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Category: Trends

Is Web 2.0 bubble being burst elsewhere and what can India learn.

First there was kiko which was bought by Tucows a few days ago for 250,000$ and now another a so called web 2.0 company (HuckABuck) is listed on eBay with its current highest bid is about 9300$. Now Is this a burst of a bubble or the end of the web 2.0 era. Moreover Is there some lessons that India can take from this which is now entering the web 2.0 fray.

Bubble

My opinion on these companies is fairly straightforward, these companies can’t be called 2.0 in truest sense. No I am not arguing semantics here, my point is that these are merely features and none of them have fundamentally created new value which is required to be called a 2.0. Features don’t create big business but rather they naturally chart their course to get attached the product that they are a feature of (or should’nt it be the other way round). Now kiko is a feature which fitted naturally into tucows and they have had a more than fair return. Bubbles are condition when there is a market failure due to multitude of reasons. So this is certainly not a bubble but market at its work and hence HuckABuck would find the right buyer for the right price too.

Coming to India and web 2.0 my general observation has been that India is typically about 36 months behind the valley in any of the trends (Europe is generally 18 months behind valley). This happened during the dotcom days and now the same with web 2.0. With the recent business world article on web 2.0 entrepreneurs we could say that web 2.0 has entered Indian mainstream. The web 2.0 trend had started in US around 2003 and it got fancy name coined by Tim O Reilly in 2004.

Now what is that we can learn from web 2.0 that has happened in Valley and Europe so far. One thing that is certainly undeniable is that there are some fundamental changes that are happening. (See my opinion on web 2.0 & mobile 2.0 on top right side bar) During this tumultuous times we could either choose to build features (call it web 2.0 or not) for becoming a part bigger platforms or build some innovative platforms and unlock great value. To be very frank I am not way too impressed by the list in the BW article, though I have not tried any of the service listed there but one look at most of them will tell you that they are like what Bazee was a few years ago. No doubt that they may walk their way to riches but then they have quickly look out for their Ebay (or GYM). Kanwal Rekhi when I met him once had an interesting name for such Bazee kind of companies, he called them YAFO(yet another fad opportunity) companies. But then India does not have ( & may not have for a while) any incentive to fundamentally innovate. As one of my VC friend sums up very nicely why would anyone risk his neck when he can make huge money by just sitting on a couch and tapping a few buttons.

The reporter from BW did not seem to do thorough research on web 2.0 and hence did not cover couple of other significant players in India, two of my top picks would be the Ashish & Gaurav from tekritisoftware (ourmedia.org that they built a while ago is more 2.0 than you could know) & cleartip.com ( I just can’t stop gushing about these guys, infact they should add a caption to themselves – ‘Clear the pain from booking a Trip’)

Why 2.0 is romanticized ?

Why is that many (including me) drum up about 2.0 a lot. Why is that we leave what we have in the so called 1.0 and move onto the next version. After all if you look at it isn’t that all the existing businesses will close down tomorrow. Infact there is so much 1.0 business that exists to be done out there that many a times there is no real reason required to move to the next version. For instance in the mobile world there are only 2.5 billion cell phone users in the world of a population of 6.5+ billion. Thus there is market gap of 4 billion (it is 2 billion if we discard 50% assuming that they are economically so challenged that they will not be able to afford a phone even if handed out free ) to address for the mobile 1.0 players, then why bother a mobile 2.0. If you agree with me that a change from 1.0 to 2.0 is huge shift and not just an incremental one then the reason is very easy to see. During any huge change there is turbulence and thus a huge shakeout, those who had huge advantage due to status quo no more have that advantage. Think of it this way when there is big calamity (earthquake, war, flood) the rich and the poor are all affected the same. What else is the literal meaning of disruptive. In the rebuilding phase is all are alike and have similar chance to build up new things. And for smaller guys there is relatively higher chance of succeeding in the new turbulent conditions as he is not relatively disadvantaged.

An interesting read in the related context would be Rajiv’s account of the discussion at Mobile Monday on how difficult it is for a small developer to get his content/application hosted in a telecom network which is a mobile 1.0 play.

virtual games ecosystem

IMO the Indian entry into the space of virtual worlds would happen through something like this because historically companies in India have been formed that way. Services is a competence which we have built very well and this approach is much less risky.

Is India ready for Media 2.0 ?

          I had been chewing this thought for a few weeks now in my head, there is so much discussion about the rise of the new media all over the developed parts of the world but is this new baby been given birth to in India.

          A question that is been nagging me since long is that are these talked abou changes relevant to India. I have been trying to find data or pointers which could be supporting evidence to this.  By the way what do people mean when they say 2.0 ?  How much of any of web 2.0 , media 2.0, publishing 2.0 etc is applicable to India.? Before I delve into India and Media 2.0 let me explain a little about what is meant by media 2.0. 

Loosely this term refers to an economic change (I like the word inflection :)) affecting how media is being produced & consumed. These is brought out by changes in technology of how people produce and consume media and also how preferences of consumers are changed.

 
           Let me explain a little bit further there was not a time too far ago when our only way of consuming media was through channels which were TV/Radio/Theatres etc. In this world the most powerful person in the media value chain was the one who controlled the distribution as that was the most expensive (exhorbitant license fees, huge setup costs etc) asset. It turned out that in such a dynamics that those who market the best could get the best returns. So in this world there was clamour for amassing the best marketing armor.  Also in this dynamic it became evident that irrespective of how good media content is produced, if you had big marketing muscle power you could get away with highest returns. Also producing good media  was naturally expensive and risky ( there are so many big production budgets which have bombed). This more or less explains why some of the current big media players are so big  what triggers the reasons for the M&A happening in this space.

      What is happening  now is due to change in technologies distribution & production dynamics are changing in a big way.  Players in the market who find that they are better off doing more marketing than making better films they do not have incentive to do good production. This leaves a bad taste with the consumers on this and drives them away from the mass media (shift in consumer preferences)

       What this causes is a drop in the equilibirium price of media industry because of the change in supply & demand. ( To be a little bit more technical  , supply & demand curve are both pushed outwards leading to drop in equilibirium price).  Now this is happening in the developed world and there is a lot of data supporting the above arguments. What I am trying to do is to gather data for India on which I could do this analysis. (Does anyone have any pointer, it would greatly appreciatd). I saw this but it was of not much help

     On the contrary what I find is that there is data supporting that the Indian media industry is still deep rooted in Media 1.0 world. Not single media company has got even a  whiff of media 2.0. Still the most of these companies are buying TV , Billboard media space, rights from Barbie/Chitrakatha/Dhoni blah blah and are happily singing the ‘content is the king’ tune.

      Thus while Murdoch buys Myspace and BBC opens up its content for people to do anything that they want mauj buys righs from sachin ( & interestingly sequoia funds it too ).   This is what has been puzzling me for a while now, are these changes(economic) to happen slowly to India or is it that it is already hit us with its force and it is that we (industry) are not reacting/adapting to the changes. 

       In all this what I find very hard to believe is that no one seems to be even remotely talking about it (even in the blogosphere -? ).  Even desipundit.com does not impress me here, which I think is a fairly good Indian media 2.0 example.

        In the rest of the world there is fair share of visionaries, smart bunch of people who recognize this changes and pushing the boundary of think in the 2.0 space notably Stowe boyd, John Hagel, Clay Shirky, Scott Karp, Umair Haque, Jeff Jarvis.  Where are the Indian counterparts ?

Bible of Production 2.0

     Bible of Production 2.0 released ( announced at Lessig) [Hat tip – Rajat]. The seminal paper on production 2.0 released in 2001 has now been expanded in to a mamoth book titled "The wealth of networks"

     It involves very very heavy jargonry (you have been warned :-)) but it is a must read for anyone interested in understanding how our lifes are getting transformed in this era of internet. 

web 2.0 in India

   Alok Mittal at Venturewoods refers to recent buzz/rumour about Facebook being valuated at 2 billion $. Certainly Facebook valued at $ 2 billion is a little too high and if one does calculate it should be around $ 750 million. IMHO these valuation are not a sign of bubble. I think these days anything that is not understood well is termed as a bubble given that we had a history with a bubble. 

   Alok mentions that this may get a few in India to roll out something simillar to it. Yeah he could be right but I am not too thrilled about it. India is more than 18+ months behind the valley & other places in web 2.0. Sure blogs picked up & there are a couple of simples aggregators around but then that how far things have gone. Whil valley already has many now 2nd generation of web 2.0 entreprenuers but here in India we are yet to see atleast one good web 2.0 play.

   Someone might just plainly copy myspace or facebook without getting to know what it takes to build these plays and that kind of an approach I am sure goes nowhere. Anyone remembers vQube built out of IISc to compete with Skype way back in 2004. I have not heard of any one single person in India who used it so far. Skype made a few billion $ exit but where is vQube now ? But if someone builds myspace for India the right way then that would no doubt lead to terrific amount of value creation for everyone 🙂 Did someone hear Subhash Chandra say "It’s the beginning of the end of television" a few days ago. Myspace for India could be very well positioned in a few years for Subhash to do a Murdoch. 

   As Alok I would love to see some kick ass action in this space in India. One of the primary pillars of web 2.0 is its colloborative & sharing nature. Infact the key element of any technology culture like in the Valley is that the folks there are super connected to each other. That is one key thing I feel we are missing in India. To help create such a culture a few of us have been trying to put up a barcamp together here in hyderabad which is to be held tommorow. Theme of this barcamp is "web 2.0 and the next generation internet". We might also jump into the barcamp at bangalore as well. It is been very hard for us to reach out to interested people but now we have close to 150 registered to attend the barcamp. Hop on to the event by registering yourself in the wiki, it would be a fun event to attend. 

Bourgeois in arms

      Madhu, Raji  & myself used to discuss and debate over coffee & lunch breaks at my previous organization on whether IT workers should form unions. I used to argue that IT workers incentives are way too differently aligned for them to form a collective body to address their common issues [One big issue that used to discussed in those context was over ergonomics & general health issues: un-ergonomical chairs, sedantary habits, Repetitive strain injury etc]. I used to sum up in the end that it was not a topic I thought that made a lot of sense for discussion in IT professionals context. [ Please don't bring in  to the argument Open Source community, they don't need unions anyway]

   Today morning when I read Peter Rip scream UNIONIZE, I literally fell of my chair :D. A VC wanting to form a union to protest/protect in a socialist way the way they used to make money in the free market economy. Is'nt this the last set of people on earth that one would want to see form unions :D. Are'nt the VC's the epitome of the success of what we call the capitalist economy.  

 Oh Boy this blowing of conches makes one thing pretty clear. There is an inflection looming/upon (albeit a huge one) the VC landscape. Btw don't make the classic mistake of thinking that this is event is causal in nature , it is rather a symptom. So what is the cause then, web 2.0 is ofcourse of one of them. This is classic schumpter at work and that is what makes technology sooo interesting. IMHO it is better the bridge the newly created gaps in the VC industry and embrace the change than to rise up in arms 😀 

    Fred, Feld, Cowan, Ed, Burnham, Brad, Anand, Alok, Sanjay,    … and all other VC's out there would like to know what you guys think. 

Killer article from TechReview

              Very intriguing stuff on ubiquitious computing by senior editor of MIT’s Technology Review. Read the article/post titled Social machines, it is from Aug 2005 issue of the maganize but I got around to read it now.


3 launches see me TV

I got the link to this from so many different disparate sources today. These are the kind of services that will take of in a big big way. This is going to be huge because the incentives are aligned very well.

It’s being dubbed as the most democratic reality TV. In this anyone can be a content creator(prosumer) in the network & he gets paid a cent every time a downloader downloads the clip. This is taking prosumerism to another new level where the producer gets a good share of the value(money) that he creates.

Joel vs Others

        USV organized a session on understanding peer production, Joel rants on how much it was jibber jabber of the academic/business kind. I like folks Joel, Paul, Marc who are not afraid to speak their minds. People like these are very essential as they play a role in stirring up an ensuing conversation/debate in an otherwise echo-chambered blogosphere.

      I must admit to one thing that Joel mentioned it was really very hard to comprehend what benkler was saying in the session.I found david gibbons explanation & analysis on the session of good help & interest.  If your interest is in understanding peer production then his another blog called greaterthan2manifesto will be of great help.

 

 

 

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