Paul Elosegui – Page 6 – EUCAP Capital Partners

Social Filtering Site Digg.com Gets Smarter

Social news filtering sites, where users votes on the importance of news, are set to replace newspaper editors in the future. But current sites are struggling to harness the wisdom of the crowds of contributors. Digg.com one of the leading news filtering sites has made changes to improve their members voting quality.

With the ever increasing amount of information and news sources, filtering and ranking news has become essential. The blogosphere is often criticized for its bad quality and inability to inform, and newspaper owners are toughting bigmedia, newspapers, will win over the web. The big criticisms aimed at the blogosphere, at the Citizen Journalist, as a replacement to newspapers are:

Rubbish blog entry quality

“Some blogs are conversations among people you’d frankly prefer not to meet, others ar cries for help and their writers are clearly in need of therapy. Others are just people expressing themselves, which is an entirely honourable pursuit, but would you like to meet this geek on a dark night?” Paul Hayes, The Times.
Inability to filter the good from the bad

Social filtering sites, like digg.com and technorati.com, are filtering and extracting relevant quality information. Work still remains though, one of the problems is Groupthink ; a herd mentality amongst voters, where the editorial is set by a smaller group of friends, and show a common thread or opinion. Worst are
the habitual witch hunts with the most popular
digg A-listers tarring digg.com critics

James Surowiecki, the leading proponent of the wisdom of the crowds, sets certain conditions for this filtering to be effective:

Diversity of Opinion:The broader the input of opinions and news the better

A group of mix-skill agents perform better than a group of skilled agents
Independent Casting of VotesIf voters can imitate or be influenced by others in the casting of votes, groupthing or monkey-see-monkey-do syndrome sets in. In fact Surowwiecki observes the Unwisdom of the Crowds that comes with too much concensus and conformity
Decentralized Channels where no central organization has powers to influence the vote or the filtering, so voters remain truely independent. Linux development is a great example of decentralized collaboration
Intelligent Aggregation the diverse and independent opinions of the crowds must aggregated and averaged to extract its wisdom. A great example is Google’s study of people’s web links to a site through a complex aggregation system called pagerank to extract a ranking of web sites

The change to digg.com tries to resolve the herd or groupthink problem by favoring independent voters

This algorithm update will look at the unique digging diversity of the individuals digging the story. Users that follow a gaming pattern will have less promotion weight. This doesn’t mean that the story won’t be promoted, it just means that a more diverse pool of individuals will be need to deem the story homepage-worthy.
Kevin Rose, digg.com

An additional problem is the spammers skill in gaming the aggregation system in pursuit of peoples valuable attention.

Google has a groupthink problem also in that, due to the predominance of its search engine , people are now linking to sites the appear at the top of Google’s ranking only. People’s votes or web page links are being influenced by the concesus of the crowd. It seems information filtering sites are being hampered by their own success.

Microsoft Loosing its Lock on the Office Software Market

The Open Document movement, from the OASIS industry consortium, is slowly but surely wresting Microsoft’s market dominance in word and spreadsheet applications. The Oasis consortium is formed by government and public institutions around the world, as well as software vendors that commit to public licenses.

Governments all over the world are starting to demand a common open standard for their documents, such that they are no longer limited to using Microsoft’s Word and Excel applications. The idea is that documents are stored in an open public domain format, such that anybody can write a program to process the document; all software vendors can compete in providing a word and spreadsheet applications.

Best of all, the open source openoffice.org suite of office applications, are free to use. The office suite includes word processor, spreadsheet, presentation, vector drawing, and database components. It is available for any platform, including Linux and Microsoft.

The commonwealth of Massachusetts leads the push to make an open document format obligatory. WIth so much pressure Microsoft has had to respond and open its proprietary binary document formats. The first step has been to set up its own XML-based file formats, and granting a conditional public license for its use; its Office Open-XML standard. The downside of the standard is that it is taylored for Microsoft Office Suite, in addition to a license prohibiting some competitors from using it.

In the most recent breakthrough, Microsoft has announced it will also support the Open Document Format (ODF). Thus Microsoft Office documents will be open to other applications, like the free openoffice.org free editors and spreadsheet software, opening Microsoft up to huge market pressure.

Open Document Standard Fight Continues

The development of the document standards has been accompanied by strong debate. One the one hand figureheads from Microsoft, like Brian Jones, who is a leading player in the Microsoft Office team, and developers at IBM and SUN who are part of the Oasis and openoffice partners.

In spite of the continuing debate over the pros and cons of the two standards, the fact is that Microsoft is having to embrace a public domain format based on the XML, which is the bedrock for the long term commons vision of the web.

[Related entries

Blog or Die !

Jason Calacanis, the head of Weblogs blog network (acquired by Netscape), sets out his vision of the corporate blog’s role and importance to a business. In his inimitable style:

If you are in the Internet industry and you don’t have time to blog about your product then you should quit. Go home, give up, and find another career. Your competitors are blogging about their products and talking to the market, and there is no way to compete if you don’t engage the discussion. So, by not blogging you basically are giving up and telling the market that you don’t care. That’s the honest truth.

Blog or die!

You can’t compete in the web-development space without a blog any more. Period, end of story.

[Blog or die. – The Jason Calacanis Weblog]

Not much room for subtlety in Mr. Calacanis’ view. A more conservative company policy, which will probably reach mainstream companies in the next few years, is to use blogging as a part of a companies Public Relationships tool kit.

On a most basic level, with more press release agencies going online, a blog is a substitute for the News & Events section of a corporate blog. Two popular online press release agencies are:

Second, is the importance of giving the company a human face. Specially, if you have a strong corporate brand name, having an emotive fuzzy image can go a long way to generating a positive response. More and more important is also a companies interaction with its community of clients.

Unfortunately, a blog is not the be all and end all. May be necessary but not sufficient. A blog by itself will not generate a strong brand; you have to do that by other means. More and more brands are created through exceptional products and services.

Is Google Hiring Hacker or Software Engineers

Classical software engineers work in organized and structured ways, for the pursuit of perfect code. Give them a specification of what you want, and they will deliver on time, to cost, and with zero defects. Their work process is down to a science. Quality, on time, within costs is their mantra.

EDS, IBM, and NASA are some of the bastions of this scientific process. They have achieved the top level of the computer science game, as measured by the CMM organization and the prestigious Software Engineering Institute.

Hackers, on the other hand, pursue the beautiful solution. As with other artistic media, a beautiful solution is impossible to explain, but you recognize it when you see it.

Larry Page’s original Back Rub algorithm, which powers Google, is a beautiful solution. Job’s and Wozniak’s first Apple prototype computer was a beautiful solution.

Beautiful solutions are so astounding that they need not be perfect; imperfections add to their charm.
The code will not be finished on time, it will cost more and will be full of errors, but you will be impressed. It will be novel, it will enlighten, and it will make an important contribution; beautiful solutions make a difference.

Hiring Beautiful Solutions or Perfect Code

Web companies, like Google, are hiring both. Software engineers to polish and maintain established services. Hackers to create services from nothing.

To try and stay ahead of the game, Google is hiring candidates that can innovate; hackers to artfully create new astounding services. To maintain and polish its existing software, Google is also hiring software engineers to implement process and quality.

The novelty is that Google likes the 2 in 1 solution; hacker and computer scientist in one. By Google’s own admission, all their employees have to be 30% hacker and 70% scientist.

Hispavista, my company’s spanish arm, has 70 technical staff. Also a mix of hackers and software engineers. But unlike Google, they work in separate teams. Following Steve Job’s famous example at Apple’s skunkworks, our hacker and scientists work in separate departments.

Our development department has achieved CMM level 2, and could easily certify as ISO9001 compliant. Our head of development produces the best quality and lowest costing function points in Europe; he has among best software engineering teams in Europe.

Our innovation department produces beautiful solutions. Dating back to 1995 our Strategy Director has created web services that have amassed millions of internet subscribers; he is a hacker of some reknown whose works have been sold for tens of millions (literally).

Hackers and Scientists Under One Roof

The problem is that their process and culture are totally different. Software engineers aim for zero errors and zero delays, hackers aim to be world famous. The hard part is getting good hacking and coding at the same time.

One can’t live with out the other, yet are totally different in approach. Our experience at Hispavista is that they are best roomed on opposite sides of the building, and project hand overs require a good referee.

Google, on the other hand, has opted for the borg approach, part human part machine. Googlers engineer sofware for 70% of the time, and hack 30% of the time.

Eric Schmidt has repeatedly described how hacking project’s that do well online become bona-fida software engineering projects. The successful hacker is given a team of people to manage, code to review, and quality to assure. The question for the hacker is whether to continue as software engineering manager or hand over to somebody else so as to get more hacking time.

Web 2.0: The Rise of the Hacker Army

Ed Yourdon, one of the inventors of software engineering, ~~visiting digg.com~~ visiting Google observes that web2.0 startups will need software engineers as the service grows. Hackers will not be out of work though.

Software engineering may be outsourced, but entrepreneur and intrapreneuship has become the essence of competitive edge and is core to a business. Innovation has become the new marketing. Judging by the way Google is recruiting among the web2.0 hacking community, hackers are here to stay.

Build It, Blog It, and They Will Come

marketing innovation

Traditional Marketing

According to traditional marketing professionals, the “build it and they will come” attitude leads many entrepreneurs to their ruin. The full quote is:

“If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door”, [Ralph Emerson]

Allegedly wrong, wrong, wrong. Apparently, many entrepreneurs suffer and fail because they overlook the over-arching importance of Marketing..

Or so they say.

Ken Olisa, one of the more eloquent traditional technology marketeers, presents traditional marketing beautifully at his Marketing as a Science? seminar at a Cambridge Entrepreneurship center.

According to traditionalists, marketing is a core capability of a company without which your enterprise is doomed to fail. Many investment consultancy firms, like Ken Olisa’s Interregnum plc, charge high fees and equity percentages for providing this marketing and fund-raising to entrepreneurs.

Innovation is the New Marketing

The new school of thought is that traditional marketing is dead. In Seth Godin’s words, All marketers are liars. The best marketing is an exceptional added-value product or service.

We live in an increasingly efficient market. Information flows more and more perfectly. Marketing, the art of promoting your product in the market, is a commodity accessible to all. Disintermediation between client and supplier is prevalent. Successful differentiation of your company is about your product and service, not about your marketing plan.

You only have to note the lengthening queues of un-employed facilitator, coordinator, administrator management consultants. Advisory help for entrepreneurs is still a good idea, perhaps through an experienced non-exec director. But, the corporate skill set has ceased to be a differentiator; communication technology has made it a commodity.

In words of another entrepreneurship guru; “it is about engineers, not MBAs”.
Guy Kawasaki has a novel company valuation method; add $500K per fully employed engineer, and then subtract $250K for fully employed MBA

The partners at EUCAP are increasingly focused on core technology and service capabilities. Deep sector knowledge. An un-graceful total obsession with your client base, product and service. An Otaku cult of your market. That is the core capability of succesful company.

Build it, blog it, and they will come

Business Advantages of Giving Your Software Away – The Open Source Business Model

Ross Mayfield, the otherwise astute CEO of Social Text has chosen to give away his enterprise wiki code for free. Another of a long line of businesses to choose the Open Source route. In a world of proprietary commercial software vendors, where copyright is the default, why are these companies giving away their software?

Folly or Genius?

Firstly, use of the open source (OS) software comes with certain obligations. Under the one of the more common licences used, COMMON DEVELOPMENT AND DISTRIBUTION LICENSE (CDDL), when using the OS software you are obliged to:

Redistribute any modified code in turn, under the same licence as the original code
You may consume but not resell, i.e. you may not exploit the whole or part of the software commercially

Open sourcing companies benefit by:

1. Sharing development cost The open source development model, responsible for creating software like Linux, has proven to be very efficient. Eric Raymond, who helped Netscape exploit open source development in its fight against Microsoft, has documented how and why distributed development produces such quality results in his Cathedral and the Bazaar.

2. Marketing Open source promotes better communications with clients, more customer awareness and faster adoption. Like Linux or Apache (web server) software, if the application is better than other software, word of mouth marketing can provide a dominant maket position.

The question for businesses is whether the remainder of their value-added to their customers and their value chain will generate an adequate return on investment. Open Source business models leverage many different types of value-added. For example:

Dual Licence Business Model, consists in providing a fee based licence for commercial use of the software. MySQL AB is a leading example of this business model. The ease with which MySQL clients can develop, test and prototype is an obvious advantage of the dual license.

Service Business Model, consists in providing the software for free, and charging for consultancy and service for implementation and maintenance. Although the Open Source community is becoming more corporate friendly in its responsiveness and support, dedicated commercial support has definate value-added to many clients. In fact, many companies work just by providing integration, implementation and maintenance services for popular Open Source software like MySql, Apache, JBoss, Tomcat, Eclipse.

No Guarantees

Open Sourcing does not guarantee success though. Larry McVoy, a long time Open Source activist and key contributor to Linux, had to widthdraw the open source license on future developments of his widely used Bitkeeper code-control software. He stated that

“Open source as a business model, in isolation, is pretty much unsustainable. We believe if we open sourced our product, we would be out of business in six months. The bottom line is you have to build a financially sound company with a well-trained staff. And those staffers like their salaries. If everything is free, how can I make enough money to keep building that product for you and supporting you?”

Strong Vision

Using Open Source Model can provide great leverage, but it places a lot of pressure on management. Success requires a very clear vision of the core value-added of the company relative to its customers and suppliers.

Europe’s Online Advertising Should Top €10 billion by 2008

Forrester Research’s Jaap Favier predicts €100 billion will be spent online in 2006, growing to €263 billion in 2011:

In the coming five years, the number of Europeans shopping online will grow from 100 million to 174 million. Their average yearly Net retail spending will grow from around €1,000 to € 1,500, as UK Net consumers, who currently spend €1,744 each year, outspend even their US counterparts online. Overall, this will cause European eCommerce to surge to €263 billion in 2011, with travel, clothes, groceries, and consumer electronics all above the €10 billion per year mark.

As expected the growth is fueled first by early adopters, or technology optimists, half of the current body of internet users, who are broadening their spending into clothing and electronics.

But the bulk of the growth is to come from the mainstream users, who comprise 90% of the retail customers, are starting to have an impact in online spending. As broadband becomes widespread, the non-techie customers are being won over by convenience and price advantages offered by online retailers. Favian told ZDNET that

“Consumers take about a year after going online before they will purchase something online. The first thing they purchase is either a book, a CD or a trip.

All welcome news for all online businesses, including online publishers. Using the traditional 10% of sales is the marketing budget rule-of-thumb, the online marketing spend for Europe should top €10 billion in 2006. The prediction is below Jupiter Media Metrix’s forecast of €4,014 million by 2008. A reflection of the online advertising struggle to gain its proportinoal share of the overall advertising spend.

Millionaire File-Sharer To Fight Music Industry Law Suit

The Recording Industry Association of America (RIAA) has filed thousands of copyright infringement lawsuits against filer sharers on networks like Kazaa and Napster, who have all accepted to pay damages to avoid going to court.

The recording industry has artfully developed a variation of the “John Doe” lawsuit program that offers plaintiffs the opportunity to settle. After learning the identity of an illegal file sharer through a “John Doe” lawsuit, but prior to amending the complaint to reflect the infringer’s name and address, the RIAA offers the opportunity to settle the case before proceeding further with the litigation. So far, all the accused Kazaa and Napster users have had no recourse but to settle, paying $2000-$3000 to the RIAA.

Enter Shawn Hogan.

Shawn is founder and CEO of Digital Point Solutions, and with clients like Disney, he is not short of a buck or two. Last November Shawn got a call from a lawyer at the Motion Pictures Associaiont of America (MPAA), in which he was accused of downloading a film on BitTorrent, another file sharing network. He was given warning that he was to be taken to court unless he paid $2500.

Shawn denied any wrong doing, and has evidence that he had already purchased the DVD in question. After some careful thought, Shawn has decided to set aside a hundred thousand dollars to pursue the case through the courts. Shawn has to countersue and win damages so it sets a legal precident for a class action lawsuit against the MPAA.

The MPAA has responded, “Mr. Hogan has said, he is absolutely going to go to trial, and that is his prerogative” says John G. Malcolm, the MPAA’s head of antipiracy. “We look forward to addressing his issues in a court of law”.

If Shawn wins the case, the MPAA will have stop its terror campaign on the millions of file-sharers. Morever, they will have to pay damages to many of the people from which they extorted a settlement, typically children, students and pensioners. A heroic deed.

Wired article reported the case as Shawn Hogan Hero. Shawn insists on his blog that he is not a hero, and he directs the thousands of donation offers to the Electronic Frontier Foundation which fights the copyright abuse by the music and film industry.

Data Feed Standards Conflict Looming Between Google, Amazon and Shopping.com

The National Association of Retail Technology Standards (ARTS) has embarked on the Unified Data Feed Standard Project. The standard aims to unify the data feed templates used by all the shopping comparator sites.

The problem is that merchants looking to be included in these engines need to handcraft a data feed of product information and price for each shopping portal. The work adds a considerable overhead since each of the shopping portals has a widely different template for the data feeds.

But an overview of the data feed standards at Amazon and Google Base shows each has considerable investment in disparate systems. Unifying data feed standards will require considerable investment, and disruption of current partners and affiliate networks for all shopping portals, and price comparators.

In the mean time, many merchants are currently opting to outsource generation, optimisation and submissions of data feeds for their ecommerce site to specialist players like Enclick Online Solutions.

[Disclosure: EUCAP Partners is invested in Enclick Ltd – data feed provider and its shopping portal]

Scoble Reaches Mainstream Readers Finally

Robert Scoble, famous Microsoft blogger finally sees his book “Naked Conversations” selling in numbers. Published in January, with great blogosphere A-list support and promotion, it is only now selling in numbers, ranking 500th in Amazon. His explanation, I am reaching the mainstream

Back in January, our publisher, Robert and I were hearing a phenomenal amount of praise and we thought we had hit it out of the park. In fact, we were hearing the amplification of an echo chamber that we had warned about in Naked Conversations and we had merely made it to first base.

What’s happening now is that the word of mouth engine has motored past blogging’s inner circle. And that is helping us tremendously. What I also think is impacting us is a Long Tail factor, a book who’s strong takeoff is anything but long ail behavior.

From Naked Conversations: Naked Conversations: A Long Tail Case Study?.

Scoble’s book is finally reaching its intended audience the mainstream company PR teams who are starting to experiment with blogging as a corporate communication tool.

ADDENDUM CORRECTION: The blog entry regarding sales of “Naked Conversations” was penned by
Shel Israel (co-author), and not the-famous-one Robert.

(Sorry Shel)