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That was quick

Tuesday, November 15, 2005

Ian Holsman writes:

Google has just released a free service to do web site analytics which is/was their ’urchin’ product. sorry all you startup’s who were in that space?.. maybe next time ;(

It wasn’t too long ago that developers and VC rushed into the Internet to escape this pattern on the desktop, where Microsoft methodically vacuums up any idea likely to have wide applicability – turning them into features of one of their hubs.

It’s very common for hubs to absorb adjacent universal functions. Three forces, at least, drive that: appetite for features, keeping your complements commoditized, and scale efficiencies. In the Microsoft story one of them is/was the need to find new features that can drive upgrades. Another, also seen in the Microsoft story, is the strategic necessity of keeping competing hubs from emerging in their market – for example if they hadn’t taken the word processing network away from competitors then they would have been forced to negotiate with a powerful partner rather than lead of weak developers (“chasing tail lights”). Finally there are pure production and demand side scale advantages.

Of course in some cases the story doesn’t demand a complex model like that. Adding analytics to your ad network is just a feature, like adding footnoting to your word processor.

I liked a line I read recently about how so many ventures in there days are “built to flip,” but that the speaker’s firm was being “built to last.” When strong hubs emerge in a market, like Google, Yahoo, Amazon, eBay, etc. flipping becomes a valid move in the game. There was a time when one of the more dominate models for a venture was to flip it into Microsoft, and while that’s still a common model it’s not as rampant on the land as it used to be. In those days the Microsoft developer network could be productively viewed as an extension of their acquisitions or R&D strategy.

When this happens in a market it has two consequences. The ventures become much more winner take all games; since there is rarely more than one place to flip a particular effort into. That kind of risk drives developers to look for other markets to play in. The customer also changes; if you know that your firm’s future is very likely to lead to flipping into Yahoo, or Microsoft, then they become the customer and the day to day customers are no longer job 1. That creates lousy dynamics for seeking really useful innovations – you’re now innovating for the hub, not for the user.

Filed in business modeling | Comments (0)

Club Pricing

Monday, November 14, 2005

Paul English is peeved about what a pain in the neck it is to buy a membership in a health club. He asks “Why the sleaze?”

Here are some theories:

  • Low barrier to entry means too many health clubs; i.e. excess supply, leading to sleazy marketing practices as they desperately attempt to survive.
  • Lack of consumer protection laws or enforcement removes the only effective negative feedback on the sleaze.
  • Testosterone and steroids.
  • The subscription pricing models (i.e. lock-in and upfront discounting) is sleazy out of the gate, it’s all down hill from there.
  • Clubs that adopt aggressive value pricing are more sustainable than those that don’t. The more aggressive the more sleazy.
  • Matching price/user to cost/user is impossible, all attempts to do so look and often are sleazy.

Clubs are the text book response to the standard list of problems with of public goods, e.g. overcrowding, under provisioning, free-riding, etc. It’s fascinating that in this example the club doesn’t resolve those problems; it just reframes them. The presumption is that once you are allowed into the club you will find a world where facilities and services are abundant and collegial; i.e. you will enter a world where the facilities are now a public good. You won’t be excluded and there won’t be rivalry. The water in the pool will be warm and you won’t have to double up in the lanes when you swim. Piles of towels will be close at hand. The exercise equipment will be standing by and dependible when you need it.

Most of the health clubs I’ve experienced fail to achieve the eden like fantasy. They are under provisioned and overcrowded at the hours when I would show up. Interestingly the lanes in the pool would be occupied by people who used them for hours every day, in effect free-riding on the membership contributions of people like me.

These clubs have terrible pricing problems. They would like to charge people for the value they extract from their facilities, including the value of reducing their guilt by having a membership even if they don’t use it. Of course they don’t mind if they over charge. The more they can push their prices up toward that goal the better the facilities they can provide will be. That’s all reasonably virtuous.

I have a bad feeling that the distribution of load imposed by the customers is power-law in shape; but the willingness to pay isn’t. Which is why on the high end you get the heavy user free-loading illustrated above. On the low end you get a long tail of users who are charged far more than they will ever consume in services. The entire thing’s a mess.

I have noticed that some very high end hotels have health clubs that don’t suffer from these problems. They, presumably, are subsidized by the hotel’s guests. In a few cases they even sell a reasonably priced membership in a transparent fashion.

The YMCA is a good special case. As a not for profit they can do their value pricing by using needs based analysis. Their prices are clearly stated on a sheet of paper at the front counter. At the bottom of the sheet it invites you to speak with them if you can’t afford the price they are offering. At the same time solicit donations from the better off members of their community. It’s interesting how this doesn’t suffer from the sleaze problem. It also means that when you gain entrance to the club and the public good isn’t as wonderful as you might hope your reaction isn’t that you have been mislead, but rather that a group of good people are doing the best they can with limited resources. Which, if your well off, might lead you to donate.

At the same time the Y’s model for how to fund the club doesn’t resolve some of the problems outlined above. They still have some members who draw off 100 times more services than others – i.e. free loaders. And the club are always a bit under provisioned, the water a bit chilly, the equipment a a bit run down. The community is generally very convivial; particularly if it makes you happy to see hordes of elderly and children using the club around you.

The private health clubs have eroded some of the communities common cause around the Y. That has weakened the Y as an institution. For example the Y wasn’t able to raise money to build a new branch in downtown Boston recently.

Filed in business modeling, economics, group membranes | Comments (0)

Universal Demand for Quality

Sunday, November 13, 2005

I’ve been reading some books about professionalism. The one I was reading yesterday touched on an interesting model that I’m not quite sure what to make of, but it certainly caught my fancy.

Some commodities have universal demand; i.e. everybody wants some. Some examples: food, education, knowledge, safety, health, mobility, conflict resolution. States naturally are drawn into providing a regulatory function for these industries. A state that fails in these areas finds its legitimacy at risk. Their universal demand assures a strong signal from the citizens to the state, particularly in any functional democratic state.

Meanwhile, universal demand tends to attract numerous suppliers; and in the absence of barrier to entry too many suppliers. Which will lead in short order to market failure if the quality of the goods supplied is hard to measure dependably. The market fails because the horde of suppliers furiously underbid each other until they can’t make a reasonable living, which drives all the competent suppliers to seek other work.

The lack of clear quality measures leads the substitution of alternate sources of legitmacy: pomp, pompus attitude, parasiting on other sources of authority, advertising, character defamation. (A point which deserves a blog posting of it’s own, but since that’s unlikely I’ll toss in this marvelous line. When this happens you see a pattern: consumers hold the trade in very low esteem but hold their personal practitioner in the highest regard. Where have I heard that before?)

It is practically impossible for most buyers to evaluate the quality of what they are buying. If you can’t tell from the plate on the table in the resturant if the kitchen is or isn’t a public health nightmare there is no chance you can evaluate the quality of your teachers, lawyers, groceries, or the city’s levee.

(Oh no, another aside: The library I was reading this book in has taken to using the fire alarm to annouce that the library is closing. It’s a nightmare waiting to happen – the fire that breaks out at 20 minutes before closing time.)

So that’s the story. A commodity with strong demand whose quality isn’t transparently obvious can easily engage in a rush for the bottom, a market failure. If the demand is universal the state will find the pressure to respond irresistible. And so the state will step in to regulate.

As early as the 16th century some European states established regulatory mechanisms for medical providers. Now that’s a great example because it looks to me like those states picked, more or less at random, one class of medical hucksters declared them legit, and declared the others ill-legit. They had to do something.

What I find thought provoking is how granting the state license (the franchise, the monopoly) to one group is a new kind of standards making I’d not recognized before. In the presence of 16th century medical science (i.e. a something totally bogus) and complete market failure (i.e. doctors and barbers sharing the same wages) the state has a chicken and egg problem. No quality, and no market. By tagging one group as responsible it solves the market failure. Wait a few centuries with luck the might science emerges.

If the practitioners don’t capturing the regulator and the regulator keeps demanding that the practitioners address the quality problem this can work. There is some hint that is exactly what happened with the medical profession. That time and time again the profession failed to provide reasonably quality; for example Doctors were very slow to adopt ideas about public health, hygiene, etc. If you want to be nice you could say they were very loyal to their professional practices. Forces would come to bear that would force them to change; in the absence of the professional monopoly there wouldn’t have been anything for those forces to bear down upon.

Filed in General, standards | Comments (0)

Identity Blackmail

Thursday, November 10, 2005

Credit rating firms are the premiere example of an identity business in my gossip model of identity. They aggregate gossip about citizens from institutions that have active relationships with them know them. They then sell models of those citizens to institutions that would lack a model but need one to reduce risk. You and me, those who are being modeled are typically not their customers, we lack any relationship with these gossip firms. They have relationships with their suppliers, firms with models, and their demand comes from firms without models.

That’s been changing as consumer protection laws have begun to force the credit rating firms to develop a relationship with the consumer. That’s turned out to be profitable.

These gossip firms aren’t limited to just credit rating. Some of them will talk about credentials – criminal, academic, licensing. Some of them do medical records. I assume there are ones for insurance and physical location, etc. etc.

The Internet is beginning to provide an interesting new source of supply for the gossip companies and new business models for building them. You can aggregate a lot of information about some people using just a search engine; and who knows maybe it’s higher or lower quality than the information a more classic background checking firm could get you. The social networking sites are kind of gossip firm – with much smaller suppliers and customers than the traditional credit checking firm.

A friend asked recently how he could fix the bogus links that come up first on Google when you enter his name. These were articles from a local newspaper full of inaccuracies. Since there is no consumer protection laws around google’s role as a gossip intermediary my answer – a somewhat more nuanced version of ‘get better fresher gossip’ – wasn’t particularly helpful.

Today another friend sent me a link to a web site with a model of everybody. They have scraped the web trying to find each and every one of us, and then populated their model with what they found. Here’s what you get if you look up my name.

Recalling that the credit check firms where forced into the discovered that it can be profitable to create a relationship with the people they are modeling. Recall that the social networking firms (orkut, linkedin, friendster, etc. etc.) start right out the gate by creating a relationship with the people they are modeling.

I’m amused to notice that the folks at this place have a button that allows me to claim my page. Since much of what they collect is woefully incomplete and full of errors this button looks a lot to me like blackmail. The first time I saw that “claim your page” technique was at blogshares – a delightfully silly game built around how many links your blog has. Technorati has a similar device. So it’s not always blackmail; though it does always have just a hint of something odd. That’s the nature of gossip.

Thanks for two typos so far.

Filed in identity | Comments (0)

Building Houses on Sand

Thursday, November 10, 2005

Philip Jacob worries, and rightly so, if this current enthusiasm for building websites that rollup bits and pieces isn’t, well, insanely risky.

“…would you incorporate a library in your application that was licensed under terms like this?

  • Required you to read and understand several pages of legalese
  • Is free right now although you might be charged for it at some point in the future at a price that you cannot negotiate in advance
  • Can stop working at any time for any reason without notice
  • Can undergo functional changes at any time without notice
  • Can be rate-limited at any time without notice
  • Does not have any service level agreement
  • Places restrictions on the data you generate using the library, some of which are bizarrely techno-legalistic and open to interpretation”

The licenses of all these fun web APIs are mavalously diverse. It is clear that each firm’s lawyer plays the role of genetic engineer gene splicing together a handful of licenses to create yet another mutation. While in long run (after you’re dead) the ecology will put most of these out of their misery. License interop is hard. This is another example of “standards as a substitute for lawyers.” Phil would like to have some standard licenses; but

We know how this plays out. First we get a bloom of diversity. Then we get consolidation. In the end we get a power-law distribution across some number of licenses. In the final end game the elite members of that distribution engage in a long standards battle who’s outcome can not be predicted – they might make peace, they might split into seperate markets, one might win, etc.

In early phases the smart players move quickly to capture market share that will provide key negotiating power in the later stages. Some of the early movers have to be profitable, others don’t. Some players value a strong position in the future more highly than others. Some players discount risk of having to switching later.

There are adjacent disputed territories to consider. Consider four of the larger players. The communication companies (though they haven’t fully accepted their fate yet) lock in users with physical networks and charge for bandwidth by the month. Companies like AOL, Yahoo, Google charge via advertising and lock-in by capturing a large distribution bottleneck. Platform vendors charge for a stream of updates and lock in via APIs and licenses. Players like the FSF or the ASF are sort of inside out with their focus on freeing developers (their principle consituency) from the licensing/API lock-in points.

All this is just part of the passion play around the emerging Internet OS, and to think I used to believe this was all kind of simple.

Filed in programming, standards | Comments (0)

What do I need line for, when I have color?

Sunday, November 6, 2005

I am not worthy! Peter Davis attempts the impossible; to reduce thousands of man years of work on PR agendas, industry politics, entrepreneurial hope, market share machinations, expert puzzle solving, and late night enthusiasms into a simple block diagram! Maybe version 1.1 could show the number of email messages, frequent flyer points, and billable legal hours. Oh, possible he could hint a the IPR dispute density with drop shadows?

Filed in identity | Comments (0)

What is Social Software

Friday, November 4, 2005

There is a thread unfolding over here about this one liner:

“The whole point of social software is to replace the social with software”

But the thread has descended into a who said exactly what discussion that avoids the provocative nature of the standalone statement.

The statement is obviously true in for some situations.

For example consider a bug database. These tools allows a group of people to engage in the work of resolving bugs more effectively by draining most of social interaction out of the work. They enable the bug to found by one actor and resolved by another without the two interacting socially at all. Much the same way that doctors can treat desease without engaging in any particularly social interaction with their patients.

In a second example look at a problem that arises in source control systems. Two individuals are hacking away and their chanages happen to overlap. Mr. Speedy gets his changes into the source control system first. Mr. Methodical shows up later and discovers that his changes conflict with Speedy’s. There is nothing more commonly used as an example of social than conflict resolution and here we have exactly that problem a tiny dishpan model. The conflict resolution that happens at this point might demand a social interaction, but we have discovered that in a surprisingly large number of cases it works out well to just dump the whole problem into Mr. Methodical’s lap and let him puzzle out a solution. In this case the software design has done exactly what the quote suggests; replaced the social with software.

Or consider the wiki. I stuff some useful content into the wiki. Another actor dives in and rephrases it into grammatical english. A third actors repairs a date I got wrong. That process is hyper-effective because none of the actors need to engage in a social interactions. Each actor bears only the cost of his contribution, but none of use have to orchestrate a social relationship with each other. Most people’s initial reaction to wiki’s is bewilderment because they are so extremely a-social. It takes a while before you discover that can be a positive.

Social relationship creation and maintenance is costly. In numerous situations it is absolutely worth those costs. But that does not mean it should be automatically tacked onto every interaction. Fixing a bug, resolving a source code conflict, touching up a wiki entry, can be an oportunity to met new people and make new friends; but they do not need to be forced to serve that function.

I was quite conscious of this when I added the “report a typo” link that appears below all my blog postings. I know that most people don’t complain about my many typos because to do creates a delicate social dynamic. The form found under that link therefore doesn’t even prompt for an email address. I made the choice that I was more likely to get useful typo reports without the social aspect and that was a better balance of design than improving my ablity to say thank you to people do provide typos.

That tiny example shows the kind of tuning about social that systems of this kind enable.

A more accurate statement might say:

One exciting aspect of social software is the option of removing social aspects from the interactions.

If you want to get all big picture-ish … the whole point of the scientific revolution was the discovery that you could making amazing progress on some problems if you discarded all the important stuff. That how fast an object falls is not related to how much you love it; and the weather tomorrow is not related to your attitude about the rain gods. Autism can be surprisingly useful.

One way to frame the problems social software is dealing with is to label them as coordination problems. The bug fixing, wiki refining, and source control conflict resolution are all coordination problems at their core. They all run the risk of reaching bogus outcomes if you drain off the social elements entirely. The system failures that arise when that happens are well known. For example there are libraries full of books on what happens when product development becomes divorced from the end user’s needs and situations.

What’s exciting about open source is that it lets you experiment with exactly how to set the knob on how much social you leave in the coordination scheme you deploy.

Via the typo link, this extremely insightful addition: “And social interactions often draw from a limited pool, so by removing the need for them with software, this pool can be conserved and applied to actions with a greater possible return.”

Filed in open source, programming | Comments (0)

Trustable Tagging Agents

Thursday, November 3, 2005

I’ve been wondering for some time now why we don’t see more software agents posting into del.icio.us. I wrote one a long time ago as part of some work I was doing; that agent would search for things that had been posted a lot and then tag them with the tag a.big.fat.one; it would masqueade as me when it posted. I wish I’d given it it’s own account, mr_trend_watcher say.

So. I see that Alex Bosworth has written a del.icio.us software agent. The agent’s account at del.icio.us is private.bookmarks; but let’s call him PB for short. When PB posts a URL for you he tags it as for you. You may not have known this but every del.icio.us user Sally has a page of URL’s tagged as just for her by other users. They do that by tagging them for:sally. Here are the URLs other folks have sent me sent to me, but unless you log in as me you can’t see them, sorry.

Oh, look! You can see everything than anybody asked Mr. PB to post “privately” for them. Mr. PB exhibits some very racy posting behavior. Mostly porn, but plenty of health issues, private login pages, tutorials, job search sites, etc.

The wise men in the ivory towers have spent a river of ink on the puzzles around agency. Do you trust Mr. PB to keep these secrets? Mr. PB is running at sandbox.sourcelabs.com; do you trust his hosts?

Mr. PB works via a bookmarklet and you can get one of your very own here, if you trust him. Oh darn, you can’t delete anything you’ve posted.

Filed in General | Comments (0)

Just Push The Button!

Thursday, November 3, 2005

The solution is always just one gesture away.

Actually. Reading Billo’s rant reminds me how much fun it is to rant.

I used to have a coworker who specialized in ranting about the word “just”. He’d try to get people to stop using it. Somebody would say: “Just put it in a database.” or “Just schedule a meeting.” or “Just tell Sam to do it.” and he would be off and running. “Don’t use that word!”

I’m comming to feel the same way about “light weight” as in “Light weight scripting language.” “Light weight data store.” “Light weight presentation layer.”

Don’t do that!

Filed in General | Comments (0)

Egg Drop Programming

Thursday, November 3, 2005

… asked us if we ever intentionally got lost in a town, perhaps a town new to us, so that we had to learn the place in order to get back to a place we knew. Several people nodded vigorous agreement, and one guy noted that he and his colleagues use a similar technique to learn a new legacy code base. They call this air-drop programming. This is a colorful analogy for a common pattern among software developers. Sometimes the best way to learn a new framework or programming language is to parachute behind enemy lines, surrender connection to any safety nets outside, and fight our way out. …

Took that from here.

There are varients of this technique, walk-about, year abroad, home visit.

My techniques of this kind aren’t as random as that sounds. For example in a city I will find the old train station, park and then walk in the direction that seems to go down hill economicly. Or in code I will find the error logging or memory management and then work backward up the call tree, at first breadth first and then selectively depth first. Sometimes I look for the chinatown, or the I the center of what was the city’s primary industry 30 years ago. Often it’s good to look for the place where a bloom of new code occured, try to figure when it happened, and then look at the borders between it and the older code.

Now: Get lost!

Filed in frameworks, programming | Comments (0)