enthusiastic ?¢‚Ǩ‚Äúwith a big cheesy grin, and they dance like they are skiing a ski-slope. Very amusing.
Without resorting to specific examples, the general vibe of the place was very positive. When you travel, you create a lot of theories, my most recent one was that countries that were formally oppressed, have very grumpy locals. But the Poles shut that theory down in flames, as I found everyone to be smiling, laughing, and generally happy. Possibly also a little smart-alec ?¢‚Ǩ‚Äú in Warsaw, all the strip clubs are located on (Pope) John Paul II Street.

Despite the positive feeling I had from the place, at the back of my mind, I could not forget the atrocities these people had to face. Warsaw is a city that was razed to the ground by the Nazis (as the Soviet’s sat watching) ?¢‚Ǩ‚Äú travellers visiting the city moan how ordinary it is, but when you think of its history, you see things differently, and appreciate the Polish spirit. For example, they painstakingly rebuilt their Old Town, with only pre-war pictures and paintings to guide them. The city felt eerie for me. Krakow is a much more beautiful and vibrant city than Warsaw, for obvious reasons (it wasn’t bombed). But everyone visits Krakow, so you probably knew that already. I had a friend that I used to work with in Sydney, that lives in Wroclaw, and I really liked that city as well. Both cities have amazing Market Squares (Krakow’s is the largest in Europe ?¢‚Ǩ‚Äú Wroclaw not far behind) and they both have an atmosphere in their old towns which I really liked (locals strolling by, entertainers, tacky shops and restaurants). I arrived in Wroclaw at 11pm, and my friend dumped my bags at the local hostel so we could party: Wroclaw and Krakow, like any other university town, is a bit of fun as well. All the Poles I met in Wroclaw, had come from other cities in Poland, and would tell me how much they loved the city and how it is the best one in Poland (Krakow comes close, according to them).

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Krakow during Independence Day, also known to us as Remembrance day (November 11)

Auschwitz and Birkenau are something else ?¢‚Ǩ‚Äú where it is estimated estimated that between 1,100,000 and 1,500,000 people were murdered by the Nazi’s. I ended up touring the sites on my own, missing my friend’s group tour, but which instead turning into a more powerful experience for me as I did it on my own. I was surprised I didn’t get as emotionally affected as I thought I would, but then again, I consider wanting to punch a wall on two separate occasions as minor outbursts. What made be sick was the evidence of children being killed ?¢‚Ǩ‚Äú as 12 years old children were treated just like the adults. What really got to me, was seeing a presentation of children shoes. That is, children aged no more than five years old. Walking around Birkenau, which was where most of the exterminations took place, was chilling (and it was a lot of walking ?¢‚Ǩ‚Äú the site is 171 hectares large). It became very dark when I was touring the huge site, and visiting the compounds of the prisoners and seeing their living conditions, was something that made it hard for me to swallow. Seeing the ruins of the furnaces and gas chambers on Birkenau, as the Nazi’s attempted to cover their crimes on their retreat, just reminds you how recent all of this was.

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The Nazi’s tried to cover up evidence of the killings that occured, by blowing up the gas chambers and furnaces

When I met up with my friends later that night and shared our experiences, they told me how angry they were to see the Jewish children fly the Israeli flag around ?¢‚Ǩ‚Äú their point being, it is that nationalism that created conflicts like this. That is usually something I would say, but I don’t really share that sentiment. Sitting in on a Jewish memorial service where the furnaces were in the dark as I wound up my tour on Birkenau, was definitely an experience I am glad I had.

Half the reason I went to Prague was to visit Veronika and Pete ?¢‚Ǩ‚Äú two old friends and workmates. The rest of the reason was because I just had to see what the fuss was about. Just as I suspected, not much ?¢‚Ǩ‚Äú a great city, but way too much hype. It has one of the best integrated transport systems I have been on, and the buildings are very pretty. But that’s exactly the problem with Prague: it’s pretty. It’s a place you visit with your girlfriend, on a weekend away. Having said that though, as my friend Petr showed me, it’s way too much fun for the single (and not single) man.

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Prague’s city centre – the big building is the national library, me thinks

Veronika and Pete miss Australia because of the friendliness of ordinary people. As a contrast, Veronika would complain how clique and rude Czech people were. She reckons, and she is by no means an ugly girl, how hard it is to meet people at a club ?¢‚Ǩ‚Äú everyone goes out with their groups of people, and refuse to socialise with other people, because you just don’t do that. Foreigners provide a breath of fresh air to Czech people, because they can break out of that clique.

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Prague: pretty.

Pete also reckons the emphasis on looks here has created a bulimic culture amongst women. He puts the figure at every second or third girl – and a quick look around the club proved him right, as all the girls looked unrealistically thin. On a related conversation I had with this American I met at the hostel who was about to start teaching English, he says how back in the States, everyone raves on about how beautiful Czech women are. However he says they are not beautiful but just skinny! "Everyone is so fat in America", he was saying, "that they see a skinny girl and they go gaga here".

The Soviet museum in Prague deserves a mention. Seeing the communist posters to inspire workers, made me realise how similar communism is to capitalism, with slogans talking about ‘efficiency’ and ‘output’. It was funny to see words I had always associated with capitalism, on a communist poster.
Watching a video about the failed 1968 revolution left me feeling mellow. A pop group mentioned in the video called the Plastic Group of the universe (I am sure it sounds better in Czech) used these lyrics: "Throw away your brains, throw away your hearts. Throw away everything that makes you human, and become pigs". For me, those words really help sum up the things I have learnt about communism and Nazism in the last month. Having just read Stalin’s biography, a quote on the wall helped sum up what took me 500 pages to find out as to how he could do what he did: "One death is a tragedy; one million a statistic". Like a spoilt seven year old with divorced parents, the Stalin’s of the world can get away with murder, because they don’t feel the consequences of their actions as no one will reprimand or tell them. And yet even Stalin was capable of breaking down, when his son was captured by the Nazis ?¢‚Ǩ‚Äú because the suffering of the war then became personified with a familiar face. There is no such thing as monsters in history ?¢‚Ǩ‚Äú only people detached from reality. It’s not hard to smack them back, it’s just that some need to be smacked harder than others.

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Budapest’s House of Horrors on the other hand, annoyed me. Of all the museums I have seen detailing atrocities of the Nazis and communists, this was the most extravagant of them all, but also the worst. It was too fabricated, and too glossy. When you are talking about horror, take the gloss out.And while we are on it – Budapest as well, was very different from Prague, and as a city I much preferred it as it had more character. Although a girl that helped me at the train station, said she hated it: good for a few days, bad for living here.

My experience with Hungarian people was something else as well. Whenever I was with a group of friends/travel companions, I always saw the rudeness of Hungarians. But in the few times I was alone, I found Hungarian people to be very nice and friendly. Even though I regard Hungarians as friendly, the incidents of rudeness really stuck in my mind ?¢‚Ǩ‚Äú like for example, a guy at the ice-rink, literally shooing this woman away, like she was some intruder to a military base, when she inquired when it re-opened.

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Budapest’s parliament

Hungarian’s also just look different. Maybe it’s my historical knowledge that helps colour my perceptions, but if there was one word to describe them it would be "warriors". The men looked very different, very rough and tough. They were also weird: when I went to the baths with some of my female friends, there were incidents when men would just stare. Sure, my friends were pretty, but no one stares like that unless you are a psychotic.
Budapest definitely ranks as one of the most memorable cities I’ve been to, and one which I would put top on the list to visit again. The city has a character which I think all the former Ottoman Empire lands have, like Belgrade and Sarajevo. The baths are an amazing experience, and I really wished I had more time to do the rock-climbing tour underneath the city. It is hard to talk about cities as to why you like them, and it can be done, but this blog posting is getting way to long.

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Budapest’s Heroes square

Something I didn’t mention at the beginning of this posting, was one other similarity the three before-mentioned cities have in common: the are all new members of the European Union. And rising stars whilst they are at it. According to a study published by The Economist Intelligence Unit, the Czech Republic ranks as the third most attractive country in the world for off-shoring, after China and India. Whilst cheap labour has something to do with it, the location of the country and its relatively well developed telecommunications and educated workforce help contribute to this.

But notice I said location was an important factor. Like before, the location of these three countries at the centre of Europe’s next big empire (the EU) means that they are again in the spotlight. Expect to hear about these three countries a lot more in the future, as the Visegr?ɬ°d group play catch up to the rest of the developed world.