The network(ing) effect

To paraphrase Metcalfe’s law, the value of a network is proportional to the number of connections, squared (n²). Which is why valuations on social media platforms like Facebook and networking services like LinkedIn are mainly calculated on the number of users and subscribers, based on the volume of transactions and a notional value of each member engagement that can be sold to advertisers and other third parties. But as a user, these networks are largely two-dimensional – you are either “connected” to someone (or not), or you “like” something (or not? – Facebook does not support “dislike”). Whereas, in the real world, our relationships and connections are more multi-faceted, and our preferences are more nuanced than binary.

I was recently reminded of the 1990’s dinner party game, Six Degrees of Kevin Bacon, and the notion that we are all connected to each other by no more than six degrees of separation. At a networking event last month, I was talking to a senior executive from a major bank, whom I had just met. Within 5 minutes, we realised we had a number of mutual connections. In fact, when I looked at LinkedIn, I discovered we had more than 20 “1st degree” relationships in common, most of them deep network connections I have maintained over many years. And although LinkedIn was helpful in confirming the “proximity” of our business and personal networks, it was only by meeting in person that these links would have been identified.

Similarly, at lunch last week, a business associate I’ve known for several years’ mentioned names of two people he had been working with this year, in completely separate contexts and in unrelated situations. Turns out that I knew both of them personally. Again, LinkedIn may have been able to “confirm” these relationships, but the “value” was in already being connected.

So, this may suggest that the true network value of Facebook and LinkedIn is overstated, because:

a) the number of potential network connections far outweighs the number of actual connections

b) the limitation of binary classification of relationships does not allow for the depth and complexity inherent in our networks of relationships

c) neither platform allows users to build contextual connections (apart from basic linear profile information).

In the end, the quality of relationships wins out over the number of connections. As Kevin Bacon so aptly put it:

If social media and networking platforms measure success only by the number of “likes” and “followers”, then they devalue the importance of building deeper connections and sustainable network relationships.

Next week: Token Issuance Programs – the new structured finance?

Personal data and digital identity – whose ID is it anyway?

In an earlier blog on privacy in the era of Big Data and Social Media, I explored how our “analog identities” are increasingly embedded in our digital profiles. In particular, the boundaries between personal/private information and public/open data are becoming so blurred that we risk losing sight of what individual, legal and commercial rights we have to protect or exploit our own identity. No wonder that there is so much interest in what blockchain solutions, cyber-security tools and distributed ledger technology can do to establish, manage and protect our digital ID – and to re-balance the near-Faustian pact that the illusion of “free” social media has created.

Exchanging Keys in “Ghostbusters” (“I am Vinz Clortho the Keymaster of Gozer”)

It’s over 20 years since “The Net” was released, and more than 30 since the original “Ghostbusters” film came out. Why do I mention these movies? First, they both pre-date the ubiquity of the internet, so it’s interesting to look back on earlier, pre-social media times. Second, they both reference a “Gatekeeper” – the former in relation to some cyber-security software being hijacked by the mysterious Praetorian organisation; the latter in relation to the “Keymaster”, the physical embodiment or host of the key to unleash the wrath of Gozer upon the Earth. Finally, they both provide a glimpse of what a totally connected world might look like – welcome to the Internet of Things!

Cultural references aside, the use of private and public keys, digital wallets and payment gateways to transact with digital currencies underpins the use of Bitcoin and other alt coins. In addition, blockchain solutions and cyber-security technologies are being deployed to streamline and to secure the transfer of data across both peer-to-peer/decentralised networks, and public/private, permissioned/permissionless blockchain and distributed ledger platforms. Sectors such as banking and finance, government services, the health industry, insurance and supply chain management are all developing proofs of concept to remove friction but increase security throughout their operations.

One of the (false) expectations that social media has created is that by giving away our own personal data and by sharing our own content, we will get something in return – namely, a “free” Facebook account or “free” access to Google’s search engine etc. What happens, of course, is that these tech companies sell advertising and other services by leveraging our use of and engagement with their platforms. As mere users we have few if any rights to decide how our data is being used, or what third-party content we will be subjected to. That might seem OK, in return for “free” social media, but none of the huge advertising revenues are directly shared with us as ordinary end consumers.

But just as Google and Facebook are facing demands to pay for news content, some tech companies are now trying to democratise our relationships with social media, mobile content and financial services, by giving end users financial and other benefits in return for sharing their data and/or being willing to give selected advertisers and content owners access to their personal screens.

Before looking at some interesting examples of these new businesses, here’s an anecdote based on my recent experience:

I had to contact Facebook to ask them to take down my late father’s account. Despite sending Facebook a scanned copy of the order of service from my father’s funeral, and references to two newspaper articles, Facebook insisted on seeing a copy of my father’s death certificate.

Facebook assumes that only close relatives or authorised representatives would have access to the certificate, but in theory anyone can order a copy of a death certificate from the UK’s General Register Office. Further, the copy of the certificate clearly states that “WARNING: A CERTIFICATE IS NOT EVIDENCE OF IDENTITY”. Yet, it appears that Facebook was asking to see the certificate as a way of establishing my own identity.

(Side note: A few years ago, I was doing some work for the publishers of Who’s Who Australia, which is a leading source of biographical data on people prominent in public life – politics, business, the arts, academia, etc. In talking to prospective clients, especially those who have to maintain their own directories of members and alumni, it was clear that “deceased persons” data can be very valuable to keep their records up to date. It can also be helpful in preventing fraud and other deception. Perhaps Facebook needs to think about its role as a “document of record”?)

So, what are some of the new tech businesses that are helping consumers to take control of their own personal data, and to derive some direct benefit from sharing their personal profile and/or their screen time:

  1. Unlockd: this Australian software company enables customers to earn rewards by allowing advertisers and content owners “access” to their mobile device (such as streaming videos from MTV).
  2. SPHRE: this international blockchain company is building digital platforms (such as Air) that will empower consumers to create and manage their own digital ID, then be rewarded for using this ID for online and mobile transactions.
  3. Secco: this UK-based challenger bank is part of a trend for reputation-based solutions (e.g., personal credit scores based on your social media standing), that uses Aura tokens as a form of peer-to-peer or barter currency, within a “social-economic community”.

Linked to these initiatives are increased concerns about identity theft, cyber-security and safety, online trust, digital certification and verification, and user confidence. Anything that places more power and control in the hands of end users as to how, when and by whom their personal data can be used has to be welcome.

Declaration of interest: through my work at Brave New Coin, a FinTech startup active in blockchain and digital assets, I am part of the team working with SPHRE and the Air project. However, all comments here are my own.

Next week: Investor pitch night at the London Startup Leadership Program

Update on the New #Conglomerates

My blog on the New Conglomerates has proven to be one of the most popular I have written. I’d been contemplating an update for a while, even before I heard this week’s announcement that Verizon is buying the bulk of Yahoo!. Talk about being prescient…. So, just over two years later, it feels very timely to return to the topic.

Image sourced from dc.wikia.com

Image sourced from dc.wikia.com

Of the so-called FANG tech stocks, when I was writing back in May 2014, Facebook had recently acquired WhatsApp and Oculus VR. However, apart from merging Beats Music into its own music service, Apple has not made any big name deals, but has made a number of strategic tech acquisitions. Meanwhile, Amazon has attempted to consolidate its investment in delivery company, Colis Privé, but got knocked back by the French competition regulators. Netflix finally launched in Australia in March 2015, and within 9 months had 2.7 million customers, a growth rate of 30% per month. Finally, Google has since renamed itself Alphabet, and purchased AI business Deep Mind.

Over the same period, Microsoft appears to have reinvigorated its strategy: back in May 2014, Microsoft had just completed its acquisition of Nokia. Since then, Microsoft has announced it is buying LinkedIn (following the latter’s purchase of Lynda.com in 2015), but has also shut down Yammer, which it had only bought in 2012. The acquisition of LinkedIn has been framed as a way to embed corporate, business and professional customers for its desktop and cloud-based productivity tools (and maybe give a boost to its hybrid tablet/laptop PCs). On the other hand, Microsoft has a terrible track record with content-based products and services, as evidenced by the Encarta fiasco, and the fact that Bing is an also-ran search engine. I think the jury is still out on what this transaction will really mean for LinkedIn’s paying customers.

So, what are the big tech themes, and where are the New Conglomerates competing with each other?

First, despite being the “next big thing”, VR/AR is still some way off being fully mainstream (although Pokémon GO may change that….). Apple and Google will continue to go head-to-head in this space.

Second, content streaming is not yet the new “rivers of gold” for publishing (and the sale of Yahoo! might confirm that there’s still gold in those advertising hills….). But music streaming (Apple, Spotify, Amazon and Google – plus niche services such as Bandcamp and Mixcloud) is gaining traction, and Amazon is building more content for SVOD (to compete with Netflix, Apple and Google). But quality public broadcasters such as BBC, ABC and NPR are making great strides into audio streaming (via native apps and platforms like TuneIn) and podcasting. One issue that remains is the fact that digital downloads and streaming still suffer from geo-blocking, and erratic pricing models.

Third, Amazon continues to build out its on-line retail empire, even launching private label groceries. Amazon will also put more of a squeeze on eBay, which does not offer fulfillment, distribution or logistics and is a less attractive platform for local used-goods sellers compared to say, Gumtree.

Fourth, Amazon is making a play for the Internet of Things (which, for this discussion, includes drones), but both Apple and Google, via their hardware devices, OS capabilities and cloud services, will doubtless give Amazon a run for its money. Also, watch for how Blockchain will impact this sector.

Finally, payments, AI, robotics, analytics and location-based services all continue to bubble along – driven by, for example, crypto-currencies, medtech, fintech, big data and sentiment-based predictive tools.

Next week: Another #pitch night in Melbourne…

 

 

 

 

C-Suite in a quandry: To Blog or Not To Blog…

Should CEO’s be on social media? That is the question many boards, PR advisers, marketeers and C-Suite occupants are faced with these days. Partly driven by existentialist angst (“I Tweet therefore I am”), partly a desperate act of “me too”, many CEOs are in a dilemma about how to engage with the new media.

While it might sound like a good idea to have a CEO blog, in the wrong hands or used inappropriately, it can come across as inauthentic, too corporate, or just crass.

The use of CEOs as “personal brands” is nothing new – think of Richard Branson, Anita Roddick, Steve Jobs, Jack Welch etc. And while social media has the potential to extend the CEO’s reach to customers, shareholders and employees, it also abhors a vacuum. If companies do not take control of their public persona, their customers and employees (supporters and detractors alike) will fill the void for them.

I am seeing this debate play out in different ways:

First, there is a difference between a personal brand and a business brand, so it is important to establish boundaries while recognising how the CEO’s personal standing can be used effectively to complement the corporate presence.

Second, having the CEO recognised as an expert can enhance personal influence but may not directly benefit the company if it is not relevant to the business – does Warren Buffet’s prowess on the ukulele boost instrument sales, or help the share price of Berkshire-Hathaway?

Third, if CEOs do choose to outsource their blog content, make sure it is genuine and aligns not only with the CEO’s personal values but also with those of the company, customers, shareholders and employees.

Finally, CEOs or Boards struggling with this topic, or those worried about whether to take the plunge into social media would be advised to consult Dionne Kasian Lew‘s new book, “The Social Executive”, which is sure to become an essential guide on the subject.