The Facts: Dairy Management Inc. is a Government department created by the then President Bill Clinton in 1995 which builds on the Dairy Production Stabilization Act, which was drafted around 1983. This almost-privately run department, with a CEO like leader has a single-minded focus. It is to make Americans eat more cheese and drink more milk. As a consequence of its persistent efforts, a typical American in 2010 eats more than 30 pounds of cheese compared to a third of this amount a few decades back.
People born in the 70s were brain washed into believing that drinking milk is essential to good heath. That cheese is high-protein and hence very essential for humans is an ingrained thought to most of us. Various incarnations of butter, cheese, yogurt and milk stare innocuously at us begging us to consume them, across stores. Problem is, nobody tells you that this is a marketing push by the same department whose sister concerns are lambasting the American public to reduce their cheese consumption and raising concerns about growing obesity due to increased cheese consumption.
On the one hand, the department promotes cheese through Pizza and fast food chains and on the other, as recent NY Times research indicates it also promotes reducing cheese consumption for health benefits. Apparently they are feeding the population with subsidized cheap high calories while blasting them to show more restraint and not fall victim to obesity. I am sorry I don't get this at all. A department that has such self-interest in making the most out of its $140 million budget surely is not in a position to talk about obesity. Its easy to see the conflict of interest in this.
The problem is also more inherent to how capitalism has evolved in the last hundred years. While losses, in terms of health-care costs and obesity concerns, have become public, the profits, from rising dairy production, are private. Much like the banks, who keep their profits but rub their losses on public through threats (real or perceived is up to the reader to decide) of systemic collapses, these institutions have the mandate to increase dairy consumption but also "fight" public health concerns.
Except for the astute observer, such things largely go unnoticed by the general public. Praise needs to be bestowed upon NY Times for bringing such issues out. This is exactly what journalism was born to do. In open democracies, transparency only comes from media when our representatives unleash these duplicitous schemes on the public. In the end, its up to us to decide whether eating that double-cheese crusted pizza will increase our health-care bills or not. If we don't show that restraint, I guess we cant criticize the Government for not reforming the health care issues. But what about those marketing campaigns I saw as a kid which made me say cheese? Marketing should be left to the businessmen themselves and not pushed by the Government. If a Govt. Department markets dairy products aggressively, and makes deals with chains like Dominoes, to push more cheese, they have no ground to tell the same public not to eat that cheese.
Monday, November 15, 2010
Wednesday, November 3, 2010
Why Meg Whitman Lost...
Meg Whitman turned eBay into what it is today, the biggest auction site on the planet. I like eBay, I bought loads of stuff there and except a glitch or two, the marketplace mechanism she put in place pretty much works fine. Meg, who oversaw eBay for a long time, has a reputation for being a tough taskmaster and a very very demanding boss. But very few people who were at her level can claim to be the opposite.
Meg, who apparently never cast a vote until she decided to run for Governor of California, lost quite badly yesterday. Badly not only in terms of votes (she polled around 41% to Jerry Brown's 54%, which is a much bigger spread than the surveys had predicted) but also in terms of return on investment. She spent about $160 million in the 2010 election for a job that would pay about $200,000 a year. Surely she was not doing it for the money cause she made more than enough for herself and her family at eBay. Obviously she was running for Governor either because she really wanted to do something for the public or its just her innate leadership drive. Whatever it is, its a pretty bad loss.
Now, had the Governorship of California been auctioned on eBay, she would have been the highest bidder what with a $160 million bid. Nobody would have come close. Of this money, almost $140 million is her own, that's about 10% of what she made at eBay. Ouch, that's a lot for losing an election. Depending on what your interests are, this type of money can do a lot of things. For Meg, she could have generated loads of jobs by simply investing in California. She could have stayed away from the bloodsport she got bludgeoned in. But that's what drive does I guess.
So, here are a few things I think went against her in spite of the scale of monies involved in this election. Please note that this is the largest personal wealth any person has ever spent on any single election in the history of United States.
1. Out of touch: People on the street had no idea who she really is. I mean, tech industry folks like myself or my friends surely know everything there is to know about her in the public domain, but the minimum wage workers? Nope. They think that she is some wealthy corporate person, who lives in a million dollar mansion in the hills and goes around in chauffeur-driven cars. That's never an image that would help those seeking public office. Sadly, Meg could do nothing about it. She is what she is. She is a legal multi-millionaire, a fact she could not take pride in public because people would always say, "hey, you are rich, what do you know about unemployment?". Due to this, a lot of women could not identify with her. This is reflected by the fact that more women voted for Brown than they did for Meg.
2. No participation in democracy: The fact that Meg never voted, deftly exploited by Brown, only hurt her already out of touch image. It made it look like Meg woke up one fine day and realized that she has a few hundred million to throw around and see if she could become a Governor. She has nothing to do anyway, except maybe give a few talks here and there. Lesson: People who want to run for public office in the future, please start voting from now.
3. Foul campaign: The amount of muckraking done by Meg's campaign is just too much. Yes, Brown did some too (that whole "whore" episode was so bad taste) but maybe Meg could have run a cleaner campaign and could have said what she has in mind for California instead of foul-mouthing how bad Brown is for the state? This makes it a lesser of the two evils situation and given the above two problems of being out of touch and never having voted, totally worked against Meg.
4. Money cant buy me love: Again and again, the major point that Brown hit Meg, where it hurt the most is the fact that she was pumping so much money into her campaign. Even people who don't usually vote know how much Meg spent. This has so badly ricoched on her, she never fully recovered from it. A strange victim of her own success.
5. Maid issue: Finally, the last nail in the coffin that sealed her defeat is the whole drama about her using an illegal immigrant as a maid for years. Less said, the more about this issue. This never went down well with the Hispanic community in California and for the right reasons. Lesson: Maybe Meg would have been better off, had she brought this out herself in the beginning of her campaign? Politics is a bloodsport and such skeletons in the closet will be adroitly manipulated by the opponents.
In the Republican wave of 2010, when the house was lost and major Senate gains being made, it must be really disappointing for Meg to loose. Maybe Mark McCormack can update his best-seller on "what they dont teach you at HBS" and include a chapter on "winning the public mandate" since clearly HBS did not teach Meg that. And if he does update, I will bid for the book on eBay.
Meg, who apparently never cast a vote until she decided to run for Governor of California, lost quite badly yesterday. Badly not only in terms of votes (she polled around 41% to Jerry Brown's 54%, which is a much bigger spread than the surveys had predicted) but also in terms of return on investment. She spent about $160 million in the 2010 election for a job that would pay about $200,000 a year. Surely she was not doing it for the money cause she made more than enough for herself and her family at eBay. Obviously she was running for Governor either because she really wanted to do something for the public or its just her innate leadership drive. Whatever it is, its a pretty bad loss.
Now, had the Governorship of California been auctioned on eBay, she would have been the highest bidder what with a $160 million bid. Nobody would have come close. Of this money, almost $140 million is her own, that's about 10% of what she made at eBay. Ouch, that's a lot for losing an election. Depending on what your interests are, this type of money can do a lot of things. For Meg, she could have generated loads of jobs by simply investing in California. She could have stayed away from the bloodsport she got bludgeoned in. But that's what drive does I guess.
So, here are a few things I think went against her in spite of the scale of monies involved in this election. Please note that this is the largest personal wealth any person has ever spent on any single election in the history of United States.
1. Out of touch: People on the street had no idea who she really is. I mean, tech industry folks like myself or my friends surely know everything there is to know about her in the public domain, but the minimum wage workers? Nope. They think that she is some wealthy corporate person, who lives in a million dollar mansion in the hills and goes around in chauffeur-driven cars. That's never an image that would help those seeking public office. Sadly, Meg could do nothing about it. She is what she is. She is a legal multi-millionaire, a fact she could not take pride in public because people would always say, "hey, you are rich, what do you know about unemployment?". Due to this, a lot of women could not identify with her. This is reflected by the fact that more women voted for Brown than they did for Meg.
2. No participation in democracy: The fact that Meg never voted, deftly exploited by Brown, only hurt her already out of touch image. It made it look like Meg woke up one fine day and realized that she has a few hundred million to throw around and see if she could become a Governor. She has nothing to do anyway, except maybe give a few talks here and there. Lesson: People who want to run for public office in the future, please start voting from now.
3. Foul campaign: The amount of muckraking done by Meg's campaign is just too much. Yes, Brown did some too (that whole "whore" episode was so bad taste) but maybe Meg could have run a cleaner campaign and could have said what she has in mind for California instead of foul-mouthing how bad Brown is for the state? This makes it a lesser of the two evils situation and given the above two problems of being out of touch and never having voted, totally worked against Meg.
4. Money cant buy me love: Again and again, the major point that Brown hit Meg, where it hurt the most is the fact that she was pumping so much money into her campaign. Even people who don't usually vote know how much Meg spent. This has so badly ricoched on her, she never fully recovered from it. A strange victim of her own success.
5. Maid issue: Finally, the last nail in the coffin that sealed her defeat is the whole drama about her using an illegal immigrant as a maid for years. Less said, the more about this issue. This never went down well with the Hispanic community in California and for the right reasons. Lesson: Maybe Meg would have been better off, had she brought this out herself in the beginning of her campaign? Politics is a bloodsport and such skeletons in the closet will be adroitly manipulated by the opponents.
In the Republican wave of 2010, when the house was lost and major Senate gains being made, it must be really disappointing for Meg to loose. Maybe Mark McCormack can update his best-seller on "what they dont teach you at HBS" and include a chapter on "winning the public mandate" since clearly HBS did not teach Meg that. And if he does update, I will bid for the book on eBay.
Wednesday, September 8, 2010
Idiot Box = A Smart Box...
I wish I watched more TV. Then, I would have realized that there are many ways to optimize the idiot box. For starters, there is search. To jump from one channel to another, even on a set-top box, is a pain. The distance between two interesting channels is always too much. Second, there is no way for me, as a user, to find out where an interesting program is being beamed unless I check some papers or websites, which I will never do. Takes us back to what we do on the web daily, search. Now, had there been a way to directly search on the TV, the idiot box would become a smart box. Just provide a good search bar somewhere on the screen, damn it. But then, TV's don't have operating systems. So, why not create an O/S for TVs?
That's what Google TV is doing. No, Google will not make the hardware but will partner with TV makers like Sony to pre-install the O/S to make TV's smart. And Google will make small boxes (like set-top boxes) that can be hooked to existing TV's so programs can be made searchable. The Google TV then, will have a built-in browser (Chrome, or some mutant version of it) that will help the user easily navigate through the clutter of content, search through the programs to what the user wants to see, help enable them to record and play these programs later. We cant do this now, although we can record on DVRs and that is why Google TV looks so bloody promising. Where Apple failed, Google goes. While Apple TV was a great idea badly implemented, GTV looks like it will redefine the media business slowly but steadily.
Of course there is YouTube, owned by Google. Legions of people daily use this web video service to upload, and watch videos. Google TV will take advantage of this demographic, which is huge. YouTube is already making money, reportedly about $500 million in 2010. If GTV kicks off, this number will reach the sky because GTV will sync perfectly with YouTube, making watching videos even more easier. We dont have to start laptops and desktops to watch videos anymore. Then there are apps. Super cool apps are being built for Android every single day, and these apps will sit pretty in GTV and enhance and enrich the user's television viewing experience. Bottom line, television is finally going to marry Internet and its all coming together by 2011. Video is the fastest growing media on the Internet (check this: 178 million people watched 33.2 billion videos in just one month recently) and Google is neatly positioned to take advantage of that. In the end, watching television and searching for what we want to see is going to be redefined and very soon.
I wish I watched more TV, I probably would have thought about this whole search-bar-in-a-television business long back. I have my excuse, hope you have yours ;)
That's what Google TV is doing. No, Google will not make the hardware but will partner with TV makers like Sony to pre-install the O/S to make TV's smart. And Google will make small boxes (like set-top boxes) that can be hooked to existing TV's so programs can be made searchable. The Google TV then, will have a built-in browser (Chrome, or some mutant version of it) that will help the user easily navigate through the clutter of content, search through the programs to what the user wants to see, help enable them to record and play these programs later. We cant do this now, although we can record on DVRs and that is why Google TV looks so bloody promising. Where Apple failed, Google goes. While Apple TV was a great idea badly implemented, GTV looks like it will redefine the media business slowly but steadily.
Of course there is YouTube, owned by Google. Legions of people daily use this web video service to upload, and watch videos. Google TV will take advantage of this demographic, which is huge. YouTube is already making money, reportedly about $500 million in 2010. If GTV kicks off, this number will reach the sky because GTV will sync perfectly with YouTube, making watching videos even more easier. We dont have to start laptops and desktops to watch videos anymore. Then there are apps. Super cool apps are being built for Android every single day, and these apps will sit pretty in GTV and enhance and enrich the user's television viewing experience. Bottom line, television is finally going to marry Internet and its all coming together by 2011. Video is the fastest growing media on the Internet (check this: 178 million people watched 33.2 billion videos in just one month recently) and Google is neatly positioned to take advantage of that. In the end, watching television and searching for what we want to see is going to be redefined and very soon.
I wish I watched more TV, I probably would have thought about this whole search-bar-in-a-television business long back. I have my excuse, hope you have yours ;)
Thursday, July 29, 2010
Thoughts on FaceBook's Revenue Model...
Another friend of mine posted more incisive questions to my ramblings on Google's precarious Social Network situation. He asked:
"Search Ads make so much money because the focus on "intent". FB/display ads work on 'brand awareness" and "generating intent". Yes, they are important, but monetizing them is hard. If you try too hard(like in Myspace) you end up pissing your users who leave your site.
What happens when this demographic grows up, or when everyone's FB circle becomes sooo huge that it becomes less useful, or if something better comes along? i.e how sustainable is FB?
Let me start off my trying to explain how Google makes money. Google's revenue model is very straightforward. It makes money through:
1. Advertising
2. Search results
3. Sponsored links
4. AdWords/AdSense
I agree that search ads work beautifully because of 'intent'. This means that more people search, more pennies fall into Google's coffers. On FB, people don't 'search'. Yes they do search for friends and groups etc but they don't search the web, they search within FB. So FB cannot monetize 'intent' as neatly as Google can. Regardless, advertising on FB has been growing like a virus in a petri dish. Lets dig deeper and check FB's revenue model in more detail. Those ads that you see on the right side (to the user) of your FB account brought in about $250 million to $300 million Users dont have to do anything on this (well they can click the Like tab and spread the message). These ads can also be custom targeted. For instance, if I am a fan of Beatles on FB, one of these ads could be Beatles' album or a guitar instruction DVD. I think that this revenue model is here to stay. Next, engagement ads, which need user-interaction and sometimes user endorsements brought in another $100 million or so to FB in 2009. These ads need the users to interact with the ad, they could be games that need to be clicked or puzzles or even quizzes (Haven't we all FB boys taken one of those silly "What animal are you" type quizzes at some point or other?). Next, Gifts and virtual goods brought in another $50 or million or so. These could be those ubiquitous and constant birthday reminders and gift suggestions that FB throws at us (quite surreptitiously). Finally, Microsoft which has an agreement in place with FB and sells around $50 million or so worth of banner ads on FB. Please remember that all these ar 2009 numbers.
So if you look really close, you have see that one through three from Google's revenue model above are applicable to FB in one way or another. FB is also smart enough (until now) to not piss us users off like MySpace (what a horrible site that has become) did. Sponsored links will appear as FB as the number of fan clubs and corporate profile pages grow. I think these corporate sites will bring in more revenues in the future. If for instance, Toyota wants to spread a product safety message or market a new technology, FB community would be a great place for such propaganda. A closed private network within the vast Internet. Revenues will keep flowing from that side. What is left is the mega-selling AdWords/AdSense type programs. Here intent plays a huge role, no doubt but I think its probably a matter of time before FB comes up with its own version of FaceWords and FaceSense programs.
Only a certain section of FB users are active on the site. Even if you take that as 40%, it translates to 200 million active users. The site is only a few years old and from what it was it has dramatically changed. As the users grow up, FB will morph itself into something more suitable to that particular demographic depending on the private network within. Basic services such as email, photos/videos uploading will only increase as the Net usage and speed increase. The users will start uploading more and more data to FB and keep throwing it around opening paths to better image searching (on which Google is working hard, even taking cues from rival Bing). So as the demographic matures so will that section of FB along with it, reinventing itself. The bigger the circle of influence gets, the better it is for FB from the perspective of advertisements. True, there could be a lot of chaff in an individual circle but that is users problem not FB's. Whom you add and what you share on your profile is entirely up to you. Such privacy issues will always remain (Whether its email or FB). The onus is on the user to be diligent about what she puts on the network. The safe bet being the assumption that someone somewhere has a copy of that image/document/whatever you put on the Internet. FB is not an exception to this.
Finally, I believe that FB has gained so much traction that something else coming up is really tough. There are so many social networking sites, its daunting to even keep a track (for an exhaustive list and the number of users on each network, check http://en.wikipedia.org/wiki/List_of_social_networking_websites). But FB is easily the most generic and famous among all these. Mail apps like Hotmail has about 350 million users (Yahoo around 170 million or so and Gmail 140 million or so) but FB has 500 million and growing. How will it sustain this growth or where the next 500 million will come from is tough to answer. It could acquire other budding social networks in Europe, increase presence in Asia/Latin America where it is weaker. It might also move into a different direction in terms of services/apps offered. I guess the possibilities are endless when you have 500 million registered accounts on a single network.
"Search Ads make so much money because the focus on "intent". FB/display ads work on 'brand awareness" and "generating intent". Yes, they are important, but monetizing them is hard. If you try too hard(like in Myspace) you end up pissing your users who leave your site.
What happens when this demographic grows up, or when everyone's FB circle becomes sooo huge that it becomes less useful, or if something better comes along? i.e how sustainable is FB?
Let me start off my trying to explain how Google makes money. Google's revenue model is very straightforward. It makes money through:
1. Advertising
2. Search results
3. Sponsored links
4. AdWords/AdSense
I agree that search ads work beautifully because of 'intent'. This means that more people search, more pennies fall into Google's coffers. On FB, people don't 'search'. Yes they do search for friends and groups etc but they don't search the web, they search within FB. So FB cannot monetize 'intent' as neatly as Google can. Regardless, advertising on FB has been growing like a virus in a petri dish. Lets dig deeper and check FB's revenue model in more detail. Those ads that you see on the right side (to the user) of your FB account brought in about $250 million to $300 million Users dont have to do anything on this (well they can click the Like tab and spread the message). These ads can also be custom targeted. For instance, if I am a fan of Beatles on FB, one of these ads could be Beatles' album or a guitar instruction DVD. I think that this revenue model is here to stay. Next, engagement ads, which need user-interaction and sometimes user endorsements brought in another $100 million or so to FB in 2009. These ads need the users to interact with the ad, they could be games that need to be clicked or puzzles or even quizzes (Haven't we all FB boys taken one of those silly "What animal are you" type quizzes at some point or other?). Next, Gifts and virtual goods brought in another $50 or million or so. These could be those ubiquitous and constant birthday reminders and gift suggestions that FB throws at us (quite surreptitiously). Finally, Microsoft which has an agreement in place with FB and sells around $50 million or so worth of banner ads on FB. Please remember that all these ar 2009 numbers.
So if you look really close, you have see that one through three from Google's revenue model above are applicable to FB in one way or another. FB is also smart enough (until now) to not piss us users off like MySpace (what a horrible site that has become) did. Sponsored links will appear as FB as the number of fan clubs and corporate profile pages grow. I think these corporate sites will bring in more revenues in the future. If for instance, Toyota wants to spread a product safety message or market a new technology, FB community would be a great place for such propaganda. A closed private network within the vast Internet. Revenues will keep flowing from that side. What is left is the mega-selling AdWords/AdSense type programs. Here intent plays a huge role, no doubt but I think its probably a matter of time before FB comes up with its own version of FaceWords and FaceSense programs.
Only a certain section of FB users are active on the site. Even if you take that as 40%, it translates to 200 million active users. The site is only a few years old and from what it was it has dramatically changed. As the users grow up, FB will morph itself into something more suitable to that particular demographic depending on the private network within. Basic services such as email, photos/videos uploading will only increase as the Net usage and speed increase. The users will start uploading more and more data to FB and keep throwing it around opening paths to better image searching (on which Google is working hard, even taking cues from rival Bing). So as the demographic matures so will that section of FB along with it, reinventing itself. The bigger the circle of influence gets, the better it is for FB from the perspective of advertisements. True, there could be a lot of chaff in an individual circle but that is users problem not FB's. Whom you add and what you share on your profile is entirely up to you. Such privacy issues will always remain (Whether its email or FB). The onus is on the user to be diligent about what she puts on the network. The safe bet being the assumption that someone somewhere has a copy of that image/document/whatever you put on the Internet. FB is not an exception to this.
Finally, I believe that FB has gained so much traction that something else coming up is really tough. There are so many social networking sites, its daunting to even keep a track (for an exhaustive list and the number of users on each network, check http://en.wikipedia.org/wiki/List_of_social_networking_websites). But FB is easily the most generic and famous among all these. Mail apps like Hotmail has about 350 million users (Yahoo around 170 million or so and Gmail 140 million or so) but FB has 500 million and growing. How will it sustain this growth or where the next 500 million will come from is tough to answer. It could acquire other budding social networks in Europe, increase presence in Asia/Latin America where it is weaker. It might also move into a different direction in terms of services/apps offered. I guess the possibilities are endless when you have 500 million registered accounts on a single network.
Sunday, July 18, 2010
Why Google Needs A Social Network
A good friend of mine posted a very interesting question to my ramblings on Google's hubris. His question is:
"why does it even matter that google hasn't succeeded in social networking in spite of trying? should an aircraft manufacturer also make cars and succeed at it? should a tv network also make tvs or dvrs? some great companies have found it difficult to break into other related ideas. coke used to own a wine business that went nowhere. is there really a danger that google will become irrelevant if it doesn't do social networking?"
I think it matters a lot that Google makes its presence felt in the social networking space. Lets look at an analogy. Think of Microsoft getting into web browsers in mid-90s. Why did it matter to a O/S company to make browsers? It did because at that time Bill slowly realized that the future of IT industry is shifting from desktops to the Internet. Microsoft had to succeed in not only beating Netscape but also in bettering it (although I prefer Firefox to both). It cunningly reverse-engineered Navigator and bundled it in Office. Had Microsoft not gotten into browsers, it would have lost a great opportunity to make its presence felt in the Internet industry. Wonder how the tech world would have been now. Now that cloud computing is here to stay, it only makes MSFT's moves valid.
Google currently is the top dog when it comes to search. And it makes all its money thanks to its efficient search algorithms (thru Adwords and Adsense programs). But the way I see it, the net is growing into an animal the type of which we haven't seen before. For this animal, search will become a menial task. Don't get me wrong, people will still search and search hard for the net is so easy to get lost. We need a janitor who takes us where we want to go. But that's the role of the janitor, it stops there. Social networks offer the higher end services (if not now, in the future) and will make people stay more in their sites and engage users through various apps. Naturally, advertising dollars will shift to places where people hang more. How people navigate will matter less and where people will navigate to will matter more. Hence, its crazily important that a pure web company like Google has a strong presence in social networks, or it will risk becoming a more menial search service provider (not that its inherently bad or anything). This is exactly why Google is scrambling hard with its botched attempts like Orkut, Wave, Buzz and now something else.
If Coke fails in making wine it hardly matters because wine-making is not Coke's forte. But if Coke fails in expanding into other beverages (like filtered water, flavored water, juices, coke variants like coke zero, healthy beverages etc), it will not grow. Now being stagnant is the enemy of Wall St. Already Coke's market is stagnant. It has two basic choices, expand into new markets (China, India, Latin America) and/or move into new product lines. That's why Coke purchased Vitamin water. For Google, geographical expansion is not as important as paradigm expansion. The net's paradigm is shifting through social networks. Google China can take a hit from Baidu but FB has already gained traction across geographies. It does not matter if Apple is not into creating social networks for a business because Apple is not a net company, its a product company. But Google is a pure-play net company who's raison d'etre is the net. So if the net is moving into social networks, it only makes sense for this net company to have a strong presence in the same.
Had Sun gotten into consumer market (since it had some of the best technology/IP/brainpower) and focused on areas that Dell, HP focused on, it would still have existed today. Sun made halfhearted attempts, failed and paid a big price. If Google misses the social networking boat, I believe, that something similar will happen. For Google, the growth will come from controlling as much of the net as possible and its impossible to do this without a strong presence in social media. With FB and Twitter expanding the way there are, its hard to miss their power in Web 2.0.
I could be totally wrong in all this analysis but I sincerely believe in it. My belief only strengthens when I read/hear more about Google's perseverance in making a mark in social media. For a net company, it has to succeed in this space, or it can remain being an usher.
"why does it even matter that google hasn't succeeded in social networking in spite of trying? should an aircraft manufacturer also make cars and succeed at it? should a tv network also make tvs or dvrs? some great companies have found it difficult to break into other related ideas. coke used to own a wine business that went nowhere. is there really a danger that google will become irrelevant if it doesn't do social networking?"
I think it matters a lot that Google makes its presence felt in the social networking space. Lets look at an analogy. Think of Microsoft getting into web browsers in mid-90s. Why did it matter to a O/S company to make browsers? It did because at that time Bill slowly realized that the future of IT industry is shifting from desktops to the Internet. Microsoft had to succeed in not only beating Netscape but also in bettering it (although I prefer Firefox to both). It cunningly reverse-engineered Navigator and bundled it in Office. Had Microsoft not gotten into browsers, it would have lost a great opportunity to make its presence felt in the Internet industry. Wonder how the tech world would have been now. Now that cloud computing is here to stay, it only makes MSFT's moves valid.
Google currently is the top dog when it comes to search. And it makes all its money thanks to its efficient search algorithms (thru Adwords and Adsense programs). But the way I see it, the net is growing into an animal the type of which we haven't seen before. For this animal, search will become a menial task. Don't get me wrong, people will still search and search hard for the net is so easy to get lost. We need a janitor who takes us where we want to go. But that's the role of the janitor, it stops there. Social networks offer the higher end services (if not now, in the future) and will make people stay more in their sites and engage users through various apps. Naturally, advertising dollars will shift to places where people hang more. How people navigate will matter less and where people will navigate to will matter more. Hence, its crazily important that a pure web company like Google has a strong presence in social networks, or it will risk becoming a more menial search service provider (not that its inherently bad or anything). This is exactly why Google is scrambling hard with its botched attempts like Orkut, Wave, Buzz and now something else.
If Coke fails in making wine it hardly matters because wine-making is not Coke's forte. But if Coke fails in expanding into other beverages (like filtered water, flavored water, juices, coke variants like coke zero, healthy beverages etc), it will not grow. Now being stagnant is the enemy of Wall St. Already Coke's market is stagnant. It has two basic choices, expand into new markets (China, India, Latin America) and/or move into new product lines. That's why Coke purchased Vitamin water. For Google, geographical expansion is not as important as paradigm expansion. The net's paradigm is shifting through social networks. Google China can take a hit from Baidu but FB has already gained traction across geographies. It does not matter if Apple is not into creating social networks for a business because Apple is not a net company, its a product company. But Google is a pure-play net company who's raison d'etre is the net. So if the net is moving into social networks, it only makes sense for this net company to have a strong presence in the same.
Had Sun gotten into consumer market (since it had some of the best technology/IP/brainpower) and focused on areas that Dell, HP focused on, it would still have existed today. Sun made halfhearted attempts, failed and paid a big price. If Google misses the social networking boat, I believe, that something similar will happen. For Google, the growth will come from controlling as much of the net as possible and its impossible to do this without a strong presence in social media. With FB and Twitter expanding the way there are, its hard to miss their power in Web 2.0.
I could be totally wrong in all this analysis but I sincerely believe in it. My belief only strengthens when I read/hear more about Google's perseverance in making a mark in social media. For a net company, it has to succeed in this space, or it can remain being an usher.
Saturday, July 17, 2010
The Hubris of Google
Google, an integral part of our Web life, is hardly making any dent in the most exciting field of social networking. Totally out-shined in this sphere by FaceBook (FB), Twitter, and even Linkedin, Google seems to be scrambling for new ideas to make a mark in this space. Both FB and Twitter have a minuscule of resources Google has. Whether its brainpower or pocket depth, Google outguns these two companies put together and then some. Harvard folks call it disruptive innovation but the term has become so cliched these days that I shudder using it. Also, I am not sure if FB and Twitter are disrupting Google because they don't compete directly (search business I mean). Yet, the amorphous nature of the new economy makes companies like Sony and Microsoft work closely on a few things while being at each others neck's in other areas (example: gaming consoles). Apple and Google shared a lovely relationship before Android was born and caused a bitter divorce. Friends in the morning are foes at night and so on.
Google has a miserable presence in the social networking space. First, there was Orkut, then there was Wave, now its Buzz. Through all these avatars, Google failed to build a viable social network. While Orkut could only get popular amongst a certain section in a certain demographic, Wave totally failed to take off, with Buzz being a stillborn. FB has more than 400 million active users, of whom 50% or above log in, any given day and spend over 500 billion minutes per month on Facebook. That's an awful lot of time (even to waste right?) for any company to capture if it wants to. While I don't want to digress into the sociological consequences of this type of usage, its hard not to notice that. Twitter ended 2009 with just over 75 million user account although a majority of Twitter accounts are inactive, with about 25% of accounts having no followers while around 40% or so of these accounts having never sent a single Tweet. But, Twitter is a white-hot medium for companies in their reaching out efforts. FB supposedly captured around $500 million in revenues in 2009 and is projected to be on the path to becoming a billion dollar (revenues) company in 2010. Advertising money is raining on FB. These are massive numbers for a website that lets people interact in a web 2.0 way. Dell and many other companies use Twitter avidly while FB is a darling of many companies (who end their TV commercials directing users to FB). Web is moving from being a search-able vault to being a private network, which allows users interact through any media (audio, video, files) they like. FB and Twitter are succeeding in building these private networks but Google does the menial task of being a search service provider.
If Google never tried in this space, it would have not mattered. But Google tried, hard. Orkut is a wannabe, it never captured a sizable market in the US or Europe. For some reason, its only famous in Asia and that too among a certain demographic. Google Wave (from a user experience) was a confused product, with no proper utility but some cool features. Who cares if it has sexy technology? As a user, its useless for me. Seems like, Google must have thought "wait a minute, what is FB anyway? It lets people share pictures (we have Picasa), it lets people email (We have Gmail), it lets people share videos (we own YouTube), it lets people update their status (they can do that in Gmail too), so lets put it all together and have a whole web in Wave with a search bar that lets users search the web while they are at it. Sorry, does not work. Wave is a confused and useless product that fails to generate any user interest what-so-ever. Next, Google comes up with Buzz. What is Buzz anyway? I still fail to understand it till today. Is is just mixing Gmail with Wave and then adding Picasa with a search bar on top? But that is Wave. I am lost by this point and I give up trying to define Google's social media initiatives. Bottom line, Google has a confused, botched up and muddled strategy in the single-most interesting aspect of Web 2.0
Google also seems to positively hate FB. I am not surprised. Its like Microsoft banning all its employees from carrying an iPhone. Never underestimate the power of denial. If Steve Ballmer says iPhone is trash compared to a Windows Mobile phone, he means it because he is delirious. If Google's triumvirate management thinks that FB is trash and social media is a trend, they mean it too. Its called, disconnection from reality.
The web is moving into a strange direction. Internet is the ultimate democracy. The whole world saw what happened during Iranian revolution, thanks to Twitter. There are more users on FB than there are human beings in the United States. That is something. Its hard to ignore. More recently, its heard that Google is trying to consolidate Orkut, Wave and Buzz under one single umbrella and give it another shot. But the social media train has left the station and Google is left behind. Nevertheless, Google has terrific new areas to be excited about (such as Smart phones through Android and net-book O/S thru Chrome) and also has a vital role to play in web 2.0 thanks to its YouTube acquisition. If Microsoft could be smart enough to invest in FB, why did Google miss out?
Google, being a hardcore engineering company, is filled with some of the best brain power there is on Earth. There is also some amount of justified pride in being Google, for all the greatness it accomplished in the last decade. But pride can easily turn into hubris. By neglecting this vital medium, Google might have shown what ancient writers have seen in great heroes. Because its so good at what it does, Google never looked at the social media seriously enough and that probably why it failed to build a viable presence in social media. I would love to be proven wrong in the coming few years, but for now social media networks seems to be the hubris for this hero, a sore tendon on the great Achilles.
Google has a miserable presence in the social networking space. First, there was Orkut, then there was Wave, now its Buzz. Through all these avatars, Google failed to build a viable social network. While Orkut could only get popular amongst a certain section in a certain demographic, Wave totally failed to take off, with Buzz being a stillborn. FB has more than 400 million active users, of whom 50% or above log in, any given day and spend over 500 billion minutes per month on Facebook. That's an awful lot of time (even to waste right?) for any company to capture if it wants to. While I don't want to digress into the sociological consequences of this type of usage, its hard not to notice that. Twitter ended 2009 with just over 75 million user account although a majority of Twitter accounts are inactive, with about 25% of accounts having no followers while around 40% or so of these accounts having never sent a single Tweet. But, Twitter is a white-hot medium for companies in their reaching out efforts. FB supposedly captured around $500 million in revenues in 2009 and is projected to be on the path to becoming a billion dollar (revenues) company in 2010. Advertising money is raining on FB. These are massive numbers for a website that lets people interact in a web 2.0 way. Dell and many other companies use Twitter avidly while FB is a darling of many companies (who end their TV commercials directing users to FB). Web is moving from being a search-able vault to being a private network, which allows users interact through any media (audio, video, files) they like. FB and Twitter are succeeding in building these private networks but Google does the menial task of being a search service provider.
If Google never tried in this space, it would have not mattered. But Google tried, hard. Orkut is a wannabe, it never captured a sizable market in the US or Europe. For some reason, its only famous in Asia and that too among a certain demographic. Google Wave (from a user experience) was a confused product, with no proper utility but some cool features. Who cares if it has sexy technology? As a user, its useless for me. Seems like, Google must have thought "wait a minute, what is FB anyway? It lets people share pictures (we have Picasa), it lets people email (We have Gmail), it lets people share videos (we own YouTube), it lets people update their status (they can do that in Gmail too), so lets put it all together and have a whole web in Wave with a search bar that lets users search the web while they are at it. Sorry, does not work. Wave is a confused and useless product that fails to generate any user interest what-so-ever. Next, Google comes up with Buzz. What is Buzz anyway? I still fail to understand it till today. Is is just mixing Gmail with Wave and then adding Picasa with a search bar on top? But that is Wave. I am lost by this point and I give up trying to define Google's social media initiatives. Bottom line, Google has a confused, botched up and muddled strategy in the single-most interesting aspect of Web 2.0
Google also seems to positively hate FB. I am not surprised. Its like Microsoft banning all its employees from carrying an iPhone. Never underestimate the power of denial. If Steve Ballmer says iPhone is trash compared to a Windows Mobile phone, he means it because he is delirious. If Google's triumvirate management thinks that FB is trash and social media is a trend, they mean it too. Its called, disconnection from reality.
The web is moving into a strange direction. Internet is the ultimate democracy. The whole world saw what happened during Iranian revolution, thanks to Twitter. There are more users on FB than there are human beings in the United States. That is something. Its hard to ignore. More recently, its heard that Google is trying to consolidate Orkut, Wave and Buzz under one single umbrella and give it another shot. But the social media train has left the station and Google is left behind. Nevertheless, Google has terrific new areas to be excited about (such as Smart phones through Android and net-book O/S thru Chrome) and also has a vital role to play in web 2.0 thanks to its YouTube acquisition. If Microsoft could be smart enough to invest in FB, why did Google miss out?
Google, being a hardcore engineering company, is filled with some of the best brain power there is on Earth. There is also some amount of justified pride in being Google, for all the greatness it accomplished in the last decade. But pride can easily turn into hubris. By neglecting this vital medium, Google might have shown what ancient writers have seen in great heroes. Because its so good at what it does, Google never looked at the social media seriously enough and that probably why it failed to build a viable presence in social media. I would love to be proven wrong in the coming few years, but for now social media networks seems to be the hubris for this hero, a sore tendon on the great Achilles.
Sunday, June 20, 2010
Killed by Ignition
We are living with legacy transportation systems, while alternatives are available. We are demanding inefficiency while smarter choices exist. These choices will hopefully create a dent in the demand-side of the hydrocarbon value chain and help create an economy that will focus more on fuel that will not end this civilization soon. Driving an SUV in this time and age is like using a mainframe to update my blog. Its like spending $20 per minute calling India from the US while there are alternatives that cost a cent. But when it comes to cars, somehow we are blind to these alternatives. We refuse to believe that smarter choices are available and if we know that smarter choices are available, we refute to promote them.
We need to divorce the internal combustion engine from hydrocarbon energy and we need to do this on a war-footing. An obsolete technology, this engine wastes about 90 cents on a dollar. This is due to the fact that only about 10% of a gallon is used to propel the vehicle/driver forward, while the rest of it is wasted in various operational aspects of the engine ending up as heat and exhaust.
The most simple thing to do is to demand more fuel-efficient vehicles. But we are all caught in the web of form not function, style not substance. Hence, a lot of people think its cool to buy SUV's and sports cars which suck gas like a starving vampire would suck blood. The car companies (especially the big three in the US) are culpable for promoting a lifestyle that derives self-identity from the car a person drives. They stick up some "green" labels on the new vehicles which cunningly display some "sustainable" feature or the other, usually hogwash. Looked beneath the surface, most of these vehicles are made the same. Until the gas prices truly reflect their social cost, consumers will not change their habits. When gas prices fall, the SUV's will come out and when gas prices go up, the demand of hybrids will increase. But we do not understand that these price mechanisms follow the evil calculus of OPEC. These countries manipulate their supply to promote demand. The economics of oil dictate the lives of businessmen and politicians alike. Here is a facet of the oil economics (I found this breakup at http://jb-williams.com/).
Based upon a $3.00 gallon of gasoline, the average break-down is as follows.
Gasoline Retailer $.01 cents per gallon
Oil Company $.08 cents per gallon
Refining $.29 cents per gallon
Marketing/Distribution $.32 cents per gallon
Taxes $.59 cents per gallon
Cost of crude $1.71 per gallon (delivered)
As you can see, the retailer makes nothing, the oil company itself makes wafer-thin margins while the refiners and marketing make close to 20% of the margin. Government gets about the same (20%). Since most of the oil companies are vertically integrated, we can safely assume that about >21% of the cut goes to them while about an equal amount going to the Government. This is the reason why usually Governments do not care too much about reducing oil dependency. Tax money is easy money, it goes into running bloated and inefficient governments. This is why they refuse to make sincere efforts to promote hybrid and electric vehicles. Besides, the car companies have massive lobby operations which help reduce investments into public transport. So the more oil is sold at the retail outlets, the more tax money the Government gets and the more the profits of the oil company and the more dependency on cheap energy (since social cost is not taken into account). This web of dependencies can easily be classified as a socially acceptable drug addiction.
Since we, the people, are alone in this war against oil, there are a few things we can do. First, demand more fuel-efficient and smart cars with engines that do not waste too much fuel. We can promote and invest in companies that are innovating towards this end. Tesla, an electric car company, has been investing bucket loads of money to make a good looking electric car but they are too expensive at the current rates to cater to the mass market. Toyota Prius, Honda and Ford hybrids, while being more affordable are not well liked by consumers for the lack of sex appeal. Again, this is because we put more focus on style than substance. I guess, its up to the car companies to restyle these hybrids and electrics into more likable designs but at the same time, we can make a few style sacrifices as well.
There are a couple of others ways to increase the fuel efficiency of vehicles. The first is by using lighter materials for manufacturing, and this is the department of material science engineers. If spiders can make webs that are stronger than kevlar, I wonder why we cant make a material that is light enough to be fuel-efficient but strong enough to be safe. The second method is by using aerodynamic drag reducers. These drag reducers are perfectly suitable to trucks doing long-hauls and they help improve fuel-efficiency by about 10-15% depending on different studies. Using lighter and stronger materials could be cost-prohibitive which makes drag reducers a more cost-effective and scalable solution. The drag is created because of design issues. Almost all trucks that you see on highways are shaped like big boxes. Not a lot of thought is put into their design. Its easy to see that they are not efficiently designed since more energy is required to move a rectangle or square compared to sleeker shapes. A square has to displace a lot of air and this creates a drag which in turn demands more energy from the engine. There are already companies out there that place smartly designed drag reducers that help reduce this drag. We should have to start using them.
Drag-reducers for trucks and semis and hybrids and electrics are the way to go in the future. These technologies are not rocket science. In fact, these days even rocket science is not rocket science. If we can improve various aspects of our lives by focusing on efficiency, I wonder why we neglect something that is so basic. Transportation is an integral part of modern life. But the methods used for transportation are archaic and even anachronistic. To tolerate an internal combustion engine that wastes 90% of the non-renewable resource put into it is essentially living in apathy. To destroy ecosystems that took thousands of years to come to life because of this apathy, is to kill life by ignition, the ignition of our internal combustion engines.
We need to divorce the internal combustion engine from hydrocarbon energy and we need to do this on a war-footing. An obsolete technology, this engine wastes about 90 cents on a dollar. This is due to the fact that only about 10% of a gallon is used to propel the vehicle/driver forward, while the rest of it is wasted in various operational aspects of the engine ending up as heat and exhaust.
The most simple thing to do is to demand more fuel-efficient vehicles. But we are all caught in the web of form not function, style not substance. Hence, a lot of people think its cool to buy SUV's and sports cars which suck gas like a starving vampire would suck blood. The car companies (especially the big three in the US) are culpable for promoting a lifestyle that derives self-identity from the car a person drives. They stick up some "green" labels on the new vehicles which cunningly display some "sustainable" feature or the other, usually hogwash. Looked beneath the surface, most of these vehicles are made the same. Until the gas prices truly reflect their social cost, consumers will not change their habits. When gas prices fall, the SUV's will come out and when gas prices go up, the demand of hybrids will increase. But we do not understand that these price mechanisms follow the evil calculus of OPEC. These countries manipulate their supply to promote demand. The economics of oil dictate the lives of businessmen and politicians alike. Here is a facet of the oil economics (I found this breakup at http://jb-williams.com/).
Based upon a $3.00 gallon of gasoline, the average break-down is as follows.
Gasoline Retailer $.01 cents per gallon
Oil Company $.08 cents per gallon
Refining $.29 cents per gallon
Marketing/Distribution $.32 cents per gallon
Taxes $.59 cents per gallon
Cost of crude $1.71 per gallon (delivered)
As you can see, the retailer makes nothing, the oil company itself makes wafer-thin margins while the refiners and marketing make close to 20% of the margin. Government gets about the same (20%). Since most of the oil companies are vertically integrated, we can safely assume that about >21% of the cut goes to them while about an equal amount going to the Government. This is the reason why usually Governments do not care too much about reducing oil dependency. Tax money is easy money, it goes into running bloated and inefficient governments. This is why they refuse to make sincere efforts to promote hybrid and electric vehicles. Besides, the car companies have massive lobby operations which help reduce investments into public transport. So the more oil is sold at the retail outlets, the more tax money the Government gets and the more the profits of the oil company and the more dependency on cheap energy (since social cost is not taken into account). This web of dependencies can easily be classified as a socially acceptable drug addiction.
Since we, the people, are alone in this war against oil, there are a few things we can do. First, demand more fuel-efficient and smart cars with engines that do not waste too much fuel. We can promote and invest in companies that are innovating towards this end. Tesla, an electric car company, has been investing bucket loads of money to make a good looking electric car but they are too expensive at the current rates to cater to the mass market. Toyota Prius, Honda and Ford hybrids, while being more affordable are not well liked by consumers for the lack of sex appeal. Again, this is because we put more focus on style than substance. I guess, its up to the car companies to restyle these hybrids and electrics into more likable designs but at the same time, we can make a few style sacrifices as well.
There are a couple of others ways to increase the fuel efficiency of vehicles. The first is by using lighter materials for manufacturing, and this is the department of material science engineers. If spiders can make webs that are stronger than kevlar, I wonder why we cant make a material that is light enough to be fuel-efficient but strong enough to be safe. The second method is by using aerodynamic drag reducers. These drag reducers are perfectly suitable to trucks doing long-hauls and they help improve fuel-efficiency by about 10-15% depending on different studies. Using lighter and stronger materials could be cost-prohibitive which makes drag reducers a more cost-effective and scalable solution. The drag is created because of design issues. Almost all trucks that you see on highways are shaped like big boxes. Not a lot of thought is put into their design. Its easy to see that they are not efficiently designed since more energy is required to move a rectangle or square compared to sleeker shapes. A square has to displace a lot of air and this creates a drag which in turn demands more energy from the engine. There are already companies out there that place smartly designed drag reducers that help reduce this drag. We should have to start using them.
Drag-reducers for trucks and semis and hybrids and electrics are the way to go in the future. These technologies are not rocket science. In fact, these days even rocket science is not rocket science. If we can improve various aspects of our lives by focusing on efficiency, I wonder why we neglect something that is so basic. Transportation is an integral part of modern life. But the methods used for transportation are archaic and even anachronistic. To tolerate an internal combustion engine that wastes 90% of the non-renewable resource put into it is essentially living in apathy. To destroy ecosystems that took thousands of years to come to life because of this apathy, is to kill life by ignition, the ignition of our internal combustion engines.
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