“From my cold, dead hands…” It’s something that came to mind as I was thinking about writing this post. The part that doesn’t make sense about the Internet, today and perhaps since ever, is that American concept of “Freedom,” of independence and lack of governance.

In my post on piracy, my point was not complete. YES, historically, there has been a trend in every industry towards eliminating inefficiencies and yes, in some ways making things digital is just another step down that line, but NO, as @ksilvennoinen pointed out in the comments, digital goods do have a value greater than zero, the question is how to find a way to recuperate that value from customers.

To me value equals investment, but that is not the way pricing works. Unfortunately, I managed to misplace my pricing bible some months ago and can’t seem to recall most of the rules of pricing, but there is a strong psychological component to it. And the psychological part is what I am confused about. To get another book in here, it’s just like “Positioning: the battle for the mind,” if online goods are ‘positioned’ against a never-ending slew of free content, how do you position yourself to be priced at a value greater than zero?

On the one hand, it’s not so hard. You position yourself in such a way that a comparison does not make sense. Let’s take digital books, an area I actually don’t consider as threatened as publishers and media-outlets would like you to believe. The reason is that as soon as you download a digital book and view it on a PC, it immediately becomes an inferior product. Unlike a TV-show or movie, which I can frankly watch on a post-stamp (no matter what David Lynch says), reading and eyes work best together on either paper or e-paper (haven’t tried reading on the iPad, though I really like doing it on the iPhone). Of course the real threat to e-books in a PC environment is websites, but that’s a story for another day.

To get back to it, e-books work best in a dedicated reading environment, which immediately creates opportunities for platforms and putting walls around those. Platforms ensure that there is a network effect of content, walls ensure that there is no inter-leakage between the quality-controlled inside and the dark-waters-of-piracy outside. And that mechanism allows digital goods to be priced to recuperate investment and more. But…

Where it gets confusing again is how very open the Internet is. This openness allows you to create an app in a day, it also allows you to jailbreak an iPhone (now with US-gov. support), and it allows for me to get a movie that Chinese kid 107-xg46-*** released 5 minutes ago on the torrentZ. Amazon was built on this openness, as was OS X, as was pretty much anything that was stolen out of the Xerox labs 35 years ago. While there is a trend of eliminating barriers in general, it is even more prevalent on the Internet.

So, what I am asking myself here is the following questions:

• Is this 1969 again, where hippies roamed free, sex was consequence-less, and there is an Aids-epidemic on the horizon, which will make us go back to the 50s in terms of promiscuity?
• Are platforms doomed? I’m just talking platforms, not walls around them. Twitter is an example of an open platform.
• Are the walls around platforms doomed? So: iTunes & iOS-devices, Amazon & Kindles, Facebook & human relationships, every online retailer in the world…
• Is pricing digital goods a logical thing when taking into consideration how it is positioned against other digital goods?
• Should digital goods be free and prices be set for things that cannot be spread digitally: iOS devices, Kindles, Disk-media, other consumption-devices…
• And many more questions…

Getting back to value equals investment in my third paragraph. In any chain that leads from idea to the user, there are value points, which come from some kind of investment. In the embroidery example, a strong value point appears to be the creator. Without that person, there would be no creation. And, of course, there are plenty of examples on that. In the case of iPhone, strong value points are both the conceptualisation (R&D expenditure) and the production costs. In the case of Amazon, the website (presentation, distribution, etc.) is a strong value point. The end-product can still be digital, as it is in the case of the embroiderer’s designs, the iPhone apps, and the Kinde-ebooks, but the investment in certain parts of the chain is very much real.

And the value to consumers, which the crux of the matter, is equally real. If I compare 2010 to 1995, we live in the era of digital convenience. From e-banking, to restaurant-reviews, to TV-shows, to software, we undeniably live in a better world, but one where, ironically, we are less willing to spend as much on it. But there is another side to this as well. Let’s say, everything that exists is walled off. You’d have to pay to get access to every blog-post, to every youtube-video, to everything else that is already being charged for. I would sincerely start to question whether it was all worth it.

The Internet continues to be confusing to me, part shopping bonanza, part free-for-all utopia. Writing this has brought a little clarity, but if you have stuff to add that clears it up even more, please feel free to share it in a comment.

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I have a general philosophy on the evolution of the B2C and B2B relationship, one that is inspired by history. Let’s look at some examples. Money first took the form of barter, then gold, then coins, then paper, and now bits and bytes. Transport: on foot (great shoe-sales), animals (great stable-sales), cars (great garage sales), planes (great duty free sales), and finally tele-conferencing (great device sales). Books: handwritten, handprinted, printing-press, mass-media, internet, iPad / Kindle. At every turn, something was replaced, an industry was destroyed, yet it was for the purpose of evolution. Don’t get me started on evolution itself, as that is all about destructive replacement.

The point about all of these is not about destructive replacement. It’s about improving a product in the eyes of the consumer. And what enabled this improvement? Common standards, collaboration, user-feedback, guts, ruthlessness, innovation, progress, etc. Why producers don’t like to cooperate with that? Because every technology requires an investment to make it work.

Think of the poor embroiderer, which is what inspired this post (bound to get a lot of flack). It’s a funny industry. I wasn’t aware that needlework designs are being sold over the internet and thus at the risk of piracy. I suppose I always thought an embroiderer embroids, then sells their product and ships it to consumers. Instead, they seem to go to the simplest side-product of their work, the one that becomes a foundation for potential mass-production, the “design-chart,” which is then being “shipped,” via download, to customers. Interesting! It kinds of makes sense from a distribution standpoint. Customers are not willing to pay for the shipment of needlework, instead they prefer producing locally, which really is a great idea. The only problem here is the way it is distributed.

In a B2C relationship over the internet, I think, it always comes down to eliminating as many barriers as possible. When you buy from an online shop, you really want the product in your house as quickly as possible. If I could reach my arm into the screen in front of me and pull out the product that I just ordered, that would be just perfect. It’s worse when the product is digital, because the customer knows that it’s just bits & bytes really not worth anything tangible (I’m just talking about the 1s & 0s here) and it could be in the customer’s home in a millisecond. Instead, business erect as many barriers as they possibly can, whether it’s a big ‘copyrighted’ sign across a picture, an overly complex signup/payme page, or the somewhat convoluted iTunes-model, where it really is easier to pay than to pirate.

But in the light of evolution, these barriers are bound to be broken! The same reason why gold is no longer a form of payment, because it’s really heavy and annoying to handle, the world of commerce has a way of evolving towards something easier and easier and easier, until finally I pay by waving a magic wand (eh RFID chip) across a panel.

Let’s get back to embroidery. The problem is two-fold. 1. fragmentation, because any solution that I am about to propose will not get blanket acceptance. 2. the silly notion that selling designs, which seems like the most valuable thing an embroiderer has to offer (actual IP), is something that should be done in a direct B2C relationship. In the light of consumers constantly wanting to break barriers, this offering of valuable IP seems like an industry-defeating purpose.

So what are possible solutions?

• consolidation & protection. Basically the iTunes model, where everything is placed behind a secure window that can preferably only be accessed via a specific device (my personal belief is that anything bits & bytes will eventually be free as that is not where the real value lies).
• selling designs via local shops. If the problem is distribution, why not partner with local shops that keep your designs behind bars and just print out the end-product for consumers.
• selling designs via the machines that produce needlework. No idea what they are called, but they have a strong incentive to keep their machines being used and have a direct line to consumers.

I’m sure any of the above is a solution with problems, but my point is the following:

• Piracy will continue to exist and will become worse if you make it easy for people to pirate.
• Consumer products evolve in a fashion that keeps pushing out inefficiencies and piracy is one of the quickest ways online to remove these inefficiencies.
• The only way to prevent privacy is to not distribute anything that can be distributed via bits & bytes.

Case in point: the idiot that just walked into an Apple store and jailbroke every damn iPhone 4 on display.

Last point: I am not advocating piracy. I run a company myself, I have a business degree, and I believe in getting paid for your work. But I do believe silly strategies deserve to get punished. And there are plenty, plenty, plenty of them that I have mentioned on this blog over the years.

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I feel that something like this does not need to be said, but Spotify a relatively new service here in the Netherlands and selected countries, while cool, is missing one key ingredient: suggesting new music to users that feels somehow related to what they want.

Spotify knows what users want. There are few songs that I haven’t been able to find on Spotify, which in itself is awesome. But it ends there. When I look for the “Baby got Back” song, which I tend to do, it plays EVERY song that has those terms in the title (luckily fewer than you might expect). Instead of saying, hey, it’s “Baby got Back,” it’s a 90s song, it’s a hip-hop song, it’s funny (to some), it just plays the list of whoever decided to use those terms in the title (no seriously, there’s only 72 tracks).

Why it doesn’t need to be said that such a feature needs to exist, is because it already has for some time. Starting with Amazon, which suggests products to you based on what other people with similar tastes like, to Pandora Radio, which unfortunately (grrrr!) doesn’t work outside the US anymore, to Last.fm, which also plays some funny regional games since CBS took it over, iTunes Genius, which rocks (though iTunes as a music-player is way too bloated), Netflix, another US-only service (I’m sensing a pattern here…), etc. etc.

It’s called collaborative filtering, it’s not a new thing and I don’t at all get why not all (music-)services have it. It leads to more user-engagement, it allows listeners to navigate a musical world that has become increasingly diverse and fast-moving, and it has drastically improved my music-listening experience.

So my question is: why doesn’t Spotify have collaborative filtering? Is it expensive to implement, does it require more data than Spotify has, is it an up-and-coming feature, or is it a hidden feature that I haven’t discovered yet? In any case, it is the No. One Reason why I don’t open Spotify as often as either of us would like.

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We’ve talked to a number of investor these last months and I can classify their questions into three categories:

• Intellectual Property Protection (IPP)
• Revenues
• and Operations

Revenues is a straightforward concept and reflects market potential, market share, and business-model. Operations can also mean business-model as that clearly affects your operations, it also concerns the team, and it very much concerns *the last mile*—a very detailed understanding of how your product comes of the “factory line” and goes into a customers hands (every step and every screw has to be planned out). And IPP, well IPP is something special.

Intellectual Property Protection refers to legal and other ways that you protect the innovation and knowledge that is built within your company and its people. It is not as straightforward as simply taking out a patent, copyright, or trademark, though those are usually the first avenues that investors will pursue when talking to you about IP. IPP can just as much come from keeping information tacit—inside the heads of your team—, developing systems that spread an innovation across many parts—e.g. the way technology companies prevent copying from factories they outsource production to, by only giving them parts to produce, but not the whole—, another systematic answer could be deep vertical integration, which ensures a higher quality of products and services than can be replicated by vertically smaller competitors (a strategy pursued by Apple and Starbucks), and last but not least: speed—in some industries it pays to just scale very quickly, rather than build a protective base around IP (a contrast between e.g. web and medicine).

But let’s get real for a second. You’re an inventor, you developed something new. The most obvious path to pursue is a patent. The first issue is cost, because taking out a patent is not cheap. Basically, by filing a patent in your country, you can protect yourself for a while because there is a period, 1-2 years, I believe, where you are filing it and it can serve as a type of legal instrument to prevent other companies from filing a similar patent. But in the end, you have to shell out maybe €5000 per country to protect your invention internationally—and those costs do not cover the legal cost or protecting a patent once it’s being breached. Let’s get real x 2: you’re a startup and while your technology may be innovative, it may not be what the market needs (which can relate to actual taste, but also to cost, to regulatory issues, etc.) and that means that your patent, if you decide to take it out, may not be worth squat. Let’s get real x 3: your invention may not be unique, at least not in its current form, and pursuing a patent in that case is not even feasible.

So practically speaking, what do you do? Just to be clear, I don’t have the final answer to this, though it is something I am constantly thinking about as a potential risk in our, a technology startup. So my interpretation and approach are entirely my own, but I am writing this to start a discussion more than to give the final answer.

The answer to me is all about strategy. IP protection has to make sense in the context of a longer term business strategy, long term meaning to me longer than 2 years and preferably longer than 5 (if you have an actual patent and it has market value as well, you have over a decade of protection). And IP, just like a business, is something that can be split up to cover different areas related to supply, to the manufacturing, to the end-product, to the service, etc. So the more broad and comprehensive your way of protecting your intellectual value is, the less it can actually be replicated by your competitors.

All IP concerns aside, it is sometimes of benefit to not protect the whole value chain. This is true in our business, which I will write about some other time, where we can split up our technology into core-components that are integrated into new solutions which act as a platform for more solutions. Locking off that whole chain is perhaps of some benefit, but in some ways we would like to have people innovate in their respective areas and for us to focus on developing better products out of that. My point is that IP protection should be seen as something that can be shifted to those areas most critical to your business and that new development in your industry is not necessarily something to be scared of. In the end, we are in the product business and if we can produce superior solutions for customers that outweighs comprehensive IP solutions.

So the conclusion is, even if you are developing a product that is not entirely novel, there are places in the value chain where you can still develop an IP solution. And if you are developing novel solution, it has advantages on both the supply and the market side, to not make your IP too restrictive and thus diminish your product potential.

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Having reached a personal milestone, part 5 of my entrepreneurship diaries, I should mention that it’s very pleasurable and useful for me to write on these topics, and I hope it’s the same for you. In this post, I want to briefly address the issue of uncertainty in early stage technology companies and how that affects management.

As I mentioned before, I was asked to join this company as CEO after consulting them on the commercial applications of this exciting new technology. Joining a year later, we had a good understanding of the strengths and weaknesses of the current organisation. During the consulting stage, I wrote a business plan with a fairly clear time line (to me and our sponsor), but it wasn’t being executed upon as required. One of my the deliverables I set myself was therefore to get development back on track, which not only respects the resource boundaries (financial, human, technological) we face, as well as sends out the signal that we are a serious business.

One thing I keep hearing over and over from entrepreneurs is that you have to be comfortable with ambiguity. And that is absolutely true. We continue to iterate on ideas based on changes in technology, customer and partner feedback, and our own ideas, something that would drive any sane man crazy, but we have to keep it under control. The best way that I find to do that is continuing to develop the vision of where we are going (the strongest motivator I can imagine) and maintain a loose type of project management that gets us to that goal.

I call this project management, as it deals with schedules, milestones, and resource allocation over a period of time. Uncertainty is an important factor to consider in this. In a large company, chances are you’re dealing with a predictable environment, in an early stage startup this is not the case. Getting a tighter schedule in place continues to be a challenge we are working on, however I find that being alert, flexible, and adaptive all the time contrasts with the more stable art of project management. Please correct me if I’m wrong, in which case present a solution also! Of course, there have to be thresholds in place, which to me is very much defined by risk assessment.

Regarding risks, let me start by saying that not all risks can be addressed, which is why being comfortable with ambiguity is so important. And second, there are many different types of risk, technology, financial, market, etc., but one usually outlines the thresholds that you have to respect. In my case, I see this clearly as market risk, as nothing matters if your customers aren’t buying… however, this really is not something to take for granted.

In medicine for instance, which is traditionally patent-based and largely dependant on a complex regulatory process, you have a 15 year window, of which you can spend up to 12 years developing your super-innovative cure. Clearly the technology risks outweigh the market ones (note: this ignores the rise of generic, cheap, knock-off drugs). In the web-industry, on the other hand, it’s perfect for rapid prototyping, it’s hard to protect innovations and easy for competitors to clone them, and it makes much more sense to push out your products asap. That means that there can be plenty of competition and the risk lies in grabbing sufficient market share to make a (sustainable) profit.

In our case, we are not as “high-tech” as medicine and not as “high-market” as web-development, in the sense that we face both market and technology risks. However, I see market risks as more important and try to align both market & technology approaches together. As an example, one of the things we did several months ago, was demo our technology to the general public and to selected partners. After the experience, we interviewed them thoroughly on their experience, as well as their initial expectations. We want to make sure that people don’t expect something different than what we deliver and that our product meets and exceeds their expectations. That gives us a clear view of where we want the product to go.

On a technology level, that presents us with certain thresholds in terms of “the experience” and price-points. And whenever we face a technology change, whatever solution is being developed, it has to fit within that end-picture the customer expects. That also overcomes the problem of black-box development, which is not uncommon in technology development.

So, that’s more or less how we continue to develop the vision for our company and the project management that supports it. We started with a lucid dream of producing great technology. We demoed initial versions and tried to align our vision to the needs of our users. And we end up (hopefully) building what our customers want and pay for. I would love to do this in a web-environment, as that really makes prototyping so much cheaper and quicker, but we do the best we can with our not so intangible technology.

All my entrepreneurship diary posts can be followed under the tag ‘Vincent’s eDiary.’ I don’t write about what we do as a company on purpose, but you can always ask in the comments or via the email address on the right.

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Pomplamoose Pas Encore

Internet IS disintermediation. It removes boundaries between services/product producers and consumers.

Which means that if your business model consists in standing between them, as a gatekeeper, then you have a positioning problem. Record companies have been learning this the hard way during the last decade.

We all know about Myspace and how musicians made their work popular before signing a contract with a record company (think Lily Allen and Arctic Monkeys).

It looks like even this time is over : the music industry business model is now getting a step further towards disintermediation with the smart, cheap and beautiful Pomplamoose. Read more »

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This movie was one I anticipated for some time. I’m a Sci-Fi geek, a movie freak, and a Cameron disciple (ever since Terminator 2). Most important to me today however: seeing whether the world of cinema was about to change forever… or not. My review will *not* be about the story, but about a number of themes it addresses, namely the 3D experience, motion capture, and (some spoilers) it’s environmental message.

First, the 3D experience. I’m afraid I didn’t like it very much from where I was sitting. And that I learned is one of the keys to watching a 3D flick, you have to experience it just right.

A couple of thoughts on the human experience: You have to wear glasses, you have to sit in the right place, and no one can pass the screen to go to the bathroom or else all is destroyed.

• The glasses: there are generally 2 types of glasses used in 3D cinema, active ones with shutter technology, and passive ones, which are just like regular, slightly over-sized sunglasses. I used the latter. Having biked for 30 min. at full speed just to get to the cinema on time (that’s how geeky I am about this), I found that sweat really didn’t agree with these glasses. The cinema provided me with one of those alcohol drenched tissues, but that definitely didn’t last me through the two+ hour movie. For the rest, I found them a little dark and the image without them was a lot clearer, though of course not meant for regular 2D viewing.
• Sitting just right: so I arrived to a packed cinema, meaning that I had to sit bottom-center-right and also that I have to try to see the movie again in a more empty cinema. To me the viewing experience definitely seemed sub-par and I will have to research optimal placement prior to seeing my next 3D movie.
• Other people’s bladders: so a couple of things disrupted the experience: my seating position, the subtitles, and people passing the 3D screen to go to the bathroom. The latter seemed to disrupt the image physically with the light of the entire image actually changing, and my thought is that they must have disrupted the beamer in some way. And while the subtitles seemed to float as much as the rest of the objects (see next paragraphs), they took away from the illusion of staring into a wonderful 3D world at times.

Generally, I think that Avatar should actually be viewed in an IMAX theater, which has a far larger screen and is designed for 3D, and not a regular cinema converted to 3D, which seems to be all the rage these days. And while dubbed movies kind of suck, I think it may be a better choice for people like me residing in a non-English country.

THE BIG QUESTION: So how was the actual 3D? Apart from the qualms I mentioned, actually pretty interesting! A few years ago, I watched Superman Returns at an IMAX, which required me to put and take my 3D glasses on and off as a green or red symbol appeared on screen and that sucked. But for Avatar, I could keep the glasses on all the time.

The 3D itself wasn’t the pop-out kind either, rather it was like you were looking into a window at 3D objects. In one scene, Sam Worthington’s character was exploring the alien jungle and looking at some exquisite flowers and it felt to me like I was standing opposite him looking at the same objects, which was nothing short of amazing!

I liked 3D a lot in slow scenes like this, but fast scenes such as battles were a little harder to follow. Cameron tells one hell of a story though, which drew you into the picture regardless.

Topic 2: Motion capture
The actual revolution that this movie is supposed to herald is the new kind of motion capture used, called performance capture. As far as I understand it, it allows for a few innovations in film making: accurately capturing face movement, having real characters interact realistically with virtual ones, and, for the camera person, seeing in realtime the result of the performance capture through the camera’s viewfinder.

THE BIG QUESTION: did it work? Hell yes!!! You notice it first with the female antagonist, Neytiri played by Zoe Saldaña (I had no idea!), who is completely “performance captured,” and whom you fall in love with within a few minutes. Her face shows an amazing range of emotions, from anger to joy, that demands an emotional response from the viewer. The last time I found myself infatuated with a virtual character was in King Kong, where I felt real sympathy with this fantastical character that Peter Jackson brought to screen.

Topic 3: the environmental message (limited spoilers ahead!)
Yes, one of the strongest themes of this movie was preserving a planet, respecting it’s inhabitants, both plant and creature. It was very powerful, I thought, but some people may consider it as preachy.

The problem with this message is that following it would require us to abandon 99% of our technology and return to a lifestyle more connected with nature and I’m very sceptical that this could ever happen, certainly not in time for this century’s crisis.

What Avatar manages to show is that the human race, through it’s relentless need for progress and profit, will always end up destroying that which exists in order to create something new. Avatar condemns our race to a “dying planet” and it can’t send a sadder message than that.

In Conclusion:
Above all, Avatar is an Action and Sci-Fi flick, and a good one at that, but it also makes you think, which many of Cameron’s movie seem to do. Definitely a re-watch for me, both on the silver and the small screen.

Rating: 7/10

Vincent
(p.s. minus the added formatting and picture just now, this post was written on an iPod Touch, forever dispelling my notion that typing on a touch screen is impossible. It did lead to some typos & grammar errors, mostly caused by it’s 95% useful predictive spelling engine.)

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I’m always fascinated by business models, i.e. at how entrepreneurs and companies put together services in order to make money from them. I’d call it the source code of business if I hadn’t seen the other source code in Luxembourg —legal and accounting—but arguably that’s more like binary code, i.e. 99% unintelligible.

Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

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Hi, Vincent here. I have neither the intent, nor the talent to develop this application, but it was a thought/pain I experienced at a museum today and an iTunes search didn’t reveal an app like it.

A brief background. I’m pretty a-cultural, but I find audio-tours in museums generally a must, which means I usually spend the 5 or 10 euros extra to get one of those players to walk around the exhibition with headphones on. A little anti-social, but it helped me discover the lives of some amazing artists, like Vincent van Gogh, Rembrandt, Toulouse-Lautrec, etc. And my favourite nation of artists: Japan!

Yesterday, I was an an exhibition of “That Scream Guy” Edvard Munch. I was there with my sister and it seemed a little wasteful (it was only 3 rooms of lithographies), not to mention anti-social, to get an audio-guide. Still, it helps tremendously to get just a little background on a picture, really adding to the experience.

Here’s the iPhone app I would like to see.

1. Point the phone at a painting (an immediate weakness there),
2. image recognition happens (how?),
3. it hooks into a source of info about it (preferably in an audio-format) such as Wikipedia,
4. and you get to hear or see a description of the painting you are seeing.

It’s nothing genius and apart from perhaps the image recognition part, it seems fairly cheap/easy to produce.

The one weakness: cameras in museums aren’t always allowed. I would guess this means that you have to work together with museums to get things going (which sucks!).

Well, this is just something I want to throw out there, a la the much underused twitter hashtag #freeideasiwanttoseehappen

So if someone is looking for a creative challenge, you have your first customer right here!

/Vincent

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I’m no lawyer, my only exposure extends to our company law activities at my workplace and past legal battles regarding farming ground and such—did you know that as a farmer you can let you cows graze on someone else’s lawn and if he doesn’t object, you can argue that you are the owner? At least in the Netherlands, this happened to my family once.

I think there is a certain danger here, if Apple doesn’t fight it, which it does, while Palm Pre continues to try and gain access anyway. It seems very shady on Palm’s side, but doe sit have a case here? I will discuss the strategic implications, as far as I can identify them.

Apple, as we all know, is a very interesting company. It is very vertically integrated, building hardware, software, and has a large influence on the connection between them (e.g. mobile internet), as well as the content provided on them (e.g. music, movies, the app store). Some would call this a monopolistic situation and it seems strange that it gets away with this, while Microsoft, with something that is, for now, as trivial as a browser, does not (in the EU at least).

iTunes is a powerhouse for media and mobile software, but this can be segmented into different areas and different phases. The iPod was released at the beginning of this decade (phase 0), shortly after iTunes, which then built up a power-position for music (phase 1). As the iPods became mobile computing devices, more content was being shipped via iTunes, such as video and those little games (phase 2). Finally, 2 years ago, the iPhone was released, with about a year later, the App Store (phase 3).

Music, phase 1 of ITunes’ power play, is the area which the Palm Pre (to my understanding) is impeding upon. You could easily see Video being the next thing to sync, though I’m not sure if this is possible now. Unless the iPhone takes a step back towards a more web-app-based approach, I don’t see the Palm Pre being a threat to Apple on the App Store front.

Apart from a phase-based perspective, there is also the matter of the lowest common denominator (LCD). Why do people buy mobile Apple products? I would argue that nearly everyone buys an iPod, because of playing music (and not so much video), while a growing niche segment buys the iPod Touch and iPhone for applications and games, as well as media. The LCD is music and it continues to be of strategic relevance to Apple, even with the hyping of their App Store, where Apple will continue to stay entrenched indefinitely.

So, from a strategic perspective, Palm Pre does not stand a chance. Apple will continue to make iTunes incompatible with each future version. Legally, on the other hand, I am not nearly qualified enough to make that assessment, though I think the “cow argument” may apply. If Palm Pre keeps trying hard enough, and continues to get a user-base that desires this link, there may be a legal argument towards loosening Apple’s grip on mobile media.

Since iTunes isn’t very profitable for Apple, I’m not sure what the implications will be for it, but I expect them to fight ’till the last breath.

Vincent
(Picture has no relation to this topic, but is of a cool movie nevertheless)

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From the European FT this weekend:

“Blackberry owners will soon be able to download music wireless tracks to an application that will help the smartphone compete with those made by Apple and Nokia. … Most tracks will not have copy protection software, which restricts how many devices the music can be moved to.”

It’s the word “most,” which has triggered today’s rant on PR, technology, media, and more. First of, what kind of statement is that most tracks will not have copy protection? Why not all, why not none?

Looking at the past, we all know that copy protection, aka DRM, has plenty of negative associations attached to it. And, as with most negatively perceived technologies, it has been hacked so often that the word “protected” has just become a PR term. Copy protection is not a feature, it’s a handicap, but clearly most songs on the Blackberry platform will not be handicapped, which is… a feature??

We all know that optimally, no producer (or organisation associated with music production) would allow music to be released DRM-free. But the very fact that protection means Zilch, means that actually there is no point to implementing any kind of DRM-system, except on the request of the owner(s) of particular songs (which probably happened here). So, instead of all or none, we get “most,” which is just BS. I already predict that this new initiative is going to fail, by the sheer indecisiveness of the PR message alone, which is a reflection of how little thought-out the business strategy must be.

My point in all of this, infused by a single expression of vagueness, is that somehow technology has spun out of control. There is a system of checks and balances in place, there is a self-correcting mechanism at play, but no one has the complete overview of how it works and when it will work. In the case of the recession, for example, things will balance themselves out again. And hopefully we will get a system in place, the more open the better, that will regulate what is happening. But there will very likely be many casualties of war.

In the case of media and profiting from it, it looks bad, very bad. The word “most” perfectly reflects the uncertainty of where it is all heading, but anyone can see that with production and distribution becoming cheaper and more decentralised, there is hardly any need for centralised music companies, except to build systems that track what is out there and rate it (e.g. CBS/Last.fm, Hypemachine) or to fund the more expensive part of the formula: getting on TV/radio (which will also disappear at some point) or setting up a concert (which will hopefully never disappear, but is hopefully self-sufficient).

Sadly, the only solution I see to saving “the industry” is to silo everything off, which is arguable already happening when you look at the behaviour of businesses like Pandora, CBS/Last.fm, and Hulu) and sue the crap out of anyone infringing. That would make everything nice and predictable again, but only if you could make it impossible to go from one side to the other. Star wars.

Some systems where this is the case, more or less, would be gaming consoles, and you would need the same for audio and video content. But because the light and the dark side (traditional media vs. new media vs. piracy) are not separated, you will continue to see a shift towards freeing everything until the only thing predictable will be that there is no money to be made from media, just from the products (e.g. merchandising) and services (e.g. concerts) around it.

Yes, I continue to be very down on traditional media. Feel free to lift my spirits in this area.

Vincent

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I’ve long been an anti-fanboy of online video, for some reasons that I already mentioned. As such, I did not expect a strong response on my recent request for collaborative video recording ideas. Similarly, other efforts at discussing online video production, a topic that I personally find interesting, on Friendfeed and with friends, have been met with little enthusiasm.

So, I have come to the personal conclusion that online video is something that people simply don’t care about (very much). Here are a few reasons why:

1. No success-story on the web: Youtube was acquired by Google, which does not prove its business-model; Loic LeMeur (yes, that LeWeb ’08 guy) abandoned his video-idea, pretty much; The promising Stage6 by the DivX people was abandoned due to, I believe, excessive illegal content being posted on it, etc. etc. OK, the French Dailymotion is no. 1 on Techcrunch’s new Ranking of European hot startups, but even that service isn’t what I would call the perfect implementation of a video service. As a matter of fact, the only thing that seems to work out is television, Hulu (basically television and US only), and Piracy.
2. Bandwidth: even though bandwidth is clearly increasing, it is still, for any business that wants to set up its own video service, a dramatic weight to carry, at least compared to other content on the web. And what if you want to upload your own video? Prepare to have to wait for a while.
3. Does not speak our language: as I mentioned in my previous “hate-post”, the web is largely text-based and the often non-indexability of video means that it does not interoperate with the most-used web-application: Search.
4. Unforgivingly immersive: I listen to audio-podcasts and music all the time, because it’s compatible with the rest of my lifestyle, e.g. travelling/communiting or doing exercise. You have to give all your attention to video, which I consider a barrier to entry for our A.D.D.-infested society.
5. Expensive to produce video (?): a question-mark there because obviously hardware-costs are falling. But still expensive, as it’s complicated and requires both expensive (in terms of time and money) training, patience (a time-cost) while editing, and the ability to work with specialised (and often expensive) video-editing software.
6. Unforgivingly intrusive: It took me a long time to adopt a webcam, until it was basically built into my laptop. I still don’t like to have to dress (up) and make up my hair just to have a conversation, and all that, even though now I will rarely Skype without it. But I am a, tongue in cheek, modern man, which I can’t say for many of my peers.

These and more reasons is why I suspect that Online Video is not a hot topic and might perhaps never be. If you’re in the midst of an online video startup, I don’t know what to tell you, except I hope it radically improves on what has come before.

Vincent
(Picture courtesy of The Guardian)

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I don’t know if anyone of you caught the CNN+Facebook stunt two days ago, where the, I guess burial (?) of Micheal Jackson was shown live on CNN.com, next to a stream of Facebook status updates on the same screen. If I say “Micheal, we LOVE you,” I think you get the general idea of how that went. The CNN-part was beautiful, don’t get me wrong, Stevie Wonder was singing and he rocked. But somehow those two, Social Media with Old Media, didn’t seem to mix at all.

In the Netherlands, when I grew up, we had a TV-station, called The Box (later bought up by MTV, which now has a Music-TV-monopoly in the Netherlands), which allowed people to sms in and request songs. That later evolved to a system, that still exists, I think, of sending messages via sms to the channel, which would play while a song was playing. If I say “Dutch boy or girl, I LOVE you,” I think you get the general idea of how that went.

I can see the attraction. It must be incredibly addictive to try and get your message on the air, to get your 140 characters of fame. And it felt exactly the same with the Facebook+CNN thing, where it seemed more like Facebookers were competing for air-time with themselves and with the unforgiving flow of the live-video station.

As a TV-sceptic—I’ve stopped owning a TV as an adult, and switched to the more geeky (I know…) XBMCs and the internet—I would be more than happy to see this medium go, but I also understand that this 79 year old tradition of sitting absolutely still with a TV-dinner will not go without a fight. The Micheal Jackson + TMZ scoop aside, Big Media still has a higher budget to be quicker and (maybe!) more relevant than small & new Media alternatives are.

Is the Internet the direction to take, however? I think I just made a case that the, still addictive quality of a few seconds of fame (Twitter is the perfect example that we haven’t evolved passed that yet), makes for a somewhat effective marketing strategy for Big Media.

I think that TV is also relentless and monotonous. It does not allow you to switch contexts, it’s a non-stop flow of information, and it doesn’t care about making you waste 15 min. of each hour with senseless advertising. In that sense, it is the complete anti-thesis of the Internet, which has already delivered on the promise of complete user-control (compared to the Old status quo, at least). TV doesn’t care about you, except for your continued presence in front of the tube, and while Internet companies really want the same, we at least have found ways to get around that.

In that sense, I think that anyone with some sense of wanting to keep control over their own life, will continue to turn away from TV. I like watching it, don’t get me wrong, but on my own time and without commercials. The future of Television will either to stay unchanged, reserved for the traditional folk too tired to want to think / interact, or it will be a mash-up of video (e.g. I have 3 min. to waste, I want Stevie Wonder only, without the MJ burial thanks, and on my watch television.)

End musing.
Vincent (can’t stop signing my name, sorry, (my) blogging feels more like writing a letter than anything else.)

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I’ll spell it American… happy, blogosphere? Here’s a few interesting examples of how the battle is being waged in terms of virtualisation of software:

• I can’t run Windows Live Writer—simply the best blogging software on both the Mac and Windows—through Crossover, because it was built in .Net. And .Net apps don’t work in Crossover.
• You can use the free Virtualbox from Sun to run your virtual OSs (a great development environment!), but if you want to launch Windows apps from your Mac, you need to pay for either Parallels, Fusion, Crossover, or any other commercial variants for this purpose. Basically, a software like Parallels allows you to place a shortcut to a Windows app onto the Dock or the Desktop, which will launch Windows + the app, when you click it.
• The best Windows user-experience on the Mac is through Boot Camp. It would be a million times quicker to boot if you were able to hibernate on the Windows side and safe sleep on the Mac side. If you don’t want to risk losing your unsaved data however (why would it be unsaved?), you’re probably better off booting the traditional way (3-5 min. out the window right there). Well actually, it used to be an official feature, now it isn’t.
• Sharing your OS X documents with your Windows ones (in other words, using the same folder for both OSs) is very possible when you use Parallels. When you use boot camp however, it all of a sudden gives you a convenient error.

Georgia, in response to my post about the OS War being over, wrote that she thought that this whole discussion is about standards. I think that the edges are getting very blurry and I eventually see hardware, on the PC-side at least, becoming pretty irrelevant. In the meantime, however, you get these little annoyances, beyond stuff like Office for Mac being inferior to Office for Windows, which make me wonder if they are here by design or because they haven’t gotten around to fixing it yet. I’m betting on the first.

Standards, for now at least, are still causing wars.

Vincent

(Picture is of course of the game Virtua Tennis 3, and has absolutely zero to do with this post)

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I’m a little sick with the flu, hence a few days off blogging, but I just wanted to share this with you (the video from vbs.tv does not seem to show up in the rss-feed).

It’s the story of Carlos Amorales, a Mexican visual artist, who does some pretty interesting things, including: graphic design, installations, performance art, and co-founding a record-label. If you don’t have time to watch the whole thing (it’s only 14 min.!), worth checking out is:

• 01:15, when he shows how me makes his illustrations by keeping a digital database of images in different shapes. All in black, though he occasionally uses red. If you think these simplistic, then look at some of his installations (next point), and you see that these are just the beginning, really.
• 04:40, when he shows some of his installations and talks about how they give the audience the ability to enter the work. It made me think about how creative developers/artist can use the new technology of “augmented reality” to create layers above art-installations that take you more into the experience. Any museum I go to these days, I always get the audio-tour as  it adds to my understanding of what I’m seeing. The same could apply to pointing your mobile camera at it and seeing a visual augmentation. Of course, this is where those infernal copyright laws come in; I think this is something that should be done first with certain avant garde / independent artist, to show-case the potential…
• 09:20, when he talks about his record label, Nuevos Ricos (turn down your speakers before clicking this link), for which they created a manifesto, which included giving all the music away for free. Instead the focus was on performance, on entertainment. I mean, well it’s completely ridiculous and you can see that it’s more of an experiment to understand youth culture. At the same time, it is something that many anti-copyright people (including me) have argued for, that music should be about the performance, not about making money from a shiny disc / digital file. But in the end, maybe music/art should be about self-expression and we all express ourselves in different ways. Some, like the clowns in the video, who have very little musical talent, will prefer showcasing themselves. Others will prefer to just make music and make a living from that. We live in a very nuanced world, after all…

End thoughts, hope to be back this Monday.

Vincent

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