Subba’s Serendipitous moments

October 28, 2010

Extrapolating the past Vs Inventing the future.

Filed under: Business,Innovation,Leadership,Learning,Perspective,Strategy — Subbaraman Iyer @ 10:41 pm
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Vinod Khosla –a co-founder of Sun Microsystems and its first Chairman is a highly respected Silicon Valley investor as the general partner of Kleiner Perkins. Over the last few years, he has moved away from technology to Energy and Greentech.

Yesterday he delivered an interesting talk at Caltech on Extrapolating the past Vs Inventing the future. The talk was peppered with some brilliant statements, some philosophical musings and scenarios for the future. I found the talk scintillating The entire talk can be viewed here. (The audio quality at the beginning of the session is poor quality, but when Vinod begins his talk, the audio quality is excellent)

Here are some of the excerpts:

Extrapolating the past is ridden with mistakes starting from forecasts:

On why forecasts go wrong (he talks about a number of forecasts that’s gone completely haywire:

Assumptions get embedded in our system. We don’t question our assumptions. Forecasting is about our embedded assumptions not explicitly stated.

On quantitative modeling:

Chasing the false precision, chasing the 3rd order effects

Input the measurable, ignore the immeasurable

Obscured embedded assumptions.

He concludes the section after giving several instances by saying that “The more rapid the change, the less likely are the assumptions to be right”.

On why inventing the future is absolutely critical:

He starts by explaining the Black Swan effect giving several examples and declares that much of what we assume to be true is retrospective predictability. Some great statements that he makes:

Improbable doesn’t equal unimportant and the only thing that’s important is the improbable.

No matter where you look, there’s room for innovation, however unlikely it looks

Bring me the ideas that has a 90% chance of failure!

If you take enough shots at the goal, failure doesn’t matter; it doesn’t exist.

“Imagine the possible”.

His final words in response to a question from the audience sums it all: “The talk is just to give a perspective; but most importantly is to convey an attitude”.

Well said, Sir !

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October 26, 2010

Ray Ozzie’s new memo to Microsoft

Filed under: Business,Model,Strategy — Subbaraman Iyer @ 3:58 pm
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Ray Ozzie is a legend. Bill Gates rated him as one of the five best programmers in the world. Ray created Lotus Notes – the popular email and collaborative workspace solutions in the world. Ray succeeded Bill Gates as the Chief Software Architect when Bill decided to leave Microsoft. He is truly a visionary and I had found his earlier memo The Internet services disruption very interesting

Now as Ray prepares to leave Microsoft, he has penned a farewell memo titled Dawn of a new Day. It makes interested reading as he explains several new shifts about where the “post PC world” is headed.

When I read both the memos I get a feeling that despite the 5 years that he spent there and his exhortation for changing, he hasn’t been effective enough. After his routine praise of Microsoft, he makes a subtle but pointed criticism of Microsoft’s business model when he says:

Yet, for all our great progress, some of the opportunities I laid out in my memo five years ago remain elusive and are yet to be realized.

Certain of our competitors’ products and their rapid advancement & refinement of new usage scenarios have been quite noteworthy. Our early and clear vision notwithstanding, their execution has surpassed our own in mobile experiences, in the seamless fusion of hardware & software & services, and in social networking & myriad new forms of internet-centric social interaction.

There is also a veiled pointer to Microsoft’s seemingly glaring weakness of not being able to conceive the future when he says:

In our industry, if you can imagine something, you can build it.  We at Microsoft know from our common past – even the past five years – that if we know what needs to be done, and if we act decisively, any challenge can be transformed into a significant opportunity.  And so, the first step for each of us is to imagine fearlessly; to dream.

The one irrefutable truth is that in any large organization, any transformation that is to ‘stick’ must emerge from within.  Those on the outside can strongly influence, particularly with their wallets.  Those above are responsible for developing and articulating a compelling vision, eliminating obstacles, prioritizing resources, and generally setting the stage with a principled approach.

But the power and responsibility to truly effect transformation exists in no small part at the edge.  Within those who, led or inspired, feel personally and collectively motivated to make; to act; to do.

In taking the time to read this, most likely it’s you.

At times, it almost seems that he is endorsing Google’s strategy and technology approach.

October 21, 2010

Facebook overtakes Google in eyeballs. What next?

Filed under: Uncategorized — Subbaraman Iyer @ 8:06 pm

 

Ever since I made the rather controversial statement in Feb 2010 in a public forum in Singapore that Facebook will overtake Google from a traffic point of view before 2011, I have had some interesting conversation with a variety of people. I guess I misjudged. As of Sept 2010, Facebook had overtaken Google in terms of eyeballs.

Not surprisingly, it also has the largest page views and leads the 2nd contender by a huge measure. Will the people and eyeballs create a business model that can be potentially be bigger than Google which has current annual revenues of U.S.$27 billion? That’s the big question!

I have also said that while they may compete for advertising dollars, Facebook’s model lends itself to both advertising,   entertainment and commerce as it becomes the Internet.

Facebook has indeed the potential to dominate everything that we do on the Internet and I just list 2 main revenue opportunities here:

The advertising revenue model:

Facebook’s advertising revenues (its only revenue stream) was projected to end up at $1.5 billion in 2010 which is an incredible increase from $635 million. My reckoning is that it may even cross the $2 billion mark in 2010 itself.

The biggest advertisers have boosted spending by at least tenfold in the past year as Facebook crossed the 500 million users mark.  "Two years ago the big brands were experimenting with us, they started buying with us a year ago. Now, they’re going big." said Facebook’s COO Sheryl Sandberg in a recent interview.

If this be true, then Facebook has an accelerated growth trajectory ahead than what Google had during their initial years. As far as advertising is concerned, Facebook provides the demographic characteristics and interests, an increased social engagement through social graph and these are the buying criteria which marketers have traditionally been used to. So Facebook becomes the platform of choice foe marketers to reach a broad online audience. On the contrary Google’s target is based on the search intent and while Google is making search better by predictive technology, it could still lag behind the Facebook model.

My reckoning is that Facebook’s advertising revenue model may come more at the expense of TV advertising than the text advertising. Facebook can always create an equivalent of Google’s Adsense and AdWords model and draw some revenues from Google. I expect this may be a $10-12 billion business in 5 years.

The entertainment revenue stream:

With the success of Zynga and several other gaming companies like EA choosing Facebook as the platform, it is only a matter of time before every other gaming and virtual goods service embrace Facebook. Facebook earns a cool 30% out of all revenues the gaming revenues and revenues from virtual goods. Based on current run rate, this could be another $5-7 billion in 5 years.

There are several other revenue streams coming out of commerce. An alliance with Amazon, an acquisition of PayPal and this can become the harbinger for all revenue streams coming from commerce.

So, when will Facebook overtake Google in terms of revenues? Your guess is as good as mine! But wait, I am still mentally occupied with the question and will come to some conclusions early next year.

October 11, 2010

If Google’s search speed is not fast enough, try Instant!

Filed under: Business,Innovation,Learning — Subbaraman Iyer @ 4:50 pm
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What does a company that powers 70% of the search market, has over $20 billion in sales relating to search believe the speed of search should be?

Google estimates that a search typically takes the following:

  • 9 seconds to enter
  • 0.8 seconds for data transfers between the data centers
  • 0.3 seconds for processing.
  • The users then spend 15 seconds choosing the link that the search results show up.

If anyone believes that this is a slow performance, Google Instant comes your way. It saves the average user 2-5 seconds per search via instant results, enhanced predictive technology and scroll-to-search functionality.

Google Instant will search at the speed of thought. Or at the speed of serendipity.

If every Google user used Instant, it would save 3.5 billion seconds a day. In other words that is 11 hours saved every second.

Now of all the great engineering prowess that Google deploys to make Google Instant, it is the predictive technology aspect that’s intriguing, deeply unsettling and maybe a big game changer. The search attempts to predict exactly what a user wants, showing the results that it thinks he wants in grey text, allowing him to choose. So, even if a user doesn’t know exactly what he’s looking for, the top prediction is shown in grey text in the search box and the user can stop typing as soon as he sees what he needs.

So, a search is a real time stream enabling the user to see more search results.

It essentially could mean that different people would see different search results for the same query. This could be just the beginning. The search results could again vary depending on the device from where the search is initiated or even by location.

This  means the world of search is just not getting faster, but incredibly complex.

Well, all the marketers and SEO gurus have to change. Sites will need to be optimized for letter combinations, not just complete keywords. This also implies that advertisers will have to purchase more keywords in order to optimize performance. More importantly, Google will gain another revenue stream through ad impressions as currently advertisers are not paying for impressions.

I reckon the compelling reason for this development is that Google’s mobile search traffic grew over 50% in first half of 2010 and 1 in 3 queries from smartphones are seeking information about nearby places. Now mobile users would just like to enter a few characters and choose the query from an autosuggestion list. Right now it is difficult to figure out what this engineering feat of Google Instant will mean in terms of revenues.

And I am not sure whether fast is better than good.