Bruce MacVarish Notes

Creating Value from Information Assets

To Facebook, you're worth about $81. Your friendships are worth $0.62 per connection. Each “Like” or post is worth about $.03. When added up, information generated from your (and all other Facebook users')  friendships, likes, posts and pages accounted for $68B in Facebook's planned IPO.

From the WSJ post on how Facebook creates and values information:

The Financial Value of Facebook’s Information Assets

"The value of all the information Facebook collects is in the hinterland between its reported balance sheet book value of $6.6 billion and the anticipated post-IPO market value. Facebook is a pure information-based business; it doesn’t buy, make or sell anything else. Using Facebook’s own conservative valuation of $75 billion, its information value gap is more than $68 billion.

What information has Facebook collected from you and me? Facebook reports it has 845 million Monthly Active Users (“MAUs”) as of December 2011, up from 608 million in 2010 and 360 million in 2009. Facebook claims users punch the “Like” button or post a comment 2.7 billion times per day. Estimates suggest about half of those are “Likes” and half are some form of written content. Based on Facebook’s recent trajectory, this extrapolates to 2.11 trillion pieces of monetizable content collected during the past three years. Facebook’s filing also discloses that it has 37 million pages with 10 or more “Likes,” while other sources indicate Facebook hosts nearly 22,000 business pages. Its 845 million users, each with an average of 130 friends, equates to 109 billion friendships. Facebook’s S-1 corroborates this figure as “over 100 billion friend connections.”

Dividing Facebook’s 2.11 trillion pieces of content into this market-to-book valuation differential indicates that each “Like” you click or item you post will be worth about $.03 to Facebook or its future investing public.

Because Facebook actually generated $3.7 billion on these information assets last year, the realized value of its information portfolio is only 1/20th its investor-anticipated potential. Facebook and its investors plainly expect this gap to be closed through its information monetization capabilities. Information value gaps aren’t unique to Facebook — Google and other information-centric businesses experience the same gaps."

How is your business creating value from the information you and/or your users generate while using your product?

"Most organizations do not benefit from a global pool of data-churning staff and a pure information-based business model. But to remain competitive, they must continually become more information-centric. This starts with CIOs considering what sources of information are available both internally and externally, envisioning how this information can be deployed in transformative ways, and valuing and managing information as an actual corporate asset."

Want to start finding the answer?   Read just about anything written by Hal Varian including "Information Rules".

Frames and the Personal Cloud

Forrester's Frank Gillett recently published a new report on the growth of tablets titled "Tablets will rule the future Personal Computing Landscape"

Of specific interest to me was Frank's view on how tablets and a new form of personal computer they call "frames" will interact with the personal cloud.

"We predict a new form of PC, called frames, that will rise as a result of tablets and other technology innovations and why tablets will cannibalize laptops but not the new forms of desktop PCs."

This graphic illustrates the interaction between personal mobile devices like phones and tablets with (i) a desktop "frame" for productivity and creation and (ii) the personal cloud.  

I like the vision ... and believe in the opportunity of synchronized, brokered and context-aware personal cloud services that power today's and tomorrow's mobile devices.

How we access the Web

David Beckemeyer has published an insightful comparison of how people access the web today and how it has changed in the last two years.  

Check out these two graphics from David.

 

This is how we accessed the Web in 2010:

-97% from desktop, 90% Windows, 3% mobile

 

This is how we accessed the Web in 2012:

-54% from Mobile, 56% iOS, 46% Desktop

As David rightly points out:

"The take-away for me is that not only are we headed into a mobile future, but we are headed, for better or worse, into an Apple future, and we better get used to it. If you take the Mac and iOS combined, Apple now owns 45% of the surfing experience, already surpassing Microsoft Windows at 38% – and it’s only getting worse for Windows, as iPad sales continue to steamroll PCs. This “Android Dominance” meme is utter fiction and wishful thinking. Windows Phone? Get real. Unless you’re fine playing in a niche space, if you’re building a product or service and it isn’t designed with mobile first, it’s time to re-think it – throw out your plans and start over. I’m dead serious. What’s more, if it doesn’t thrive in an Apple-dominated mobile ecosystem, it’s also time to go back to the drawing board."

Mobile (cloud) first in an Apple ecosystem friendly way.

 

Social by Design: Design Thinking & Business

I came across another insightful presentation from David Armano (@armano) ... this time on Design Thinking & Business.

My favorite line:

"Design Thinking gets us thinking holistically and differently".

Social by Design: Design Thinking & Business

View more presentations from David Armano

Personal Media Memory Map

Kristina Loring at Frog Design does a nice job summarizing day 1 of PopTech 2011.

What caught my eye was the Personal Media Memory Map developed by the New York Time’s R&D Lab.

The app takes your basic personal info and creates a personalized map of media relevant to your lifetime by aggregating and curating articles, pictures, posts and other content. 

Check out this video of Alexis Lloyd talking about the challenge of creating these personalized media maps.

 

 

 

The 6 Killer Apps of Prosperity

 

Niall Ferguson identifies the 6 Killer Apps of Prosperity that drove the Great Divergence is wealth creation between the West and the East after 1800.

They include:

1. Competition

2. The Scientific Revolution

3. Property Rights

4. Modern Medicine

5. The Consumer Society

6. The Work Ethic

In essence, it came down to Ideas and Institutions.

So some questions come to mind:

• What new Ideas and new Institutions will drive wealth creation in the next 100 years?

• How might the "Ideas and Institutions" model be applied to creating wealth for companies and individuals?

• Who (nations, business, individuals) are defining and implementing the new killer apps of prosperity for this century?

 

Google Unlocks Voice Data

Google announced that starting today, you can download a copy of all your Google Voice and other communications data.  

This is a huge move by Google that unlocks new value for end users, for application vendors and advertisers by enabling new ways to benefit from our communications and conversation data.

The value of voice communications is no longer found in the connecting of conversations but rather in the data, analytics and relevance derived from the conversation content.

 

 

 

Cupcake Model of Product Strategy

Is your product strategy a "Cake" or "Cupcake"?  

From Brandon Shauer at Adaptive Path -

 

Creative Leaders

A Knowledge @ Wharton study on why creative people can lose out on leadership positions found that creativity is the single most important quality for success today.  

Yet, the study found that when it came to hiring and promoting practices, today's businesses consistently marked down the creative managers and bypassed them, selecting less creative types.

We are in the midst of transition from an industrial economy to a networked information economy.   As a result,  the sources of value creation and growth are also shifting from natural resources and industrial capital to information resources and creative networked capital.   I'm not the first to highlight this, but here are a few earlier posts on the topic if you're interested:

extracting new value from data,

the value of data 

strategy in the Edge Economy

the creative value of Data + Design

I believe this is a big deal as new companies are formed and incumbents look to redefine themselves in new growth markets.

Creative Leaders understand how value creation is shifting away from our industrial legacy resources toward business models and architectures optimizing resources found in networked information.  For more context, here's an excerpt from a recent Forbes article on "Why Steve Jobs Couldn't Find a Job Today"

"The argument goes that America was blessed with lots of fertile land and abundant water, giving the country a big advantage in the agrarian economy from the 1600s into the 1900s.  

During the Industrial economy of the 1900s America was again blessed with enormous natural resources (iron ore, minerals, gold, silver, oil, gas and water) as well as navigable rivers, the great lakes and natural low-cost transport routes.  A rapidly growing and hard working set of laborers, aided by immigration, provided more fuel for America’s growth as an industrial powerhouse.

But now we’re in the information economy.

Those natural resources aren’t the big advantage they once were. Foodstuffs require almost no people for production.  And manufacturing is shifting to offshore locations where cheap labor and limited regulations allow for cheaper production.  And it’s not clear America would benefit even if it tried maintaining these lower-skilled jobs.  

Today, value goes to those who know how to create, store, manipulate and use information.  And success in this economy has a lot more to do with innovation, and the creation of entirely new products, industries and very different kinds of jobs.

Unfortunately, however, we keep hiring for the last economy.  While we “get” the need for innovation, we don’t seem to understand much about how to “do it.”

Are you a Creative Leader?   Do you understand the new rules of value creation in the networked information economy?  

If you are hiring a leader, are you hiring an industrial-age leader or a networked information-age leader?  

Research would say your company's success or failure will depend on your answer.

Innovation is saying 'No' to 1,000 things

"People think focus means saying yes to the thing you’ve got to focus on.  But that’s not what it means at all.

It means saying no to the hundred other good ideas that there are.  You have to pick carefully.

I’m actually as proud of the things we haven’t done as the things we have done.

Innovation is saying ‘No’ to 1,000 things." - Steve Jobs

Here is a video of Nike CEO Mark Parker talking about "editing" at Nike.

 

check out Zurb's post on Jobs and Nike CEO Mark Parker - http://bit.ly/oI1vWh 

VMware's Journey to Cloud Applications

By now you've seen the news that VMware has acquired Socialcast as a complement to their recent purchases of Sliderocket and Zimbra.  Add in the launch of their own Horizon App Manager and VMware has some interesting building blocks for enterprise cloud applications.

With the move on Socialcast, they continue to invest aggressively in the next wave of cloud based enterprise collaboration solutions.

To understand VMware's vision for enterprise collaboration, it is worth reading CTO Steve Herrod's reasoning for the Socialcast acquisition:

"First, let’s step back and look at today’s approach to enterprise communication. For the last 30 years, personal computing has primarily focused on automating the metaphors of the pre-digitized workplace including the “inbox” and “outbox” tray, manila folders, and printed documents. We’ve largely replaced printed memos, mail carts, and filing cabinets with documents, email, and file shares. These tools have dramatically improved our productivity, but the increasing volume of information can be overwhelming and requires manual prioritization and organizational work to keep up with this data deluge.

While traditional mail- and document-centric interaction will certainly remain critical, there are new approaches to collaboration taking root that better exploit the paradigms of the web. For example, communication is increasingly iterative, with fine-grained interaction replacing letter-like back-and-forth. Furthermore, these activity streams increasingly take place across dispersed groups of informally linked collaborators rather than following the boundaries of a formal organization hierarchy. And in today’s frantic world, the information in these activity streams should only interrupt the right people at the right time… and of course be safely archived and searchable. In summary, there is an opportunity for improved collaboration across a company that can drive new levels of productivity and employee satisfaction.

So to summarize Steve's points on the new wave of collaboration, he focuses on how collaborative communication is changing:

- Communication is iterative

- Communication streams occur across informally linked collaborators

- Communication should interrupt the right people at the right time

- Communication streams should be safely archived and searchable

These are all great points and ones I embrace and support.   I like the vision and see how their acquisitions fit together accordingly. 

But, for me, it still begs the question

"Why is VMware moving into the enterprise collaboration space at all?" 

As I look at VMware's industry, company and product positions, along with their acquisitions and push into the enterprise collaboration market, it is clear their strategy is to use their leadership in infrastructure virtualization to address the bigger customer pain point around cloud applications and services.

VMware is the leader of infrastructure virtualization.  Today it is their core business.   Yet, as they continue to grow their core business, I believe they see even more growth beyond infrastructure.  A larger opportunity for growth is tied to applications.  

VMware sees themselves helping enterprise customers on a journey from on-premise independent infrastructure to virtualized, cloud based applications and services.

As VMware has conversations with customers about infrastructure pain points and how virtualization and the cloud architecture offer solutions, they are also hearing about the next set of pain points for enterprise IT organizations related to applications.   Large enterprise customers are trying to figure out:

1. Should I migrate my enterprise applications to the cloud?

2. If yes, which applications should I move, and how fast?

3. Which applications will need to be rewritten for the cloud?

4. Which applications will never be provided from the cloud?

5. Which new cloud based applications can improve performance?

Most large enterprise customers intend to use savings gained from infrastructure virtualization to fund the migration and rewrite of legacy applications to be hosted or provided from the cloud.

So as VMware talks with their enterprise customers about virtualization and infrastructure, it is natural for the conversation to include the bigger challenge of applications.   As a result, VMware has the opportunity to talk about when,which and how to migrate existing applications (#1-#4 above) to the cloud AND - more specifically related to their acquisition of Socialcast - offer new cloud based applications that can improve productivity (#5 above).  

VMware is leveraging their core business and competencies to extend into the near adjacent markets of enterprise cloud applications to accelerate growth.  

As VMware lead their customers on a journey to the cloud, having "proof-point" cloud applications will help customers see the value, productivity and ROI of their journey while positioning VMware for new growth. 

VMware's M&A strategy is grounded in their industry, company and market position while aspiring to new, adjacent growth opportunities.  From this perspective, I see why VMware is interested in the enterprise cloud collaboration space?  

We should expect to see additional moves and investments by VMware as they pursue their own journey from infrastructure virtualization to cloud applications.

Microsoft + Skype: Video as common as email or IM

If there was a central vision being offered by Ballmer and Skype CEO Tony Bates on Tuesday, it was this:

"They want to make Internet video calls as common as email or instant messaging."

The Value of Average Influencers

Liz Gannes interviews Duncan Watts about a number of topics included in his new book "Everything is Obvious".

I found his perspective on the challenges, reality and research focused on "Influencers" very interesting (about 3:17).  

He suggests it is very difficult to identify the very few people that have strong influence in the network... and the results are often disappointing.

Instead, Watts sees research on influence moving toward finding the very many people that have "some" level of influence in the network.  

It would seem that Watts sees more value in finding the "average many" influencers instead of the "vital few".

 

 

Human Behavior as the start of Social Design

Jenn Webb interviewed Paul Adams in prep for Web 2.0 Expo scheduled for later this month.  

The interview is well worth a read. You should also keep an eye out for Paul's forth coming book titled "Social Circles" (I've already pre-ordered).   

One of many interesting quotes from Paul's interview includes: 

"Our (mobile) phone, or whatever we carry around with us, will probably be our primary source and producer of social media data, so it's important that when we use it, we're not burdened by its place in the ecosystem — for example, by seeing constant privacy controls or too many invasive alerts."

Paul Adams, Global Brand Experience Manager, Facebook

For me, it is interesting to think about his reference to "whatever we carry around with us will probably be our primary source of social media data".  

What about you?

 

Not all Graphs are the same

Chris Dixon, CEO of Hunch, recently presented at a GoogleTechTalk at the Google New York office.

Chris talked about the value of Graphs ... as in social, communications, intention, taste graphs ... the evolution toward Graph Wars ... and strategic choices important to developing graphs.

 

I was particularly interested in his question:

"How are Communication Graphs related to Social or Taste Graphs?"  

While there may be some overlap in "nodes" that appear across all 3 graphs, there are many "nodes" that are distinct.  As a result, we should expect to see the use of each graph as the source for distinctly different services for users.

Because not all Graphs are the same, the value of network analysis and new graph based services will continue to grow.