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.

The power of the online mob wins at Digg.

A user revolt has just happened at Digg (you can read about it at Techcrunch, BoingBoing, the NY Times, and TextYT). Digg, for those who don’t know, is a social content site where users can post links to articles and websites and other users can comment on them and vote them up (digg them) or down (bury them). Stories with most diggs float up to the top of the list and the front page of Digg.

After someone posted the decryption key for HD DVDs, Digg got a request threat from the company that owns the rights to HD DVD to take the article down. Digg caved in and did that.

Well, the Digg community was furious. Soon, the entire front page of Digg was full of stories and article posted by users with the same decryption key. Digg kept taking them down and suspending users. But eventually, the mob won. Digg co-founder Kevin Rose posted the following:

Today was an insane day. And as the founder of Digg, I just wanted to post my thoughts…

In building and shaping the site I’ve always tried to stay as hands on as possible. We’ve always given site moderation (digging/burying) power to the community. Occasionally we step in to remove stories that violate our terms of use (eg. linking to pornography, illegal downloads, racial hate sites, etc.). So today was a difficult day for us. We had to decide whether to remove stories containing a single code based on a cease and desist declaration. We had to make a call, and in our desire to avoid a scenario where Digg would be interrupted or shut down, we decided to comply and remove the stories with the code.

But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be.

If we lose, then what the hell, at least we died trying.

This is fascinating stuff. This isn’t just collective intelligence at work. This is collective activism at work and it seems to have worked. Of course, some might wonder what would happen when the mob is wrong or has the wrong intentions. Some might say that this was the case here, where intellectual property rights were being challenged.

I’m not going to try to judge this is good or bad. I am just going to point out how powerful this can be.

In a lot of science fiction writing, a classic nightmare scenario is that where networked artificial intelligence built by humans becomes so powerful that it takes over the world. Maybe the scifi writers got it wrong. Maybe what we should really be worried about is networked human intelligence (or lack thereof), or the power of the online mob. Unless of course, you are like me, and you believe that humanity as a whole can be good and smart and can have the right intentions, and that it’s only a minority of people who are evil and it’s when they get a lot of power that all hell breaks loose.

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?

Learn about Web 2.0, HTML, XML, and more with this cool video

I just found this today. I will definitely be using it next time I am teaching me e-business class, right before (or after) I discuss HTML, XML, and the Web 2.0 environment.

Internet radio grows up.

The NY Times today have a nice short article that clearly explains some of the more popular Internet radio services out there. These are web-based music streaming services that allow you to create a personalized radio station that chooses songs for you based on certain criteria. Those criteria vary depending on the service. Two of those services show the difference between using experts and the collective intelligence of the crowd to provide better recommendations:

Pandora uses “musicologists” who classify hundreds of thousands of songs and artists based on their musical “genetic” makeup. For example, the “genome” of Madonna’s “Let it be” is comprised of “electronica influences, danceable grooves, a subtle use of vocal harmony, use of string ensemble and a vocal-centric aesthetic.” As songs get played for you on Pandora, you can vote them up or down and thus teach your station to play better music for you.

Last.fm uses know experts but instead employs mathematical algorithms to analyze the playlists and listening habits of its members to create recommendations. In addition, Last.fm promotes itself as a social networking site, à la MySpace. Pandora does this a little bit by allowing people to share their personal stations, but not to the extent that Last.fm does.

 Which one works better? I don’t know. I’m a loyal Pandora listener, especially for an instrumental jazz station that I have created and honed over the last few months. I have never used Last.fm. Whenever I go to its site, I get overwhelmed by the social networking bells and whistles. All I want is a simple, customizable radio station and that’s what Pandora gives me.

Maybe in the end that’s what matters the most. The quality of the recommendations by the two services is probably comparable. What’s different is their functionality and look and feel. One is a simple, no-frills, customizable radio station. The other is a full blown social network that’s centered around music and musical tastes.

It’s all about information: The wireless application and service innovators.

Business Week has a special section on wireless technologies this week and as a part of it, they showcase what they call “The New M-Commerce Barons.” They are the new innovators in wireless applications and services. Going over this impressive list of innovations is illuminating in the sense that one can identify the types of opportunities that are available today for creating business value using technology. Some examples:

1. Use information technology to reduce even the slightest time delays in a person’s daily life. Check out Mobo, for example, which allows you to pre-order food using a text message so it’s ready when you get there. For a busy New Yorker, the ability to save 10 minutes of waiting for lunch to be prepared is worth a lot.

2. Provide information, using a simple interface, that is otherwise unavailable or hard to get. Loopt, the brainchild of 21-year-old student, provides the location of your friends with GPS-enabled devices. 4info allows users to send text messages with questions on news, sports, movies and so on. Google also does this very successfully for all kinds of information.

3. Allow people to share information. Call it community building, call it social networking, call it whatever you want. People have always loved to share information, from showing off vacation photos to giving recommendations on restaurants. Eyeka allows users to share photos and video and even sell them to those who want to buy.

4. Piggyback on someone who’s already successful. iSkoot allows users to make Skype phone calls using their cell phones and voice networks. (Jajah already does this without using Skype, by the way)

So, it’s all about information. How you create it, manipulate it, interpret it, distribute it. Find a way to add value to at least one of those processes and you may have an idea for a successful business.

Interestingly enough, Business Week also showcases the latest trends in wireless devices, but compared to the innovations in wireless applications and services, the devices just look downright boring.

Twitter, Dodgeball, and other funny things about privacy.

When I teach my class on e-business, at some point we talk about location-specific services. The idea is that information and services are available on a device that is mobile (from a cell phone to a laptop) based on the device’s current geographical location. I talk about how it would be possible for a company to push information, such as an ad, to a cell phone or PDA if it knows its location (through GPS, for example). So, as I pass outside a BestBuy store I could, theoretically, receive a message on my cell phone giving me a unique code I can use to get 15% off my purchases if I go in and buy in the next hour.

What ensues is a flurry of hands up followed by complaints about invasion of privacy, annoying interruptions, and so on.

At which point, I usually give my short speech about how in the US Constitution, privacy was never explicitly written (only implied by certain later amendments) and how that is representative of the schizophrenic attitudes Americans have about their privacy. They always seem to be complaining about its loss, often up in arms trying to protect it, but in the same breath will give away tons of personal information for just about anything: discounts, free t-shirts, 15 seconds of fame on YouTube, you name it.

Dodgeball (owned by Google) and Twitter are two services that allow others to know where you are and what you are doing at all times. They do it in slightly different ways but the bottom line is the same: They can be used to disclose private information about one’s location and whereabouts. And both are very popular. In fact, Twitter was all the rage at SXSW recently.

The way I see it, people will give up their privacy more and more, partly because there will be better things offered in exchange and partly because they will have no choice. We seem to be continuously decreasing the amount of private information we truly expect to have. But at some point, and it may already be here, there will be a huge market for “privacy technology.” The average joe and jane out there will be willing to pay for “information island” technologies: solutions that allow them to have information that is fully disconnected from the rest of the networked world. I have a feeling that in the not so far future, we’ll be talking about all the start-ups that offer exactly those kinds of solutions.

Assignment Zero: Journalism through crowdsourcing.

Assignment Zero is a fascinating new experiment in journalism. It uses crowdsourcing (allowing large groups of people to collectively create or build a product though small individual contributions) to report a news story. This is the long tail of information at play.

Up till recently, the information we consumed came from few centralized sources that we considered the experts. They included the news organizations, the newspapers and the magazines. The billions of viewers and readers were simple passive consumers of the information created by the few. Today, we are moving away from the centralized information model and closer to a distributed “long tail” model of information creation. We consume information that may be created by multitudes of non-experts, simply because they happen to be closer to where the information resides. We can all be both consumers and active producers of information.

Assignment Zero is using online collaboration tools such as wikis to allow anyone out there to contribute to a massively produced news story. Besides, who better to provide information on a story than the people who are directly involved in it? This could include the victims of a big storm, the participants in a demonstration, the employees of a company under investigation, or anyone else who is part of the story itself.

There have already been attempts to do that. Yahoo is letting users contribute photos and videos of events online to report what happened. They call it “You Witness News.” A NY Times article on Assignment Zero describes other efforts to produce crowdsourced journalism:

At newspapers like The Asbury Park Press in New Jersey, Florida Today in Brevard County and The News-Press in Fort Meyers, Fla., citizens can dial into databases and public records, or contribute their own experiences to provide grist for reported efforts.

A project at The News-Press on the high cost of sewer and water lines (available in the newspaper’s paid archives at www.news-press.com/apps/pbcs.dll/frontpage) included volunteer engineers going over blueprints in their spare time and an insider who disclosed critical documents.

Is there still a need for journalists and editors? Of course. Journalists can still provide the expert analysis or the focused writing that crowds cannot. And editors are necessary for all types of news stories, whether produced by a journalist or thousands of contributors, in order to keep things smooth, correct, and verified.

But where we get our information is becoming less and less centralized. It’s also (hopefully) becoming less biased and more authentic. 

Web 2.1: Business 2.0’s Next Net 25

Business 2.0 has identified their first Next Net 25: 25 Web 2.0 companies that they think will make it big in the near future (months, not years). I call them Web 2.1. They are cool, smart, useful, and in many cases, profitable (or at least able to become so). Check them out here.

Some of my favorites: Joost, Turn, Vitrue, Fon, SuccessFactors

Ning: Create your own social network

Ning is the brainchild of Marc Andreesssen, one of the creators of Mosaic and a co-founder of Netscape. It’s an amazing playground for social networks. Basically, any user can use Ning’s ridiculously simple interface to create their own private social network which can include photo and video sharing, discussion forums, tagging and social bookmarking, and blogs, as well as a fully customizable look and feel for each social network. Ning goes beyond that and makes the source code for your social network open for your to tinker with. You can basically customize your social network virtually any way you want.

This is yet another great example of the rebirth of the web as a platform. For years, decades actually, the building of applications has been the domain of technogeeks, engineers, and computer scientists. More and more, they are being relegated to the background, building not applications, but the infrastructure that allows everyone else, the non-geeks, to build their own applications. The interface is becoming simple enough, that it’s like putting together lego pieces. In fact, it’s easier. There’s no guess work as to what fits where.

So now, the 12-year-old girl who wants to build her own social network for girl-fans and boy-fans of the shoes worn by the latest American Idol contestants, can do it in just a few minutes. Before you know it, and if word spreads around, who knows? She may find herself with a thriving business of a niche social network site that even makes money. How? The old-fashioned way. Running ads by Google.