In August 2011 Google acquired Motorola for $12.5 billion. As reported here and by others, many speculated that the acquisition would cause many handset manufacturers to consider developing their own operating systems. There has been little news on the development of alternative operating systems until today's announcement in the Yomiuri Shimbun, Japan's leading business newspaper. Yomiuri Daily reports that Docomo and Samsung are partnering to develop an operating system for cell phones. Docomo is the largest cell phone operator in Japan.
In addition to competing with Apple and Google in the smart phone market, the new OS will make it easier for carriers to offer their own services to subscribers. This feature of the OS may be attractive to cell phone carriers as they fight to avoid becoming just low value-added networks. However, an operating system built for the carriers rather than customers looks like a questionable strategy.
This article from IP Carrier describes the issues facing carriers.
I have posted many times on financial models and business plans. I have said repeatedly that VCs find it easier to look at the financial model rather than the business plan to understand the business concept. This quote from Tom Kleiner, a founder of renown VC firm Kleiner Perkins, makes the point nicely:
“I don’t know how to write a business plan. I can
only tell you how we read them. We start at the back, and if the numbers are
big, we look at the front to see what kind of business it is.”
My first book, Billion Dollar Company: An entrepreneur's guide to business models for high growth companies, integrates business concept and financial model development.
Rangan.com is an excellent blog that deals with communications and public relations for businesses. In a recent article they had an infographic on why people use social media. Basically, usage of social media produces the same dopamins as sex and food. The article also states that people would rather give up sleep, alcohol, cigarettes and sex in order to keep their social media. Strikes me as bizarre that social media is more popular than sleep or sex. Maybe that's why the Y generation is not getting married:)
While the biology may explain the phenomenon, what triggers the behavior of social media? I think the explanation goes back to early child behavior. Children are able to teach at age two before they can read and do many other things. Social media is a form of teaching, perhaps through showing off. Why do so many people repeat the same quotes from Ghandi on Twitter? Everybody wants naturally to teach.
The second reason everybody uses social media is that it enhances self-esteem. Social media is the adult version of presenting a finger painting to a parent for approval. I believe that much of computer usage in general relates back to self-esteem. Computers make output very easy and creative and artistic output much easier, which increases the opportunity for self-esteem building outputs dramatically. This blog might be evidence. One might also cite Github, the open source coding forum, as another example.
I think more research is needed to show the relationship between self-esteem, computers and social media, but there is more to learn than just the biology.
Edudemics has an interesting post on integrating technology in the classroom. They offer a matrix developed at the Northern Arizona University to demonstrate the phases of integration, as shown below.
The matrix has two shortcomings.
The developers of the matrix assume that technology must be phased in. Overlooked is the natural adaptive abilities of children.
The most successful projects using technology in classrooms use a total immersion approach where the laptop or tablet is constantly used by every student from day 1 in all curriculum.
The matrix was developed for teachers and overlooks the objective--children learning. We will never learn the proper way to use technology in the classroom until the approach starts with a focus on the natural abilities of the child and how they learn.
The views expressed herein are my personal views and do not represent the views of any organization, client or university with whom I am affiliated.
Joi Ito, the Director of the MIT Media Lab, did a piece on Google Think about the four trends he sees for 2013, which are listed below:
Hardware as the new software "Supply chain provider companies are making
the cost of manufacturing [hardware] and risk really, really small.." There is much new hardware being developed, much of it open source. I expect that this will produce many appcessories. Appcessories are peripherals attached physically or through wifi to tablets to capture data (sensors) or to create new experiences. Very big opportunity.
Gene Printing "Bio-fabricating
genes using something called a 'CMOS' chip, which basically allows him to print
genes using machines instead of people". Biology is not my field but the idea of using CMOS chips is logical. CMOS chips are the special purpose chips that you find in your car for example.
Life Long Learning"It
has always been my [Ito] opinion that 'education' is something people do to you,
whereas 'learning' is something you do for yourself." My thoughts on life long learning are here. Lifelong learning is perhaps the most important lesson to learn from schooling.
Survival of the Quickest "You
want to have your peripherals wide open and adapt as quickly as you can. I
think that will be an important survival trait of people and companies in the
future." The abundance and speed of information has been a recurring theme here at SF.The implications for the management of organizations is an under appreciated point. A post I like on that theme is here.
If I do a post for the future of 2013 I may write about this relationship:
I began studying and thinking about social entrepreneurship about 3 years ago when I joined OLPC. I have written about 20 posts on the subject for Sophisticated Finance. What I think were two of the best posts are here and here. Teaching and lecturing helped me to advance my thinking. My latest thinking is that social entrepreneurship is not a meaningful distinction within entrepreneurship. In other words, we should just focus on thinking about and teaching entrepreneurship.
In some recent writings the CEO of the Kauffman Foundation, Carl Schramm, has expressed the same view. Some others also share this view, such as this article--"Predicting the Future of Social Entrepreneurship". Despite the hype and increasing popularity, people are coming to realize that social entrepreneurship is not a meaningful distinction in the discussion of entrepreneurship, or perhaps more precisely such a distinction does not contribute to a greater and more meaningful understanding of the subject--entrepreneurship.
I began my study of social entrepreneurship focused on the "social" difference in this form of entrepreneurship. Soon I came to realize that "social" implied some normative judgment. These social entrepreneurs were doing something "better" than typical entrepreneurs. This distinction caused me some concern because I had never thought that for-profit businesses were bad or less admirable than other types of organizations. Curing cancer in Palm Beach seemed as worthwhile as curing malaria in Africa.
Along the way to trying to understand social entrepreneurship I read Michael Porter's new work on "shared value". Porter's thesis seemed obvious to me, but it reminded me that any discussion of a business model needs to be grounded in economics and more precisely in the micro-economic concept of value. This prompted me to look for an economic definition of social entrepreneurship.
This search lead me to the work of Felipe Santos at INSEAD. Santos defined social entrepreneurship as maximizing value creation and satisficing for value capture. In other words, one transfers as much value to a recipient as possible provided that cash flow is sustainable. For the benefit of the recipients, the shareholders or funders foregoe a market rate of return by accepting only sustainable cash flows, cash flows sufficient to stay in business (after some investor return).
I liked this definition because it made no normative judgment, but how did it explain why so many people were "doing good" through social entrepreneurship. Then I realized that the causes of the "do gooders " could be explained as simply product-market decisions. C.K. Prahalad's work on the bottom of the pyramid, the 1 billion people living on $1-2 per day, basically advises one to develop products that poor people can afford to buy as the means to solve their problems.
I feel very comfortable thinking of the bottom of the pyramid as simply another market. Ten years in Indonesia (per capita income $600 at the time) probably made this an easy decision for me. Also, this approach to thinking of the poor as a market is consistent with how Clayton Christensendefines markets in terms of the "underserved".
In summary, "social entrepreneurs" focus on a particular market of needy people and have lower return expectations because they elect to transfer more value to the recipients. These distinctions suggest to me that traditional entrepreneurship can achieve all these ends without the need for a new discipline.
I am co-authoring a book with Chuck Kane for Oxford University Press titled "The Business of Social Entrepreneurship". Chuck is an Instructor at MIT Sloan and he and I have taught courses there for the last two years in January on social entrepreneurship.
I met Adrian Garcia several years ago when he worked at MesoAmerica, perhaps the first venture capital firm in Central America. I would also point out that Adrian is a graduate of the MIT Sloan School, so we have some other shared interests.
Recently Adrian and a partner, Allan Boruchowitz, founded Carao Ventures, a venture capital firm that specializes in early stage tech companies targeting the Latin American market. What differentiates Carao from most VCs is their approach, which I quote below:
"Carao Ventures has an early stage startup program where one of our partnerstakes an active role in the startup through the next stage of company development, participating in relevant roles such as strategy, finance, marketing and others."
I saw on Google Reader today a previously overlooked feature--Trends. When I clicked on it I got analytics on my blog reading. The first statistic surprised me (and prompted this post), which is below:
"Since July 15, 2007 you have read a total of70,466 items."
Based on another statistic on Trends, I have seen 3.5 million blog posts since 2007. I read about 2% of the articles I see. What blogs provide the most information of interest to me are shown below:
3Quarks is the most eclectic. Hacker News is a must read. NYT Technology just a habit.
A colleague at MIT of Marvin Minsky once described Minsky to me as "the smartest person in any room". Every time that I read something by Minsky I better understand the comment. Today's Minsky quote is on learning from this article, which also includes comments from Alan Kay.
"The most important thing in learning is copying how other people think. I don't think learning by doing really gets one to emulate how other people think. The way to learn something hard is by getting new ideas. How do you do something in your head? ... We need a cultural situation where every child has an adult friend who they can emulate. And communicate their ways of thinking to the child. Do something that gets each child to spend a few hours a month with someone worth copying. What we do now is to take a six year old and send him in a room full of six year olds. The result is that every person grows up with the cognitive capability of a five year old."
Minsky's point on learning is a recurring theme for him. A quote from the SF post on the 25th anniversary of the MIT Media Lab is below.
He [Minsky] said that when you see a great idea do not bore down to better understand the idea. It is much more important to ask the person how they came up with the idea. Understanding how original thinkers think about problems is the especially valuable part because a similar approach could be used to solve other big problems. Minsky also mentioned the concept that great ideas frequently come where several disciplines intersect. (I always find it fascinating when a great thinker is interested in how other great thinkers come up with their ideas. Obviously a lesson for all entrepreneurs.)
The Minsky article is courtesy of @OLPC_Mexico and my friend Mariana.
Last week I wrote a post--Corporate Performance Raises Questions-- that discussed the inverse relationship between corporate profits in the U.S. and wages earned. Corporate profits are at an all time high and wages earned as a percentage of the economy appear to be at an all time low.
Paul Krugman, Nobel Laureate and NYT columnist, wrote an op-ed piece on December 9 citing the same statistics and making a point that IT technology is not only replacing low wage jobs but also more value added positions. My post on the disruption by IT of higher value positions appeared in this August 2010 post--The Future of Professional Services. Mr. Krugman's article-Robots and Robber Barons--is here.
I doubt Mr. Krugman reads this blog, but if you want to know what he will be writing about, read Sophisticated Finance :)
Thanks to my friend, Martin, for pointing me to the Krugman article.
Yesterday I was preparing to teach my January class at MIT Sloan (ignore they got my name wrong) and came across an interesting article--Identifying the Drivers of Social Entrepreneurial Impact--by Paul Bloom and Brett Smith (1). I like models, heuristics and other systematic theoretical approaches to business problems. Such theory generally provides a comprehensive starting point to understand an issue.
The article identifies seven capabilities an organization needs to achive scale on social ventures:
Staffing--"the effectiveness of the organization at filling its labor needs, including its managerial posts, with people who have the requisite skills for the needed positions, whether they be paid staff or volunteers"
Communicating--"the effectiveness with which the organization is able to persuade key stakeholders that its change strategy is worth adopting and/or supporting"
Alliance building--" the effectiveness with which the organization has forged partnerships, coalitions, joint ventures, and other linkages to bring about desired social changes
Lobbying--"the effectiveness with which the organization is able to advocate for government actions that may work in its favor"
Earnings generation--"the effectiveness with which the organization generates a stream of revenue that exceeds its expenses"
Replicating--"the effectiveness with which the organization can reproduce the programs and initiatives that it has originated"
Stimulating market force--"the effectiveness with which the organization can create incentives that encourage people or institutions to pursue private interests while also serving the public good"
1 and 5 are not unique to social entrepreneurship and required for every for-profit business model. 2 is a critical insight and the key to establishing "value creation" and "brand" in a "change" strategy. 3 is particularly challenging given the large number of low quality partners available. 4 I tend to ignore in favor of individual empowerment but it may have value. 6 is the real key to scaling and particularly challenging in the developed world when one considers replicating selling, distribution and perhaps manufacturing. 7 is sort of a key performance indicator. When the private sector starts to compete with you then scaling really starts, but the question arises about whether you can still compete. A serious approach to 1-6 will surely help.
For anyone perhaps silly enough to approach social change through a non-profit (except for museums, performing arts centers and a limited number of other projects that cannot attract capital from financial markets), I think the seven capabilities also apply.
(1) Journal of Social Entrepreneurship Vol. 1, No. 1, 126–145, March 2010
Forbes has a story today on Mary Meeker's annual report (link to slide deck) on trends in the Internet. Meeker is a former star equity analyst at Morgan Stanley and now at the renown venture capital firm Kleiner Perkins. Three slides prompted some thoughts.
The increase in student loans in the last ten years is staggering. The increase in loans is in part explained by increased costs for higher education and increased enrollment. However, the shear scale of this debt concerns me and a marked contraction in such borrowing would have significant negative consequences for institutions of higher learning.
The growth in digital information will accelerate which reinforces the point that curation of data is a huge, unheralded business opportunity. I have talked about this point many times but there is still little effort to exploit it. LinkedIn News is a simple example but this approach just scratches the surface of the opportunity.
Tablets have caught on very quickly with children, as shown below, but the key question remains. Will parents pay the iPad/mini-iPad prices, especially for younger children. A rugged tablet built for a child at a better price point still looks like an undeveloped market.
Jerry Haar, the Director of the Pino Entrepreneurship Center at FIU (where I am on the Board), introduced me to Todd Oretsky, the Founder of Pipeline Brickell. Pipeline Brickell is a somewhat unique concept which combines shared space with mentorship and access to capital for startups and early stage companies. What makes the concept different is that mature high tech companies, such as Google, and services providers, such as IP attornies, also use the space. Looking for an expert on an issue, the answer may be just down the hall.
Pipeline Brickell has as well thought out office space as I have seen anywhere...in the world and beautifully done. Definitely designed for collaboration and creativity. Perhaps not surprising given that Oretsky came from the world class law firm of Skadden Arps. Oretsky plans to expand Pipeline to cities in Latin America and to link networking opportunities across multiple cities.
Silicon Valley Insider had an interesting article that showed two key statistics for U.S. corporates:
Corporate profit margins are at an all time high
Wages as a percentage of the economy are at an all time low
These two factors are explained in part by the significant improvement in productivity over the last 20+ years, in large part due to the wide ranging benefits of IT adoption, as shown in the chart below.
Image credit: Teachmefinance.com
As productivity improves through the use of IT, workers are eliminated or reduced. With more workers chasing a shrinking number of jobs, salaries offered can be lowered which also benefits profit margins.
However, as SVI points out, passing all the benefits of increased profitability on to shareholders (and senior management) does little to motivate workers. Workers with a lower standard of living are not going to remain productive at historic levels.
