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Tag: value

Day trading the information stream: Reading and Writing

Published April 1, 2008 by cgerrish

Our filtering of information pouring off the network is starting to resemble the activity of a NASDAQ market maker. A market maker is a buyer and seller in a set of tickers on the electronic market. She’s always looking for pools of liquidity, ways to match up a buyer and sellers in whatever trading or crossing network that provides the acceptable transaction.

We are buyers and sellers of information. Techmeme, Delicious, Twitter, Google Reader, Technorati, The Gang and NewsGang, The NY Times, MSNBC, YouTube, iTunes, Facebook, MySpace, CNN, your favorite Blogs, Meg Fowler, Chris Brogan, KR8TR, Karoli, C-SPAN, The New Yorker, The Public Library, News.com, TechCrunch, Mahalo, Google News, Yahoo News, ESPN, Digg, TWIT, Your personal network, and Your friend’s networks are all pushing information into the marketplace. You choose what to buy. You also sell your own writing, photos, music, films, radio into the networks you have access to, the pools the provide the most liquidity.

Just like a Hedge Fund, or a portfolio manager, we try to put together the best portfolio of feeds, and pick the best stories and pieces out of the stream. The term we hear these days is “curator” or “editor.” But the sense of time is not of the long term investor, but rather of the day trader or the market maker.

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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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Facebook: Love-based Valuation & Poisoning the Well

Published December 1, 2007 by cgerrish

It’s Love (heart)

The temptation of total surveillance is always there, for government and for business. Marketers want the ability to know everything about everyone’s behavior, tastes and buying patterns to target offers and advertising at us. The more they know, the better they can target. Although most businesses need to do more than preach to the choir, they need new converts.

Facebook’s Beacon takes users for granted. Users love Facebook and they love what they can build within the Facebook platform. Love is a strong emotion, and when it is betrayed it can behave in unpredictable ways. Social networks are fragile and Facebook took a big risk with Beacon. More and more, Beacon is being viewed as a betrayal of Facebook’s users. When you think about the valuation of a company like Facebook, the real value is in the love and respect of the users. The technology is a wasting asset that has nominal value. Facebook risked everything with Beacon. The steps they take to recover at this point will determine the future value of the company.

The idea of “love” as a factor in value and valuations came to me from two directions. I heard former quarterback Steve Young talk about what made Bill Walsh’s 49er Superbowl teams so special. Young cited a number of factors, but added that the feeling of love and respect among team members as a key ingredient. It was a conscious coaching strategy that Walsh used to build a winning team. The other source is a talk given by Clay Shirky on software applications, Perl and community-based developer support. His idea is that a strong community can be a more dependable resource for application support than a commercial firm in the business of selling support services. This is certainly true of the Perl, Python, PHP and Ruby communities. It’s also true of applications like WordPress, Joomla and Drupal, and libraries like Prototype and Jquery.

You’ll often hear people joke about the special ingredient in some recipe being ‘love.’ We laugh, because we think of love as being insubstantial, in some ways without physical presence or value. But if we take it for granted, the joke’s on us.

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