SortiPreneur

Foxes are Supposed to be Smart

I've been meaning to write about the News Corp - Microsoft deal rumours of which have been afloat for a few days, but lots of traveling and two events got in the way.  The deal involves MSFT paying News Corp to block Google from accessing its content and having it exclusively indexed by Bing.

My first reaction to this is that it won't work.  I beleive that information wants to be free and we see versions of that play out all over the web. I am all for creative monetization of attention, but gaming the system with biz dev deals does not seem to me the smart way to go about it.

One area that this "shift to free" has worked extremely well is news.  There has been much said and written on how the web is killing journalism and that the news room is going to die because of the web.  While many print media outlets are being hurt by the reduction in friction in news publishing, I think the casualties have not hurt the quality of the news we consume.  If you look at the example of the reporting the blogosphere (especially Arrington) has done of the recent Scamville issue, and compare it with NYT's coverage of it (as Fake Steve Jobs did), you can see how less friction has led to better news in some cases.

In any case, my big issue with this deal is less the economics of attention but the fact that this type of one-on-one agreement for exculsivity is just unnecessary friction.  There is no value being created for the ultimate consumer of news.  The consumer has so far voted with her clicks that she's found the way Google has directed her attention to news more valuable than the way Microsoft has.  Now MSFT and Murdoch are forcing her to either go to two sources for her searches, or switch to what she feels is a lesser search engine.

Now, I also think this is something Google has had coming. In its decisions regarding the economics of attention, Google decided on a black box approach.  Albert Wenger has written a smart post on this issue: 

One of the reasons that Craigslist is so hard to attack is that Craig has chosen to the give the bulk of the benefits to the network itself (as “consumer surplus”) by operating most of Craigslist for free.  Google made a different choice, which is to keep a ton of the economics for themselves (and often in a non-transparent manner, i.e. it’s unclear how much of the economics Google takes).  That will eventually create openings for others based on a willingness to share the economics differently.

Microsoft took a first step into that direction with the cash back for shopping.  A deal with news organizations would simply be a further step in that direction.  It is therefore not clear that Google is maximizing long term value by hanging on to as much of the profit as they are.  That is the real heart of the ongoing conflict over news indexing.

As the attention economics gets more and more streamlined, we will see similar attempts at biz-dev'ing by incumbents.  Most attempts will be unnovation (to borrow Umair's term), and will not lead to any disruption.  The exciting developments will focus on increasing value.  I try to keep focused on those.

Messina on Targeting

One of the long-standing holy grails in mobile apps is location-based targeting and promotions.  Chris Messina (via Çağan) has a great post dealing with very critical nuances in this area.  It's worth a read.

Social Beans at Defrag

Defrag is on and as usual, it's tackling important issues.  One of those is Social Beans - the enabler of Skeleton Portability across social media platforms. Grou.ps founder and CEO Emre Sokullu is discussing Social Beans at Defrag tomorrow.

Tiny House

Sometimes it's great to be reminded of how little we really need.  The rest is all wants.

Bobiler in Taksim

Extraordinarily fun Turkish entertainment site Bobiler.org has created an experimental cyber protest against the Turkish courts' bans of websites, including Youtube.  Check it out.

Social Media Scamming

There is a long-overdue discussion (a few follow-on posts) that got kicked off by Michael Arrington this weekend on the topic of incentive advertising ecosystem that is supporting the hyper-growth social gaming industry.  I have not studied the details of the issue.  Nor do I click on the types of ads that he's talking about.  However, as a social media user, I am absolutely certain that there is not enough value created through this type of advertising models to justify the enormous revenues we are hearing that surround this industry. I am very happy that Mike has decided to tackle the issue.

The debate has reminded me of a very widely-known secret in the Turkish internet and mobile industries.  If you speak to anyone who was a player in the ring-tone/logo download mania we had a few years ago, they will confide in you that it was a common practice to get people to sign up for (usually) worthless services and charge them through subscription fees buried in thick fine print (and sometimes not even hidden, simply omitted).

The GSM operators turned a somewhat blind eye to this for a while, but recently, with government and customer pressure, they now seem to be doing an effective job at policing their ecosystem.

Clay Shirky describes social media as "anything worth spamming".  I guess we will go on seeing many versions of the type of scams that Arrington is pointing out, or the versions in Turkey I mentioned.  What is critical is those of us with a clear vantage into these issues need to bring them up with more rigor.

Net Neutrality

Can you imagine what the internet would look like it had come out of R&D at a place like AT&T or BT?  One of the greatest things about the internet is that it's public domain. Yet, the internet sits on the infrastructures of relatively few commercial entities.  With this comes the difficult issue of regulation.

Sonia Arrison has a good article on the topic and why she thinks the net neutrality issue should be tackled with an independent, self-regulating approach, rather than inviting the government to step in.  It's worth thinking about.

Ross Dawson: Turkey's a Hot Internet Market

My friend Ross Dawson was the keynote speaker at the IPZ2009 (interactive marketing summit) last week here in Istanbul.  It was great catching up with him and listening to his insightful social media presentation.

To follow up, he has just posted his "Five reasons why Turkey is one of the hottest Internet markets in the world".  Since I have made it my business to invest in the Turkish internet industry, I obviously agree with all of his points.

One interesting point Ross has picked out is the language skills.  He found English skills outside of the professional sector pretty weak.  However, Turks grew to be the third largest nationality on Facebook prior to the introduction of Facebook in Turkish.  Which makes me think there is a level of language skills, while not sufficient to communicate conversationally, allows one to utilize social media pretty effectively.

Ross's post would be an excellent primer on anyone interested in the Turkish internet market.

Startup Insight

Readers of my blog know I am a big Paul Graham fan.  I like him because he is, smart, honest and on the side of the entrepreneur.

His most recent essay, on his insights on what a startup is really like, is one of his most brilliant.  I especially like the part where he talks about the relationshp between founders, colleagues and the companies:

Several people used that word "married." It's a far more intense relationship than you usually see between coworkers—partly because the stresses are so much greater, and partly because at first the founders are the whole company. So this relationship has to be built of top quality materials and carefully maintained. It's the basis of everything.
...
Just as the relationship between cofounders is more intense than it usually is between coworkers, so is the relationship between the founders and the company. Running a startup is not like having a job or being a student, because it never stops. This is so foreign to most people's experience that they don't get it till it happens.

Yesterday, I was discussing this exact same issue with a Turkish entrepreneur.  I can not agree more with Paul.

Minimum Viable Products

I'm a big fan of Eric Ries's MVP notion.  I firmly believe that it's exceedingly rare that a startup or a product fails because it's missing that nth feature.

Feature creep is tempting in the early stages when the product is the one area of a business that the founders have close to full control on.  And since founders tend to be very passionate and hard working, they feel that adding that one extra feature will differentiate their product and help them in going to market.

Optimizing features by applying the Pareto Principle will lead to a more effective use of resources.  Nivi has a great recent post on this topic with some great ideas and examples.  My favorites:

“If Apple can launch a smartphone without Find or Cut-and-Paste, what can you cut out of your product requirements?” – Sramana Mitra

“The first version of Gmail was literally written in a day.”

– Paul Buchheit