My First Day

Back in November, in My First Post, I said that I started this blog because, being newly self-employed, I expected to have "... enough that I felt free to say, and enough time to say it." I also expected "... to cover a fairly eclectic (i.e. scattered) set of topics for a while, until I either find a niche or fade away." Looking back, I did cover an eclectic set of topics, and I did fade away from posting after a while.

As of today, I am no longer self-employed -- today was my first day as a Google employee. I might start posting again, but not until I get my bearings in my new role, and once again find enough worth saying that I feel free to say.

Until then, thanks for listening.
- dG

Paying Attention (and Money) to Google

Imagine a company whose business is buying and selling widgets. The company gets type-A widgets from its suppliers and resells them to its customers. Add one small wrinkle on the supply side – the company acquires many of its type-A widgets by barter. It manufactures personalized type-I widgets as trade goods, and asks its suppliers to pay type-A widgets for type-I widgets.So far, there’s nothing unusual about that business. Now let’s replace type-A widgets with “attention” and type-I widgets with “information”. Our company now manufactures personalized information, asks its suppliers to pay attention in exchange for that information, and then resells that attention to its customers.

Sound unusual? I don’t think so – I think that’s the business engine behind media/advertising companies in general, and Google in particular. Audiences are attention-suppliers, and advertisers are attention-customers.

---

Testing the Model

Q: But wait – why would anyone pay real money for a fuzzy idea like attention?
A: Because they believe that paying attention is often a first step towards paying money – it’s easier to buy something you’ve first thought about. That’s the whole point of (much) advertising.

Q: What are some examples of companies in the information-for-attention-for-money business?
A: Network television delivers information in the form of programs, and resells viewers’ attention by inserting commercials into gaps in the programs and by inserting product placements into the programs themselves. Newspapers deliver information in the form of news, and resell their readers’ attention by inserting advertising sections into the paper and individual ads into the news sections themselves. Google delivers information in the form of search results, and resells searchers’ attention by adding “sponsored links” to the side of the page.

Note that information-for-attention-for-money businesses often serve the same audiences as information-for-money businesses. Cable television, investment newsletters, and subscription websites provide information very similar to that available from the three industries listed above. Information consumers can choose to pay an “attention tax” to the first set of providers, cash to the second set, or some mix. Although the two business types serve the same audience, their business models are very different – in the first case, the audience is a supplier and the advertiser the true financial customer; in the second case, the audience is the customer also.

I --> A --> $	I --> $
network TV	cable TV
newspapers	investment newsletters
Google	subscription websites

Q: Is attention easy to resell?
A: I’m far from an expert here, but my guess is “sort of – it’s easy to resell; it’s hard to resell well.” Attention is easily lost and damaged in transit:

• Shifting my attention a long way in mental space (e.g. from a TV show about the Rose Parade to a commercial for beer) is likely to lose my attention. Shifting my attention a shorter distance (e.g. from a TV show about the Rose Bowl to a commercial for beer) is more likely to deliver it in good condition. That’s the whole point of targeted advertising.


• Shifting my attention a long way in physical space (e.g. from a web page to the bottom of the page) is harder than shifting my attention a short way in physical space (e.g. from a web page to a popup ad obscuring that web page). That’s why advertisers are always trying more intrusive ad placements.


• Shifting my attention dilutes the value of the information I came for in the first place. I choose to pay attention to you because I value the information you provide me. If you move too much of my attention to something else, I’m getting less information bang for my attention buck, and am therefore likely to start paying attention to someone else instead of you. That’s why advertisers don’t always use the most intrusive ad placements possible.

So What?

Is this model useful, and if so, how? I think it helps to understand the forces shaping Google's market, and therefore helps to understand what they and their competitors are likely to do next. If I were Google, I would think about ways I could add more and better attention to my inventory, including manufacturing more and better information to trade. If I were in the information-for-money business, I would think about what it means for my audiences to have a choice of information sources, some of whom only charge attention, not cash. And if I were in the information-for-attention-for-money business, I would recognize that I'm competing directly against Google, and think hard about how to differentiate my information and attention offerings from theirs.

I'll post more on these fronts as my ideas develop.

- dG

---

References

• Geoffrey Moore's recent post on Google—What’s the big idea? suggests that the disruptive innovation behind Google is recognizing that "Any stream of electrons delivered over the Internet to a human being on the other end, regardless of whatever attributes it may also possess, is a form of media, and can be monetized as such."


• Michael Goldhaber's 1997 article The Attention Economy: The Natural Economy of the Net" and Davenport and Beck's 2001 book The Attention Economy: Understanding the New Currency of Business explore some related aspects of the economic value of attention. (I haven't read the book, just the reviews.)

Squid Labs Salon (6-dec-2005)

In Neal Stephenson’s Baroque Cycle trilogy (Quicksilver, The Confusion, and The System of the World), there are a number of scenes portraying meetings of the Royal Society of Science in its early days. (They're too long to include here - see pp. 183-186 of Quicksilver, or just search for "Royal Society Meeting", for an example.) I was struck by the eclectic no-boundaries mix of topics, the “anything’s possible” attitude of the participants, and the juxtaposition of wide-ranging theory with very specific practice. I have no idea if he accurately captured the feeling of those actual meetings, but I know he did a good job of anticipating the feeling of a meeting I attended earlier this month.

---

Squid Labs is a Bay Area engineering consulting firm. They sponsored an informal salon that pulled together a couple dozen presentations, described (roughly in the order they were presented) below.

• Laser-scored origami: An origami artist showed off some of the creations he made by using a computer-controlled laser-cutter to pre-score the fold lines into the paper. The scoring let him expand his already impressive range of work to include even more complicated forms, including curves.

• Yew bow: At the previous salon, someone demonstrated how to shoot arrows using a bow made from cross-country skis. This time the material of choice was a 5-foot-long yew branch (collected from fallen wood, of course, since everyone knows it has better properties :). Notable quote to encourage audience participation: “I‘ve got arrows; we’ve got an alley”.

• Pop-up font: You know those pop-up books that make all kinds of shapes lift up when you open the pages? Saul wanted to make some pop-up text, so he designed a font, complete with fold marks, that he could use to drive the laser-cutter to cut and score any message he wanted in cardboard.

• Holiday crackers: A couple of people showed us how to make holiday crackers from readily available material. They bought some “pull string get spark” starters in Chinatown, a variety of flash cotton, paper, and string at a fireworks supply site, and assembled several crackers while riding BART to the salon. Their version is more dramatic than the commercial variety – pulling the string produces a 6” burst of flame. (My 4-year-old son loved the spare that I brought home.)

• Microwave fun: I’ve seen microwaving a light bulb to get it to light up; I hadn’t ever thought of putting the base in a cup of water to keep it from sparking. Another fun trick – measure the frequency of your micro's wave’s by using thermal paper (e.g. from an old fax machine) pressed to a wet paper towel – you’ll see “hot spots” separated by the wavelength (in this case 12.2cm). And finally – microwave grape plasma - tricky to make work, but impressive if you pull it off.

• Racecar shoes: A shoe designer showed an early prototype of some new kids sneakers. They look like little racecars, with the bonus feature that if you hold the “key” next to the sneaker, the headlights turn on and you hear the “engine” revving up.

• Cyclist air filter: A bike commuter decided to do something about breathing car exhaust every day, so he rigged up a personal HEPA air filter out of a vacuum cleaner bag in a backpack, some tubing, and a dive mask/snorkel. (When asked if he actually wore the rig in public, he responded “no comment”.)

• Flocking birds fight cybercrime: A researcher at Paypay described and demonstrated an approach for finding needles of fraud in a haystack of transaction data by using an approach called particle swarm optimization. The first step (which is proprietary and wasn't discussed) is determining what fraud smells like. The second step is, roughly speaking, to turn a flock of virtual birds loose on your data and have them all look for bad-smelling regions. The trick he showed was having each bird respond to a mix of "social" (look where the flock has had the most success) and "individual" (look where I've had the most success) motivation, resulting in collective behavior that was pretty good at finding global peaks while avoiding getting trapped on top of local hills.

• Shared bike lockers: One of the people working on the Bike Link project for getting more use out of bicycle lockers at rapid transit stations described and demoed the core technology.

• LED bike wheel: Another bicycle commuter (we were near Berkeley :) showed off the light show he built onto his wheel By hooking up four spoke-aligned rows of red/green/blue LEDs to a programmable microcontroller at the hub, he's able to create dozens of different patterns (many vaguely Spirograph-like) as he rides.
  

• Wireless motes: Elaine Cheong from Berkeley showed us some prototype “motes” (miniature distributed sensors that communicate wirelessly), and demonstrated some software for simulating their behavior.

• Sample size = 1: A paper by Seth Roberts (of Berkeley) was summarized (not by Seth). The paper describes a variety of physiological and psychological experiments he ran on himself over several years. One of the more interesting results was successfully changing his body's target weight (it's "set point") by regularly consuming flavorless calories in the form of sugar water. The presenter was in the process of trying to duplicate the results on himself.

• Pedal light: Another bicyclist showed a way to build a mini-generator into existing bike pedals, so that your pedaling would automatically light up some rear-facing LED’s.

• ROKR replacement: a Motorola employee showed us his design for a better combined cell-phone/music player than the ROKR – he velcroed an iPod Nano to the back of a Motorola Razr, and demonstrated all the resulting features (including the ability to balance vertically while sitting on your desk). (Your call how far his tongue was in his cheek.)

• Consciousness and God: Frank Heile presented a paper on Primary & Symbolic Consciousness, in which he suggests that humans have two parallel mechanisms for processing and responding to the world. The lower-level one is often in charge, but the higher-level one is the one that uses words, and hence the one in which our sense of identity resides. He suggests that at least part of the reason humans have a concept of God comes from the interplay between these two systems.
  

• Monetizing plastic: The inventor of a clever new plant hanger, Hangit, talked about his quest to make money from a cheap piece of plastic. (He cited that little table-shaped thing that keeps the top of the pizza box from sticking to the cheese as one of his inspirations.) He successfully created and shipped a useful-sounding product; it's too early to know if he will be equally successful at making money from it.
  

• Aero lamp: One of the designers of an airplane-shaped lamp made from laser-cut aluminum and steel talked us through the design process. One interesting point – they decided to “open source” the design, so anybody could build their own copy of the lamp if they had the right tools/materials. Another point – the economics of China. In quantity 1, it cost the designers $400 to build a lamp. In quantity 10, it would cost them $200 each. If they ordered 1000 from China, the cost would drop to $25 apiece.
  
  

---

My personal reaction - "wow". I love living in a world where people have that much passion on that many different topics, and have the right mix of persistence and knowhow to turn their passions into practice. Next time, I intend to have something of my own to show off.

- dG

The Long Tail – A Short Introduction

The “long tail” is an idea that’s been getting a lot of buzz in the tech blogosphere over the last few quarters, often by the same people discussing (or dismissing) “Web 2.0”. However, based on a very informal survey I’ve done over the last few weeks, it hasn’t yet spread to the mainstream. I think it’s a powerful idea.

This post is an attempt to introduce the idea of the long tail to more people. (And, selfishly, to clarify my own understanding in the process.) Note that I have no hard data here, and am not attempting to be rigorous – this is a qualitative introduction only. I first came across the idea in Chris Anderson’s Wired article – see his website for a much deeper discussion with more insight into real-world numbers.

---

In a nutshell.

I think it’s easiest to start with an example. Let’s imagine a graph of the number of books sold by your neighborhood bookstore. (For example, Kepler’s, in front of which I’m currently writing.) Draw a vertical bar for each title, with the height of the bar determined by the number of copies of that title sold each month. Sort the bars from tallest to shortest, so the best-sellers are on the left, and the niche titles on the right. The graph will look something like:

Now – draw the same graph for Amazon. By definition, the rough shape will be the same – there will be a tall “head” of hits on the left, and a shorter “tail” of niche titles on the right. However, Amazon has a much bigger inventory (although nowhere near as nice ambience :), and there’s reason to believe that a lot of Amazon’s sales come from books far down their best-seller list. If true, Amazon’s graph will look something like:

The central idea of the long tail is that, in today’s world, the proportions of many such curves are changing, and the tails are growing longer.

That means that the relative importance of “niche” offerings vs. “hits” is increasing. It does not mean that hits are going away, or that we’re shifting to a completely flat world where all books are equally popular. It does mean, though, that the total contribution of niches is climbing compared to the total contribution of hits.

If I had hard data and wanted to quantify things, I would look at metrics like the mid-point of total sales – at what point on the curve is the area to the left (total sales of books more popular than the mid-point) equal to the area to the right (total sales of books less popular than the mid-point). In a short-tail world, that mid-point is pretty far to the left, and therefore represents a fairly popular offering. In a long-tail world, that mid-point has shifted to the right, and therefore represents a less popular offering.

---

So what’s going on here?

Is this just about books? No. The dynamic of a weight-shift from hits toward niches applies across many industries and domains, including:

• Television channels. Not that long ago, most markets had much less than the 10 or so possible VHF stations. Then UHF added the potential of a couple of dozen stations. Now cable makes it’s easy to have hundreds of choices.
• Movies. Old movie theaters were designed to give large audiences the choice of one or two films. Then they started sub-dividing those big rooms. Now a dozen or so screens is normal, and only occasionally on the release of big hits do they show the same title on more than one screen.
• News. The authoritative voice of the news used to be a network anchor (you had a choice of two or three) your local paper, and one of a handful of national/global papers. Now, not only have the number of network anchors and easily-accessed newspapers / newsfeeds proliferated, the entire MSM (“mainstream media”) has had the long tail of the blogosphere appended.
• Cars. We’ve come a long way from Henry Ford’s one model available in “any color you want, as long as it’s black”.

In my opinion, this shift is driven by lower transaction costs. The dramatically lower level of information friction means that it’s easier for more consumers to connect with more suppliers. That means there are more opportunities for people to bump into more stuff that they want. Suppose I want to learn about lemurs (a long-tailed primate). Whereas before I might have settled for a pretty-good information source (e.g. a book on mammals), or just given up and decided to learn about something more popular instead (e.g. dogs), now I can easily choose between several books that are exactly on topic. Because I have access to many more choices, I’m more likely to find a perfect fit. And because my perfect fit is different from yours, at least some of the time I’m going to choose things that are less popular than I would have settled for choosing before. Hence, the tail gets longer.

Are long tails good?

In my opinion - yes. Transactions happen when a buyer values something more highly than a seller, and when there’s an opportunity for the buyer and seller to connect. Transactions create value, because both parties are happier with what they get than what they give. (Otherwise they wouldn’t choose to consummate the transaction.) In economics, that's called the transaction surplus, and negotiating prices is all about deciding how to split the surplus between the buyer and the seller. In all cases, though, value has been created by the swap.

In a long-tail world, buyers have more choices. Instead of being limited to a few best-sellers, they can and do pick some newly available niche items. Therefore, they are choosing things they value more, which creates more value than was possible in a short-tail world.

Note that not all transactions are as directly financial as buying a book – I might be exchanging my time, my attention, and/or my money for your words, your ideas, and/or your stuff. The dynamics are the same, though – now that it’s cheaper and easier for us to choose between many ways to meet our needs, it’s more likely that some of us will make less popular choices, and our collective weight will shift from hits towards niches.

- dG

Disney p.s. - I Saw Fireworks

One thing to add to my recent post about Disneyland technology - their fireworks. Not only did they do the usual great show with synchronized sound, light, and fire; they also included a few shapes I'd never seen before. My previous "how did they do that" highwater mark was the smiley face - a circle, two eyes, and a mouth in three different colors. This time, I also saw:

• a wireframe cube (kind of like a Necker cube, but really 3-D)
• a globe with an equatorial ring (sort of like Saturn), plus a couple of perpendicular longitudinal rings
• my personal favorite - a fully-outlined five-pointed star

Someone must have some great design tools, and/or some great intuition, to get all the right projectiles to burn in the right place at the right time.

(By the way - IMO, the best place to see the show is from Main Street facing the castle, preferably at the end away from the park entrance and near the statue of Walt and Mickey.)

Disney's Magic Kingdom of IT

We just got back from three days at Disneyland. In addition to having a great time in the physical world (California Screamin's 0 to 55 in 4 seconds is just plain fun, even if it is tame by today's standards), I also enjoyed some glimpses into the magic kingdom of technology.

No deep thoughts this time - just some interesting trends and gadgets:

• AstroBlasters: The newest ride at the park is Buzz Lightyear's Astro Blasters. It's a very simple ride - your two-person buggy follows a flat track through a bunch of scenes of aliens and evil robots; you have a joystick that lets you spin the cart to a new heading, but no control over speed or path. The twist is that you have a "laser pistol" that you can use to shoot targets in the scenery, and the ride keeps track of your score as you go. And -- it automatically takes your picture, superimposes your score, and lets you email it to yourself (or to anyone to whom you want to brag). And -- to blur categories even further -- there's an online version of the game that lets people at home form teams with people physically in the park, cooperating to earn even higher scores. Is it a ride? Is it a video game? Is it an arcade game? Is it a mMORPG? I find the blurring of the lines fascinating, and expect to see many more experiments in that kind of blurring in the future.
  
  
• VMK: Disney introduced the Virtual Magic Kingdom, www.vmk.com, this summer. It's a fairly standard MMORPG along the lines discussed in my earlier post on virtual worlds. One small twist is that a big piece of the commercial model is pure marketing -- they're creating more reasons for more kids to want to visit the parks. (See this article on "advergaming" for some examples of and concerns with this sort of marketing to children.) Another, and IMO more interesting, twist is the crossovers they built between the real and virtual worlds. If you correctly answer a few questions in a park scavenger hunt (e.g. "which of the following five animals is not found in Critter Country?"), you get a code good for some virtual schwag (e.g. a fancy sofa for entertaining virtual guests in your virtual house). Again, I expect to see many more experiments with these sorts of crossovers in the future. (FYI - my kids didn't find vmk.com very interesting - other virtual worlds were more captivating. Your mileage may vary, though.)


• May I take your picture? I once worked with a CFO who started his career as a beach photographer - he'd walk up to people on vacation and offer to sell them a picture of themselves, following up (I believe) by snail mail . Technology is changing the mechanics of that business for the better - we saw several generations in play at Disney. (These aren't unique to Disney; I was struck by how many different versions were in use at once, though.)
  
  • Wandering photographers offer free 60-second photo shoots at key points in the park, handing you a slip of paper with a serial number. On your way out of the park, you can walk up to a counter, preview your photos, and pick up instant prints of any that you choose to buy. (One small fun twist - a "point to the ground and look surprised" shot that's doctored to show you looking at a creature popping out of the pavement.)
  • Major rides automatically take your picture at key points (e.g. the big drop), have a bank of displays at the exit to the ride where recent photos are visible, and a counter to buy/pickup prints if you like them.
  • AstroBlasters (see above) not only displayed your picture; it superimposed your score and let you email it to yourself. Note the different commercial model here - the cost was low enough that they made it a feature of the ride, not a direct revenue opportunity.
  • The "visit with Stitch" booth (see below) gave you a wallet-sized card with a personal URL to access your photo online.
  
  I predict many of these mechanisms will converge by tying more and more to your user ID, which you'll carry around on your park pass (as a barcode today, and RFID tomorrow). All sorts of images, events, points, and promotions could be tied to your ID, resulting in a personalized "My Visit To Disney" web page to view when you got home (or from your PDA while waiting in line at the next attraction). If done right, I'd like it as a consumer, and it could easily lead to both more repeat visits and more opportunities to sell me stuff. (Of course, if done wrong, the privacy concerns could kill it before it got off the ground.)
  

• Picture picture. There were many pictures hung around the park of classic Disney scenes - no surprise there. The fun part is that the pictures were actually collages of many small (~1"x2") snapshots of people. Sort of like a full-color version of those old ASCII-art renditions of the Mona Lisa, where each pixel was made up of a character with the right amount of black. To my eye, the visual effect was just okay; the concept, with its implied message of "Disney is 50 years of people", is what made it neat.
  Mashup suggestion: select an image on Flickr/Riya, and auto-generate a collage by replacing rectangles with appropriately colored miniature pictures containing the same tags/people as the original. For example, how about a graduation photo made of scenes from four years of college life, or a 50th wedding-anniversary photo made of scenes from 50 years of of family life?
  
  
• Innoventions is a showcase of almost-available products and technology, often with some heavy-duty advertising for its sponsors. A few things that caught my eye:
  
  • Touchscreen virtual aquarium: a large flatscreen display running a virtual fish tank program (like the screensavers), but interactive - click on a fish and it changes to another, draw a fish and it swims around the tank, click up top and it adds food that the fish swarm to eat, etc. No rocket science, but nicely done.
  • Who needs a lap?: a video display built into a pair of sunglasses, and a little box that projects a working picture of a keyboard by detecting finger motion. Put them together, and we're not far from being able to pack everything a laptop does into an iPod-sized package. (Unfortunately, you couldn't actually play with these, so I'm not sure how usable they are.)
  • Talk to Stitch: step into a small booth with a person-size video screen at the front, and have a conversation with a cartoon character. The sense of actually talking to a character was very good - enough motion, body language, and emotion to feel real (or at least, as real as talking to blue cartoon aliens ever feels :). There's clearly a human operator - the technology here isn't about speech rec and AI; it's about creating a convincing virtual avatar.

All in all, a great trip. I haven't been to other parks recently, so I don't know if Disney is still pushing the edge of what's possible, but I certainly liked what I saw.

Riya Launch - Am I a Dinosaur?

I attended the Riya launch party at Michael Arrington's house Friday night before Thanksgiving. The party/launch felt like a great success, and the semi-public alpha is now underway. But ... there's something I just don't get ... why do people want Riya? It's very cool technology - automatically parsing tons of photos to extract and recognize faces and text is impressive. And the user experience looks good. It's the app that leaves me cold - it scratches an itch I just don't have.

Part of Riya's sales pitch is that there are "30 gabillion" photos out there, and we need better tools to cope. That's just not true in my world - we take pictures, we send a few to family now and then, and we make an album occasionally. To me, digitial photography is a hassle-reducer, not a game-changer. I like not dealing with film, and I like ordering prints online, but moving from atoms to bits hasn't changed the number of images in my life or the way I relate to them.

Tara Hunt of Riya suggests the opposite - she believes that digital photography is deeply disruptive:

Camera companies keep trying to come up with printers that make it easier and easier to print your digital photographs, photo printing outlets give you the option of printing your shots through big machines - but printing out photographs is passe. It is online photo networks and photo sharing that understood the true disruptiveness of digital photography.

If Tara's right, I'm a dinosaur, and the climate is changing. That's certainly plausible - digital photography does dramatically lower the cost of creating/storing/sharing images, and therefore could lead to the kinds of slower and deeper changes that I've discussed earlier. If so, we just need a few more pieces of enabling infrastructure to kick in, and all of us dinosaurs will see the (flashbulb) light.

So how close is digital photo infrastructure to enabling deep change? My opinions are:

• Capture tools are way over threshold - price/performance of digital cameras is great and improving, including ubiquitous camera-phones at the low end. Most images these days start life as bits, not as atoms.
• Management tools are at threshold - desktop support (on both Windows and the Mac) and Web services (like Flickr and, of course, Riya) feel functional enough and almost easy enough for most people to use, once things tip enough for most people to care.
• Display tools are below threshold - systems like Tivo Digital Photo (view my PC-managed photos on my TV screen) and Ceiva (Net-connected LCD picture frame) are good ideas, but IMO aren't yet easy enough to seamlessly integrate into my life.

My bottom line - I probably am a dinosaur, but I'll have lots of company for a while longer. Riya-like technology is necessary to live in a world where we all take and view gabillions of photos, and is helping to pave the way to that world. However, we're not yet there, and Riya alone is not sufficient to take us (or at least, to take me) there. Riya's rate of success will depend on where I fall on the adoption curve - if I'm typical of the early majority, dinosaurs still rule the earth, and Riya's growth will be slow. If I'm typical of the late majority, the dinosaurs are about to die off, and Riya's usage should explode.