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Category: value

From Industrial production and low prices to the digital and no price

Published February 5, 2008 by cgerrish

Xerox Machine

I liked this article by Kevin Kelly so much I thought about copying the whole thing in this blog post. And I suppose I could have taken credit for it by changing the font, or maybe the color of the font, and calling it appropriation like Sherrie Levine or Richard Prince. Copying, reproduction and appropriation are tricky concepts, but Kelly makes some nice progress in thinking through value in the age of digital reproduction.

I particularly liked this quote:

When copies are super abundant, they become worthless. When copies are super abundant, stuff which can’t be copied becomes scarce and valuable.

When the product is digital, it is in its core, super abundant. Kelly’s essay looks for value in other places, in what he calls the “generative.” He defines these as kinds of things that can’t be copied, like trust, immediacy, authenticity, etc. For instance, we will pay for the container that we like. A book exists in many forms, sometimes the traditional hardcover format is just what we want. Other times a digital version is what we need when we’re searching for a particular piece of text. The actual book doesn’t exist outside of its containers.

One reason to posit this range of new manifestations of value is to stop the legal crusades against consumer in an attempt to enforce the economics of scarcity with digital products. If we allow the digital to be abundant, what can we sell? What will have value? Television is freely distributed, it aggregates audiences and sells advertising. Most of the content sites on the web work based on this age old model.

The problem with scarcity is that it’s undemocratic. A scarce resource, if there’s a market for it, sells for a high price. Few can afford it. Mass production and mass consumption of the affordable is where real money is made. It’s that jump from industrial production and low prices to digital reproduction and no price that is confounding. Mass production and digital production will need to combine into a seamless stream of the free and the cheap.

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MS-Yahoo: Can Ray Ozzie Make Elephants Dance?

Published February 3, 2008 by cgerrish

My two cents on Microsoft’s hostile bid for Yahoo: Microsoft, finding itself in the new world of the social graph, needs to buy some friends. People don’t like Microsoft, they fear and respect it. People don’t buy Microsoft products, they buy products that already contain the OS and Office. People choose Yahoo, they choose delicious and flickr. They like Yahoo Finance. And it’s all supported by advertising.

The question about whether Microsoft could successfully integrate Yahoo is a people question. Is there a strong enough personality within Microsoft to envision an entity that creates a new integrated whole. Clearly it’s not Steve Ballmer, and that means it’s got to be Ray Ozzie. Ozzie is trying to move the key Microsoft revenue streams on to the network with his “Live” initiatives. Yahoo is the advertising framework and user base that could contain and support the new web-based Microsoft Office live.

If Ray Ozzie can make elephants dance, many of are wondering who will call the tune. Microsoft is willing to pay $31 a share, but the cost to Microsoft will be much higher if they decide that Yahoo has to be rebuilt on a Microsoft technical stack. That was their approach with HotMail and it was very expensive. Is this the moment in time where Microsoft embraces a mixed technical operating environment? Yahoo is a big supporter of open standards and open source, the community is justifiably concerned about how Microsoft will affect this. When you integrate YahooMail and HotMail, do you make your decision based on technical stack or the quality of the product? Are the decision makers at Microsoft capable of making a decision based on product quality?

Can a shot-gun wedding result in a happy marriage? When we discuss $1 billion in efficiency as a result of the merger, we’re referring to the brutal process of merging groups, firing people, closing facilities and trying to keep the lights on during the process. The digerati of the Bay area and Redmond will be significantly affected by these changes, and it will ripple into the surrounding economies. There will be a lot of pain for both those who stay and those who leave.

It’s up to Ray Ozzie to provide a new vision of the combined entity that will convince those left standing that it was worth it. For the deal to ultimately be successful, Microsoft will have to be transformed as much or more than Yahoo.

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Transparency and Information Asymmetry in Venture Capital

Published January 27, 2008 by cgerrish

Is The Funded going to create transparency and symmetric access to information for both buyers and sellers in the private investing market? TechCrunch says that they’re going to create a database of term sheets. If this works, it’ll change the landscape of private investing.Today venture capital firms have vision into the pricing market, in fact they largely create it. New companies are completely in the dark. How do you decide the right price for equity units in a private company? How does a new company know if they’re getting a good deal, or getting taken? Openness and transparency will change the market and just like with IPO pricing, the status quo will resist the change.

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Design Thinking: Zeldman to Buxton to Gillmor

Published January 16, 2008 by cgerrish

This thread of thought bounced from Zeldman to Buxton to Gillmor.

Jeffrey Zeldman wrote a post about how Apple should hire itself out to fix the awful state of user interface in a number of devices. My immediate reaction was that there’s no reason that good UI should be unique to Apple. Jobs and Ive just start at a different point than most manufacturers. The question really comes down to where the power lies with regard to design thinking in an organization, and at what level design decisions are made (or not made). At Apple the answer is very clear.

This lead me to a lecture by Bill Buxton at Stanford’s HCI program. I wasn’t able to attend in person, but a video of Buxton’s lecture is available through iTunes University. Buxton’s lecture provides the link between industrial design and software interface design– the interface is now part of the form factor. Buxton has been hired to change the design culture of Microsoft. That’s a tall order, but I give them credit for bringing Buxton on board. His ideas about understanding the transitions between states, and the journey from sketching to prototype are very important.

Steve Gillmor chronicles the transition of software applications from the hard drive to the cache / cloud. His latest prediction is that Silverlight will become the rich internet application runtime of choice for the new MacBook Air and the iPhone. Clearly it won’t be Flash or Java. The Ajax apps are already there, but more richness is always better. If Microsoft plays it right, they could find a path into their next incarnation. MS Office may be dead, but Ray Ozzie’s Live Office is yet to be born.

The reason that no phone or computer manufacturer can compete with Apple is they don’t understand what design thinking is or why it’s important to their organization. Phones are designed by a set of pipes, the telecommunications network makes the design decisions. Computer and software interface design is still dominated by the hardware, it’s designed back to front. Until the value of design is understood, and the hardware stops designing the software, Apple will have no competition. It’s all about the ratio of features to features used. Apple leads the field by a mile.

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