Ideation on social media, venture capital and startups

I was thinking this morning how much I’d like to have all my text messages forwarded into the cloud, storing these conversations and allowing me to search against them much like Gmail does with email messages.

It also got me thinking that if Google picked up my tab for SMS ($5/mth) I’d gladly allow them to do what they wanted with the data and/or serve me ads.

I’d imagine that the social graph information in text messages is extremely valuable, especially since text messages are often at the top of people’s hierarchy for communications importance and tend to be very much real-time.

Does anyone already have such a service? The only thing I found on a very quick pass was an iPhone app called TreasureMyText.

Additional Thoughts?

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Assuming the economy comes back from the recession-depression thing that it’s in now, when it does, we will have completely moved on from advertising….

…No one needs advertising, and there are much better ways to sell products.

Remember that perfectly targeted advertising is just information…

-Dave Winer

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Peter Thiel with some interesting insights on the root cause of the 2008 bank failures…

… Peter explained, he recognized that the leading investment banks were in much deeper trouble than their share prices reflected. How might a hedge fund profit from that insight? Betting against the entire sector would have been clumsy. What a fund would need to do, he decided, was bet against one bank at a time. But how could anyone predict the sequence in which the big investment banks would founder?

Peter mulled the problem. Then it came to him. “I realized that, the more Republican the institution,” he explained, “the sooner it would go down.”

Events unfolded just as Peter had predicted….

Why? Why did the most Republican banks suffer mortal wounds while the least Republican survived? “I have three explanations,” Peter told me. “I’m not sure which one is right, but I am sure at least one of them is.”

• A hostile federal bureaucracy. Despite a Republican in the White House, the bureaucrats who staffed the regulatory agencies, the Treasury and the Fed remain unfriendly to the GOP. Consciously or not, they proved unforgiving toward Bear, Lehman and Merrill but sympathetic toward Morgan and Goldman.
• An inability to accept reality. At the most Republican institutions, the principals believed in free markets–only too devoutly. Even Milton Friedman would never have argued that markets work perfectly all the time, only that they work a lot better than government intervention. But at Bear, Lehman and Merrill, folks became convinced that the markets possessed almost magical properties. When trouble started, they literally couldn’t believe it.
• Uncoolness. All the investment banks recruited at the same elite universities, and political correctness at such schools is profound. (If you want proof, just look at the last election cycle. The faculty at Harvard contributed to Democrats over Republicans by a ratio of 93 to seven.) At Yale and Berkeley and Wharton–at all the elite schools–the Democratic Party is cool; the Republican Party, decidedly not. The least Republican investment banks were therefore able to snap up the best talent, leaving the most Republican firms to pick through the leftovers. “In big financial institutions,” Peter said, “it could be that a Republican profile now correlates with technocratic incompetence.”

I think Thiel’s last point on the homogeneity of Wall Street is quite interesting. When you consider the backgrounds of most of bankers (at least those in the real positions of power) they truly are of the same pedigree. I contrast this with my experience in the technology sector, which I believe to have a much richer and more diverse composition in background. Too often we tend to gravitate/associate toward like-minded people; often to our own detriment. The award winning book by Dorris Kearns Goodwin, Team of Rivals is a fascinating account of how Abraham Lincoln’s balked the system by hiring many of his former adversaries to avoid these very issues. President-elect Obama is said to be considering a similar approach and it will be interesting to see if this actually materializes. All in all, an interesting theory by Thiel.

-Article via Forbes

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I am happy to announce a new sponsor to LeveragingIdeas: Lore Systems

Lore is in the managed services space, providing hosting, consulting and infrastructure services to businesses of all sizes. I am super psyched to have Lore on board because I personally know the company and they are doing some really interesting stuff. I am hoping to do a number of interviews with Lore’s founder, Mike Velotta.

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Me: I know you are a tried and true entrepreneur. Can you give us the back-story on Lore?

Mike: Absolutely! Around 1994/1995 I was an engineer for Microsoft and we were starting to get creamed by Solaris, Oracle and Netscape who were all making servers, databases, etc. Microsoft was losing market share but had the foresight to know that a huge boom was coming. They came up with a strategy of creating spinoff businesses focused on Microsoft infrastructure (providing co-located and managed hosting for windows environments) but without pushing the Microsoft brand. It was an awesome opportunity…Microsoft was basically our VC and life was great.

However by 1998, Microsoft left us on our own and by 2000/2001 the bust had set in; we were in a tough spot, suffering through an identity crisis of sorts. It was tough going for a while and forced us to get creative. We began to diversify into services and scored some great partnerships with Juniper, Dell and Cisco. We really focused on hiring people who were of an entrepreneurial mindset and things began to turn around. By 2004 we really hit our stride with 40+ employees. We’ve kept up a highly profitable business ever since, growing at least 20% a year.

Me: What’s the biggest trend you’ve been observing in the managed services business?

Mike: Anything to reduce energy consumption! Shockingly data centers uses 20% of the North American power grid. That’s more power than manufacturing or factories. The problem is that wattage per sq inch continues to skyrocket, as hardware gets smaller. Intel’s newest chips will use more power per square centimeter than that coming off a rocket nozzle on a spaceship…seriously. It’s an enormous output of heat. So glycol based cooling, virtualization (only uses 5% of CPU) and use of the cloud need to be embraced to allow for better scaling. We may also see more focus on the geographical location of data centers, for example, in areas where wind or solar can be taken advantage of. The only issue is that you need to get the fiber optic cable out there!

Me: What’s the biggest myth surrounding the industry?

Mike: Definitely the biggest myth is that it’s okay to make provider decisions based only on price. The issue is that there is NO regulation in managed services. Not all firms are built equally; in fact many facilities are not kept up or tested. For example, Go2Meeting went dark for 2 days; talk about a painful business mistake! Always take a tour — it will be obvious if the facility is up to snuff and could save you a huge headache.

Me: And I need to ask…how are you guys holding up during this economic downturn?

Mike: We’re doing really well! The managed services business is incredibly resilient for a few reasons. First, we’re somewhat insulated being a ‘utility.’ Second, we’re usually the first bill paid, and the last one canceled because being connected is now the lifeblood of almost all businesses.

I’m planning to follow-up with Mike on topics such as Green IT and Virtualization. As a web entrepreneur I’ve come to realize the importance of understanding trends in the managed services space. Energy usage and data protection are major issues. Having a relationship with a great firm like Lore is invaluable in helping to scale and grow your businesses. If you’d like to learn more about Lore and their services, you can email Mike personally (mvelotta@lore.net) or visit their website at www.lore.net.

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I found the following data fascinating:

This is a screenshot from WeFeelFine, an “exploration of human emotion” created by Jonathan Harris. In my opinion, such data is the future of the web; a real time snapshot of how people are feeling, being and living.

So what emotions were people feeling this morning at 9am EST, following Barack Obama’s historic Presidential win? ‘Peaceful’ at 45.9 times normal levels and ‘Hopeful’ at 43.7 times normal.

Pretty neat! It’s a proud day for many Americans including myself.

*Here is a previous post of mine discussing WeFeelFine

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I gave a talk today at Defrag with Dick Hardt of Sxip and Chris Shipley of DEMO fame. Our topic was “flow apps” and I wanted to share some info/conversations I found last night as I was preparing. I have added a few of my own comments in here, but for the most part aggregated the thoughts of others…

The Back Story. Why Has Flow Emerged?

Stowe has talked a lot about this…

We have inherited the Web 1.0 vision of the Web as a giant network of documents, linked to each other, where you can wander forever. Source

The seed for the change in the blogosphere was a seemingly small advance. RSS feeds are a way to receive the posts from blogs without visiting them. Source

How Do We Define Flow?

“Flow Is Freedom”

Flow As a State of Mind: (From Wikipedia) Flow is the mental state of operation in which the person is fully immersed in what he or she is doing by a feeling of energized focus, full involvement, and success in the process of the activity. Proposed by positive psychologist Mihály Csíkszentmihályi

…But, flow means something different in terms of information processing. Flow is about information coming into me, not me going out to information.

It’s Fast & Dynamic: Conversation is moving from a very static and slow form of conversation — the comments thread on blog posts — to a more dynamic and fast form of conversation: into the flow in Twitter, Friendfeed, and others. I think this directionality may be like a law of the universe: conversation moves to where is most social. Source

It’s About Activity & Social Participation: My hypothesis is that people will find it most natural to have the most active conversation where the flow feels fastest: meaning, where there are many people so that any given topic or link creates a great deal of commentary in relatively short order. Source

….So flow is more participatory, with lower barriers to entry. Flow can be more spontaneous and thus conducive to conversation, versus content. However, flow (or its data) is most valuable in the aggregate.

…Flow does require a platform to create the channels that deliver maximized data value. Example: Location Aware iPhone apps, Stocktwits, etc. To me this means there will not be one killer-app that aggregates all flow.

Does Flow Mean Information Overload or Freedom?

Overload: However, sometimes there’s just too much information and too little time. I’ve noticed that sometimes I don’t read everything that shows up in my RSS feed reader and even if I do, I don’t peruse the entire article or pause to think more about what the author has written (which is an excellent way to appreciate new ideas). Why? Because there’s just too much information to process and a limited amount of time/attention. Source

Freedom: Yesterday I gave up. I gave up trying to answer every email and read every blog and listen to every podcast. Instead of unplugging, I gave in to the flow. I let it wash over me and I did not try to drink in every drop. And amazingly enough, I felt free. I was free to dip my cup in and take a sip whenever I wanted without drowning in all of that information. Since there is so much to choose from, I can have the most delicious and tasty sips and let the rest just flow by. Source

It’s Not About Information…It’s About Attention

“The focus shifts from information to attention” - Someone

As our digital lives shift from being focused on the old fashioned desktop (space-based metaphor) to the Web environment we will see a shift from organizing information spatially (directories, folders, desktops, etc.) to organizing information temporally (river of news, feeds, blogs, lifestreaming, microblogging)…

Significance of this Change: This is a leap to the meta-level. A second-order desktop. Instead of just being about the information (the first-order), it is going to be about what is happening with the information (the second-order).”

Shift from Explicit to Implicit: But taken together, over time, the little snippets coalesce into a surprisingly sophisticated portrait of your friends’ and family members’ lives, like thousands of dots making a pointillist painting. Source

Monetization: In The Future, Attention and Conversation Are Monetized, Not Content. Kevin Kelly outlines 8 ways to monetize in the networked information economy where value follows the path of conversations and attention, not the path of content that increasingly is free. Source“

“It’s going to shift us from acting as librarians to acting as day-traders.” Source

How To Harness Flow? Channels, Context, Filters:

The Role of the Platform: At its simplest (its true power) Twitter is a phone switch for routing information flow. The software switch is an affinity-based construct that manages the signal-to-noise ratio of the information flow based on the contouring signals (gestures) of the members of the group. It goes beyond bootstrapping, harnessing the brain’s ability to add the gut instinct of survivability to the equation of what choices can be made about information triage. Source

…Discoverability: Filters can be Social like Digg, or automated like Techmeme. Discoverability can come from search like Summize. Note: I use Summize more than I do Twitter (but that’s only possible/relevant due to network effects).

“Channels” Create Context: Make relevant conversations Discoverable. While the question of decentralizing Twitter as a method to improve scalability and performance is important, we shouldn’t gloss over the need and value of filtering Flow into specific streams of relevant conversations and making them discoverable and social. Source

Channel Example: StockTwits

Unexploited Data/Social Graph: Can there be a social value in voice conversations?

Why Important for Business? [Flow Creates] new value for users - and therefore new revenue growth opportunities - at the “edge of the enterprise” will require new viral application strategies and networked business models that create and monetize value from data found in networks, markets and communities of enterprise end users. Source

Creates New Monetization Opportunities: See Above

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I have been doing a bunch of traveling lately but hope to make more substantial posts soon…

In the interim, I thought these facts on angel investing from Entrepreneurship Professor Scott Shane were enlightening:

Prof. Shane notes that only 21% of angels meet the Securities and Exchange Commission’s requirements for being an “accredited investor” – or an individual making $250,000 annually or more, or a couple making $350,000 or more (or net worth of more than $1 million). What’s more, the majority of angels don’t end up making money on their investments, and only 2% of businesses they invest in eventually become IPOs. And only 15% of angels do “extensive” research on the sectors of the businesses they fund.

The median angel investment is around $10,000, Prof. Shane finds.

-Via the Wall Street Journal

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In 30 years time…

1. Do you expect to see VCs placing larger and larger bets on companies or industries that could result in a singularity?
2. What will be the role of acquisitions? Will acquisitions be the dominant means by which companies gain human capital and innovation?
3. Will we see an equity marketplace develop for privately owned companies?

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We assume that technology continues to bring us closer together; sometimes, however, it divides us further.

Yes, the web is inherently about connections and discovery. Tools like Facebook, Twitter and Email have allowed us to strengthen and expand relationships on many fronts. As we’ve grown increasingly comfortable with privacy tolerance issues we’ve exposed more and more. In some respects our tools have commoditized communication and given us the ability to share more, while doing less (ex: the ability to communicate metadata such as location, presence, etc is more or less automated). Online, we can connect to anyone, anytime and we assume we are now even better stewards of relationships because of it.

This week I spent a good deal of time in a hospital with an older family member. My experience reminded me that while younger generations have moved more of our lives online, it’s likely been at a severe cost in intimacy for older generations. What was once a 45-minute phone call, is now replaced or reduced by email, text messaging and Facebook. The problem is that our new mediums are so profound that we have changed entire communication patterns and expectations, without our even thinking about the consequences. Unfortunately, we forgot that this shift in communications hasn’t been universal among our initial social graph. These changes have been at the expense (loss) of certain persons, even as they ultimately expand our reach.

It serves us well to remember that there are generations that don’t use the same technologies we do. The communications shift has created collateral damage: reduced intimacy and depth in relationships with those who have not crossed the digital divide.

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