Social Media vs TV: kill or be killed

Advertisement dominates business models deployed by social media companies, including Facebook, Google, Twitter, Yelp, and a host of others. Although we think of them as technology growth companies, historically advertising revenues have been flat relative to the GDP *.

Web-based ads — most famously Google AdWords — grew rapidly not because they somehow generated new economic growth in the country, but because they helped TV kill newspapers, Craigslist.com being the early hero.

Now that newspapers are effectively dead, the only way for the ad-supported internet business to grow is to kill TV-based ads. While the TV industry fights it off with YouTube, Facebook, and Twitter, we should expect more video ads on our mobile screens. In the meantime, the likes of HBO and Netflix have to put a strong bet on content quality. Such a bet would be independent of the distribution media and would have a good chance for translating video streams and downloads into real growth.

* also see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1399613 
tags: internet, video, data, packaged payload, distribution, content, media,

Lunch Talk: 1952 Flight to California

No Universal Studios, no Disneyland, no Silicon Valley, yet.

tags: lunchtalk, innovation, transportation, packaged payload

Invention of the Day: the Tea Bag

In our book, Scalable Innovation, Max Shtein and I introduce the concept of Packaged Payload, an element of the system that encapsulates an essential ingredient — mass, energy, information — that moves within the system. The Packaged Payload is critically important for the functioning of the system.

Paradoxically, most people don't see it in their everyday lives because engineers do a good job at hiding the functionality. For example, we can't see AC electricity because it's securely insulated within the wires. Also, we can't see data packages because they are transmitted over wireless connections. We can't see ocean shipping containers either because we buy products in retail, not in bulk.

Explaining the Packaged Payload to students and inventors can be a challenge; therefore, Max Shtein and I are always on the lookout for good examples. Today Max sent me several pictures — a Packaged Payload galore, as he called it — that make the concept easier to grasp. For example, in the picture above you can see chocolate milk and tea packaged in single-shot bags.

Remarkably, the tea bag was invented more than 100 years ago (US Patent 723, 287), but it got popular relatively recently when a new system of fast-food establishments, e.g. McDonald's restaurants, Starbucks Coffee shops, and others became a common place.

US Patent 723, 287, issued March, 1903.

The tea bag represents the Packaged Payload in a food distribution system. Similarly, many other food items are available for one-time use. All of them are standardized for mass production, delivery, and dispensation (see below).

Thank you, Max!

tags: packaged payload, distribution, system, example

Facebook's market power

The Facebook patent I briefly discussed yesterday points to a business and technology revolution, similar to the one that made Chicago a major commercial center in the United States in the 19th century. Back then, the proliferation of railroads helped move grain and cattle from small, scattered farms to large grain elevators and slaughterhouses. As the result, Chicago merchants benefited enormously from the new economies of scale. Similarly, Facebook enjoys enormous economies of scale by aggregating and processing huge amounts of scattered pieces of user preferences data. 

Furthermore, Chicago merchants developed a new standardization system that

...partitioned a natural material — a steer or a bushel of wheat into a multitude of standardized commodities, each with a different price, each with a different market (Nature's Metropolis: Chicago and the Great West, by William Cronon).

The new partitioning system allowed the merchants to sell their commodities to those consumers who were interested in a particular grain variety or beef cut and willing to pay the right price for the right commodity.

Similarly, Facebook has the ability to partition their user social graphs (and even individual users like you and I) into a multitude of parts that can be sold to advertisers and content providers for the right price at the right time and in the right place. The only difference is that instead of the Beef Chart of the 19th century they have the User Interest Chart of the 21st century.

tags: innovation, technology, control, packaged payload, distribution, scale, facebook, social, advertisement

Invention of the Day: Wind-powered Sawmill

In the 17th century, the Dutch dominated sea trade and naval warfare. That time in European history is often referred to as the Dutch Golden Age. One Dutch inventor was particularly instrumental in giving his small independent nation a decisive advantage over Spain, the naval super-power of the 15th and 16th centuries.

In 1594-97, Cornelis Corneliszoon van Uitgeest (c. 1550 - c. 1600), a Dutch windmill owner, invented and perfected the first wind-powered sawmill. That is, before Cornelis two workers had to saw a log manually, using a specially designed pit. It was a long and ardious process.

Before:

After:

Source: Power from Wind: A History of Windmill Technology
By Richard Leslie Hills.

The new device allowed its operator to produce wooden planks 30 times faster than before.

Why this tech advance turned out to be strategically important for the Dutch nation?

Because wooden planks was the key material for building ships. In combination with ubiquitous windmills, the new technology enabled Dutch shipbuilders dramatically increase production of low-cost naval vessels, both military and commercial. As the result, the Dutch could not only swarm Spanish ships in sea battles, but also transport great amounts of commercial goods from newly discovered places in Africa and Asia, which gave them strong market advantages. The invention of the wind-powered sawmill brought about a 10X change in productivity that rippled through the entire world.

Eventually, the British overtook the Dutch, partly due to James Watt's improvements of the steam engine, which was much more powerful and reliable than the windmills.

tags: invention, innovation, 10X, source, tool, packaged payload, 

Google patent: If you don't skip ads you'll be watching them until we get tired showing them to you.

On July 2, 2013 USPTO issued to Google US Patent 8,474,713 "Targeted video advertising."

The patent covers a business model where a user can skip ads and the advertiser is charged only for the ads that actually get watched. In Claim 2 we read:

"...withholding display of a non-advertisement based video program to the user until the user has been shown a predetermined number of video advertisements without the user choosing to skip the displaying of one of the video advertisements."

Unlike in TV advertisement, video ads on the Internet will not stop if you just wait for them to stop. They will go on forever or until Google decides to stop them. As a result (since most services are personalized, claim 27) patient people will see tons of ads.

If you see an ad, skip it immediately!

Google Glass is the ultimate surveillance machine.

Google Glass has the potential to turn everybody into a surveillance camera. By capturing and analyzing video streams coming from multiple sources, Google would be able to cross-reference its image recognition algorithms with GPS data gathered by the target's Android or iOS device.

For example, when Bob's Google Glass device captures Alice on University Street in Palo Alto, Alice's mobile sends its location data to a Google Maps server. Although the two devices work independently, the information can be easily matched by timestamps and location data. Moreover, if Charlie sees Alice from a different angle, his Google Glass stream can be used to complement data received from Bob's and Alice's devices. If David — independently — tags Alice in his G+ post, the process of verification is complete. Unknowingly, Bob, Charlie, and David form a Google Glass spy network capable of tracking Alice's every move.

Although this scenario sounds a bit far fetched, Google has already implemented it in its web search engine. Because Google strives to download and index every available web page in the world, it knows which pages contain links to a particular page. Knowing the relationship helps Google assign high rank to pages that have a greater number of "incoming" links — the algorithm was Page's and Brin's research topic at Stanford. In short, if Alice, Bob, Charlie, and David are web pages, Google knows who sees whom. Similarly, Google has the ability to implement this logic for video streams, location data, and other bits and pieces of information collected from mobile devices.

tags: control, detection, social, network, packaged payload, google

Lunch Talk: Staying productive in the office; e-mail, tasks, etc.

Jared Goralnick, CEO of Awayfind.com speaking on time management hacks to advice for making the most of your relationships at the Googleplex.

tags: lunchtalk, control, communications, packaged payload

A potential technology for ultra hi-res MRI machines.

MTR reports on an early stage research in nanoscale magnetic field detectors.

(MIT Tech Review. Feb 1, 2013) Currently, researchers have limited tools to study the molecular structure of proteins. X-ray diffraction can give them an atomic-level view of some proteins, but many copies of the protein must be crystallized into a rigid lattice, a process that does not work for all proteins and results in an averaging of protein shape. Conventional MRI, which can be used by doctors to peek inside the body, doesn’t let researchers see anything smaller than a few micrometers in size because the detectors aren’t sensitive enough to pick up magnetic field signals from very small structures.

Two reports published online in Science on Thursday open up the possibility that researchers may be able to determine the structure of individual proteins in living cells. ...the researchers show how specially modified diamond flakes can be used as nanoscale magnetic field detectors.
These tiny sensors can elucidate the structure of single organic molecules. With nanoscale MRI, researchers may one day be able to directly image proteins and other molecules at the atomic scale.

It would be amazing to trace individual proteins in live cells. For example, we could see how specific medicines work in real time, or how DNA decoding results in signalling, etc.

tags: health, biology, detection, packaged payload, control, science, research

Starbucks and McDonald's compete to deliver Diabetes 2

Recent medical research confirms my corollary that Starbucks is McDonald's for the affluent.

Researcher Marie-Soleil Beaudoin has discovered not only that a healthy person's blood sugar levels spike after eating a high-fat meal, but that the spike doubles after having both a fatty meal and caffeinated coffee – jumping to levels similar to those of people at risk for diabetes.

Since many Starbucks sell fatty sweets and lunches, adding coffee to the mix creates a recipe for sure-fire Diabetes 2: sugar (salt) + fat + caffeine. Similarly, when McDonald's sells coffee in addition to its traditional junk food they reproduce Starbucks' commercial success and the Diabetes 2 recipe.

tags: 10x, health, control, packaged payload, business, model

Invention of the Day: Klystron.

Klystron was one of the first inventions that put Stanford University on the world's map of high technology.

 

On the picture above: The 40-cm. klystron used for the U.S. Army blind landing system before World War II, Stanford University, 1939. In foreground, kneeling, Russell Varian adjusts the tube. Observing, left to right, are Sig Varian, David W. Webster, head of the Physics department, William W. Hansen, and John R. Woodyard, who was responsible for building the model shown. (Sperry Gyroscope Co. Photo)

In the second half of the 1930s, motivated by the growing danger presented by German air force, Russel Varian invented a device that could generate microwaves necessary to detect a plane flying above the clouds.

At the time, Russell knew nothing about the research on pulsed radar then being carried on in secrecy by the military. He began to visualize a system that amounted to an outline of what was later known as Doppler radar. Such a system would need a practical source of short waves. He knew that the generation of short waves by conventional means was limited by the difficulty of building suitable resonant circuits attached to conventional tubes and that at the shorter wavelengths the efficiency of the resonant circuits was very low. He concluded that if practical requirements for generating microwave power were to be met, a new type of resonator would be needed. (IEEE wiki)

According to the 1937 technology licensing agreement  with Stanford, the university got half of the financial returns derived from the original klystron work.

In 1948, two years after the end of the WWII, Varian Associates - one of the first successful Silicon Valley's high-tech firms - was formed. In addition to radar applications, microwave technology was used in TV broadcasts systems,  radio, and long-distance telephone communications.

Remarkably, invention of the klystron was due to what we would call today business model, rather than technological research

In his article, "The $100 Idea," in the February 1976 issue of Spectrum, published by the Institute of Electrical and Electronic Engineers, Dr. Edward L. Ginzton described the genesis of the klystron invention as "practically a text book demonstration of the validity of 'management of technology.' It demonstrates the wisdom of being 'coupled to the market place' and of identifying societal or market needs rather than merely advancing technology for its own sake."

tags: invention, innovation, patent, detection, packaged payload, history, 4q diagram