“The Not So Global Internet”

Fred Wilson writes about how frustrating it is when companies break the internet:

We are in the caribbean this week celebrating the year end holiday with friends and family. Yesterday we installed a VPN client so that the Gotham Gal could do some online shopping on a website that only sells to users in the US. We also installed a bittorrent client so that a friend of my son could watch films he had rented on iTunes before he came down here.

The latter experience was particularly frustrating. My son’s friend rented the films on iTunes in NYC, flew down here, then when he tried to play them, they would not play because of IP blocking, but the rental clock (24 hours) started ticking anyway and he lost the rental rights he had paid for.

I buy all my movies through Apple TV and am strongly opposed to piracy. But I bet many people who pirate would be happy to pay if it were easier to buy and download content.

Here’s a service I’d love to see. For every Bittorrent file, create a corresponding Bitcoin wallet. When people download the torrent file, encourage them to pay a fee to the Bitcoin wallet. The creator of the content gets to take the Bitcoin. I bet this method would generate considerable revenue for content creators.

Two eras of the internet: pull and push

The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to understand. One simplifying pattern comes from the two types of actions internet users take: pull and push.

Pull Push
dominant platform Search Social
dominant platform company Google Facebook
growth era 2000s 2010s
successful content type Utilities Media
content durability Stock Flow
successful publishers TripAdvisor, Wikipedia, Yelp, & many more tbd
marketing activity links and algorithms shares and people

Pull is when you are seeking information, usually an answer to a question. You want to know the closing time of a restaurant, the description of a hotel where you are thinking about staying, the details of an historical event you heard about, etc. You go to your computer and pull the information. The killer app for pulling information was Google.

Search grew exponentially in its heyday (roughly, the decade of the 2000s) because it benefited from a positive feedback loop between the supply of and the demand for information. As search demand grew, websites developed content to meet that demand, which in turn further stoked demand.  The successful websites of this era were mostly information utilities such as Wikipedia, Yelp, and TripAdvisor.

Push is when you are using the internet in a more passive way and content comes to you. The killer app for push is social networks, the most popular being Facebook. Information is pushed from user to user via likes, shares, tweets, etc. People tend to push things they find funny, interesting, moving, outrageous, etc which usually means they push media: articles, videos, lists, gifs, photos, etc.

We are currently experiencing a positive feedback loop between social networks and media publishers, analogous to last decade’s search + information feedback loop. There are a few other key differences today:

1) Desktop vs mobile. The current era has an additional dimension of complexity due to a simultaneous transition from desktop to mobile computing. Consequences include the rapid rise of native apps over websites, and a dramatic increase in the overall scale and reach of the internet.

2) Stock vs flow: Media tends to have a much shorter shelf life than informational content. The main defensible asset for last decade’s publishers was the repository of content they accumulated. The defensible asset for media publishers is the machine – the combination of people, technology, practices, financial and other assets – that produces a constant flow content.

3) Bundled vs unbundled monetization – In the prior era, monetization usually meant placing ads on websites next to content. In the new era, atomized chunks of content are pushed through social networks and consumed on mobile phones. The most successful ads are funny, interesting, engaging, compelling, etc. on their own (so-called native ads) and don’t rely on bundling.

There will probably be a few big, successful companies that emerge from the push era. As in the pull era, the successful companies will reinforce the feedback loop: riding the trends instead of fighting them.

“The dawn of trustworthy computing”

Nick Szabo:

On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we have to fill out forms and make ourselves vulnerable to identity theft in order to participate in e-commerce, and it often is very difficult to prohibitive to conduct many kinds of commerce, even purely online kinds, across borders and other trust boundaries. Today’s computers are not very trustworthy, but they are so astronomically faster than humans at so many important tasks that we use them heavily anyway. We reap the tremendous benefits of computers and public networks at large costs of identity fraud and other increasingly disastrous attacks.

Recently developed and developing technology, often called “the block chain”, is starting to change this. A block chain computer is a virtual computer, a computer in the cloud, shared across many traditional computers and protected by cryptography and consensus technology. A Turing-complete block chain with large state gives us this shared computer. These block chain computers will allow us to put the most crucial parts of our online protocols on a far more reliable and secure footing, and make possible fiduciary interactions that we previously dared not do on a global network.

–  “The Dawn of Trustworthy Computing

Top 10 websites

Top 10 websites in the US according to Quantcast:

Screen Shot 2014-12-06 at 3.54.06 PM

A few observations:

1) As Josh Kopelman points out, 4 of the top 10 sites (YouTube, Facebook, Twitter, Buzzfeed) didn’t exist 10 years ago.

2) On Twitter, people seemed surprised to see MSN and Microsoft on the list. I assume they are there because most versions of Windows still default users to MSN/Microsoft pages.

3) Some people on Twitter were surprised that eBay is ahead of Amazon. I think this is because Amazon appeals more to the tech demographic. As they say: “EBay is for people with more time than money. Amazon is for people with more money than time.”

“This business is like bird spotting”

One of my favorite quotes about startups/VC, from legendary VC Mike Moritz of Sequoia:

I rarely think about big themes. This business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock. For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Sequoia is careful not to redline neighborhoods.

In traditional business thinking, generalizations about “flocks” i.e. markets/categories/sectors can be very useful. But when your job is to identify exceptions, generalizations can be dangerous.