My Tech Revelations

Closed Systems Acting as Catalysts

noreply@blogger.com (Ari Kesisoglu) — Sat, 21 Nov 2009 19:24:00 +0000

Quite a few companies has been very successful with their proprietary closed systems. Some examples that come to mind are Microsoft (Windows, Office), Apple (Itunes), and Amazon (Kindle). A general fear with these very successful products is that they have a potential to become (natural) monopolies and damage consumer choice.

On the other hand, one can argue that these products bring a fresh approach to the market, heavily invest for take-off and disrupt the industry. They basically act like a catalyst.

According to the related wikipedia article, the term economic catalyst is used to describe entrepreneurs or companies who precipate a fundamental change in business or technology. We like catalysts as they bring innovation, change and freshness, but we don't like closed systems as they limit our choice. If these two clashing characteristics is combined in some products, can the final outcome be positive for the consumers or an industry overall?

Let's start with Microsoft and Windows. Windows has a market share of 90-95% and Microsoft is being widely criticised on some of their practices (I obviously won't comment on any to let you make your own judgement). Let's forget about these for a while and think about what the existence of Windows actually did for the computing industry: since its initial launch in early 80s, windows made it easier for end users to use PCs. Arguably, the industry would have been smaller if people didn't have Windows' easy interface in the early days [1].

One can make a similar point about Apple and Itunes. As cute as they are, Apple's products are pretty closed systems. It's typically hard (and in some cases illegal) to use software/media not purchased from Apple. The internet is full of documents explaining how to hack your own devices.

Before we say how bad this is, let's look at what Apple has done to the digital music industry:

Share of (legal) digital music within total music shipments in the US was 10% in 2005, almost all of it sold through Apple [2]. In 2007 it was ~20% with the lion share (~17%) from Apple [2].
In first half of 2009, the share of digital reached 35% with Apple shipping 25% of total US music alone [2].
Total music shipments increased by almost 50% between 2005 and 2008 [3].

So all in all, Apple acted as a catalyst and arguably they disrupted an industry. More consumers enjoyed and paid for music. It became easier to buy music. Moreover, in this case with consumer pressure things became less closed over time, improving consumer choice.

Nowadays we are seeing a similar move in the e-readers. Amazon came up with Kindle in late 2007. You guessed it: Kindle was and still is a closed system. It in a way locks consumers to its platform, offering little or no choice other than buying books from Amazon itself. But then look at this data on US ebook sales revenues [4]:

Q1'02: $1.5m
Q4'07: $8m (this is when Kindle launched)
Q3'09: $46.5m

The growth in last 2 years is larger (both nominally and percentage) than in the 5 years ending in 2007. It's impossible to correlate this growth to Kindle only (or to any one factor), but stagnated growth before and aggressive growth after Kindle's launch date, combined with all the PR around Kindle, seem to be too much of a coincidence. I want to remind you that Sony Reader, which is mostly an open system, was in place a few years before the Kindle but failed to have Kindle's impact on ebook market.

All these products were closed systems. Do we like them closed? Not really, we want more choices to use them as consumers. But as long as these companies don't use monopolistic powers to prevent competition later on [1], closed systems might initially be beneficial to consumers by creating disruption in some industries.

--

Photo credit: JenniPenni
Also, this post is more or less a data supported documentation of my recent discussion with a friend.

[1] The unfortunate practices that Microsoft adapted after their success, that resulted in a US Department of Justice action, raise the question of where to draw the line between cashing in on being a catalyst and becoming an abuser of power. I'll pass this topic for now.
[2] Apple Itunes Market share of US Retail music sales, Emarketer, and US physical and online music revenues, Emarketer (Subscription required)
[3] US Digital and Physical Music shipments, 2005-2008, Emarketer (Subscription required)
[4] International Digital Publishing Forum

Humanity's Pace of Development, a Good Visualization

noreply@blogger.com (Ari Kesisoglu) — Mon, 26 Oct 2009 22:38:00 +0000

I was reading Tim Harford's Logic of Life. It's a great book from a smart economist and has a few very interesting revelations about daily life. I was particularly impressed by one visualization it had in its closing chapter, 'a million years of logic', and I thought I'd share.

It is really hard for us to see how fast things are developing lately. Let's do this together; assume all of last million years has happened in one year. Using that scale, we learnt how to control fire sometime in spring and Homo Sapiens appeared in mid-November.

Circa 19 December was when we have seen cave paintings. Egyptian Paraohs' time was around 30 December. 31st December have witnessed the rise and fall of the Roman Empire.

Columbus discovered Americas roughly at 7:30 PM. First world war began 11:10 PM. We invented the internet at 11:50 PM. Google at 11:55, Facebook around 11:58 and iPhone around 11:59. Quite amazing eh?

We always say things are developing very fast lately and we know they'll only get faster. I found this as a smart way of putting things into perspective and show 'how fast'.

Now stop and think for a second about this pace. Then move on with your fast life :)

Augmented Reality: Can it be Monetized?

noreply@blogger.com (Ari Kesisoglu) — Sat, 04 Jul 2009 13:03:00 +0000

Augmented Reality refers to combination of real world information and computer generated data. The idea is to add information on top of what you see to make more information available to you. The image on the side is one basic implementation of augmented reality.

A few years back, this sort of technology could only be seen in hollywood productions (remember how terminator saw the world, with lots of text and numbers beside images?), now it is on its way to hit the mass market. Let's see some of it's uses.

I'll start with a cool demo on star trek. First let's watch the video:

The great thing is, this is live today. Anyone with a PC that has a camera can test this. Check it out here.

Also, the CNN hologram interview in November 2008 was another use of augmented reality. I have to say this was a bit cheeky though, as people in the room didn't see anything, but the hologram appeared only on TV. Still a good step in the right direction.

Besides the geeky implications of this technology, there are two monetization opportunities that can be captured rather soon: Gaming and Apparel.

The opportunity in gaming is pretty obvious, I've covered what's coming here. The market is already there, if we keep in mind that [$ = user x $/user], better technology implementation will both 1) make the current customer base happier with more gaming applications [higher $/user] and 2) make gaming more usable by a larger audience [more users] so the $ pie will grow by both sides of the equation.

The opportunity in apparel is also interesting. Augmented reality can be used to improve user experience in online apparel sales, which is rather weak now. According to emarketer, consumers in the UK spent 57 pounds to online and 136 pounds to electronics (and 67 pounds to beer and spirits) on average [1]. In real world, apparel spend per capita is obviously not half of electronics for the majority so there clearly is some opportunity there.

I don't have data for this, but chances are, the reason why people don't buy clothing online is because they don't feel comfortable with what they're buying: will it fit, how will it really look etc. I don't think people are fond of going to crowded stores to browse thousands of irrelevant stuff in order to pick a few (my wife can always prove me wrong though ;-) ).

Below is a video of an example technology from Zugara to illustrate what I mean by improving user experience. The application is very basic for now, and in my humble opinion not 'there' yet, but gives you the idea of what is ahead of us.

Who knows, perhaps the infamous boo.com was only 10 years ahead of its time.

Picture credit: HowStuffWorks

[1] December 2008 data. Full info is here, but you'll need subscription.

Recent Step Changes in Technology that Accelerated Pace of Innovation

noreply@blogger.com (Ari Kesisoglu) — Sun, 07 Jun 2009 21:07:00 +0000

I was just going over my shared items in friendfeed and noticed an interesting trend: A noticeable amount of news that have given me some sort of excitement are around touch screens and motion controls.

I have two products to thank for this :) Apple iPhone and Nintendo Wii.

Wii: Nintendo somehow decided to go against the common wisdom (at the time) that the success in gaming platforms were dependent on better and faster graphics. They introduced an ultimately simple to play platform that doesn't require advanced controlling skills.

Nintendo CEO Satoru Iwata recently said the following about motion control devices becoming industry standard: "It's a good thing because we believed that we were doing the right and now others have validated that". Now that's a very humble way of expressing the fact that they have changed an entire industry. Look at the videos below to see what Microsoft and Sony are producing or envisioning to exceed Nintendo.

Here's the Sony PS3 Motion Controller demo video:

And here's the Project Natal (visionary) video from Microsoft for XBox:

Although I'm not hardcore gamer these are still quite exciting technologies. All thanks to Nintendo's initial blue ocean strategy.

iPhone: Before Apple launched iPhone in June 2007, the mobile phone area had become a bit boring. Yes Blackberry was there, yes phone producers were launching new phones but in my opinion most players were milking the market without really introducing any decent improvements to consumer experience. I realize that's a bold statement but think about this: how many non-geeks that you knew were browsing from their mobile before 2007?

Then came iPhone and created a sense of rush in the market. Here's what happened within 2 short years:

- the mobile user interfaces improved significantly

- there is a mobile software ecosystem now (mobile software are being sold significantly more)

- smartphone market grew substantially

- laptops are focusing on touch screens. Notice how this hints to a future convergence between mobile devices and computers. Compare that to the past talks of a potential handheld and mobile phone convergence.

Nowadays the pace of innovation and improvement is only accelerating. Here're some of the latest news around the topic:

It’s Gonna Be A Summer Of SmartPhone Love

A Flood Of Android Phones Coming This Year

Whether you like iPhone or not, I think we should all be thankful to Apple for pushing significant change in an important industry.

Asking Users to Pay: Still a Taboo

noreply@blogger.com (Ari Kesisoglu) — Tue, 24 Mar 2009 23:26:00 +0000

It's not a secret: social networking sites have a monetization problem. To the best of my knowledge all major ones including facebook, myspace, bebo, hi5, friendster etc are trying to make money from advertising. None of them have been a success story so far.

The problem is that none of these networks have made an innovation in advertising. They have huge pageviews and are using brute force to monetize:

very high pageviews X very low CPMs = unsatisfactory revenues

On the other hand, there are some not-so-mainstream players, like SecondLife, GaiaOnline, Chinese Tencent, and some Japanese ones, which successfully overcame a taboo: they're able to charge their users for value added services.

The idea is to offer users some value added services, such as a decoration to include in your homepage (that everybody knows is a paid item) or offer a paid gift to send to someone else etc. This is almost impossible to accept for some people, but there are some people who are willing to pay for these services.

Why would people pay for these? There might be many reasons (status building, time saving, visual appreciation etc) but does 'why' really matter? At the end of the day people attribute some value and do pay to these stuff. Why do some people buy anything branded when a very cheap chinese version is available at a fraction of the cost? Same story here.

Some smarter networks went beyond just offering paid content to their users: they created an economy where suppliers can be formed within their system and these suppliers can sell directly to the users. The notable example is SecondLife and its Linden Dollar based economy. Think about it: users are happy to have a choice and pay for services/e-goods, suppliers are happy and innovating more and more, the social network is happy, investors are happy...

I struggle to understand why no major social network is putting a significant effort behind this. Especially when we know there are success stories around it. I fully agree that membership should be free. But why not giving the users a choice and providing them with additional services?

Maybe the old days where charging users was a taboo have a stronger impact to today. Maybe it has to do with US culture - don't forget that Europe was significantly ahead of the game in mobile network monetization on entertainment front.

Mobile entertainment market (estimated to be $65B in 2012) was monetized much earlier and arguably better in Europe. As the two mainstream players in social setworking are US based, let us hope that social networks' fate will be different than mobile networks' in monetization.

Further reading: On the same topic, I found the following article on how to monetize a social network very interesting too, you might want to check it out.

Photo credit: blentley

Waste, Efficiency and Innovation

noreply@blogger.com (Ari Kesisoglu) — Sun, 15 Mar 2009 12:35:00 +0000

Being able to waste plays an important part in evolution. Females prefer the males that can waste, in theory. Waste here means ownership of something not required for survival, a longer than necessary tail in birds for instance.

Anders Møller found out that male swallows with artificially lenghtened tails were preferred more by female swallows [1]. There are theories to explain this, generally around the following lines: if you can survive AND afford to waste, you must be good. This doesn't apply to human females of course, no expensive diamonds or champagne can sway their minds ;)

Companies always try to avoid waste, probably rightly so. In Innovator's Dilemma however, Clayton M. Christensen pointed out that our very successful companies have a tendency to focus on their most successful products, direct most resources to these and thus risk losing their ability to innovate. This effect makes them efficient companies but sometimes make them dinosaurs.

Waste is bad, there is no question about it. On the other hand, if I somehow combine the above two paragraphs, I come to the conclusion that maybe if directed wisely, waste can accelerate technological innovation. Let's think how credible this argument is. A good starting point is the rules of economic efficiency:

- No one can be made better off without making someone else worse off.

- More output cannot be obtained without increasing the amount of inputs.

- Production proceeds at the lowest possible per-unit cost.

These are all valid points when processes and technologies used in production are all stable, and thus production operates within the limitations of status-quo. This is all good, but there is a theoretical limit that a company will hit by making stuff more efficient. To reach beyond that point, innovation will be needed.

Arguably, investing in innovation will lead to some waste in the system. That is because randomness seems to play part in innovation process. You can read more in The Randomness of Corporate Innovation, here's a quick finding:

“The most effective innovations are the result of formal product development teams in less than 50 percent of cases. The rest of the time, effective innovations stem from rogue inventors or “under the radar” skunk works.”. This obviously doesn't mean innovation is fully random, but there is some randomness factor in it. You can read more on this topic in The Rules of Innovation.

Some companies realize this and have official schemes trying to boost innovation at the risk of creating some waste. Google's famous 20 percent time to engineers is one of them. W.L. Gore is another company which implements such schemes. One can argue, these are all waste because engineers could be working on defined projects for current products during the time freed for them. On the other hand, that would make the companies more efficient, but maybe less innovative.

So there is an interesting relation between innovation, efficiency and waste. This probably is a result of randomness, or the partly random nature of innovation. Well, maybe female swallows weren't irrational after all: ability to waste could be an important asset.

Photo credit: cdbtx

[1] Møller, 1988

Technological Singularity: Economic Impact

noreply@blogger.com (Ari Kesisoglu) — Tue, 10 Mar 2009 23:27:00 +0000

I was watching Sarah Connor Chronicles and heard the term "singularity" in one of the episodes. I had no clue about what it meant and did a quick research. Wikipedia defined technological singularity as a theoretical future point of unprecedented technological progress.

The concept was a bit too theoretical for my taste but just as I was about to close the page I've noticed an interesting article by Robin Hanson: Economics Of The Singularity.

Well it seems we have experienced singularities in the past and they had a huge impact on our civilization. Here's some interesting data from the article:

- 2 million years ago there were 10.000 humans (or rather protohumans) on earth. On 10.000 BC, this figure went up to 4 million humans. Assuming the economic activities at that time were around food and shelter, we can say there was an almost perfect correlation between population and economy. Thus, in line with the population, the world economy doubled every 250.000 years or so.

- Once these 4 million humans settled down and started the farming revolution. This resulted in more stability and better conditions for human survival, thus the world economy started to double every 900 years. The farming revolution was a singularity and resulted in exponential growth (~250 times faster than before) [1].

- Then came the industrial revolution, which introduced machine based production to our lives. According to Hanson's article, in the last few centuries the world economy doubled every 15 years or so (~60 times faster than the previous 900 years). Guess what, industrial revolution was another singularity.

Singularity is an interesting concept and it definitely exists. The 1 million dollar question is: what is the next singularity? There is a fair bit amount of thinking in this space and a popular theory I noticed is the rise of artificial intelligence (AI).

I've included some further reading below if you're interested in the topic. A caveat: there is a general tendency to forecast the end of human civilization with the rise of AI - so these could be interesting information but not for everyone's taste.

Anyway let's see if we'll be lucky (or unlucky) enough to experience a singularity moment within our lifetimes :)

5-Minute Singularity Intro

Artificial Intelligence Will Kill Our Grandchildren (Singularity)

Why the future doesn't need us

Photo Credit: Justin Gaurav Murgai

[1] Bradford DeLong, Estimating World GDP, One Million B.C. - Present

Evolution of Cloud Computing: What Does it Offer

noreply@blogger.com (Ari Kesisoglu) — Sat, 07 Mar 2009 16:30:00 +0000

Evolution starts with a mutation, which is a permanent change in the structure (of the DNA). If it's a useful change females favor individuals that has this mutation and in the next generations the whole species evolves into a new structure.

In the above paragraph, swap the words mutation with innovation, females with users, individuals with companies, and species with industry. And there you go, you have the anatomy of any industry.

One of the mutations we have seen in the technology is the rise of cloud computing. The term cloud computing means that you receive IT processing as a service rather than as a product or software. The easiest way to visualize this is to compare to electricity: local computing is comparable to everyone owning a mechanical generator to produce their own electricity. Cloud computing is about centralizing the computing activity, similar to producing electricity in power plants and distributing it via grids.

One of the first companies to operate in cloud computing arena was salesforce.com. They offered a CRM solution to companies and hosted the application in their servers allowing access through web browsers. Thus, salesforce.com took out the need to install and maintain software on companies' site. This system is very appropriately called Software as a Service (SaaS).

The system has proven to be favored by the users over time and we now have many other players in the arena. A famous one is Google Apps, which offers email, calendar, document editing and more in the cloud. Even Microsoft, which arguably benefited most from local computing, is increasing its focus on cloud computing services now.

Going back to our evolution example, if some users are preferring cloud computing over the current way of doing things, it should be offering some advantages. Here's what I believe the main advantages that this innovation (or mutation) provides to users:

- Access to latest technology: In many cases per user cost of offering cloud services doesn't materially change by the client's user base. This means small businesses now have access to latest technologies with meaningful costs. Arguably, up-front setup costs are also lower thanks to standardized setup processes. The most exciting point here is that literally all internet enabled companies have access to latest technologies - this is particularly good news for emerging markets and smaller cities in developed markets.

- Easier remote access to your data: A cloud is high up in the atmosphere and it's visible from a wide area. Cloud computing is similar to that. Because the whole system is designed in such a way that everywhere is remote to the data, in theory it doesn't matter if you access it from different locations (such as home or work). Obviously companies might restrict this access to specific locations for various reasons.

- Greater collaboration possibilities: In the cloud, no specific user "hosts" a file or a data. This allows multiple people to work on the same files or tasks at the same time, offering a greater collaborating option.

- Outsource a significant chunk of IT: Many companies don't have advanced IT capabilities and they shouldn't be required to. Cloud computing moves the bulk of IT management to the provider's shoulders. To visualize, think about this: the current structure is similar to every company producing their own electricity. This requires a higher need for electricians on board, especially if your electricity use is high. With power plants, you won't really need a full scale staff on board.

These advantages lead to a higher adaptation of cloud applications like software as a service and the conversion trend is accelerating. Here are some stats about cloud computing [1]:

56% of internet users use webmail services such as Hotmail, Gmail, or Yahoo! Mail.

34% store personal photos online.

29% use online applications such as Google Documents or Adobe Photoshop Express.

7% store personal videos online.

5% pay to store computer files online.

5% back up hard drive to an online site.

The figures are proving the user demand, which is forming a strong base for demand from the corporate world. After all, it's easier for companies to move to the cloud if their employees are already used to it. However, it's obviously not possible to say that companies in general moved to the cloud (yet).

As there are strong advantages on offer, cloud computing will arguably become a standard but this might take some more time. How much time, tough to guesstimate. Do you have an idea?

I'll speculate about the future of cloud computing later on.

If you liked this post, you might also like my earlier post about the endless circle of personal vs cloud computing.

[1] Data from Pew / Internet Data Memo

Photo credit: alkhodarev

I was inspired by the following articles, you might find them interesting as well:

Cloud Computing: The Evolution of Software-as-a-Service

Is the enterprise ready for cloud computing?

What is the State of Cloud Computing?

RIAA is Suffering: Possible Learnings from Suing Your Customers

noreply@blogger.com (Ari Kesisoglu) — Sun, 01 Mar 2009 18:14:00 +0000

RIAA stands for "Recording Industry Association of America". This is the group that sued Napster and Grokster and put draconian controls over the use of digital music.

These 'victories' were encouraging for them. But somehow people still continued to download music online. As trying to convince users to pay for digital music was not even an option RIAA (and similar organizations) started to sue the individual users. Read the last sentence again. These smart folks actually sued their potential customers.

Once you're in this game, it's very difficult to turn back until you collapse. You have to put more power behind your failing strategy because your reputation as an organization or an executive is on the line. That's exactly what happened.

Next came the push of DRM, or Digital Rights Management, which is one of these technologies that doesn't work smoothly - to say the least. The idea is to restrict the capability of transfering music from one device to another because most users are cheaters and without DRM the sales numbers will plummet. It has been a bad user experience overall. The worst thing is that people who want to cheat somehow go around it anyways.

These developments meant RIAA (and similar organizations) created a near monopoly buyer with their own hands: itunes. Apple satisfied the music labels to some extent and with the combined iPod lock-in effect the huge demand flowed to itunes.

What's the P&L of all this circus?

- Did people stop downloading illegal music?

No! There are many new file sharing sites. One of them, 'pirate bay', has another very famous trial now.

- Did the music industry benefit from this potential sales channel to the maximum extent?

No! It's quite sad that there still is so much money left on the table. There is a huge demand that could be further monetized with the right approach.

- Has RIAA proven its value?

No! Last I checked music industry was shrinking. RIAA laid off a massive number of people last week. Chances are, organizations supporting RIAA are decreasing the funding because they couldn't see the upside. Surprisingly, suing your customers turned out to be an unsustainable business practice :) Or should we blame it all on the pirates once again?

What can we learn from all this circus:

1- When industry dynamics change, you might need to adapt your business: It's really not easy to change. What's more difficult is not to feel threatened by the possibility of change - it's a basic human survival learning: change can destroy you fast. However, in some cases, if you don't change you'll become obsolete.

In this case, if the music industry continues to act like it has been, we'll see the rise of more companies that let users discover their long-tail bands, at a fraction of the current costs. If in the next 10 years these companies become mass market the hits will be created organically and the music labels might be cut out of the equation.

2- Accept your mistakes and avoid the 'Easter Island' effect at all costs: In his great book 'Collapse', Jared Diamond talks about the mystery of the Easter Island. In this island, there are huge statues (pictured at the top) but no trees or tools that would help the islanders to erect these statues. What happened is that the islanders cut their trees in order to build these large statues and they went on building them until they cut the last tree. Next thing you know their civilization collapsed after the disappearance of trees. How unexpected.

What do you think the guy who cut the last tree was thinking? What do you think RIAA was thinking when suing their customers? It's OK to make mistakes but there are many points when you can go back to the right track - don't go psycho and accept that you're mistaken. Sway by Ori Brafman and Rom Brafman might be your book.

3- Look at the bright side and use the opportunity with technology: This is easier said than done. If music industry had seen digital as a potential rather than a threat, things could have been significantly different today. On the minimum they would have many more suppliers and thus more revenues.

Please don't get me wrong. I'm not trying to claim that letting piracy is the right approach. I definitely believe in compensating the efforts of creative professionals. My point is that there are better approaches than turning aggressive towards the entire world. Trying to use new technologies for monetization is one of them.

Nowadays, we're seeing a similar story in the publishing industry. The surge of ebook readers (like kindle 2) is the best thing that could happen to book publishers, if you look from the right angle.

I don't even want to talk about the video industry: These guys had originally thought that beta, VHS or DVDs would kill their business completely at the time. Guess what, these turned out to be very profitable businesses with the right approach.

So what do you think now? Will publishing and video industries be able to avoid the mistakes of the music industry?

Photo credit: wikimedia

The Cheesy Robots vs Humans War Scenario's Required Symptoms

noreply@blogger.com (Ari Kesisoglu) — Sat, 21 Feb 2009 15:00:00 +0000

In my last post I shared my quick research on robots can do today. I am quite excited to see the developments as I strongly believe that robots can improve our life quality and civilization overall. Actually I'm just dreaming about the day when a robot can do all housework for us :)

On the other hand, there is quite negative press on how the development of robots might mean the end of human civilization. I believe these scenarios are mostly paranoid, but I took the liberty of laying down one possible path of robots reaching the level of potential threats described in these scenarios [1].

Below phases are obviously fictitious but note that I'm copying some characteristics of living organisms, or their success factors with the framework of evolution.

Phase 1: Will to Survive

I'm pretty sure humans will 'order' robots to survive at some point, when it makes sense. This is pretty straight-forward: one of the more interesting problems with our machines today is that you make a mistake in setting it up and the machine breaks down. Or you let a machine run by itself and when you're back it might be broken for one reason or another.

Any living organism has a survival instinct. Assuming the living organisms are the ultimate (also maybe impossible) success level robotics aim, our robots will need to have the will to survive. This is us simply copying the nature as chances are nature has a better design ready for us.

It is not trivial to create a survival instinct in robots without endangering human survival. Lions for example could be very scary to humans when they are trying to survive; same story here. To give you an idea of the challenges, have a look at the Three Laws of Robotics of Isaac Asimov:

A robot may not injure a human being or, through inaction, allow a human being to come to harm.

A robot must obey orders given to it by human beings, except where such orders would conflict with the First Law.

A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

This is pretty controversial and challenging to execute, but we humans will find a way of making sure our robots want to survive.

Phase 2: Self Repair

It will prove to be pretty boring to take a robot to repair in every break-down. Just think about your simple machines today, wouldn't it be nice if they could repair themselves? Advanced living organisms have such immune systems.

Acquiring self repair capabilities will have phases in its own. For example, robots will first be able to replace their broken parts with already produced ones (exactly like a car replacing its own tire) but eventually they'll be able to assemble parts on their own like living organisms can do to some extent.

Phase 3: Reproduction

Let me be clear from the start: I don't think we're going to see robots giving birth to robots (it might not be necessary anyway). However, we'll definitely have robots producing robots. It's very likely that humans will ask them to do so as we'll need more and more skilled workforce with time.

In the beginning it'll be machines producing robots with a lot of human intervention like any production line we have today. Once robots get enough processing power, the will to survive and the ability to repair themselves they will be able to produce new robots on their own as they'll know how to do so.

And there you go, once we have all these three phases finished we will have the basic setup ready for the typical cheesy robot vs human war scenario. I don't think the war will ever realize but in case you are part of the group which expects a war you can wait for these symptoms before you're even afraid of a war.

Also, if you don't believe that we're likely to see life patterns in technology think about viruses. At the end of the day, computer viruses are human invention and our systems could do perfectly well without them. However, life has a pattern which repeats itself in different areas, and viruses are just one example of it. They emerged in the first setup that made its existence possible.

Similar to connected computers leading to the emergence of viruses, I believe improvements in robot technology will lead to the 3 phased pattern above. Whether this will result in a war between robots and humans or not is something you should make your own decision on :)

[1] Two remarks about the topic: 1) As you saw in my last post, we're still trying to solve simple logistical issues like balance, sensing around, moving smoothly etc. Arguably we're 1-2 decades away from any significant robot interaction. 2) Not all of machines are robots. There are plethora of things which can go wrong with our machines today (including the military ones). My aim here is to stay at the macro level and touch the evolution rather than day to day operation.

Photo credit: Pierre J.

Robots: What Can They do Today?

noreply@blogger.com (Ari Kesisoglu) — Thu, 19 Feb 2009 23:26:00 +0000

I just watched a very inspiring presentation about evolution of technology by Juan Enriquez, as part of the TEDTalks, which you can see here. The presentation contained some impressive robot demos, which got me curious about what robots can do today.

So I made a quick research about our robot friends which I'd like to share with you. I'll share my views on what it might mean for our future and evolution later on.

I have to say I had no idea how robots had improved and what they are capable of doing today. I'll show it with the help of videos so you can actually see what I'm talking about.

The first and probably most impressive robot is Boston Dynamics' BigDog. Here's a quick demo of what it can do:

Wow, did you see how it actually can stay up after the kicks? Impressive stuff. The potential uses of that is amazing. Imagine we can use these instead of various animals that we're (selfishly) exploiting for example.

While looking around, the second interesting robot I encountered was Murata Boy. This one can actually ride a bicycle. By the way, I learnt that the robots who have the shape of humans were called humanoids. Here's the demo of Murata Boy the humanoid:

Do you remember when you learnt how to ride a bicycle and what you felt when you could stand on top of it? This robot should feel that all the time :) Seriously though, the sensoring and position control seems quite impressive.

The last one I'll share is actually the 'ugly'. The robot that has the potential to become the nightmare of any human being. It's name gives the hint: South Korea Intelligent Surveillance and Guard Robot. I'm afraid to mention but the rumor is that the following is actually in use in South Korea borders.

Unfortunately, with the budgets required to develop and deploy these robots, armies around the world should be the prime buyers of these gadgets. It's so sad that this is just one potentially negative use of what could be a beneficial technology for humans (imagine using the previous robots in rescue or exploratory missions for example). Oh well.

This last robot suddenly revived my memories of the terminator the movie. Will we go into a war with robots? Will they exterminate us?

I'll be bold enough to touch these subjects in my next post. [Update: click here for the post]

Photo credit: Paul Keller

Being Special: Emotional Attraction to Wrong Theories

noreply@blogger.com (Ari Kesisoglu) — Sun, 15 Feb 2009 10:44:00 +0000

We really would like to think we're very special.

One of Aristotle's arguments made all of us really happy at the time: the earth is the center of everything. The sun, the moon, the planets, other stars they all were moving around the Earth.

Think about that, we are at the center of everything. Aristotle's supporting arguments were pretty strong for the time, the audience (that would be all of us) felt great emotional attraction to it and thus his theory got great acceptance for a long time.

Then came Copernicus on 15th century. He suggested and proved a very bold view (which he more or less had to hide until deathbed) that actually the Sun was the center and the Earth was rotating around the Sun. Now that was harsh.

Oh well, maybe we could live with that too, at least it's our system which is at the center of everything. In 1920s, we figured out that we weren't even at the center of Milky Way (our galaxy). Actually, we're quite at the suburbs of Milky Way.

Maybe Milky Way is at the center of the universe then? I don't think we know the answer, but it might be about time to accept that there is nothing special about our location in the universe.

This journey is another interesting case where we were stuck with something wrong that made us happy for a long time. Let's hope better technology, more open mindedness and improved communication decrease the number of these cases or the time it takes to get to the truth going forward.

Hey if you felt bad, here's something that will cheer you up:

We're the only intelligent species we know that exist in the universe. Actually, to be exact, we're the only intelligent species that has discovered interstellar radio communication and that has been actively using it [1].

At least that's what we know so far - now that made you feel special didn't it :)

[1] Frank Drake came up with an equation to calculate the number civilizations with which communication might be possible; with many unknowns. Here is the equation and the wikipedia link:

N: the number of civilizations in our galaxy with which communication might be possible;

and

R*: the average rate of star formation in our galaxy

fp: the fraction of those stars that have planets

ne: the average number of planets that can potentially support life per star that has planets

fl: the fraction of the above that actually go on to develop life at some point

fi: the fraction of the above that actually go on to develop intelligent life

fc: the fraction of civilizations that develop a technology that releases detectable signs of their existence into space

L: the length of time such civilizations release detectable signals into space.

Photo credit: kiwizone

Correlation Between Survival and Early Adoption

noreply@blogger.com (Ari Kesisoglu) — Sat, 14 Feb 2009 14:03:00 +0000

'Liking change' is an interesting topic as I believe how much you like change is one of the key factors that impact where you sit in the technology adoption cycle and thus the rate of diffusion. This impacts overall economical success of new inventions, and economic success determines how fast our civilization advance.

In one of my earlier posts, I had touched these topics and had claimed how 'liking change' or being an 'early adopter' might actually be discouraged by natural selection (remember that natural selection favors strategies that help the species survive). As a side note, this is probably why we have so many 'traditions' in different cultures.

Carl Sagan made me realize another angle in this topic: whether being an early adopter makes you better off or not is dependent on how fast the change occurs around you.

For example, assuming no change in the environmental factors, a monkey that lives exactly as its ancestors would be executing the right survival strategy. However, if there is a change in the location of food supply around it, the old strategies won't work and thus the monkey will be better off by changing the areas that it gathers fruits.

Likewise, in 15th century, the path that took one's parents to success would probably make someone successful as well. This is because the environments they lived in were quite similar.

Imagine that there is a lot of change around you. More importantly, the speed of change is faster than a generation time. This means not only that your generation lives a significantly different life than your parents, but also that the rules of the game changes between your childhood and adulthood. In this type of environment you'd definitely be better off by adopting and changing your way of living as fast as you can.

It's not that aggressive to argue that we passed the point of speed of change being slower than a generation time. We actually passed that point in the last few decades - just think about the advancements in communication and transportation.

So at the moment, those who are refusing to adopt new stuff are worse off and this has been true for a while now.

Now you might think 'so what, I already have a significantly different life than my parents and adopt new stuff'. Well, if you're reading this post, chances are you are not a representative of the general population. The point I'm trying to make here is that in today's environment, we are seeing a much faster adoption of technology use in the majority of the population and there is a simple explanation for that:

The speed of change catching and surpassing a generation time.

Isn't this beautiful? The faster we change the faster we (should) adopt new technologies, and the faster we adopt the faster we can improve our technology and thus change.

Perhaps the fact that early adopters are now benefiting from natural selection more than ever is also the reason why successful young executives and politicians became more and more common today.

Hmm, maybe next time you choose not to use a new approach to things or not to get that new gadget you should think twice ;)

Photo credit: hanssolo

Monetization in Social Technologies: Are We Finally Close to See the First Phase?

noreply@blogger.com (Ari Kesisoglu) — Thu, 05 Feb 2009 23:29:00 +0000

Things that are unrelated on the surface can have a cause and effect relationship. The best analysis about this I've seen so far was in Freakonomics by Levitt & Dubner. When crime in the US started to decline in early 1990s, everyone was surprised. There has been many theories about this such as success of policies, increased number of police officers or economic prosperity, but none of them was able to explain this fact in a satisfying way.

At the end of their analysis, Dubner and Levitt conclude that the decline was thanks to the legalization of abortion after the "Roe vs Wade" case in 1973. The argument is really satisfactory (you should read the book), with its essence being "when a mother does not want to have a child, she usually has a good reason". Apparently a child that was not born thanks to this case was 50% more likely (than average) to live in poverty, and thus more likely (than average) to be part of a crime. Interesting analysis.

I believe we will soon see a similar phenomenon in social technologies, in that they will be able to achieve some very basic monetization. I'll call this Social Media Monetization Phase I :)

Let's look at some facts first:

- Social technologies are mainstream, a decent majority uses them

- We have large systems able to track people's connections and has detailed social network maps

- The same large systems can store people's preferences (including social gathering activities) in forms of applications etc

- Arguably, social sites can help people 'organize' events with their network now

- These organizations tend to be economically valuable to venues and means (restaurants, bars, hotels, airlines)

- It's possible to capture that value in the form of advertising of 'preferred places' or charging transactional fees etc

However, we are not even close to see any of these; there is no indication in the market whatsoever.

Here's the unrelated fact: Google launches Latitude, which is a really great product, and suddenly location based mobile social services are center of attention. There are reviews about different products already on the market, who does what on the arena etc.

Part of the attention uncovers how important it is to be holding the holy trinity of 'location, preference and network/friends' information. And obviously this leads to discussions about how we can monetize this new wave of location based services in mobiles, in a logic similar to the one I described above.

After this point I'll speculate about what this might lead to [i.e. below is non-fact based forward looking statement :)]:

Now that there is increased focus and there is public interest to look into that, some social networks can actually notice this 'organization' potential, along with other similar uses of their data. We're very likely to see some real innovation in the market on this front.

What's important to note is that there is no connection between mobile/location services and this potential. It is a 'nice to have' but not a must: for example, do you really need to know where your friends are *now* to make plans with them? However, just the fact that current players believe there is a new (mobile) technology will make them think that they must innovate to survive.

Thanks to these innovations and mainly increased focus to the area, current players will hopefully see some of the basic monetization potential of the information they hold and money will come into the map.

I like the evolution that competition brings. Let's see what it has in the menu for us this time.

Photo credit: EricMagnuson

5 Books About Online Businesses That I Liked

noreply@blogger.com (Ari Kesisoglu) — Mon, 02 Feb 2009 20:22:00 +0000

There is no magic formula for success in online businesses but I believe there are a few patterns that one can notice. The following 5 books that I'm reviewing are the ones that helped me see some of these:

The Long Tail, Chris Anderson

We're living in a world of hits, which mainly resulted from mass production trends. Mass production was necessary to decrease costs but the trade off was the lack of customization and niche-plays. The concept of 'limited shelf space' decreased our choices further.

As its name suggests, long tail explains the economics of non-hits. The key learning from the facts in the book to me is that with new technologies we can increase supply in more niche markets, and over time demand increases for these niches that are fed by our new supply.

Online Businesses that the concepts apply to: Amazon, Youtube, iTunes

The Wisdom of the Crowds, James Surowiecki

The book starts with an example in which a group of people tried to guess the weight of an ox, in a test done by a British Anthropologist, Francis Galton. The finding of the test is the core theory of the book: noone in the group was able to guess the weight of the ox but the average of everyone's answers was pretty close to reality.

There are many examples about this concept in the book. My main take away from the book is that if organized in a smart way, a crowd can be used to create an intelligence that will exceed the smartness of any 'expert'.

Online Businesses that the concepts apply to: Google, Digg, Amazon ratings

Wikinomics, Don Tapscott and Anthony D. Williams

This is a book about openness, peering, sharing, and acting globally. Thanks to wikipedia, the concept doesn't need much explanation. The book includes success stories such as Linux and many others.

My key learning from the book was that as opposed to previous 'wisdom', companies would benefit from being open and sharing their platforms so outside world can offer to them. What's more important is that the world will benefit from this, so opennes can be a win-win when used smartly.

Online Businesses that the concepts apply to: Digg, Flickr, Twitter

Emergence, Steven Johnson

A few 'tags' can describe this book: decentralization, bottom-up behavior, collectivism. It is a great collection of cases that will help you understand this concept better.

The striking example that I always remember from this book is the dynamics of an ant colony. Ant colonies have very different dynamics than a social human community, the main difference is that ants don't have leaders. As you'll learn in the book, their queen is not really different than a warrior ant.

The beauty of an ant colony is that without anyone 'smart' in the group, they continue their successful organization for long time. I define success as the survival and growing of the colony. Obviously, their system was already built through generations so they don't need intelligence to build their systems. Our businesses still need humans to build these systems ;)

Online Businesses that the concepts apply to: slashdot.org, Facebook, Digg

The Future of Ideas, Lawrence Lessig

In 'The Future of Ideas', Lessig is trying to educate us about what it takes to create an environment that fosters innovation. At its core, it's a book at the macro level and one could say it's trying to create visibility into how the mistakes we're making in the management of copyrights on the internet is hitting innovation.

While delivering its message, it is doing a great job in explaining the necessary factors that are needed to boost innovation.

Businesses that the concept applies to: Businesses that want to improve innovation both within their company and in the outside world.

If you made it this far in the post, check the titles of the books I talked about. Try to see the patterns - you'll notice things I haven't mentioned in my post just with the little information I included here. Imagine what the books themselves will do. You can also check one of my earlier posts here which touches some of these concepts. Practice will make it better :)

I will be sharing more books as I encounter them. I'd also be very happy to hear your suggestions, so please leave a comment if you know other great materials.

Photo credit: *Your Guide

Panda's Thumb: Re-inventing the Wheel

noreply@blogger.com (Ari Kesisoglu) — Tue, 27 Jan 2009 23:15:00 +0000

In Panda's Thumb, Stephen Jay Gould dedicated the first chapter to an interesting mystery: Pandas have 5 fingers AND a thumb! What's more is that they originally had only 5 fingers (of which one could have been the original thumb). Sometime during their evolution, pandas benefited from converting their real thumb to a finger and then had to create another thumb from scratch [1].

You can see the famous Panda's Thumb in the picture on the right.

One of the theories that tries to explain this phenomena says that genetically it's too complicated to convert a finger to a thumb in isolation, without impacting the other fingers. Or Pandas might never have 're-invented' the thumb properly. Whatever the case is, they literally had to re-invent the wheel. Arguably, they re-invented the wrong wheel.

Interestingly, we humans also are re-inventing the wheel, consistently and systematically, especially in technology. Think about the standards for example: Blu Ray vs HD DVD. Or previously the same story with Beta vs VHS [2]. This is to be expected, as we incentivize our companies to play with the rules of survival of the fittest game, and they do whatever it takes to survive.

In theory, there is nothing wrong with this. At the end of the day, technology advances one way or another. However, we, the mortals of the world have limited time here :) In my opinion, we would significantly benefit if our technology was moving forward faster.

Nowadays we have hope to improve this situation though. The hope comes in the shape of various wikis including wikipedia and open source projects. For example, just recently Mozilla announced their incentive support for an open source video format. The beauty of these open source projects is that they can be used by other players and the innovation might focus to higher levels rather than more basic blocks (a refresher on different layers is here).

After all, we are intelligent species. We might be able to overcome various inefficiency challenges blocking faster development of our technology. Or can we?

[1] Believe it or not Panda's Thumb is almost a classic case studied in some MBAs (this is me adapting to media play, least it was a case stufy in mine).

[2] You can read more about standard wars and their economic implications in The Art of Standards Wars (Shapiro and Varian)

Picture courtesy of flickr user Daniel @ 127.0.0.1

Personal vs Cloud Computing: Evolution and its Endless Circle

noreply@blogger.com (Ari Kesisoglu) — Sun, 25 Jan 2009 22:40:00 +0000

In his book 'The Blind Watchmaker', Richard Dawkins says: "Evolution has no long-term goal. There is no long-distance target, no final perfection to serve as a criterion for selection ... In real life, the criterion for selection is always short-term, either simple survival or, more generally, reproductive success."

Basically, what he suggests is that there is no long term planning in evolution. In a way, whatever can adapt better to current conditions will thrive.

I'll claim that the same logic goes with technology. One good example that fits this argument is the evolution of cloud computing. The term means that your computing (or mail keeping, document storing etc) is done somewhere with a lot of computers in it, without you needing to know where that is or own the computer that does that. The only thing you care about is that you can access it from anywhere with any PC. A slightly more detailed definitions I saw are here and here.

Now, there are two extremes in this topic: everything done in personal computers (you store everything in your pc) or everything in the cloud. It seems the evolution pings back between these two extremes.

You probably heard that the first computers were the size of a room, and their capacity was worse than our calculators [pc]. A few decades later, we had more powerful servers with 'dumb terminals' connecting to them [primitive cloud]. You might remember this from your computer labs with terminals that had black screens in the universities.

Then started the era of personal computing. The claim was that you shouldn't be locked to a server and you needed power in your hands (or your personal computer). It really made a lot of sense: why would you be locked to something you didn't own or fully control? Then came the powerful PCs with great user interfaces (and Windows). By mid 90s the entire world was buzzing about how amazing the personal computer revolution had been.

When the methodology of connecting these PCs (internet) went mainstream, the 'servers' started to earn their old power. With time, internet connections became faster and evolution started to favor server structure. We saw Hotmail's rise. Instant messengers started to keep friends lists online rather than in our hard disks. We trusted servers with our data. 'Cloud' was on the rise again.

Comes 2008, many things (emails, pictures, documents...) are in the cloud. Today we say 'why should we be locked to our PCs'? If we're in a friend's house, we still should be able to access our pictures, documents, and online friends. The evolution brought us to the other end of the circle.

Now the common belief is that the cloud is the future. I believe this is very much the case for the next few years, maybe decades. On the other hand, as stuff moves to the cloud we're likely to get faster connections and other technological improvements. The environment will change during this transition.

What do you think now, will the cloud stay forever? ;)

What my Wife Teached Me: Strong Monetization Asset of Social Sites

noreply@blogger.com (Ari Kesisoglu) — Fri, 23 Jan 2009 20:40:00 +0000

We have a very democratic decision making at home: I always get to say something about the purchases that concerns both my wife and myself. Then the wife saves me from any further time consuming effort and makes the final decision. So cute of her :)

Recently, we were going to buy a camera. Here's the conversation that we had:

Me: I've read good reviews about X and Y, we can buy either one.

The Wife: A friend of mine has a Z and she's really happy with it.

Me: Have you read any reviews?

TW: No, but she's really happy. Also she has friends who have the same camera and they're happy too

Me: But your friend doesn't really know much about cameras?

TW: Well, she really liked it.

...

We bought Z

You get the picture. We're social species, we care about what people around us do and that obviously has a great impact on our purchase decisions.

In some cases, what you own might give you status and you'd prefer joining your friends or letting them know. In some other cases we might enjoy the time saved by the shortcut. At the end of the day, you and your friends have a decent likelihood of enjoying similar things. Also, how different two cameras will *really* be? You might as well enjoy taking pictures during the time you'd spend in thinking which one to choose.

So it seems every connection in social networks has an economic value. What's more, there is a value to the owner of the network and to the user. That's the good news. The bad news is, we neither know how much that value is [1] nor know how to use it yet. There is one thing I know though:

What we do today, mostly showing contextual ads in a page, doesn't really capture that value!

[1] This would be an extremely complex calculation as it's quite relative. We actually might never might manage to calculate it.

Which Monetization Camp does Your Company Belong: Fees or Ads?

noreply@blogger.com (Ari Kesisoglu) — Tue, 20 Jan 2009 10:43:00 +0000

Monetization is what you need to survive in the long term and is the key to sustainability of your business. I'll try to explain what are the top level options for online companies.

Before I start; I've seen a very good post on monetization by Andrew Chen here, which is how I'm approaching the case. Another good one is here.

Overall, the theory of monetization is simple: you should get more than you put in. Online businesses do it in two major ways.

- Charge fees: Selling your products or services to consumers or business directly.

- Show ads: Helping others in selling their products.

Charge fees

In this camp are the online businesses that make their visitors (business or end user) pay for whatever they offer.

Obviously the rules of supply and demand apply here: The lower the supply the higher the price. The higher the demand, the higher the price. Simple rules, but easy to forget.

There is a complication specific to online world: free. The existence of 'free' makes the equation of charging fees more challenging than it looks. Going with the supply/demand measures, if a business can charge fees, this means:

1) There is demand for the product/service AND

2.1) a cheaper (or free) alternative is very hard to find OR

2.2) it is significantly better than the alternatives

Generally speaking these businesses successfully charge fees online:

a- Retail:

Physical product sales: amazon, walmart, tesco and alike

Listings that match buyers and sellers: ebay, odesk

b- Travel:

Travel aggregators: Expedia

Individual players: Airlines, hotels

c- Technology/data:

Data aggregators: Research companies, archives

Software vendors

Niche communities: gaming sites dedicated to a game or platform

d- Finance:

Money Lenders: Mortgage, credit cards. This group doesn't directly charge fees but the fees are hidden somewhere in their products.

Insurance companies: Travel insurance, car insurance, specialty insurance

Payment gateways: paypal, e-money providers

e- Entertainment:itunes, video on demand, porn, gambling. This is the segment in which you will also need good lawyers :)

There is throat cutting competition and various complexities in many of the businesses above. In my opinion, the key to success here is to keep in mind the rules around supply and demand: 1) and 2) above.

Show ads

Advertising is a method of persuasion. With ads, you try to convince people to buy a specific product or service and thus help the real companies in the above camp to sell.

Generally speaking, there are two types of online advertising:

a- Branding:

The idea is to help companies to build a brand. For one reason or another, this is mostly associated with 'premium' inventories or web sites. In most of the cases, branding budgets go to known portals, such as Yahoo.

To be able to capture branding budgets, besides many factors, you're likely to have a large user base and your own brand.

b- Transactional:

Transactional advertising is about providing leads to companies to close a sale. Think of an advanced version of yellow pages. The user will buy something, makes a research and the ad is shown to persuade her that company X is the best alternative.

The more successful transactional advertising models have the following in common: you should know what the user wants when showing the ad. Three segments do this well.

i- Search advertising: Ads are shown to the user at the time of his search for a product or service.

ii- Price comparison: User is about to buy a product and is comparing the prices of different shops. Comparing retail and finance products have proven to be extremely successful in providing leads.

iii- Product Reviews: You know the user is interested with the product. You show ads about who sell the product.

Obviously, these lists are not exhaustive. Also, you can be successful either way. I suggest you take the time to think about your assets and compare to the assets of the example companies I cited above.

Can you see any common characteristics between your business and the companies above? Try define your camp as a first step in your journey towards monetization.

Photo credit: Freedom Goliath's Impermanence

The Era of Participants

noreply@blogger.com (Ari Kesisoglu) — Sun, 18 Jan 2009 10:41:00 +0000

When script wasn't invented, there was no real medium to keep information. The oldest people in tribes were the holders of knowledge. As the 'wisest' people, they were the go to person in case of dilemmas and problems. They passed this information to next generations. Probably they were adding their own twist to this information in the way.

When we had paper and pens, in the ancient civilizations religious entities somewhat became the holders of information. They kept the information to themselves and used it to make their own entities more powerful. They also passed it to next generation of 'high priests'.

When we had publishing technologies, the publishing houses (or their controllers) had the power to manipulate the conveyed information.

When mass media appeared, the information was still controlled by a handful of 'important' people.

There is a common theme in the examples above. To uncover it, let's look at Lawrence Lessig's framework from his book 'The Future of Ideas' based on Yochai Benkler's definition of original communication layers. There are 3 layers that are key to information flow:

1) Physical/platform: these are the highways or devices of communication.

2) Code/logical: Methodology to transfer the information.

3) Content: Whatever is being transmitted.

Look back to the examples at the start now. The common theme is the control of one of these layers. Various groups had motivation to control a different layer. Most importantly, the content was very rarely being produced by the normal people.

Besides its other virtues, the internet had freed the platform layer to a decent level, and that provided a good foundation for better innovation and information flow. However, during early web, its code and content layers were quite rigid. In theory you could publish whatever content you wanted, but you needed to be very adept at technology in order to do that.

What happened after the dot com crash is that people realized internet was not more than a platform as it standed. It wasn't a magic wand to convert whatever it touches to gold. Thus some innovation started, and that innovation has lead to the start of 'democratization of content' [1].

Normal people were not only the 'watchers' but the 'participants' of the game now. They started to comment on things and interact more with each other. Collaboration over the internet started to improve.

As things moved on, some concepts started where people created a decent chunk of the content. To me, that is the meaning of web 2.0. Internet is a platform and previously visitors were now participants of that platform. I'll help you visualize this.

In a normal theater, you sit in front of the scene and actors play. This is early web. There are some theaters where the play goes on in a 3D environment (in a house) and the spectators wander around the house to watch the plays [2], and can actually help themselves find what's going on within the theater, can discuss what's going on live etc. This is more like web 2.0. I'll let you guess what the next step might be :)

While these were happening, some companies like Google, Amazon and ebay has proven to be financially stable companies after the shake-up. So early web (or whatever has survived of it) is now stronger, web 2.0 is getting more traction within the internet but we don't know how to monetize it still.

Monetization will be my next destination.

[1] Idea from The Long Tail, Chris Anderson

[2] One great example is The Masque of the Red Death

Photo Credit: Môsieur J.

No pain, no gain - what happens when everything gets funded easily?

noreply@blogger.com (Ari Kesisoglu) — Wed, 14 Jan 2009 21:53:00 +0000

Our planet is working under heavy resource constraints. If you think about it, almost the only real resource we have is the sun. In one way or another, everything in the world is making use of sun's energy to continue their existence [2]. This has created competition among many creatures, focusing to different niches. For example, plants convert sun's energy into a storable form, some animals focus on getting the energy plants store, some other animals focus on getting what other animals acquired (by eating them) etc. Moral of the story, resource constraint created variety.

Once you have variety and there are different groups targeting the same resources, you need to be creative to advance or to survive. So resource constraints create variety, which encourages creativity.

Let's visualize the concept for a moment. Imagine what the world would look like if there wasn't any constraints 200,000 years ago. It's easier to focus only to humans or homo sapiens (remember humans understand stuff better when converted to social context? See here). Let's say Mr Sapiens can eat anytime as everywhere is full of different fruits and edible vegetables. Would he bother hunting, try out any changes in behavior or take other risks with his life? Maybe, but probably less as the downside of taking a risk is too high, with the upside being more limited [3]. Well, we all know that in general low risk implies low return (no pain, no gain). In this case, I'll define return as improvement in civilization overall. With that, I have created my nice argument: no constraints implies less or no risk taking, which results in less improvement.

As we do live in a resource constrained world, our civilization has developed great sciences to deal with total utility maximization. One of these goes by the name of 'economy'. Its main idea is to maximize the output with the constraints that we have so more people can benefit from world's resources.

When there are no constraints economy, which is based on the assumption that 'there are constraints', doesn't work. Supply/demand, prices, stock markets simply do not function.

Now let's come back to more recent times. Imagine this is 1998. You do anything online, you are likely to be generously funded as part of the dot com bubble. For a short term, there are no constraints in resources. Similar to my no-constraint world example in pre-historic times above, I'll claim real change or innovation was discouraged to a great extent during that time. The upside was low and the downside was high because economy was not working. Why would you bother increasing the demand for your product or try to come up with something completely new if that has a low chance of impacting your company value?

As Levitt and Dubner will tell you, economics is also the study of incentives. You incentivise people in a way, and they will act to maximize their incentives. In this case, the incentive was unfortunately to get away from innovation in a way. Luckily, no constraint is not a sustainable state. In the end, the investors will either need money to survive or will run out of money so at some point they'll stop investing. This has happened on March 20, 2000 to be exact. Suddenly people stopped investing, and NASDAQ turned down.

Although people were overly cautious in the few years that followed, in general creativity and innovation was back. You needed to be really adding something to people's lives in order to be successful. Also, you needed to focus to the basic values of businesses in order to survive as investors were really cautious. For a while, people couldn't see that this was good in the long term and internet was declared dead. However, the Internet came back strongly and gave us the new era of real improvement sometimes called web 2.0.

That's the short explanation of why I think the dot com burst was good for the world. I'll talk about web 2.0 in my next post.

[1] Photo from bigmouthmedia

[2] ok, I know that deep in the oceans, there are ecosystems feeding purely from the earth's resources, and in theory they don't benefit from the sun. This won't break my argument, go on and read the rest :)

[3] To see one potential upside, I suggest you check Why do men hunt? Some benefits for risky strategies by Kristen Hawkes.

Update: I knew I was right about the theory that humans' wouldn't try out any changes or additional work if there were no constraints :) Explanation below.

!Kung tribesman in Kalahara is a hunter-gatherer civilization and their environment is abundant in food. In a research about them, the tribesmen's answer to "Why don't you plant" question was: "Why should we plant, when there are so many mongomongo nuts in the world?" (Lee, 1968, p. 33)

From the architect to the dot com burst

noreply@blogger.com (Ari Kesisoglu) — Wed, 14 Jan 2009 00:31:00 +0000

The internet became popular in mid-90s. The first phase was the nice black screens (remember pine?) that we got used to. I have to admit, it had taken me a while to understand the fields in an email composer. I wasn't able to understand the reason to have a CC field for example. Anyways that's another story...

Web 0.1

The idea was great but in my opinion it was too much of an effort to do anything really. Yes in theory you were connected to other people. Also, the fact that your messages appeared at the addressees computer in a few seconds was amazing. If you were ahead of your time you probably were able to do some sort of browsing. However, if you were not a university student or were within that 1% of the population you wouldn't really be online.

This was the time when Vint Cerf's child started to get traction with people (by the way, have you noticed that the architect [1] surprisingly looks like Vint?).

Vint Cerf The Architect

Web 1.0

In the second half of 90s the internet stuff became interesting. There was some color in front of you. And didn't we all love Netscape :) The content was limited but the accessibility had improved significantly. Yahoo was a blog consisted of only links.

One of the key developments here was that people's understanding of privacy started to shift. They started more share information about themselves online. This is very much given nowadays, but can you imagine this in 1950s? Why would you publish about yourself and make it available to the wide public? To me, this is one of the most important changes that internet brought us: willingness to share more. One notable example is obviously Mahir, I kiss you.

During this time, people assumed the internet was a gold mine. The assumption was that any company that tried to do anything online would make loads of money. Good old times. those which sort of monetized were online retailers, very large portals, software producers and some sort of database creators (job listing, matchmaking etc). Oh and of course porn sites! Not a joke, some sources claim that a third of all downloads are still porn related. I had written about the ingredients of success as I see them here. It's amazing how people missed the basics during this period.

And there was Microsoft. Such a beautiful and successful business model which created a great ecosystem in itself. Plus it benefited hugely from rising PC sales thanks to the internet; truly amazing times. I am not in the camp that hates Microsoft. If there wasn't any Windows, many people wouldn't access the internet at that time in the first place. That doesn't mean Microsoft didn't stop or slow down innovation but I also believe they did some good for the world. And they were compensated generously for their efforts, to say the least.

One of the reason why there was so much focus on the PCs themselves was that there wasn't much interaction 'with' or 'in' the web. The web was consisted of multiple one-to-many relationships, it wasn't much different than a large library at the time. You published your stuff, people read them. Simple.

Then something really good for the world happened: the dot com bubble burst. It was very bad news for many people in the short term, but in the long term majority of the population benefited. Finally, the businesses had come back to their senses.

I'll talk about why I believe the burst was good in my next post.

[1] The Matrix Reloaded

The invention of the wheel, the complete story

noreply@blogger.com (Ari Kesisoglu) — Sat, 03 Jan 2009 11:34:00 +0000

And you thought Mr Wheel invented it in one week. Here I publish the complete story of the invention of the wheel that was lost for more than 6000 years for the first time :)

Before we start, let me make the point that the wheel first appeared in Mesopotamia ~5th millenium BC, but the first chariots found are only from 3700 BC. So something got lost in translation for a long time. The dates and some other facts below are close to reality, though the story is my interpretation of what might have happened.

BC 4500: 2 young male adults start playing a game, 'rolling stones' in Mesopotamian city of Eridu. They roll down stones from the hill and whoever can reach the furthest wins. The winners of the game are quite popular among the young females of the city.

The highly motivated players soon discover that a round-ish shape works best. It becomes a popular game among the upper castes. Lower castes cannot afford the game because it takes a slave's full week to make a wheel and the wheels are easily damaged during the game.

BC 4300: the King (also the head of the army) envisions a weapon with the wheel. If you make a large enough wheel and put sharp stones around it, it might give great damage to the human area that you direct it to. He thinks some bad tempered people can use it to give harm to their civilization and immediately bans all usage of wheels.

BC 4150: The smart Mr Potter thinks he can use the wheel in his pottery workshop. He goes through great efforts and costs to convince the all wise senior military people that this is not harmful to people but might help their city. He bribes them and the King can be convinced through their efforts. There is one condition though, the wheel must be parallel to the ground at all times.

Mr Potter starts his trial and errors to adapt the wheel to use for pottery. His friends mock him, saying that it will never work because it's too round and thus will be too fast to control. After 2 years of trial and error at nighttime, Mr Potter manages to create the first potter's wheel.

BC 4000: Potter's wheel reaches Egypt and Mr High Priest becomes aware of it. Soon he says he had seen God Khnum in his dream, while he was forming the baby humans on a potter's wheel. He interprets this as a sign from Khnum, and thinks they can all be cursed because they're playing with a God's tool. He bans all the usage of the wheels to save his civilization. Rumors spread over the geography and for the next 200 years wheels are not used even in the surrounding civilizations, until people forget why they stopped using it in the first place.

BC 3800: Mr Potter Junior had placed his ancestor's first wheel as a decorative item above a wood log in his home. One day he accidentally hits it and notices how the wheel rolls on the floor, the log with it. He envisions that this can be used for transportation of goods, and would greatly help him to move his inventory from his shop to the marketplace. It would also help him give less to Mr Monopoly, who rents his ox for exactly this purpose.

When he talks of the idea, his neighbors criticise him about his laziness and explain him that his ancestors had been doing this the same way since hundreds of years. They also argue the wheel is too round to be used for transportation it'll be very difficult to keep it balanced. His wife cries for nights as she's afraid he will cause a lot of harm to his business and their family will suffer greatly. Mr Monopoly fanatically supports these thoughts for another 20 years until he dies.

Mr Potter Junior persists, but the pressures are too high and he cannot continue his attempts to reinvent the wheel. However, he talks about it and creates some sort of awareness of the concept around the town. Some of the citizens are interested with the concept, further trial and errors continue.

BC 3750: First chariot appears, 750 years after the invention of the wheel. The first users of chariots complain how difficult and costly it is to use them because the roads are only within the cities and chariots are depreciated too quickly because of limited availability of roads. Nobody stops using though, as this is only for the rich and thus had become a status symbol.

BC 3600: The rich surrounding the King start to lobby around more aggressive construction of roads. The demand for chariots increase and the rich holding the know-how make a lot of money with the invention. The 'mass' starts to catch up with the invention and as it becomes part of normal life other derivative uses of the wheel start to appear.

You think that was in the past, now things are much different. Well think twice. Are you sure you're not reading any news that remind you of this story?

What can I say, history repeats itself...

Photo credit: Rickydavid

The Three Musketeers of Success in Technology

noreply@blogger.com (Ari Kesisoglu) — Thu, 01 Jan 2009 15:23:00 +0000

I am continuing to build my framework of evaluating technology. Here's my attempt to explain in further details what I see as the most important factors of success for new technologies.

1) Simple to use [good product]

The world has very simple rules, 'rules like gravity' [1]. Behind the scenes, gravity has very complicated details and sensitivities but what we care mostly on our day to day is the fact that if you drop something, it'll fall down. I believe a good technology should be exactly like that: I press a button on the machine -> it plays music OR I have an armor -> it'll protect me from arrows. This holds for both usage and the results (simple to use, simple to see the outcome).

If you think that's really intuitive and that all technologies are already doing that, you'll be surprised to see how much new stuff cannot be used by myself or by people around me. They're simply too complex and the user manual goes with the lines of: start by doing this, and then change that, while it does that keep pressing X etc etc.

Obviously, simplicity is very relative. For an end user simple might mean plug and play or out of the box setup whereas for a company, simple might mean the involvement of not more than two departments in the integration. In the long run, success will require you to reach 'the mass' so my take on simplicity is: simple enough for the majority of the population.

One possible exception here is the social networks. Humans are amazingly good at dealing with social situations and understanding the complexities behind it. In fact, according to a theory following 'Wason test', anything that's converted to a social context has a much higher chance of being understood or solved by humans [2]. Perhaps that's how the all chaotic myspace was successful in generating so much usage ;) So in social networks, the rule of simplicity might not apply after all.

The idea here is that people or companies won't adapt new technologies just because they are cool. Adapting a technology involves a change in behavior. Change has a cost, and liking it might even be discouraged by natural selection [3]. If by using a new technology people don't get enough of benefit to cover their costs, they simply won't use it.

2) Economically sustainable [good business model]

Another trivial one eh? Unfortunately, we'll always remember the dot-com bubble with any remarks on sustainability in technology. Oh well...

The rule is simple: for a technology to be successful (remember my definition of success), it needs to be creating positive economical value. This will almost always mean profitability. However, the timespan for different players will differ: for a company it'll be quite a short term like 1-3 years, and for a government it might be longer terms like decades.

To understand the timespan issue better, think of projects like longer lives of citizens or protection of environment. We know that we can produce more stuff with the current climate conditions than the ice age -> we're economically better off if we don't go into an ice age, thus environmental technologies might be successful.

You should get back more than you put in, and that way you can continue your existence.

3) Marketed successfully [good execution]

This is my favourite, and probably the one that receives much less attention than it deserves. Execution does make a difference. Some technologies which actually fulfill the above 2 criteria never become success, simply because of execution mistakes. For example, if enough people aren't aware of a technology it's extremely hard for that one to become a success.

There are many things that can go wrong in the execution: unqualified management, bad planning, wrong timing, poor cash flow management, hostile competitors, so on and so forth. I won't go to any further details, if you wish to learn more a really good starting point is 'The Art of the Start' by Guy Kawasaki.

Arguably, the excellent example of a failure because of execution is Webvan. This is open to discussion, overall I believe they had the above 2 criteria right but failed miserably on their execution. Too fast, too much, no experience are a few of the reasons for their failure. Sad story.

So far I've defined success and its necessary ingredients. If history repeats itself, it's best to look at the past to try to catch some patterns before looking into today and the future. That's what I'll do next.

[1] From The Matrix, Morpheus and Neo fight scene

[2] Try this:

You are shown a set of four cards placed on a table each of which has a number on one side and a coloured patch on the other side. The visible faces of the cards show 3, 8, red and brown. Which cards should you turn over in order to test the truth of the proposition that if a card shows an even number on one face, then its opposite face shows a primary colour?

AND compare to this:

"If you are drinking alcohol then you must be over 18", and the cards have an age on one side and beverage on the other, e.g., "17", "beer", "22", "coke", most people have no difficulty in selecting the correct cards ("17" and "beer").

The answer to the earlier one is 8 and brown.

[3] Imagine you have two monkeys, one likes to try new stuff like new fruits, or different techniques in jumping between trees, the other just does what its ancestors have been doing for years. Intuitively, the one who likes change seems to be in higher danger of dying and thus not being able to pass his genes on. I'm sure there will be cases where liking change is encouraged by natural selection, such as in changing environment conditions, but generally I believe liking change is discouraged. I am not aware of any scientific research proving this though.

Photo credit: edwin.11

Hello World!

noreply@blogger.com (Ari Kesisoglu) — Wed, 31 Dec 2008 12:40:00 +0000

This is my very first blog post and hence the common title.

I'm an avid technology fan, and want to speculate about the today and tomorrow of the technology in my blog. I'd like to highlight the word 'speculate' here - I work in the industry but these are my own ideas not always based on facts or research.

A good start is always defining what you're talking about. Many people today use the term technology to represent information technology or electronics. However, these are just a subset of tech. I'll use Wikipedia's definition: Technology is a broad concept that deals with an animal species' usage and knowledge of tools and crafts, and how it affects an animal species' ability to control and adapt to its environment.

If you keep this definition in mind, you'll notice that housing is a technology as well as primitive warfare like arches or armors. It actually makes sense to me: the thing that makes humans the dominant species in the world is not really the existence of computers or satellites. It's the fact that we can survive in changing environmental conditions and even change the environment to fit us to some degree.

I'm likely to focus to information technology in my blog, but don't be surprised if I define heating as a technology in any of my posts :) The level we came today shouldn't make us lose sight of what technology really is.

I'm a very impatient person and can't wait to see what will happen next in the arena. I want to speculate about what will happen in the future and comment on today's developments. Before I do that, I'll spend some time in trying to brainstorm around what makes a technology successful. Why some of the technologies are embraced by people while others fail miserably?

That will be my next post. Meanwhile, 'meditate on this, I will' [1].

[1]: Master Yoda, Star Wars II

Photo credit: axoplasm