Investment and Business Models

Web 2.0 is already showing a little of the exuberance of the dot-com craziness. Yes, the technology is "sexy" ... and it enables better GUI types of features ... and it promotes new modalities of interaction often called "social networking" ... and there are a lot of people doing it. But, it is just a new set of tools. The creativity behind using the tools to provide customer value is the key to making these tools worth using. Changing a look and feel for the sake of using the tool is as bad a decision as shaving your head because your favorite movie star has a shaved head in his (or her) currently released motion picture. Shaving your head in a quick decision may be done in minutes, but it can create months of uncomfortable interpersonal circumstances. What's the payoff compared to the risk?

There are companies seeking funding based on some variant of technologies that loosely fit the Web 2.0 concept. Some are trying to build tools to sell to tool users, competing against Open Source alternatives and the make-or-build decision process of software developers. Some are putting up sites with massive video content that is all the rage today. Can you find your (or your father's) pet rock? While Richard Nixon installed a bowling lane in the White House, setting off a national craze, many people lost a lot of money investing in bowling alleys in the 1960's. Bowling is still fun. Cabbage Patch dolls was an enormous success followed by a calamitous second year when the craze did not carry over. Following a craze, like the dot-com sock puppet business ethic of the "new economy" where you spend more money to make the sale than you see in revenue, can be a devastatingly stupid thing to do. If you are in the "craze" business, then you have experience with the cyclic nature of the products or services that you sell. If you are in a more standard line of business, then you don't want to get caught by the latest business or technology craze. The business model has to make sense in the classical way of forecasting the revenue and estimating the expenses resulting in a net positive that is large enough to allow for unexpected problems and money for reinvested.

The opportunities are out there. Mix the creative with the analytical to find a new opportunity to build a business. Your business metrics must measure the meaningful causalties so that you can tweak the variables to have the greatest effect on the business. If you do this the classic measures will show the business is capable of standing on its own and prospering, whether you are using Web 2.0 tools or not.

Digital Media and the Home Entertainment Space

Today I attended a very good panel at FountainBlue's Connections Event (see http://www.fountainblue.biz/calendar.html) on "Emerging Technologies: What's Hot and What's Not".

The panelist that discussed the "Home Entertainment Technology Space" had some very interesting slides (see http://www.digdia.com) that pointed at the features for products for the Digital Home, and where things are heading. Unfortunately, he was using the wrong terms as he proclaimed that "interactive TV" is going to replace digital TV in the future. I believe he really meant "Personalized TV", where the viewing public may have focused commercials mixed for their home delivery that could be different from your neighbor's, or being able to select viewing angle in specially equipped sports arenas.

From 1992 to 1995, I produced a newsletter for the multimedia developer called "The QuickTime Forum" and later called "Converge-The Multimedia Developer's Resource". As editor-in-chief, I recruited industry leaders to write for the print publication as well as writing quite a bit of it myself. Much of what was stated then is still very much the case today, as was brought to my attention by this current researcher. For example, the real issue behind interactivity is the enormous incremental costs associated with the content creation. This is the driving force behind the out of line development costs we are now seeing in the MMORPG space.

I am going to republish some of this material through this Blog. Please give me your opinions and comments.

Thank you,
Harrison Rose

Entering the Blogosphere

Hello:

After a year of people telling me to start a Blog, I have finally surrendered and here is my first Blog entry. Over time, I will be covering a smattering of business and technology topics with the twisted view of a serial entrepreneur living in the Silicon Valley who has been active at the beginning of several technology revolutions, and hopes to lead the next one. I expect to share my view on where things may be headed in technology, how horrendous the dot-bomb depression really was, the incredible relief that I feel now that we are finally out of this miasma, and how new business opportunities are being enabled by creativity and problem solving.

My favorite topic is the convergence of intellectual creativity, engineering creativity and artistic creativity, that can generate a whole new world of online social entertainment and interactive fun -- the true New millennium Entertainment. Electronic games must break out of the "hard-core gamer" ghetto, and will do so despite the behemoths currently leading the revenue numbers. The potential dwarfs the current limited view of gaming (or electronic games, not gambling). Who will lead and why? These are the questions worth pondering.

While I ponder the aspects of e-commerce, online advertising, sponsorship, and creative marketing applied to online social fun, I welcome comments. Though my wordsmithing may not be as tight or pithy as one might like, I will try hard to be precise and specific when practical.

Thank you for reading.

Harrison Rose
Silicon Valley, CA USA