February 20, 2014

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Over on the ProjectVRM blog I make a long-form case for why Facebook buying WhatsApp for $19 billion dollars in cash and stock is a Good Thing for VRM. Here I’ll make the case for why it should uncork a fresh wave of investment in start-ups and innovation at already-ups.

  1. Payments are headed to mobile, for real. WhatsApp has already expanded from text to photography, video and more. Payments are a tall order, but they’re on the table in a much bigger way now, and not just for WhatsFace.
  2. Meet space and meat space are now one. This should be good for all the brick-and-mortar businesses in the world. But they’ll need to be ready to work with the new systems coming to market, and not just lamenting scan & scram. And, speaking of new systems…
  3. Intentcasting will become the norm. Right now we live, at least online, in an attention economy, where surfing on the Web requires swimming upstream against a torrent of unwanted messages, nearly all of which are annoying, useless, ill-mannered or all three. Replacing it will be an intention economy in which we do the advertising, and not just the sellers of the world.
  4. Free customers will prove they are more valuable than captive ones. Because they can. They will operate more and more outside the feudal empires companies have been operating throughout the history of mass marketing. And, because of this…
  5. Economic signaling will become much more loud and clear. Both ways. Demand will have many more, and better, ways of informing Supply. And vice versa. For example…
  6. Everything we buy and own can have a cloud of its own. And that cloud can be the platform for relationship between customer and company. VRM and CRM can finally connect and constantly improve what customers and companies do for each other. And we’ll get along better because relationships will be based on truly agreeable terms.
  7. Every one of us will have our own clouds too. These will be our own secure personal spaces in the connected world. Each will have its own open source operating systems (e.g. CloudOS), programming languages (e.g. KRL), privacy canon (e.g. the Respect Trust Framework) and protocols (e.g. XDI).
  8. Market based marketing. Once free customers prove more valuable than captive ones, marketers will find that actually talking to people will have a lot more leverage than trying to herd them like cattle.
  9. Mobile advertising is proving to have some negative value. Stop right now and read Four Numbers That Explain Why Facebook Acquired WhatsApp, a post by Sequoia Capital, WhatsApp’s main VC. In it they show a note on WhatsApp CEO Jan Koum’s desk, from his partner and co-founder, Brian Acton. Explains Sequoia, “Jan and Brian ignored conventional wisdom. Rather than target users with ads — an approach they had grown to dislike during their time at Yahoo — they chose the opposite tack and charged a dollar for a product that is based on knowing as little about you as possible. WhatsApp does not collect personal information like your name, gender, address, or age. Registration is authenticated using a phone number, a significant innovation that eliminates the frustration of remembering a username and password. Once delivered, messages are deleted from WhatsApp’s servers.” Then look at what Fred Wilson says about online advertising as a source of pollution. (He starts 23 minutes in. More here.)
  10. The pendulum is swinging away from centralization. The Net’s founding protocols described and supported a fully distributed architecture, in which every node on the network is a functional distance of zero from every other node. This is what made each of us far more powerful on the Net than we ever were in the world of mainframes, or in the worlds of private networks controlled by companies or governments. There are still plenty of centralities working on the open Net, but they also have vulnerabilities, as we’re finding in post-Snowden time. It’s also significant that Whatsapp uses a customized version of XMPP (originally called Jabber), the open protocol created by Jeremie Miller and the team now working on Telehash, described as “a secure wire protocol powering a decentralized overlay network for apps and devices.”

I’m sure there are plenty more, but that should provide enough for investors to chew on. Start-ups too. A lot of doors opened up yesterday. I didn’t hear any close.