Tag Archives: technology

The EU goes Net Neutral

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If the EU had voted against strong Net Neutrality laws there would have been a serious problem between a few national governments and the supra-government of the EU. A few years ago the Netherlands became the second country in the world to fully support Net Neutral principles. Furthermore, the EU level Telecom and internet lady is Dutch, Neelie Kroes. She’s been very vocal supporting Net Neutral and “Internet Freedom” since I started following her a few years ago.

I’m not really surprised by this law passing. The EU has been under less influence of many companies than the US government. Additionally, net neutrality inherently has more privacy built into the system. It limits the requirements of deep packet inspection – because there’s no shaping based on the content of the packets, just the amount of packets. Ideally, this will mean that there is less capability in the network for deep packet inspection.

This could lead to some difficulties in the differences between US ISPs and EU ISPs. I’m interested in the ramifications of throttling across the different continents. Clearly someone getting content from a company in the EU won’t want it to be throttled in the way that Netflix has been. It could create some legal ambiguity and issues. I’m going to be watching how all of that resolves.

Kickstarter, Oculus Rift, and internet rabble rousing

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The internet is mad that Facebook bought the VR company Oculus Rift. We shouldn’t be surprised that someone bought this company, it was going to have an IPO or be bought. There’s no doubt about that. The problem isn’t that it was bought, but the company that bought it.

Oculus Rift was a startup. Startups need money so they launched a Kickstarter Campaign and raised $2.4 million. Startup money typically comes from three groups of people in early stages (3Fs) – Family, Friends, and Fools. The Kickstarter campaign clearly is the fools. Not because they didn’t think the company would succeed, but that they thought they’d have a say in the end result. Kickstart has had other scams, such as the feminist blogger that was going to buy a bunch of games and show how awful they were (but didn’t). Kickstarter has always said that you are donating and has no control if you ever get anything out of it.

If a startup is successful with the money provided by the 3Fs (and this is a huge IF as this is typically called the Valley of Death in startup parlance), these companies try to get Venture Capital Funding. The VCs are the people that have a boatload of money and try to make even more by getting companies to “exit.” There are three options for “Exiting” a startup – IPO, Purchase by another company, or failure. VCs prefer your startup being purchased by another company – it has the least risk (you never can tell what your stock price will be – see Facebook’s IPO. To get this money you typically have to give up control of your company. This comes in two forms ownership and members on a board of directors. In some cases the VC will take less ownership for more members on the board. Apparently one of those people that owned a large portion of Oculus Rift was Mark Zuckerberg – he reportedly made $337 Million on the Facebook purchase of Oculus Rift. That means he owned roughly 1/6 or 16% of the company ($2 Billion sale and all). Supposedly 2 other VCs made roughly the same amount of money on the deal. Which means that the founder likely owned less than 50% of the company and could have been forced into the deal.

Effectively, the moment Mark Zuckerberg invested in Oculus Rift, the company was going to be sold to Facebook – as long as it was shown to be successful. What this means to me is that if you read or see Zuckerberg personally investing in something, expect Facebook to eventually buy it. Additionally, with Zuckerberg owning that large of a percentage of the company, there’s no way it could have been sold to any other company. It was IPO, Facebook, or bust.

With this broader context, I cannot be mad at either Luckey or the other leaders of Oculus Rift. They knew the game when they got into VC – even if you aren’t into making a lot of money when you start, your VC will push for a positive exit for themselves.

One of the angriest people about this whole thing was Notch, the Minecraft guy. He finds Facebook creepy and is upset that his $10,000 facilitated that sale. Even if he had gotten stock for his investment, he would have only had 0.42% ownership share over the company (assuming Luckey sold all his stocks through the Kickstarter which is unlikely). Unfortunately, it’s likely his stocks would have been diluted and the VCs would have controlled enough of the board and stock to force the sale to Facebook despite all the people that could have owned stock if the money had been raised through a Kickstarter alternative like Fundable.

When investing in a Kickstarter, you can’t get emotionally attached, you need to look at it as if you’re gambling. You might never get anything from it, but at least you helped someone else’s dream come a step closer to reality. I’m happy for the folks at Oculus Rift because they got lucky in a very unfair game. I don’t like Facebook either – but it was unlikely for any other outcome unfortunately.

Experts and Algorithms

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I’m currently reading: To Save Everything Click Here by Evgeny Morozov. I find the book interesting because it really pushes back against what he calls “Internet Centrism” which he essentially defines as anything that is considered good because it’s on the internet. For instance, Bitcoin is good because it’s a digital currency or having the LA Times write an article using an algorithm for the most recent earth quake – or online book publishing (good because it destroys traditional “gatekeepers”). One of his arguments is that because we don’t understand the underlying biases behind an algorithm we can’t truly tell if the algorithm is actually better than a subjective opinion on something. An example he uses to argue this point is a comparison between traditional food critics and Yelp reviews. Yelp uses an algorithm to determine what are the best restaurants, while a critic uses both experience, repetitive visits, and an underlying knowledge set to determine quality of an establishment. We can learn what biases the critic has (indian over french) through reading his critiques over time, with an algorithm we just never see what we don’t want to on the web (see the filter bubble).

Interestingly, this is somewhat in contradiction of Daniel Kahneman’s Thinking, Fast and Slow, which argues that the only time an expert should be trusted, especially when something is subjective, is when there’s a great deal of immediate feedback on a decision. Otherwise an algorithm is more effective and will definitely get you well beyond the 50% accuracy of most experts. Kahneman’s argument rings true to me, not surprisingly. I have a strong background in analytics through my undergrad, master’s and job experience with Six Sigma. All of these rely on models and algorithms to predict specific behavior. These models can be applied to both people and processes. I’ve felt that experience is always good for helping interpret results of the analysis, but in many ways the analysis forces you to quest preconceived notions around a topic you might be an expert.

I do think that these two systems can live well together. If we don’t know what algorithm Facebook, Twitter, Google, or others actually are using to provide us information we can’t truly be sure what biases have been introduced. I think that Netflix provided us with a great example of the power and weaknesses of algorithms at the same time. They offered a million dollars for people to make a better algorithm than theirs. The group that won, actually used an aggregate of algorithms – they selected from the 5 best algorithms and combined them. These were tested against what people actually wanted to watch and how they rated the results. So it was algorithms guided by the results and continually improved. However, I think Netflix has a different objective than Facebook or Google –  they provide you the ability to enter you preferences and then a suite of selections to make you happy. Google doesn’t allow you to modulate your search criteria beyond your initial search term.

Experts have a role, but the need to display humility and a willingness to learn. Algorithms have a role, but they need to be tested for biases and in many cases we must forcefully push against them. If we only hear our own opinions how can we learn and grow. If we never are challenged how can we be empathetic with other people – both of these lower the quality of our lives and we don’t even realize it.

Innovation, Kickstarter, Etsy, and First World Problems

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Innovation happens at it’s best when companies have wide ranging experiences and sources for ideas. It’s been shown that leaders with a broad network of unique individuals across an organization have better ideas that can influence the direction and innovation of a company. It’s also been shown in other studies that a group doing research will have better results if the members have a diverse background. This is true in since in general as well. Much of the breakthroughs we see happen at the interfaces of scientific disciplines. Which is one of the reasons why it takes so long for paradigms to change in scientific communities – the old guard doesn’t want to adopt to the new truth. Scientists that move into that field from one of those boarder disciplines will be more likely to adopt that new idea than the old guard. A great example of that is physicists and biologists moving into Economics. They are bringing new ideas to economics that aren’t supported by the current theories but are slowly making head way (HFT use these theories more than classical economists).

Platforms like Kickstarter, Etsy, and Git Hub, make it a lot easier for unique ideas to reach a broad audience and enable collaboration. Github is all about collaboration between different coders, while Kickstarter and Etsy aren’t about collaboration but about sharing of ideas though design. 

Kickstarter and Etsy literally are market places of ideas. These places allow people to scratch the itch of sticking it to a corporation that might make a similar product and helping out the little guy at the same time. I personally like both places because I’ve found some really interesting presents for my wife that will likely be unique to the area I live. Essentially, Etsy is so low of volume that in a given city there might be one other person with that same item.

Many of the products fall into the “me too” category where they are fixing a minor problem that isn’t really a big deal. They are addressing first world problems. These are similar to the mobile app masturbation fest that we call Silicon Valley or San Francisco today. Some of these ideas are really novel or could lead to some cool concepts if given the support that they need. However, the ones that aren’t really useful won’t actually survive. They just don’t get the backing that they need – if they are a Kickstarter project or won’t have enough people buy stuff if they are an Etsy company. 

The other interesting thing about both is that once you reach a certain size you’re done. In Kickstarter’s case that’s reaching your financial goal to complete your project while in Etsy’s case if you sell too much you have to move on to a different platform. 

For the most part, these platforms are all about selling products or concepts that could be manufactured in different ways, but we want the hand made feel to it (or unique designs). I don’t think there’s anything wrong with that. Especially since there can be Kickstarters for documentaries and activities in third world countries.

That’s where the market place for innovation comes through. Aside from shipping concerns I don’t really care where the product is being designed or made. I’m purchasing them for the uniqueness rather than where it’s made. Some people might focus on that, I don’t however.

I will definitely use these platforms in the future. In fact, I essentially bought a watch on Kickstarter today because the goal was already made. I have no idea when I’ll get it, so when it comes it’ll be a surprise. Kind of like the wallet that I bought. I’m not super happy with it, but I’m helping someone’s dream come true. And that is really what I’m buying when I use Kickstarter.

Powerful Microsoft investor wants MS to focus on Enterprise

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According to the Washington Post an influential investor is pushing for a new direction at Microsoft. His goal is to get Microsoft to ditch the consumer market and focus solely on enterprise. He wants the X-Box gone (likely sold to someone), Surface gone (either sold or killed), and their other non-enterprise solutions eliminated as well. I think that from a Financial person’s perspective these are something of an obvious option. X-box isn’t killing it in the market, they are expensive and take a while to recoup the cost of development and all that. The Surface hasn’t had great sales – although it’s hard to separate weak sales of the Surface from the abomination of Windows 8 that sold with the bulk of them initially (I’d bet they’d be solid devices with Android on them).

I think it’s important to remember why Microsoft is Microsoft. It’s not entirely because of Enterprise. It’s because Operating systems are difficult to learn and people don’t want to learn more than one if they can avoid it. Only recently have the bulk of people been fluently on two different operating system – Windows/Mac/(few on linux) & iOS/Android/Windows Mobile/Blackberry. The most common interaction would have to be Windows & iOS and/or Android and Mac & iOS.

The reason for strong enterprise Windows sales is because of the massive consumer base that Microsoft has managed to hold on to despite it’s best efforts. If most people had to learn multiple different operating systems between home and work it would increase their stress levels at work. The skills they learned at home wouldn’t transfer well. I think this is also the reason why enterprise is conservative in upgrading their Windows OS – essentially skipping every other one. XP/Seven because those are the products that seem to build a strong enough user base on the consumer side. Most techies don’t like Win 8, so that hurts sales to Mom and Dad or their friends. They’ll tell them to avoid a product or get them to go back to Win 7 over 8 if possible.

The battle for the next OS is going to be fought on tablets and phones, before it’s fought on laptops and desktops. I know there are some tech experts out there calling for the death of the tablet, however, I think it’s far more likely that there will be a convergence between laptops and tablets. Where a tablet can meet our core needs of our laptop.

The more powerful of the two Surface products (Pro) was just that type of product. It was able to do a lot of WINDOWS laptop stuff, but in the form factor of the tablet. Should have sold well, except it cost a ton for a tablet or under powered laptop. I think that this really is the consumer space people will work from. We really don’t need more space unless we’re gaming and then people will build a desk top or buy a console.

Consoles – the X-box isn’t just a console, it’s supposed to be a full multimedia PC replacing the need of a desktop. You pair the Surface Pro with an X-Box and you’ve got everything you need for your house. This is what Microsoft is envisioning. Everyone is still using Office on their Surface, Skyping on both X-Box and Surface, and everything is based on the familiar (sort of) Windows OS. Keeping it front and center.

Let’s say MS ditches the console and Surface. They’d have to license out Windows to run on tablets and wouldn’t have the ability to help shape those conversations. They are competing with 2 Rabid fan bases in mobile OSes, one that many companies are able to use for free (with some licensing fees to MS), Google is pushing to replace MS in netbooks and likely other environments – Chromebook and ChromeBox. All of these could threaten their dominance as the work station in enterprise. For the bulk of the work I do, I could probably do it on a tablet as long as I have a compatible office suite.

Furthermore, MS isn’t the only option in many of the enterprise spaces. They aren’t the only OS, Office Suite, or Enterprise service company (Dell, IBM, Accenture, SAP, etc…) it’s not a guarantee this process would work. Furthermore, people are already talking about an Android server for some activities. These are all threats to MS core business OS and Office Suits. Leaving the consumer space only opens them up to more threats as people will want to stay in a similar environment.

This is another example of the Innovator’s Dilemma and MS should look to use Lean to help solve their cash and process challenges. Both the Surface and X-Box are good products. They just need to figure out how to find the right market for the Surface.