The Taxi Driver

I’m not sure whether this is something to proud of – but I’ve seen spent a lot of time in the backseats of various Taxi’s in a lot of different countries.

2 days ago I had come across hands down the most Tech Savvy cabbie/cab I had ever seen. Here’s the dudes setup:

  • Mounted WIFI router
  • 4G USB modem hooked up to it with 15 MBit/Second connection
  • Mounted Tablet in the middle of the car which runs ‘Whatsapp, Torrents and Youtube’ etc.
  • A GPS enabled Android smartphone mounted to his left with the Taxi company app running on it.
  • Another android device for personal phone calls and texts + bluetooth headset.

The Business model of the company is very interesting a swell. Rather than hiring full-time, uniformed cabbies, they simply use freelancers in a systemic way; pass them through a certain qualifications, ensure they have the right licenses and set them up with an app with a username to their database.

This dude can download torrents and stream TV shows while driving his car.

More over, the business model of the company is awesome. No fixed costs. Essentially they just provide a database service that ensures you get a taxi when you need one.

Good job Kazan.

The Unsung Hero of UX: “Function”

Over the last couple of years, whenever someone seems to discuss this trendy ‘UX’ word it seems that its the same thing over and over again.

Most of the time the discussion revolves around button placement, lay-outs, some cool widget, the importance of mobile, augmented reality and other similar buzzwords and trends – most of which is front end specific. One aspect that hasn’t evolved at the same rate and has really been left out of the discussion is the functionality, the programming, the databases, the data manipulation, the business process optimization and ultimate ‘usefulness’. Everyone seems to be chasing fashion and something that can generate a buzz, and less and less attention is given to the depth of a product or service.

Take for example Google. The ultimate UX service on the planet. They have a white screen and an entry box, BUT when you enter a word or phrase, enormous back end activity happens. Databases upon databases are queried, searched and what you are looking for is returned.

“I am searching = I get the result = Win”.

Now obviously using Google as an example isn’t exactly creative but it illustrates something to aspire to. At the end of the day, there is a reason why somebody is using any product, service or software and if that ‘reason‘ isn’t catered to, the prettiest and most convenient UI will be rendered useless. It seems to me that a lot of people are discouraged from spending a lot of time on building truly deep back-end infrastructure because if the front end doesn’t catch on the service is going nowhere – and I don’t disagree. The thing is, its a catch 22 – you need both, and you need the both right away.

If you don’t have a front-end that works, i.e: a human being can use it and get the results he wants, the service failed. It won’t catch on and you wasted your time.

If you don’t have a back-end that is above and beyond what everyone else is doing, even if you have the best front end and you it gets you the initial traction – your service is still ultimately going nowhere.

The truth is, despite people in the industry being hung-up on looking for the next ‘cool’ thing, the users are looking for the next ‘useful’ thing.

I believe ‘useful’ always beats ‘cool’ & ‘trendy’ in the long run.

Stay ‘useful’.

The Megaupload Case

The megaupload and Kim Dot Com case is definitely a landmark event in the legal/cyber space. One of the things that really opened my eyes to the truth on the matter is watching an interview with the man himself and hearing his side of the story.

[h4] What is megaupload? [/h4]

Megaupload is essentially just like any other internet service out there: it provides you with Hosting Space and Bandwidth to access it. They are really not that different to youtube, google, facebook, vimeo or essentially any and every hosting company out there, that is ofcourse without mentioning their immediate competition such as RapidShare and MegaShare etc.

[list_ordered] [li]User uploads Content[/li] [li]User agrees to terms & conditions[/li] [li]Content is online with a link[/li] [/list_ordered]

But, none of these services seem to have FBI cart rolling up to their owners houses, arresting them without charge and shutting down a billion dollar company with no trial. Isn’t that crazy?

So the FBI, apparently with the entire entertainment industry behind them simply grey zoned their way into a warrant and arrested Kim in his house in New Zealand. Funny enough, to make a show out of it they even had SWAT team go in…for a guy who was never charged with a violent crime? A guy who runs a website? Did they really need to have choppers and machine guns?

Anyhow, what happens next?

All his assets get frozen. The domain name gets seized. The company becomes none existent in 5 minutes. This is BEFORE he was even given a court date. Estimated value of $1 Billion.

[h6] Entertainment Industry POV [/h4]

[blockquote_with_author author=”Big Fat Hollywood Boss”] Kim Dot Com is the biggest pirate the world has ever seen. He makes a lavish living off of pirating content that honest artists and musicians broke their backs to make. Has made us billions and billions of dollars in revenue lost. [/blockquote_with_author]

[h6] Mega Upload POV [/h4]

[blockquote_with_author author=”Quote Author”] I’m not a pirate, i’m an innovator. I created a service that is no different to virtually any other Cloud Storage based service and I have been targetted by the entertainment industry because I’m an easy target. [/blockquote_with_author]

The core issue is that the architecture of communication has outgrown the current business model. I personally dont agree with Kim’s lifestyle and arrogance but that really isn’t the point is it? His business complied with the only relevant piece of legislation there is – the Digital Millennium Copyright Act, the same one that serves as the legal basis of the entire web. His business and operations model is virtually identical to everyone else.

More-over, according to Kim, megaupload built a little web app/UI for around 200 or so of the biggest content management companies to be able to delete offensive material directly. This wasn’t something required by law – just a sign of good faith?

Another thing that is suspicious about the whole thing is that they apparently had not attempted to sue him previously. This is really strange since that is the natural first step in relation to a business that is causing your business billions in lost revenue.

All the ‘facts’ about the case can be found here.

Currently Kim is starting a battle and we need to standby him.

Below is  an interview with Kim.

[youtube id=”pF48PjCtW4k” width=”662″ height=”400″]

This is a song called “Mr President” that he recently released.

[youtube id=”MokNvbiRqCM” width=”662″ height=”400″]

We Don’t Pay the Full Price of Anything: Part 1 – Energy

Lately, I’ve been beginning to question whether it was the inherent characteristics of  capitalism that were causing all the immoral behavior in the name of greed, or perhaps it was something else. The lifestyle that we live on a systemic level is simply not affordable in any sense of the word.

The thing is, from an economics point of view, the problem isn’t that the conceptual system of free markets is flawed, rather its the way that we count and measure things. I’ll try and illustrate this as simply as possibly.

Currently, the costs roughly speaking for an Oil Extracting Operation is basically:

Profit = [Revenue Generated by Selling the Oil at Market Price] – [Cost of Oil Exploration, Extraction, Refinement & Transportation]

Here is the CORE issue: the price of oil or any other natural resources you are extracting can’t simply be the cost of getting it to the consumer. That’s like saying the only cost of getting goods via robbing someone’s house is the transportation company that carries the wealth out.

Oil takes millions of years to form and virtually cannot be replaced – it just wouldn’t make sense, but, from a puritan capitalistic approach those costs should be factored in order for there to be accounting equilibrium, or if you would prefer: ‘justice’. Specifically, we should be counting:

1. The cost of replacing the Oil (hypothetical world) – a tax on non-renewable energy (slightly more realistic)

2. The cost of thorough water flooding to replace absence of oil with water.

3. The cost of properly disposing off toxic water from extraction process.

The thing is, you cannot replace the oil – I mean you really are not going to be planting millions of micro organisms into the ground with the hope that millions of years later it will be come oil. What however can happen is a tax on this limited resource. For example; 10% of all revenue from selling oil should be allocated towards R & D on the next energy source.

Let’s look at a simpler example: paper. The cost of the paper shouldn’t be just the cost of cutting down a tree and making a product out of it – it should be the cost of growing the tree as well. Once again, for every tree cut down, the cost of replanting & growing the tree should be factored into the cost.

The official economic term for these costs is ‘externalities’, officially defined as:

[blockquote]

In economics, an externality, or transaction spillover, is a cost or benefit that is not transmitted through prices and is incurred by a party who did not agree to the action causing the cost or benefit. The cost of an externality is a negative externality, or external cost, while the benefit of an externality is a positive externality, or external benefit.

 

In the case of both negative and positive externalities, prices in a competitive market do not reflect the full costs or benefits of producing or consuming a product or service. Also, producers and consumers may neither bear all of the costs nor reap all of the benefits of the economic activity, and too much or too little of the goods will be produced or consumed in terms of overall costs and benefits to society.

.[/blockquote]

The bottom line is, we don’t pay the full price of Energy, as a result virtually all other products are much cheaper than what they truly cost. Oil is used in every aspect of our civilization; to grow food, to deliver it, to build and create shelter & not to mention that practically half of our products are used with some shape or form of oil.

Companies benefit from the negative externality they impose on the planet.

Facebook User’s Content = Wall Street Property

This week has shown again a true example of the way the Financial Markets rule everything & absolutely everything. It’s also a very sad day for information freedom. It was the day a very large part of the time spent on the internet, users & user generated content was just privatized by the same investment banks that already own practically everything else there is of value on this plant.

This is a great example of the kind of tactics they use to gain maximum benefit from every purchase & investment as well as using their combined power to play the market at their will.

This last 2 weeks or has been the whole Facebook IPO Shenanigan. Here’s my take on what actually went down.

[h3]What Happened[/h3]

1. Facebook publish a shiny, pretty and dreamy S-1 IPO report. In it they publish ridiculous revenue prospects.

2. They start the IPO process and talk to prospective investors and its all too good to be true.

3. THEN, practically at the end, when everyone has to take out the wallets, rumors start about Facebook announcing some stuff…Basically, they claimed that due to their inability to monetize the exponentially growing mobile users of the site – the figures published in the report weren’t correct. The REVENUE estimates of the Business, were INCORRECT.

4. Here’s the FUNNY thing. They never actually publicly acknowledged this, apparently they had a private meeting for all the top bankers and as a result they reduced their revenue estimates.

5.  May 16th, TWO Days before the IPO. I repeat, 2 days before the IPO, they add an additional 25% of the Shares for Sale.

Ohhh my god. This is probably the most textbook case of stock market manipulations. So, once again:

[h3]What Really Happened[/h3]

1. Facebook is a hot new thing, everyone wants a piece of them, expected demand for shares is through the roof = shares are expensive.

2. Scandal + Flooding on market with so many extra shares = Price Falls.

3. At a lower price, more mom & pop investor’s can buy the shares, but also the same investment banks can now have more shares at the same price.

[h3] So? [/h3]

And don’t get me wrong, I’m not implying Zuckerberg is an evil, plotting villain. He has a board of directors that make most of the decisions for him now – he is simply become a part of the system.

The problem for us, is that now Facebook HAS to act in the interest of their ‘new owners’. If they don’t, their shares fall and people start getting fired – until the company is back to making their desired levels of profit. I anticipate even worse privacy infringements, unethical ad targeting & complete lack of morality.

Ohh, not to mention that probably half the world’s photos belong to the most greedy & power hungry people on the plant.

Good job guys! You now bought a very fat chunk of the internet. The fight goes on.

– Timur

Here’s where I got my facts:

http://venturebeat.com/2012/05/25/the-inside-story-how-facebook-panicked-and-botched-its-ipo/

http://www.reuters.com/article/2012/05/23/facebook-estimates-idUSL1E8GN0FT20120523

http://www.reuters.com/article/2012/05/23/facebook-estimates-idUSL1E8GN0FT20120523

http://www.businessinsider.com/exclusive-heres-the-inside-story-of-what-happened-on-the-facebook-ipo-2012-5

 

 

Advertising: The Cancer of Capitalism

A few months ago, I was having a few drinks with an ex-Marketing director of Coca Cola in the Carribean. He had shared a few interesting stories and facts. Here is one:

  1. Atleast 80% of the cost of every bottle/can of Coke is the cost of marketing it.
  2. If Coke don’t allocate at least 50% of the coke to advertising for ONE day, it takes them about a week to get back the market share. The effect becomes exponentially more damaging if the break is longer.
That to me is disgusting.
[divider_line]

In the beginning, ‘advertising’ was used to inform people of new products, explain to them the features & uses of a new item. Progressively, the forces of the free markets have forced companies into a spiral leading to what I consider absurdity today.

[one_half]

So here are some inherent characteristics of a free market economy: (fact)

  1. Maximum Profit is the Goal. (Maximize revenue, reduce costs).
  2. Over-time, as supply outstrips demand, there is an over-production of goods.
  3. Over-production of goods inevitably leads to an over-production of credit to try & get people to buy.

[/one_half]

[one_half_last]

This leads to the following: (opinion)

  1. Consumerism: i.e buying of things we clearly don’t need.
  2. Higher prices on the things that we do buy.
  3. Lower quality of products that we buy.
  4. An unsustainable, society wide economic system.

[/one_half_last]

But anyhow, for now I will create a simple hypothetical case to illustrate my point.

[h4] Jackie Jones & Her Jeans [/h4]

So, I will create a fictional character to make this interesting. Jackie lives in Toronto, she isn’t particularly rich but she makes a decent living as a free-lance graphic designer.

Now Jackie has two pair of Jeans and she is perfectly happy with them. Frankly, she is the kind of person who literally just wears one pair of jeans and only occasionally when her favorite pair is in the wash she wears the others. Objectively & subjectively she really doesn’t need another pair.

For arguments sake, lets say Jackie is the only person buying jeans in Toronto (she is the only demand), and there is only one company (“Cool Jeans LLC”) producing jeans (the only supply).

Lets say that the Jeans themselves cost $15 to make.

At 2 pairs, Jackie is at her natural equilibrium and the price of the Jeans is $50/each.

So Jackie bought her Jeans and now she won’t need a new pair till one of the rips beyond usability. But that will be a while. Cool Jeans LLC however already manufactured 7 pairs. They aren’t exactly going to sit around and wait for Jackie to actually NEED a new pair are they?? So they decide to target her.

They invest $10 in an Adsense campaign following her all over the internet, they set up a billboard ($20) outside her house with Jackie’s favorite actress looking stunning in a new ‘collection’ that they ‘JUST’ launched. Just to make sure Jackie buys another pair they make this pair have golden buttons on the zipper (an additional $10).

Hmmmmm. A few days passes and eventually Jackie realizes that she can’t live without those Jeans. She walks in to the store and buys em. To her surprise, they cost $80.

“How come?? I paid $50 for the last two”.

“Its a new collection m’am. Also they have golden buttons”…

“Ok, here is my card”.

Now, lets asses this case study.

1. When Jackie made the decision to buy the new pair, her demand ‘shifted’. It expanded.

There is of course the possibility that this ‘advertising’ could have been used in a different scenario to push her along the Demand curve to a lower price. For e.g: Jackie gets an email saying “You Bought 2 pairs of Jeans from us this year so we’d like to give you a discount of 40% on the 3rd”.  But as you’ll see in a minute this is less lucrative from an economics point of view.

2. The Advertising shifted her perceived value & utility of the Jeans through advertising. She was mentally convinced that this pair of jeans was significantly different from the last to view it as being on a different demand curve altogether.

3. The calculations:

Jackie Paid = $80

Cost of Jeans = $15

Adsense + Billboard = $30

Golden Zipper = $10

Net Profit/Sale = $25

Now lets look at the other possible outcome (the Jeans Manufacturer would simply not differentiate the product & sell it cheaper).

In that case, Jackie would have bought a 3rd pair at around $30.

If you deduct the $15 cost of the Jeans, the maker would have made $15/sale, which is $10 less than had he ran the whole advertising campaign.

4. The consequences for Jackie:

  1. She paid a whole $80 for the exclusivity & differentiation of the Jeans.
  2. Almost 50% of the cost of product was spent on trying to sell her the product.
  3. Upon purchasing the jeans, Jackie essentially financed her own inflation of her own perception. She bought a ‘story’ that came with the Jeans.
  4. She has Jeans she doesn’t wear now.
  5. She could have spent the $80 on a lot of more valuable purchases.
Here is the bottom-line. Advertising means worse and more expensive products.