chrome-os

Android & iOS

The mobile operating system wars have left two dominant players: Android & iOS. Windows Mobile, Blackberry, Firefox OS, and a few others are fighting over different slivers that remain.

Just a few years ago there was talk of another dominant platform: Facebook. The plans were grand, Facebook would act as a platform not just for social identity but for the web. All kinds of things were possible. Then Facebook started changing enough things around to annoy the hell out of developers (Oculus developers, take note.) At the same time, suddenly mobile apps could access all of a users contact information. The Facebook platform’s giant competitive advantage vanished overnight.

Something similar is happening in the operating system world.

Cross Platform with One Click

Take a look at gaming. If you want to develop a new video game you can use a system such as Unity 3D. When complete, you can export the game to: Windows 8, Windows Mobile, Linux, OS X, iOS, Android, Blackberry, WiiU, Playstation, Xbox 360, and the Unity web player which runs in Firefox, Chrome, IE, and Safari. Unreal Engine, the thing that powers huge video game hits such as Gears of War, can build games for Windows, OS X, iOS, Android, Playstation2/3, and XBox One/360.

In the past week Amazon dropped the fireTV. Though it looks like a monolith up against Google’s Chromecast, it marks the platform battle heating up for the television set.

I see this from a different perspective. The platform doesn’t quite matter. In order to build a successful Software-as-a-Service you need to be available everywhere. As an entertainment company, if you only allow users from a specific data provider or on a specific piece of hardware view your content, you are napping in front of a giant bulldozer.

Post OS Platform War Has Begun

Some are speculating that the platforms which will really matter are the storage spaces, such as Dropbox (recently valued at over $10 billion.)

Microsoft released Office for free for iOS, you just have to pay $9.99 a month for Office 365 to do anything meaningful. On closer inspection it may just be a clever trick to get everyone to store their files in Microsoft’s cloud, OneDrive.

And Already Ended

A new paradigm has begun: Software must communicate with other software.

In a past era of skepticism I believed Google’s acquisition of Urchin and consequently free release of Google Analytics marked the end for web site statistics software. I was wrong. Today numerous alternatives exist. Mixpanel and KISSmetrics stand out as two dominant players and that is only the tip of the iceberg. Other companies such as KeenIO provide even great quantities of raw data for analysis. Chartbeat lets news sites accelerate the efficiency of their pageview journalism. It turns out one size does not fit all.

Customers demand data portability — but to become better software must support data portability. That means the systems that erect high walls in their gardens will experience growth retardation while more open competitors flourish. By specializing developers can produce software that is really fucking good at whatever it is trying to do.

Want to perform statistical analysis on your data set? You could code in some fancy formulas in to Excel, cross your fingers that not mistakes were made. You could open the data in Tableau (which supports every DB format big and small you can imagine, kudos to them, sucks for Excel), tweak some formulas and charts around, and get your answer after 30 minutes or so. Or, you could drop everything into Statwing. Statistical analysis, complete with charts and detailed math produced in under 60 seconds.

Which tool would you rather use? The one that was built to do exactly what you were trying to do.

This is of no great insight on my part. Take a look at the best examples of web software today. All support integrations. This enables tools such as Slack to provide a centralized point for teams to communicate with each other.

Slack was released publicly less than a year ago and has support for over 40 integrations. That means you can assign a task in Asana buy typing a command in a chat room, and be notified the same way. Github commits, Bitbucket commits, Dropbox files, Stripe, Zendesk, and more all supported. Of course your company has its own specialized tools. Integrated them with Slack’s API or a webhook. Isn’t it nice not to have 55 browser tabs open anymore?

Geckoboard provides custom dashboards which allow you to monitor all of your critical metrics in one place. Over 100 and counting. Since they each do something well, show your Mixpanel and Google Analytics charts on a single screen, in a visibly cohesive format.

Mutually Assured Destruction

Why would you use Microsoft’s OneDrive over Dropbox? What would happen if Mixpanel decided to ban data from exiting their system? What if Slack stopped allowing data to be imported from Github and announced you had to use their version control?

AIR_mosaic_(Fg3_8)

W3Schools Browser Stats doesn’t match what I see on my sites. Just like Alexa’s original stats massively over-rated webmaster friendly web sites and message boards because every other webmaster had Alexa’s toolbar installed, W3Schools skews to webmasters and developers as well.

Just how bad are W3Schools stats skewed? While they report 4% mobile usage for February 2014, we see more in the range of 50% on our web sites; a trajectory of 60-70% by the end of 2014 is likely. I will leave the skew for the other numbers up to your imagination.

A more important question is — at what point should I stop supporting a web browser?

My answer is simple: Stop supporting a browser when that browser can no longer securely browse the web. A small portion of users still browse while using badly out of date browser and operating systems.

Assume these users are infected by a botnet, broadcasting spam, and probably sniffing out URLs the infected visits. Giving the impact of time, do your own research on which browsers are no longer safe.

There is a curious collision of forces occurring today. The two most man made powerful forces are crushing against each other: the deflationary power of technology and the inflationary power of fiat money.

The abstract is this:

Elected government officials perform best when they do things that require borrowing money. The end of the gold standard and the proliferation of democracy globally means governments will indefinitely support inflationary policies as it makes paying off debt possible.

Technology is hyper-deflationary. Devices become more numerous, more powerful, cheaper, at an accelerating rate. The average smartphone would be worth millions of dollars (decades ago) and have access to information rivaling every living human. Consequently, old devices are now worthless. Because of this, the end-game for technology is free.

What this means, I suspect, is that the inflationary forces will drive some asset prices up while technology drives the value of human labor down. I believe technology will win.

 
 

How we got here

A tweet I saw a few days ago:

And here is a little chart I whipped together in Tableau of the price per barrel of domestic crude oil:

crude-oil-price

 

Not being a commodities trader, this is hard to explain. A book I read last year shortly before the most-infamous man to ever be pardoned died: “The King of Oil: The Secret Lives of Marc Rich“, had a pretty good answer. Except from pages 57-58 of his biography:

In August 1971 President Richard Nixon abandoned the gold standard, whereupon the dollar immediately lost 20 to 40 percent of its value against most other currencies. As the global oil trade was based on dollars, this meant that the oil-producing nations were earning even less “real” income in terms of purchasing power. In effect, these countries had to spend more of the devalued dollars they had exchanged for oil to purchase goods on the international markets. Several important oil-producing countries now began nationalizing their domestic oil industries. The North African nation of Algeria was the first to do so, in 1971, and it was soon followed by neighboring Libya. The floodgates were opened when Iraq, one of the world’s largest producers, nationalized the concessions belonging to British Petroleum, Royal Dutch Shell, the French Compagnie Française des Pétroles, Mobil, and Standard Oil of New Jersey (now Exxon) on June 1, 1972. Six months later OPEC pushed through a plan of gradual nationalization of all Western concessions in Kuwait, Qatar, Abu Dhabi, and Saudi Arabia, and in spring 1973 the Persian shah nationalized all of Iran’s oil assets.

This post is not about gold. It isn’t about what should or shouldn’t be done. It is simply an explanation of the forces that exist whether you like them or not. No one follows the gold standard anymore and its quite unlikely they ever will again.

The Federal Reserve and other central banks around the globe practice inflation targeting. By controlling interest rates central banks choose whether borrowers or lenders (savers) are subsidized. Its a simplistic yes/no, up/down, 0/1 way of managing. Whether inflation rates are being targeting or employment, they lower or raise rates until the economy appears to be doing what they want it to do. Alternatively they just change how they measure inflation or employment.

Unfortunately even a modest 2% inflation rate looks something like this:

© Mike Shedlock, see URL for more
© Mike Shedlock, see URL for more

 
 

Deflationary, and Accelerating Technology

In case you haven’t been following the progress of technology, here are some excellent charts from one of my favorite books “The Singularity Is Near.” The Google guys liked it enough that they made the author Director of Engineering.

© Ray Kurzweil
© Ray Kurzweil

Moore’s law roughly applies to prices of other aspects of technology:

© Ray Kurzweil
© Ray Kurzweil

In some segments we see development pause or make little visible progress, and then suddenly jump forward by leaps and bounds. Virtual reality headset technology stood nearly at a standstill for two decades until the adventus of the Oculus Rift. By utilizing the massive advancements in display technology brought about by mobile phones, we went from clunky out of date headsets costing 5 figures to a super light weight nearly consumer headset costing about $300 overnight.

 
 

Why the economy isn’t working

The Western World has largely benefited from a vast middle class who had a living standard comparable to the most wealthy.

In the United States the difference between wealthy and the middle class is square footage and number of your homes. It is not dirt floor vs marble or glass windows vs no windows. While visiting NYC one of my offshore developers commented, your homeless don’t look homeless.

Government policy, both federal and local, appears oblivious to deflation. Outside of government, all of finance and all investing advice is based on price inflation. Investment bankers get rich off of borrowing your money at a subsidized rate (thanks federal reserve) and then buying assets before you have the money or need for them. Rather than seeing a solution as prices being too expensive, the solution is seen as prices are too cheap — even when you can’t afford them today!

There is an attempt to force inflation not just through low interest rates but also through laws. Rather than lowering the minimum wage, the federal government is trying to raise it. We will see a lot more of these attempts before we see fewer. While a profitable private technology company can ignore interest rates, government regulations can derail trains before they leave the station. Setting fixed prices forces economic activity outside of the law and cripples legitimate businesses.

 
 

Why tech gets so rich

Technology companies are worth an enormous amount of money right now. Without pointing fingers, some of these companies may be validly priced, with widening moats, double digit profit margins, and double digit growth. Others laughably lose money and are nothing more than turds painted in faux gold.

If you own a technology company you are simultaneously benefiting from asset price inflation and technology deflation. Each year you are better, faster, and stronger. Meanwhile interest rates are extremely low allowing you to finance growth almost for free.

 
 

A cheap, waste minimal, future

Some things are so cheap to provide at a mass scale that they can be nearly free. Education is interesting because right now prices are completely insane:

© Mother Jones
© Mother Jones

This is curious, since top tier colleges have endowments so large they just let students attend free. Meanwhile there are a massive number of high quality learning options online that cost nothing: Codecademy for programming, Duolingo for foreign languages, MIT OpenCourseWare, Coursera, Khan Academy, and many more. This is if you can’t teach yourself from the infinite books, message boards, and blogs online.

Free can come through benevolence and community support, such as Wikipedia, or it can come indirectly such as with Duolingo (crowd translating.) If technology followed old inflationary prices and companies paid more for less none of this would exist.

There is something else special that is occurring. Thanks to mobile, user bases are really fucking big now. You have a million users? No one has heard of you. Tens of millions or hundreds of millions of users are required now for relevance. That also means instead of charging customers $100 a month, you can charge them $9. In the case of WhatsApp it was actually 8.25 cents per month.

Information behaves differently than commodities. Commodity output will not double every two years. However, through the smart use of technology we can dramatically reduce waste both in production and consumption. Through better engineering we can construct buildings that we don’t simply knock back down.

There are a lot of really bad ideas out there. Focus on keeping your business running and eventually the power of those bad ideas will wane and then vanish.

Uber has problems, but the ones in the press are baloney. Here is why.

Uber is dangerous because its a phone app

No one should be using their phone while driving. Because Uber is an app, drivers look at it while driving around. Recently an Uber driver killed a kid in SF.

Taxi drivers and cab commissions across the US are claiming Uber is dangerous yet cab drivers continue to use their mobile phones and wear earphones while driving — all illegal and dangerous.

Whats the difference between Uber and bad cab drivers? When your cab driver kills someone he gets to go back to work. A recent investigation by the New York Post found that New York cab drivers found that of 16 fatal and serious crashes since 2009, only two drivers lost their licenses.

Unlike cab commissions, Uber bans drivers for just sucking, much less mowing down children. The driver who hit the kid was immediately removed.

uber-x

Uber discriminates against the poor

A lawsuit in my home city of Chicago by local cab drivers alleges that Uber discriminates against the poor because they can’t afford a smart phone.

Smart phones are not expensive. You just need an Android phone, which could cost as little as $40, assuming you don’t pick one up used for even less.

Except you do not need a smartphone to use Uber! You can use Uber by SMS, in which case a $5 reconditioned phone from Tracfone along with a $7 a month plan.

That is about what a single use cab ride costs.

Poor people don’t use cabs to go a few blocks (the only time a cab is cheap.) They walk. When they want to go far they take the train. When do poor people use cabs in the city? When they are sick and need to go to the doctor, old and have limited mobility, or physically handicapped and have no mobility.

The cab systems screws sick poor people. If these guys actually cared they wouldn’t be continually pushing for rate fare increases.

How & Why

Cities impose artificial limits on the number of vehicles that can operate in cabs. That is part of the reason why every cab driver in New York City who actually owns their medallion is a millionaire (actually the real award for that one goes to US interest rates.)

In the pre-digital age the cab system made sense. You don’t want criminals picking people up (although New York City doesn’t mind vehicular manslaughter.) You don’t want excessive numbers of vehicles on the road increasing traffic congestion and pollution.

Now we can use smart phones to do the reverse. Traffic can be reduced through innovate ride sharing programs such as UberX. You can make money while driving yourself to and from the airport. There won’t be a need for ride share lanes when everyone is sharing.

Instead of leaving driver quality enforcement up to arbitrary panels and commissions private corporations can deal with it. Crash once and your done. Let dangerous drivers stay in your system and face expensive lawsuits in civil court.

End Certain For Cab Drivers, and the Cities Which Protect Them

The age of cars is coming to an end. They produce a lot of air pollution. Too many of them makes roads painful to use and cities difficult to get around in. Cars may have even been responsible for most city crime thanks to the past use of lead gasoline.

Vehicle automation won’t be a choice. The federal government controls the highways, the National Highway Traffic Safety Administration imposes safety standards on vehicles. Assuming freely driven cars are still allowed, insurance companies will price coverage accordingly — which won’t be cheap when your in the category responsible for almost all vehicle caused deaths.

Drunk driving deaths will no longer occur. Pedestrians won’t be mowed down crossing the street. Bad weather won’t cause pileups thanks to multiple device sensors and auto adjusted speeds. When deaths drop vehicles will become lighter. They will use less energy to run.

Uber, Lyft, Google, Tesla, or some other company will provide on demand vehicle service so it will just be there when you need it.

In the future, there just is no place for cab drivers or Uber drivers.

(Or bus drivers, or truck drivers, or farmers driving tractors, but that is another story)

Some cities will reject Uber and related services. For now, they can get away with it. Eventually the gap will be really obvious, like trying to book a hotel using a pay phone verse Samsung’s newest Galaxy phone.

Overall, the poor could be a lot better off.

NYC Taxi Medallions “..a city auction of 200 new medallions for wheelchair-accessible taxis fetched record prices of up to $1.3 million each.” http://nypost.com/2013/11/17/taxi-medallion-prices-hit-record/

Bitcoin http://blockchain.info/charts/market-price

US Stock Market DOW 16,000+ https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1384808400000&chddm=4033556&chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0&ei=tdGTUviqOKuBsgeIkwE

US Housing Real Estate Las Vegas up over 21% 2013 YTD. Epicenter of the last real estate bubble (in terms of overbuilding housing on worthless land) http://us.spindices.com/additional-reports/all-returns/index.dot?parentIdentifier=6db38316-fd4f-4b21-9db9-61289d88fc9c&sourceIdentifier=index-family-specialization&additionalFilterCondition

US IPOs http://www.nasdaq.com/markets/ipos/activity.aspx?tab=filings

“Money is so cheap today, people can splurge on $1,000 faucets.” http://www.bloomberg.com/news/2013-11-25/faucets-at-1-000-abound-as-home-equity-spigot-opens-mortgages.html

Technology costs money. Hardware infrastructure and human labor takes capital. Most companies build stuff with borrowed money. Technology is accelerating. Businesses which are not able to keep up end up with dated, legacy infrastructure. In order to move forward too much ends up in the trash — sometimes stuff that is still being paid for.

Digital Ocean is rampaging EC2 & Rackspace.

iOS castrated Blackberry.

Android is rampaging iOS.

Tablets killed Netbooks.

If you can’t internally innovate, sometimes you can buy your away above water. (Hint: you need to buy innovators, not the dinosaurs, Microsoft.)

Most industries haven’t even gotten this far. But, even after an industry is eaten by software there are still opportunities. Big bureaucracies can’t innovate no matter how innovative they were when they got big.

If you sell an advertiser a 300×250 rich media ad, how much space are they allowed to take on your website?

Is it appropriate for the ad to blow up to 800×512 pixels? What if the user clicks on it? What if the user mouses over it?

In this case, the ad did the latter:

Chrome Ad

Chrome Ad's Inline pop

When I started my first internet business almost a decade ago, things were exciting. You could take a generic domain name, build a web site on it, and suddenly you had not only a real business but also a brand. Free traffic from Google was endless, the brand new Adsense program made almost any non-obscene content a money maker.

Things have changed, a lot.

Instead of writing a handful of poetic paragraphs, I will give you a bullet point list of the biggest areas of opportunity I am seeing both with my business and associate’s businesses right now:

-Desktop to mobile transition. I now fully expect the desktop to be “extinct” by the end of the decade, completely replaced with mobile phones, tablets, and next generation devices. To date yourself, today ask a high school student to describe an iPad to you, then ask them if they like Windows 8 better than Windows 7.

The opportunity — take any existing business and build the same business with an extraordinary mobile experience — app, website, or both.

-Video advertising. Big brands are comfortable buying video advertising, because it looks and acts like TV. Ad agencies can justify the non-existence of accountability beyond how many times the video was played.

The opportunity — Buying, selling, delivering, optimizing video advertising. If I was 18 right now, I would start an agency to produce video for local businesses, undercutting everyone else. DSLR’s + Adobe Cloud = $2,000 start up cost paid for in weeks, with the result being cinema quality video. 10 years ago this would have cost tens of thousands of dollars and not looked as good.

-Virtual Reality. Back in 1995 I had a computer magazine that listed all of the consumer grade virtual reality headsets. There were about 8 of them. It looked like the future. Flash forward to 2012, and the consumer grade virtual reality was almost exactly the same! The Occulus Rift bridges that gap by taking advantage of the ultra high density LCD panels and lightning fast processing power we have today. Legendary creator of Doom, Quake, rocket scientist, and multimillionaire many times over, John Carmack recently took position of CTO at the company. Just do a search on YouTube and you’ll realize they are doing something very right.

The opportunity — piggybacking on the hype of the commercial release, creating new games, communication platforms, accessories, and online communities. Hint: think about all of the third party products the iPhone created.

-IPOs. The US IPO market is strong right now.

Years of cheap interest rates have made it hard for investors to seek good yields. What does that mean for you? Business assets are worth higher earnings multiples. Though you may not be able to have an IPO of your own, keep an eye on competitor IPOs. One of the “tricks” aging tech companies use is acquiring existing companies to boost their own reported revenues, to make them look like they are still growing.

-Global internet growth.

Billions of people still have not made it online yet. While it will be impossible to give all of them their own cars (at least by what we currently call an automobile), they all will make it online one day. The numbers for servicing the impoverished at one time did not make sense. Today they do, because of the following —

-Dirt cheap infrastructure.

Take a look at Digital Ocean‘s prices. Honorable mention also goes to the price of a 4TB HD. You can run a behemoth of a web site or digital business for about $1,000 a month. Beyond that, you are making so much money the hosting costs barely matter.

-US Spying fracturing electronic markets.

The recent US scandal involving NSA spying confirmed what security experts believed for years: that the NSA has been routing global internet traffic through its own computers. What was less obvious was that the NSA is not the only country doing this, or trying to do it. In the future internet users will expect any country that a packet travels through will inspect and possibly record that packet. A digital trade war is almost certainly inevitable. This is terrible news for companies who want to operate on a global scale.

As I somewhat prophetically predicted, Google is too big to fail — at least in the US.

Internet companies will be and are today viewed as critical industries to be protected by the government. Foreign operators should expect harsh and out right unfair regulatory actions. In some cases executives may even face prison sentences (already has happened in the US and abroad.)

The opportunity — Copy the most successful cloud platforms locally. Do a good job and cozy up to your countries’ intelligence agency. Your set. The list includes but is not limited to: Google, Skype, Facebook, Twitter, Email (in general), Dropbox. For proof, look specifically at Russia and China and the alternatives to the US’s big players which dominate there. Be very cautious of trying to operate a company that will “protect privacy” or be “spy proof” or you could end up in prison.

2015 and beyond

It is a bizarre coincidence that the world today seems like it was built for me. I was enchanted by the monochromatic green-on-black screen of my father’s now ancient IBM PC as a very young child. When I discovered that I could connect it with a phone jack to the telephone system, and communicate by text with people distances away I was hooked. However, rather than becoming a programmer, my strengths were in art and writing. The ability to paint life like portraits transitioned in to designing websites by hand. Reading and writing allowed my conceptual memory to not only connect widely disconnected facts but tie them together and communicate them to others.

Your world most certainly looks different than mine, but that is ok. If you focus on your personal strengths, while accepting the radical change that is occurring you will do fine. Reject change at grave risk.

June 9th, 2011:

Three men who ran a multimillion-dollar ticket-scalping business by evading the online security safeguards of companies like Ticketmaster and Major League Baseball were sentenced on Thursday at a federal court in Newark to probation and community service, avoiding as much as five years of prison time. Source: NYTimes Probation, not Prison for Scalpers

May 1st, 2013:

Ticketmaster, trying to fight the computer tactics used by some of the most advanced ticket scalpers, has sued 21 people, accusing them of fraud and breach of copyright in circumventing the company’s online security system to try to buy huge numbers of tickets. Source: NYTimes Ticketmaster Accuses 21 of Fraudulent Ticket Buying

August 11th, 2013:

Live Nation and Ticketmaster officials testified before a congressional subcommittee in 2009 about the evils of scalping and how it should be kept separate from the primary marketplace, if not outlawed altogether. Now, the combined company says it is committed to making resale “fan-friendly”—a way to give ticket buyers as many options as possible. Source: WSJ Ticketmaster Wants in on the Scalping Act

Ticketmaster has been under scrutiny before. Almost 2 decades ago, Pearl Jam testified before Congress regarding Ticketmaster’s monopoly on ticket distribution in the United States (concert venues signed lengthy, exclusivity agreements with Ticketmaster, preventing bands from selling cheap, low service charge tickets themselves.) The DOJ opened an anti-trust investigation shortly there after. Suspiciously, the investigation was abruptly closed due to “a shortage of resources.”

Ticketmaster is the perfect example of an evil corporation. Suing individuals for things they wish to do themselves, strong arming prosecutors in to filing criminal charges and using taxpayer money to squash out potential competitors, and even possibly bribing government officials in to dropping an anti-trust investigation.

When Ticketmaster is successful doing this, it encourages other companies to act the same way.

Want to start an online ticket selling web site or mobile app? Good luck, you might end up in prison.