Web 2.0 startups in Europe.

StartUp2.0 is a competition of European web 2.0 startups. Tomorrow, May 10th, they will be voting on a list of the top 15 web 2.0 startups. You can see the list at Read/WriteWeb (which is in itself a very interesting blog).

The list of startups is not much different than those here in the U.S. (there’s lots of social networking and video in what they do) except for one difference. There seems to be more focus on geolocated services. This is partly because mobile providers in Europe have been providing excellent location-based services for a while whereas here in the US it’s still trying to get off the ground. And that’s despite the fact that GPS is a system created and owned by the US Department of Defense.

Not quite a replicator yet. And the dangers of predicting the future.

I just read an article in the NY Times about 3-D printers. They are basically machines that take digital three-dimensional plans for anything and then create a physical, solid object out of them. I didn’t know these things actually existed, but apparently they have been used in the industry for years, though they are very expensive. The article talks about efforts by one company, Desktop Factory, to bring the cost of a 3-D printer low enough that it can be bought for the home.

Granted, the solid objects created are made of a single material, nylon powder, and look like dull, grey toy parts. But let me project a little into the future. As these printers get better and better, and why shouldn’t they, the could end up solving one of the major hangups of online retailing: the lack of instant gratification. Unlike digital products, which can be acquired immediately online, physical products have to by shipped, which takes time. Sometimes, a customer wants that new basket ball right away and will choose to go to a physical store to get it, instead of ordering it online. But what if the customer could simply “print” the basket ball at home? Maybe something like this (from Wired, Issue 14:12, December 2006):

I also know the danger of making future predictions, like this one from the NY Times article:

“In the future, everyone will have a printer like this at home,” said Hod Lipson, a professor at Cornell University, who has led a project that published a design for a 3-D printer that can be made with about $2,000 in parts.

Sentences that start with “In the future, everyone will…” are dangerous. Between 1966-1967 the following predictions were supposedly made in The Wall Street Journal:

By the year 2000:

• Man will land on Mars
• Cities will thrive under huge climate controlled domes
• Travelers will fly from New York to Tokyo in under 2 hours
• Commuters will strap rockets on their backs and jet to work, or at least commute in small two-seater flying automobiles
• There will be 200,000 computers in the United States

Need I say more?

Go2Web2.0: The Complete Web 2.0 Directory.

If you feel as lost as I sometimes do in the sea of tiny Web 2.0 companies that seem to provide more and more specialized services, this is the site for you. Go2Web2.0 is a fantastic directory of Web 2.0 companies with a cool interface that allows you to visually scan dozens of companies and search them by tags. It is in itself an example of Web 2.0 technology, using Ajax and tagging very effectively.

Check it out. There are some great examples of innovation and ingenuity in there. Plus a lot of sites that are truly useful.

eBay: The other golden child.

In my previous post, I wrote about Amazon and how innovative and daring it is in its strategic moves. However, there’s another company that has been equally impressive: eBay. The other golden child of the dotcom era is also a case study on doing things well (and some not so well).

First, eBay was a marvellous idea to begin with. Auctions are a great price discovery mechanism, because in theory the seller gets the highest price anyone is willing to pay for their product and the buyer gets the product for a price that is either at or below what they want to pay for it. I say, in theory, because auctions need to have a critical mass of buyers to really work. In the physical world, the problem was always getting all the potential buyers in one place at the same time. So, they were limited to art and collectibles, livestock, impounded cars, and so on.

eBay’s founder realized that he could use the web as a virtual meeting place for auctions. So, as long as someone could go online, they could be “present” at an auction. He also recognized that people sell their own things all the time. One person’s trash is another person’s treasure. Putting the two together, eBay created the largest auction based garage sale in the world.

This was an amazing business model. eBay carries no inventory. All it does is match buyers and sellers through an online auction and charge small fees and commission for sales made. Theoretically, it was profitable from day one.

So, the first lesson from eBay is recognizing the potential of IT to create new business models. Sometimes, those business models are extensions of models that have existed for a long time (as in the case of auctions). It’s all about leveraging the technology to enable new or improved business models which may simply provide marginally additional business value, but additional nevertheless.

The second lesson is in what eBay has done since their hugely successful online auction business took off. As this recent article in Business Week describes:

Since shelling out $1.5 billion in 2002 to acquire online payment processor PayPal, eBay (EBAY) has aggressively expanded into areas well beyond its core business of charging people fees to auction off goods via the Internet. Over the last five years, a spate of acquisitions—some of which are just now generating significant profits—has made the company into something of an enigma. EBay is a Web auctioneer. It’s an online payment processor and bank of sorts (PayPal). It’s a ticket seller (StubHub). It’s a global Internet telephone service (Skype). It’s a classified ad service (Kijiji).

Now eBay is said to be moving into the social search business. Tech industry blogs such as GigaOm and TechCrunch are buzzing that eBay is in talks to acquire StumbleUpon, a popular site that lets users find other Web sites based on their interests and the recommendations of others. Both eBay and StumbleUpon declined comment.

As far as I’m concerned, that’s not an enigma. It’s a basic concept that every MBA student learns on day 1 in B-school. It’s called: diversification.

In this case, it’s what I would call integrated diversification. The different acquisition and areas in which eBay has expanded are not only related, they are very complimentary to their basic core activity: online auctions. eBay customers can pay with PayPal and communicate with each other using Skype to talk about products bought and sold. The uses for StubHub, Kijiji, and StumbleUpon are less obvious. They are all market makers, just like eBay. They create markets for tickets, all types of services through classified ads, and information/websites respectively.

Not that much of an enigma after all, is it?

Can Amazon do no wrong?

Amazon released its earnings report yesterday and things are going well for Bezos and co. Amazon’s quarterly profit increased 38 percent, to $145 million, compared with $106 million in the period last year.

Amazon is such an interesting case study on running a business, online or offline. They’ve done so many things right (and quite a few things wrong), I could usually spend a whole class session, if not more, just talking about them.

First, they started with the right product: books. They are a commodity of uniform value, an information-intensive product that benefits from the research-friendly web, easy to ship, and universally in demand. Not to mention, that in the early days of e-commerce, before everyone went online, those who would buy anything online were more likely to be big readers: geeks and heavy computer users.

So, using the right product, Amazon quickly built a very strong brand. In fact, Amazon’s brand is so strong, that when I say the word Amazon out of context in any conversation, I would bet that close to 100% of those who hear me will think of Amazon.com and not the Amazon river or rainforest.

But Jeff Bezos didn’t stop there. Against all odds and against all rational advice, he went on to expand Amazon in breadth and create a giant department store that now sells virtually everything under the sun, from books and cds to computing infrastructure to other companies, something called Amazon Web Services (hey, if you’ve spent millions building an amazing infrastructure, why not make money by farming it out?).

Things weren’t always good. Amazon came close to collapsing many times and it seemed that the dotcom’s golden child would follow all the other failed e-businesses when Bezos had another great idea. He figured that people were reluctant to buy things online from Amazon because shipping and handling fees made them too expensive. So, why not ship products for free for all purchases above $25? Keep in mind that the “handling” part of those fees is a large source of revenue for all companies that ship products.

The results were dramatic. Sales shot up and Amazon became profitable again. Why? Well, I can tell you from my own personal shopping experience that very often I go to Amazon to buy something and I fall short of the $25. What do I do? I buy one or two more things to get me above $25 and save the s&h costs. This translates into a lot more in profit for Amazon than if they had charged me for s&h. Don’t forget that a company like Amazon that ships millions of products gets very big discounts from the delivery services it uses.

Last year Bezos went a step further. With Amazon Prime, he offered second-day delivery for most products for $79 a year. Again, there were doubts all around (including from me). But it seems that Bezos can do no wrong. These new earnings show that the program has most likely been a big success.

Amazon’s innovations go beyond pricing their products and services. It was one of the first to provide XML feeds of their product pages and allow third parties to use those feeds in applications that can be used by anyone to gather and compare product information. This created an entire ecosystem of service businesses around Amazon’s market. It is also one of the major “incubators” of small businesses (eBay is the other one), with its Amazon Marketplace, where thousands of small businesses can sell goods that directly compete with Amazon’s own, while, of course, paying fees and commissions to Amazon.

I could go on and on but I’ll stop here. For all students of business, Amazon is an example of vision, innovation, effective strategic use of IT, and calculated risk.

Want to share my iPod?

Walking around New York city, I constantly see teenagers who share an iPod and a single pair of earbuds. They each put one earbud in one ear and in that way they can both listen to the same music while still being able to talk to each other.

Why is there no better solution? I think that a great innovation would be a pair of headphones that connect to an MP3 player wirelessly (most likely Bluetooth since WiFi is such an energy hog) and both pump out the same music for that single player. But the key innovation would be the communication part. Who wants to walk around the mall with their BFF while both listening to the same music if they can’t exchange the day’s gossip?

 So, give the wireless headphones a small mic (like the one used in wireless headsets for cellphones) and allow the conversation between the two headphone users to happen in a shared (and private) frequency.

Now, if the digital music player doesn’t have Bluetooth embedded in it (like the iPod), create a separate transceiver that will attach to the player and communicate with the wireless headphones.

I personally love walking the streets of New York listeing to my iPod. The music becomes the soundtrack of my day and many times it even determines my mood, depending on what iPod’s shuffle will bring my way. The idea of sharing that soundtrack with someone else as we both walk around and still able to talk to each other sounds really exciting to me.

Steve Jobs, are you listening?

Seeing data with your tongue.

The last issue of Wired magazine had this fascinating article about how researchers are taking advantage of the plasticity of the brain to use technology to either enhance human senses or to even create totally new ones. For example, they have the story of a person who used a “feelSpace belt” to acquire a sixth sense of direction, like the one that birds have to always know how to fly north or south.

For six weird weeks in the fall of 2004, Udo Wächter had an unerring sense of direction. Every morning after he got out of the shower, Wächter, a sysadmin at the University of Osnabrück in Germany, put on a wide beige belt lined with 13 vibrating pads — the same weight-and-gear modules that make a cell phone judder. On the outside of the belt were a power supply and a sensor that detected Earth’s magnetic field. Whichever buzzer was pointing north would go off. Constantly.

“It was slightly strange at first,” Wächter says, “though on the bike, it was great.” He started to become more aware of the peregrinations he had to make while trying to reach a destination. “I finally understood just how much roads actually wind,” he says. He learned to deal with the stares he got in the library, his belt humming like a distant chain saw. Deep into the experiment, Wächter says, “I suddenly realized that my perception had shifted. I had some kind of internal map of the city in my head. I could always find my way home. Eventually, I felt I couldn’t get lost, even in a completely new place.”

Another fascinating example describes how some researchers are using a device that basically hooks up a camera to a set of tiny electrodes that are attached to the tongue. Visual images are interpreted as electric current against the tongue. When people put on this device and have their vision totally blocked, they can quickly learn to “see” with their tongue. It’s pretty amazing stuff.

This is all based on the fact that our brain has the ability to shift resources around. If the visual cortex is damaged or doesn’t receive information for some reason, the brain can refocus a different part of it to start handling processing of visual information. This is why rehabilitation after a stroke or other major brain damage can restore whatever senses were compromised.

This is very promising when it comes to aiding those who are impaired in some way or even creating “enhanced” humans who can, for example, find their way around no matter where they are. But it also hold promise in a different area: enabling humans to use their senses to understand complex data sets.

Humans have a very hard time interpreting multidimensional data. Give someone a two dimensional table (rows by columns) and they can easily understand the data and make decisions on them. But add a third dimension or a fourth or fifth and it becomes very hard to represent the data in a way that humans can work with. That’s because we depend only on vision to see the data and then on our brain’s capacity to crunch multiple numbers simultaneously, which is a notoriously small capacity.

So, how about bringing in more senses? How about allowing multidimensional data to be perceived not only by sight but also by touch, taste, or even new senses, such as that of direction? Basically I’m talking about creating virtual reality environments where the environment is not a realistic replica of the real world but a representation of a multidimensional data space.

This is science fiction stuff, I know. But if a blind person can go mountain biking simply by clicking his or her tongue and using a sonar-like sense called echolocation (true story), why can’t I see, hear, touch, and taste my way through a complex data space to find solutions or make optimal decisions?

I am Joost! On-demand online TV.

About a week ago, I got an invitation to become a beta tester of Joost for which I signed a while ago. Joost is the latest project of Niklas Zennström and Janus Friis (founders of Skype and Kazaa). Just like their two previous applications, Joost uses a peer-to-peer (P2P) network to deliver digital content. In Kazaa that consists of general files (though mostly music and video files) and in Skype it consists of digitized phone conversations. In Joost, the digital content is TV video. The idea is that I can open Joost on my computer which is connected to the Internet via broadband and have on-demand TV content available to me. What’s the real innovation? The use of a P2P network. Instead of all the users getting the TV content served to them by a few very powerful servers, all users’ computers act both as clients (receiving video) and servers (sending video to other clients). In this way, the larger the network, the more powerful it becomes. The opposite of a traditional client server model where as the number of clients increases, the servers become less and less able to serve them all.

So, being the geek that I am, I got really excited about trying Joost. Installing it was a breeze. I opened the application and sat back to be amazed.

Well, let’s just say there’s a reason why there is such a thing as beta testing. While the interface is slick and the promised value-added features are cool, the actual content deliver was often jerky with sometimes garbled sound. Now, I know this may also have to do with my network at home and even with my laptop which is not the newest machine in the world. But it fulfills all the recommended specs in terms of hardware and my broadband connection is a through standard Time Warner cable modem. So, most likely, the sub-par quality is just due to growing pains. And maybe because the P2P network itself is still too small to really be able to distribute content smoothly and efficiently.

Oh, and another problem. The content kinda sucks. Joost is still trying to make deals with major providers. The incentives for them could be big. For example, if I am watching a show, let’s say “Grey’s Anatomy”, on my laptop using Joost, I can actually have advertising shown to me that is specifically targeted to me. Not the general advertising shown on a regular TV based on the large demographic to which I am assumed to maybe, probably, hopefully belong. More target advertising is more effective advertising is more expensive advertising.

Joost is still new and needs to prove itself. But the two guys who have created it have already proved to be amazingly disruptive innovators. I’m sure that by the time Joost is out of beta, it will not disappoint.

Quantum computing is here…wait, it’s almost here…ok ok, it’s not even close.

This is bad science at its best (or worst). The NY Times reports on a company called D-Wave Systems that claims to have created the first “practical quantum computer.” They announced this with a demonstration of the contraption figuring out some relatively simple tasks, and doing so at a speed “100 times slower than a PC running the best algorithms,” according to Dr. Geordie Rose, the company’s founder and CTO. All while releasing only the minimun of details on how this quantum computer might work, definitely not enough details to confirm or dispute the company’s claims.

I’m no physicist, but I’m no sucker either. Cold fusion anyone?

Quantum computing right now is more interesting as an exercise in speculative fiction. Every now and then, an invention comes along that changes everything. It’s disruptive in ways that few can predict. Usable electricity was one of them. So were automobiles, the telegraph, and the silicon chip.

Quantum computing would increase the computing power of computers so much that it’s almost impossible to predict how it would change our lives. Imagine full-immersion virtual reality, new unimaginable medications created purely in a virtual environment before put into production, or artificial intelligence beyond anything we can imagine. The stuff of science fiction. Not to mention that our current security technologies, like encryption, would be rendered, for the most part, useless.

When this will happen, noone knows. Quantum computing is still in an early experimental stage. But when it does, nothing will ever be the same again.

Electronic paper is great but don’t take my books away.

The idea of electronic paper and ink has largely existed in science fiction books and movies but it is close to becoming reality. According to a story on Yahoo! News, E Ink (a company that specializes in electronic paper technology) “holds more than 100 patents on its “electrophoretic” ink technology in which electric charges are sent along a grid embedded in the paper that cause tiny black and white particles to move up and down, creating text and images.”

One of the more obvious applications for such a technology is in the area of ebooks. Right now, ebooks are not very popular largely because they must be read on a screen  of a portable device. That screen is inflexible as well as hard to read under varied lighting conditions. Not to mention that it’s really tiring on the eyes. With electronic paper and ink, one could have what looks like a real book with real paper but which can be plugged into a computer, download the contents of an ebook, and change the display on each page to show the downloaded ebook.

This sounds great and very environmentally friendly. But the idea of having only a single book (or just a few), that can change its content on demand is horrifying to me. I am the type of bibliophile that loves to have his books around. It’s very hard for me to throw out or even give away my books and I am very proud of the book collection I’ve amassed over the years, something that makes each move more difficult. So, because of people like me, there will always be a market for plain old paper books. At least for another generation or two. I can imagine that children that grow up in a world where electronic paper is the norm never grow attached to the physical object of a book like I have.

Now when it comes to magazines, I would welcome electronic paper with open arms. It pains me every time I throw out yet another magazine when I think of the paper wasted on it (yes, I recycle, but still…). So I would love to have an e-paper magazine that would change content continuously.

Then again, I know a few people who are attached to their magazines the way I am to my books, and who rarely throw them out.