• Recently Written

  • Are you using social media in your business?
  • Hamel on Apple
  • Extending ebooks
  • Bundling prices
  • Behavioral Economics
  • Article on eBooks
  • Posts about creative destruction as of March 11, 2010
  • Posts about venture capital as of March 11, 2010
  • Posts about innovation as of March 11, 2010
  • Posts about creative destruction as of March 7, 2010

• Categories

  • economics
  • innovation
  • leadership
  • open source
  • Posts about creative destruction
  • Posts about innovation
  • Posts about venture capital
  • social media
  • startup
  • strategy
  • technology
  • Uncategorized
  • venture capital

• Archives

  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • February 2009
  • January 2009
  • September 2008
  • August 2008
  • June 2008
  • May 2008

• Admin

  • Log in
  • Wordpress
  • XHTML

• Search

This isn’t tech, but it illustrate’s a principle I’ve seen misused over and over.

When people make decisions, they often look for a single point of failure. No matter how complicated the situation, we all believe that a single factor can be removed and then – POOF! – the problem goes away.

In reality, there is usually a ’system’ that has formed around the problem. A system is an interconnected group of related and non-related tasks and processess. Within this system, removing a single process only cause the other processes to shift amongst themselves, often causing effects that weren’t intended.

In the case below, there existed a system in which pigs, trash, and food were inter-related. As it turns out, there were also influences related to private contractors for garbage and government. When a single factor (the pigs) were removed, the system shifted around and created a plethora of other problems.

Belatedly, Egypt Spots Flaws in Wiping Out Pigs

Here’s an article from Slate on the Kindle and Sony:   How To Beat the Kindle

There are good points about competition and openness. All of which I agree.

Here are some specific things to point out:

On the idea of competing on features – Compete on the user interface and the formatting of the content above all else. New users are reluctant to change and wary of learning new things. If you can make the interface intuitive, you’ll gain greater per hour usage. User-interfaces don’t win you initial sales, but they do make the consumer use the device more.

As far as the formatting, if you can make the experience as close to real-world as possible, you’ll re-create the experience of the physical world that people have come to know. Don’t make the consumer have to re-learn how to read a book.

On the idea of content – It’s not the reader that’s cool, it’s the content on it. Don’t use DRM or lock-up the content. We know that won’t work. The broader your content ecosystem extends, the more users you’ll win.

There is one thing with which I disagree. I don’t believe the ebook and music markets are similar. Sure, they are digital products, but that’s a product comparison, not a market comparison. The music market was (is) broken.  There are all sorts of inefficiencies when it comes to pricing, distribution, and selection. The publishing industry doesn’t seem to be in the same condition.

Years ago, when I walked into a mainstrema record store, I was flooded with CDs all priced around 15$. When I go into a bookstore, I don’t have that problem. The markets aren’t the same. ( My comment isn’t about the price per se, but about the market forces that surround pricing. When the prices are all similar, someone isn’t paying attention to supply and demand. )

Good read.

Here’s Om’s commentary on the Appstore ecosystem. Good stuff.

How Big Is the Apple iPhone App Economy? The Answer Might Surprise You

I made a comment about a startup in Israel using crowdsourcing for their GPS map data. (Crowdsourcing and GPS maps)

Well, Google is using crowdsourcing also. As an experiment, I entered in severa local streets and then adjusted the display to show the traffic during very heavy times. It highlighted the areas that we locals all know to avoid. Very cool.

Links:

Arterial traffic available on Google Maps

The bright side of sitting in traffic: Crowdsourcing road congestion data

Google is using the open standards approach. It gives them less control, but the open approach accelerates adoption.

Link: Google Releases Books in Portable EPUB Format

Information about the growth behind Twitter’s growth.

Link: NYT - Who’s Driving Twitter’s Popularity? Not Teens

The article makes some statements that are obviously wrong and misses the point entirely. First, it seems to suggest that teenagers are the ultimate ‘early-adopters’ of new technology. That’s patently false. DVDs? GPS? HDTV? Come on guys, there are plently of examples where teenagers don’t drive the adoption.

Secondly, the reason why Twitter hasn’t taken off with teens is not because of security or privacy concerns. What teenager makes a decision based on such logical (and adult-like) reasoning? The real reason is one of competition, not of adoption.

When new technology is released, it needs to fill a gap. The gap signals either a discontinuity in the current technology offering or it can be an entirely new service. Twitter was a new category to adults, but not to teenagers.

Why, you ask? Teenagers knew about SMS.

Teens have been texting for years. I recently had a conversation with a friend who was complaining about her 10-year-old niece texting her with nonsense. Every few minutes a text message would appear asking, “What are you doing now?” Clearly, the message wasn’t meant to annoy, but her niece want to be a part of the ‘teen club’ of texting.

When Twitter came along, it wasn’t a new service to them. It was a replacement to SMS (texting). So, the task of conquering the teenage market wasn’t one of adoption, but of competition with SMS. If you asked a teenager about Twitter (and I have), they’ll respond, “No, I just text instead.” In their mind, the two services were equivalent.

You may be arguing that Twitter and SMS are completely different beasts. Yes, they are. But they are close enough in the consumer’s mind that the difference doesn’t matter. It’s a ‘good enough’ type of argument. SMS is ‘good enough’ for me. Without some type of substantial value-add, the switching costs for teenagers over to Twitter  is too high. They’ll need to sign-up for an account, they’ll need to follow their friends, they’ll need to update their phone, and they’ll need to update their contacts. That’s too much work for a service that isn’t substantially different from SMS  in their minds.

Add in the network effects, the picture gets even bleaker. For Twitter to be of any value, a single teenager would need to convince all of her friends to join Twitter. All that seems like a drag when I’ve already got my phone ready to go.

Why have adults taken to Twitter? It’s the exact opposite argument. They weren’t heavily invested in SMS. For adults, it really was a game of adoption, not one of competition.

The real question people should be asking is why everyone is so fascinated with what everyone else is doing.

As someone who is constantly looking for new information, I welcome this feature from Google Reader:

Looking for great stuff to read?

Amazon Raises an E-Book Specter

Kindle sparks excitement for e-books

E-Books Take Center Stage

Links:

Venture Capital Returns Dip Below Zero

VC performance dipped … back in Q3 2008

How To Write A Misleading Headline

It’s been a while since I’ve dug into the technical details of Flash, but I’ve noticed that there are fewer people using it. Certainly the sites that use Flash fall into 2 categories: Brilliant and Bullsh$t. However, my thought on this article isn’t about Flash, but about competition.

It seems odd (and slightly ironic) that a great company like Adobe is being pushed out of the market by a tiny device like the iPhone. Evolution happens in the strangest places.

Link:

False Hopes: Adobe Desperate to Install Flash on the iPhone?

Next Page →

• Sign-up for our newsletter.
  Name:
  Email:

  

• Blogroll

  • A VC – Fred Wilson
  • Edge Economy – Umair Haque
  • Mashable
  • New York Times – Technology
  • ReadWriteWeb
  • Seeking Alpha
  • TechCrunch
  • Techdirt
  • Technorati
  • Wired