artificial waves in India save the shores!

Check out this cool idea that this company is doing in India: install artificial reefs offshore to protect the coastline from erosion.

As a by product they ended up creating a brand new surf spot, opening up new possibilities to boost the local economy!

Not bad!

quo vadis microsoft?

"A computer on every desk and in every home, running Microsoft software", Microsoft's original mission statement

Microsoft Corporation (MS) born on the 4th April 1975, Aries, has, like men and women of the same age, reached full grown up status. And like human top achievers of the same age is feeling the pressure and anxiety about what to do in the next 20 years in order to secure its place in immortality.


In men and women this is commonly called "the biological clock" and the prescribed solution is: have children! For companies that may not be so simple but MS seems to be trying to do just that.


For 20 years MS has remained faithful to its origins and grew up to become the largest software company in the world; from 1995 it started experimenting with the internet via IE and MSN but remained in the shadow of other rising internet stars. This was also the period in which it started having problems "with the law", namely the anti-trust regulators; in 2001 it entered the game console business and more recently (2009) it decided to launch own brand retail stores.


MS probably guesses that their core software products and approach are dated and it's only a matter of time until open source software (with continuous product development strategy rather than release based strategy as depicted in the figure below) and other innovations such as cloud computing will erase MS's competitive advantage and slowly but relentless erase its software market share.

Having enjoyed only relative success with its new business units, MS stands at yet another crossroad: will it nurture it's more recent offspring knowing that they will likely never be as successful as their "parent"?; will it invest in other brand new business?; or will it try to get back to its core and reinvent itself to maintain (or even improve) its still dominant position in the software business?


MS's current mission statement "At Microsoft, our mission and values are to help people and businesses throughout the world realize their full potential" could apply to almost any business that sells products and/or services to both people and companies. 


It may be a signal of MS's indecisiveness about what it is or the quiet resignation of a mature company that, like a 35 year old pop star, has decided to make its leaving from "very best" albums and remastered versions of old hits.


More to come on this.


note: this post was done exclusively with wikipedia as reference

things can get weird at graduate business schools...

Matthias Seifert is a friendly quants teacher that, through his cheerfulness, just about manages to escape the popularity devastation that often contaminates those who teach what is widely regarded as "the nightmare subject in business schools".

Lately, Matthias has shown in class that, contrary to the prevalent pre-conceived ideas, Germans can also have a pretty refined sense of humour.

However, pretty much like everyone else, Matthias has a weakness: it appears that he is a huge fan of David Hasselhoff (!!!).

This post is for Matthias and all the other Knight Rider & Mitch Buchannan fans around the world...




PS - if you can endure 3 mins of this you will be rewarded with "David's fish bite". Really the créme de la créme of it all...

IT@IE version of a 4square point grade system

In the previous post the author of this blog had the audacity to suggest that new internet golden baby Foursquare for which Yahoo has made an offer of $100M is, business wise, a rip off.

Don't wait for history to prove him wrong. Start doing it now by providing valuable insights and/or data that contradicts his views and WIN POINTS FOR IT!!!

If you win enough points you may become the....aaaa... JEDI of this site (or the HELLO KITTY, if you're a she).

Write about:

1) additional potential customers and/or products / services worth while paying 4square for;

2) how much these customers/products/services are worth in €€€s;
3) any additional stuff that you think might contribute to tear apart this author's argument.

The author of this blog pledges that he will compile all the relevant information, publish it and retract himself should there be enough evidence and/or a compelling case for it.

get macarronated with 4square!!!

   
"In my experience with hundreds of entrepreneurial startups, business-plans rank no higher than 2 - on  a scale from 1 to 10 - as a predictor of a new venture's success"
in How to Write a Great Business Plan by William A. Sahlman. Harvard Business Review July-August 1997


First of all I would like to apologize: I am a graduated economist. And as an economist I am particularly well qualified to grossly miss out all predictions (we call it forecasts...) about the future and then come up with brilliant ex-post explanations about why they were wrong.


This post is about the first part of my skills, applied to the exercise of understanding foursquare business model and predicting its future success.


Foursquare is one of the latest crazes in the virtual wonderworld. On the surface it looks like a basic version of (yet another...) social network site: you sign in, add friends and share with them where you are and what you are up to.


However, Foursquare has a few tricks that make it unique: the first one is that it actually tracks where you physically are when you login to it; the second one is that it comes with a "point system" that can can get you the wonderful honour of  becoming The Mayor of a specific location if you logon to the service in that location more than anybody else. So, for example, my Information System teacher Enrique and virtual wonderworld enthusiast, is The Major of IE because he logs on to his 4square account eeeeeeverytime he arrives at school; last (but not least), the user experience is so well conceived that it feels like a (highly addictive) game.


Simply put: Foursquare is the first crude attempt at getting a legal personal global positioning system whereby you can not only find out where Mr. Joe physically is in a given moment, but also access a database of where he has been to ever since he has decided to join the 4square community.


The current "service" provided by 4square has serious limitations the most important of which being (arguably) that it is really only practical for smartphone users that bother to install the appropriate application to use it. This reduces drastically the number of users that it attracts, but, nevertheless, it has not deterred the likes of Yahoo to present a lavish $100M offer for the startup.


Ok, so we know what it does and we know that Yahoo is willing to pay a fortune for it. But why? What is the business model behind it?


Follow me in answering three critical questions to solve this problem: 1) who will be willing to pay to know where we are and where we've been; 2) why would we publish this highly personal information and 3) how much would the customers be willing to pay for this. 

1) Who wants to pay for personal geo-positioning?


A few examples quickly come to mind:

• governments – this is the obvious one. Even setting aside controversial  big brother type applications such as “Mr. Anderson who has an outstanding parking ticket is just across the street from the Police Station. Agent Smith: go get him!”, personal geo-positioning can certainly be used to improve emergency services and crime investigations. 

• companies – the classical application that we have already seen in science fiction films like Minority Report is to advertise a custom made promotion when the person enters an area close to where the shop is. Additionally, marketing freaks are likely to reach a state of intellectual ecstasy from looking at an accurate report stating something like "on average there are 2,535 young males with income > €50,000 per year that pass through the number 25 of Calle Ortega y Gasset every day whereas only 527 that pass through the number 10 of Calle Serrano". Particularly, if they are responsible to decide the location of the next Rolex shop featuring the new collection specifically targeted for young men...

• individuals - even with mobile phones we are sometimes not clever enough to find a friend which is standing across the street: "where are you?"; "I'm here", "here where?", "in front of the Corte Ingles", "no, I'm in front of Corte Ingles!", "I don't see you. Wave good bye", "I'm waving", "!"#$%&$", "...aaa, in which entrance are you....?".

This last point holds the clue to the 2nd critical question…

2)     Why would I want to disclose my whereabouts to the world?

For as much as companies (and, in particular, marketing&advertising professionals) would like to believe that we would be ecstatic to be bombarded with custom made promotions about the shops in the street that we just walked in, or that web enthusiasts may like to think that the rest of the world may want to share their wherabouts online because "it's neat to be the Mayor", I would consider a fair assumption that most of the people would only do it if they were unambiguously better off in doing so. 

For example, if you were looking for a bank, a taxi, or a doctor in the area. Quid pro quo, I show where I am if you tell me where I can find what I'm looking for.

3)     How much would the customers be willing to pay?

It follows that the success of this business lies in its universality: what good is any of the services described if   only 1,000,000 in the world have signed in, even less businesses and no government authorities? The current limitations of foursquare, both technical and in terms of market penetration, explain why it is currently not making money: after all, Google would not be the giant it is today if it was used by 0,015% of the world population and could only search an even smaller percentage of available pages...


I will not dare putting a €€€ value on the venture, but at this stage I am confident enough to conclude that:

•  4square is (really) a personal global positioning system and database that sells real time information about the location of people and other entities (such as companies and government agencies). 

• The business model requires that the customers provide their information for free in exchange for the privilege of paying a fee to access the information of other customers.

• The key success factor of the business model is the capacity to, eventually, reach everything and everyone (universality).

What are the odds that this will work out? Well, Yahoo thinks they are good enough to give $100M for what is currently nothing more than an embrio of a business.

Unless, of course, my analysis is flawed or incomplete or plain wrong (or all of the previous!...) and there is some other ingenious way of making money out of it. Surely Dennis Crowley, named one of the "Top 35 Innovators Under 35" by MIT's Technology Review magazine (2005), CEO of 4square must have it all figured out!

This thought kept pounding in my head: "what am I missing?", "where did I go wrong?"... after all, as an economist I am used to making predictions (ehm, forecasts) that are grossly wrong but, as a former consultant, I am not trained to admit mistakes... So, being unable to come up with an original idea that could better explain the hype around 4square, I did what any sensible person in trouble would do: google it and hope the light would reveal itself.

I need not go far: the first link I opened had the key to the mystery. It was from a news channel in Brazil that informed that the Rio de Janeiro based fast food chain Spoleto was launching a new promotion that went something like "Use Foursquare and get macarronated" (as in, eat free macarroni).

It hit me! Foursquare's business model is much, much simpler than my previous description: take an existing successful idea (social networks), make a twist on it (call it "mobile social networks"), add charm and media attention ("like breakfast with opinion makers that video posts on youtube"), ride the "wave of the hype" for a while and wait for an industry giant to get "macarronated" with the stuff, in this case, for about $100M (or more....).

You don't believe this version? Check out Dennis' vision and where his previous venture dodgeball ended up...  (just focus on last 4 sentences of paragraph 2)

the financial crisis in a nutshell

This blog was supposed to be mostly about the extraordinary insights that a highly "sharp and sophisticated" person could bring to the world as he explores the virtual wonderworld (or shall I say, underworld?...).

However, I'm making an exception as and will post this little video that follows up from the discussion we had today about the financial crisis in the economics class.

This video has got all we talked about in class regarding the Fanny Mae's and the big investment banks ran by "highly sharp and sophisticated" people. And there is a little bonus: if you ever wondered REALLY why the heck we are bailing the banks out wait for the punchline at the end!

all rights reserved

 "IT@IE copyright statement: the author of this blog hereby auhtorizes every PERSON to copy, publish and/or broadcast all materials posted in this blog wherever and whenever you see fit as long as you tell me about it"

Basically if you can prove that you are a biped with complex communication skills and opposing thumb you get copy and paste anything you like from here. Just keep me posted about it…

Copyright discussions have recently been BIG! Prosperous, long established cash cow industries that have been sucking the marrow out of artists’ work for decades are suddenly becoming the paladins of the protection of their employees’ original creations. They are naturally concerned of protecting the generous rewards they give the artists that are lucky enough to be on their payroll: something between 0% to (maybe) 8% of the proceedings (8% only if you happen to have” Madonna like” bargaining power…).


I suspect their efforts will be short lived. Throughout the history of the industry technical innovation has reshaped business models creating new jobs and firms whilst destroying or severely damaging others. Have a look at this clip and make a short (but highly enlightning) table linking, on one side, the technical innovations and, on the other, who benefited and who lost with it.

http://www.youtube.com/watch?v=ZQW6KTt5dvk

Without underestimating the strength of the powers that currently are, I suspect it will not be possible to prevent the free spread of digital content, be it music, video, text or other. The winners will eventually be those who will better adapt to this new reality.

Which brings me to the beginning of this post and the blog’s copyright statement: there is no way I can control what you do with “my” content so I might as well play the generous and care free soul and let you have it as if your own.

It is interesting to see that there are other people which are doing the same as me lay in two groups: "the nobodys" that have got nothing to lose and have no other way to get the content out there anyhow (that’s me); and "the celebrities" who can afford to get their stuff out for free because they have other sources which will benefit from the widespread distribution of their music (that’s the Radioheads’ and company).

The great resistance to this comes from the guys in the middle. They rely on selling their content for a living and cannot get to grips with giving it out for free. This great example of the “donut principle”, where there is nice sweet cake for the extremes but a big hole of nothing for the mainstream middle, may be one of the reasons why the industry has been so sluggish in finding alternative business models for musicians.

I wonder if the this will lead to a very unequal industry characterized by zillions of "nobodys", very few "celebraties" and a big hole in the middle... any thoughts on that?