26 March 2004

Social Networking

Clay Shirky on why you cannot program a machine to replicate a relationship here via Tim Oren.

Some of the comments make the assumption that the brain is a computational machine and therefore should be replicable in code on another computational machine.

This morning whilst waiting for the guys from Mosenergo (Moscow energy utility company) to come to finally authorize the meter in my new apartment (I have only been living there 3 months) I was reading the story of the Spassky / Fisher chess match. The book moved away from history and politics briefly to talk about the mathematical permutations of a chess game, as close to infinite as I will ever get. The authors stated that the number of permutations available in any move were far too great for the brain to compute them. Some were clearly excluded immediately from experience and knowledge with a few options taking the most time. The conclusion was that great chess players used their computational ability as a base but that they were actually artists. It was their ability to "see" or visualize the chess board that made them brilliant, not their computational ability. In one section they described how players "felt" that a piece was in the right place rather than computing its ability to be there.

What's the relevance to Shirky's piece? The brain is computational, but it is also multi-layered in a way that computers just aren't (yet?). Social networking software is a tool which is fairly useless just now and will improve, but it will still have to be employed using human intelligence. Some will be better at creating relationships than others and it will have nothing to do with software and everything to do with emotional intelligence.

24 March 2004

Russian VC Tech Conference

A global first; an online blog from a Russian conference.  Albeit, that I am on battery power and there is not even a dial up connection available.  It’s being held in the Astoria Hotel in St. Petersburg.  This is the hotel that Hitler intended to make his headquarters when he invaded Russia. 

Anyway there are probably 4 people who are worth listening to (of which I am clearly one) and we all flew up from Moscow today to speak at this thing to each other and then fly back again.  A great way to spend $200 and waste a day along the way. 

There is also a whole bunch of bullshit being spoken as well – high tech investing in Russian technology is a nascent industry and there are very few people who really understand it – which does not stop them speaking. 

Worth listening to were Marie Trexler of Intel Capital and Sasha Johnson of Landbridge Capital. 

Sasha says that we will compete.  She is wrong – we will co-operate on some deals and we will compete as well.  But Russian technology being what it is we will all be secretive about what we are doing.

 

18 March 2004

The Russian Infosys?

In a piece of news that will go mostly unread across the entire world Epam Systems agreed to merge (acquire) Fathom Technology. The press release is EPAM Systems Continues Expansion through Strategic Merger with Fathom Technology. Its been a long time in the making.

There will be 1 maybe 2 real powerhouses in the offshore programming business based on talent in the FSU. I believe that Epam is a contender for that position. Fathom's senior management is good and understands that they will never compete with India etc on price - it has to be quality and complexity. Time Warner Music's CIO got it right the other day when he commented that the competition was not $/hour, or people at a desk, or lines of code produced, but the quality of the programme at the end. If anyone knows any metric to measure that please let me know.

17 March 2004

Israel Dismisses China and India

and fails to even mention Russia! The European Tech Tour is in Israel this week (well Israel qualifies for the Eurovision song contest so they get a bunch of VC's as well) The article is here from Forbes.

Not entirely sure how you are supposed to compare Israel with China and India. There may be some great technology in China and India, but its the spending power that drives deals there. Not many people in Israel but it would be the third most VC-active state in the US if it were a US state. Which is apolitical discussion that I am not even willing to start right now.

Theoretically Russia should compete with Israel more than India and China. However the article is right - we are not yet on the radar screen. Hopefully, an article in 3 years time will not make that mistake.
Skype

Following the post a few daysa ago on Skype and its need to link to physical network - here from BoingBoing is link to a ZDNet story that says the same thing. Skype via BoingBoing.

I stand by my earlier comments - its way more difficult than IT guys think. I'll buy Vonage anyday.

15 March 2004

VOIP Business Models
Om Malik reports here on Skype’s funding by DFJ and Index.  To quote; “Despite whatever the press might say, and how much fans of Skype might rave about the company, I still don’t see a business model.”

 

He’s right for two reasons; firstly because it’s voice over IP – not a new way of communicating, in the same way that the Internet spawned new ways of delivering content, but it was the same content – until blogging came along.  Secondly, because it’s a closed format.

 

The first is the most challengeable assumption.  In the case of VOIP the IP bit does not add much value to the voice; it just changes the way that the data (your voice) is carried.  IP networks allow end user services to be rolled out more quickly and cheaply.  (There are any number of forums over on Slashdot on building your own IP PBX.)  So “follow-me” or PAM services aren’t premium priced elite services only for Fortune 100 companies, they can be made available to everyone.  This has little to do with “voice over” and all to do with IP which is intelligence moving to the edge of the network.  However, I am willing to accept the charge that different delivery methods open up new business models that may not have been available previously.  It’s just that in this case I cannot see what they are. 

 

To my mind the greater reason for Skype to fail is that it is a closed format.  A not great analogy would be running fixed line networks next to mobile networks and not allowing for any interconnect.  Actually it’s worse than that; it’s running two GSM networks next to each other and not allowing any interconnect.  I understand that the plan is to allow connection to physical networks, for a price, along with plenty of other premium services.  For anyone born and brought up in the IT world go have a look at what it takes to build a SS7 stack, put it alongside a SIP stack, H523, MGCP (and the other 100 that I forget about just now) which is what it takes to make this service ubiquitous.  

 

All of the above notwithstanding, there is a reasonable chance that Skype will make its founders and investors money.  Someone will buy it and be left with financial egg on their face.

Is the US Declining?

Dan Gillmor's Sunday column hits on the issue well. Can Silicon Valley, U.S. Lead in New Global Economy?

The majority of the posters then wander off in to concerns about offshoring and outsourcing, which IMHO slightly misses the point. I think the issue here is about globalization. Pre-bubble (I prefer telecom to Internet) the Valley was THE center for innovation. Scientists and engineers both conceived new technological solutions and partnered with business teams that built the business models that executed them.

The Valley no longer has an exclusive license on new technological solutions. If you examine the geographical origins of the nano deals that Steve Jurvetson has led at DFJ you will find that very few, if any, originated in California. So much for no investing more than 2 hours away from Sand Hill Road. Nano investing is an example of innovations happening away from the core Valley, there are plenty of other examples. The Valley was a leading exporter of globalization - we all looked, admired, enjoyed the schadenfreude and then tried to emulate. In particular, we focused on being technologically better / different.

However, its not just about the technology, the business plan is fairly important as well. It strikes me that there is a fairly unique DNA that is fostered in the Valley / Bay Area (call it what you like) that encourages people to take risks. Not just risks with your personal life, but with business plans and approaches to business. Name a technology business (not a technology service business) in the last 15 years that was not born in the Valley that is a meaningful part of the NASDAQ composite. I am sure there are plenty, but not more than 20-30% of the index and probably less. That's an extra-ordinary concentration of meaningful business start-ups.

So what has this to do with Russian technology? Or what's the take away? Innovation is increasingly global, but the change is less marked in the business leaders who will make the technology in to a business. Which is why DFJ Nexus is being born.

05 March 2004

Russians Helped Iraq with WMD

An article culled by the FT from the NYT about Russians assisting Iraq with its long range balistic missile programme here.

Um well of course it did. The money provided by the US to fight Iran principally went to the USSR in buying weapons (at the height of the Cold War - go figure.) The French got in on the act as well, did not see anyone from Halliburton though. Just about all that was left of Iraq ballistic missile programme by the time of Iraq 2 were Scud Missiles (what's the difference between British Rail and a Scud Missile? British Rail actually kills people.)

Anyway they weren't really working for the Russian government but for a private company - probably was Halliburton after all. And of course the Russian government filled as it is by ex-KGB was not in the slightest interested in what its citizens were doing, especially those who undoubtedly still struggle to get an international passport.

What utter bullshit - surely the headline should be: Bush team floats reason why Iraq has no WMD.

26 March 2004

Social Networking

Clay Shirky on why you cannot program a machine to replicate a relationship here via Tim Oren.

Some of the comments make the assumption that the brain is a computational machine and therefore should be replicable in code on another computational machine.

This morning whilst waiting for the guys from Mosenergo (Moscow energy utility company) to come to finally authorize the meter in my new apartment (I have only been living there 3 months) I was reading the story of the Spassky / Fisher chess match. The book moved away from history and politics briefly to talk about the mathematical permutations of a chess game, as close to infinite as I will ever get. The authors stated that the number of permutations available in any move were far too great for the brain to compute them. Some were clearly excluded immediately from experience and knowledge with a few options taking the most time. The conclusion was that great chess players used their computational ability as a base but that they were actually artists. It was their ability to "see" or visualize the chess board that made them brilliant, not their computational ability. In one section they described how players "felt" that a piece was in the right place rather than computing its ability to be there.

What's the relevance to Shirky's piece? The brain is computational, but it is also multi-layered in a way that computers just aren't (yet?). Social networking software is a tool which is fairly useless just now and will improve, but it will still have to be employed using human intelligence. Some will be better at creating relationships than others and it will have nothing to do with software and everything to do with emotional intelligence.

24 March 2004

Russian VC Tech Conference

A global first; an online blog from a Russian conference.  Albeit, that I am on battery power and there is not even a dial up connection available.  It’s being held in the Astoria Hotel in St. Petersburg.  This is the hotel that Hitler intended to make his headquarters when he invaded Russia. 

Anyway there are probably 4 people who are worth listening to (of which I am clearly one) and we all flew up from Moscow today to speak at this thing to each other and then fly back again.  A great way to spend $200 and waste a day along the way. 

There is also a whole bunch of bullshit being spoken as well – high tech investing in Russian technology is a nascent industry and there are very few people who really understand it – which does not stop them speaking. 

Worth listening to were Marie Trexler of Intel Capital and Sasha Johnson of Landbridge Capital. 

Sasha says that we will compete.  She is wrong – we will co-operate on some deals and we will compete as well.  But Russian technology being what it is we will all be secretive about what we are doing.

 

18 March 2004

The Russian Infosys?

In a piece of news that will go mostly unread across the entire world Epam Systems agreed to merge (acquire) Fathom Technology. The press release is EPAM Systems Continues Expansion through Strategic Merger with Fathom Technology. Its been a long time in the making.

There will be 1 maybe 2 real powerhouses in the offshore programming business based on talent in the FSU. I believe that Epam is a contender for that position. Fathom's senior management is good and understands that they will never compete with India etc on price - it has to be quality and complexity. Time Warner Music's CIO got it right the other day when he commented that the competition was not $/hour, or people at a desk, or lines of code produced, but the quality of the programme at the end. If anyone knows any metric to measure that please let me know.

17 March 2004

Israel Dismisses China and India

and fails to even mention Russia! The European Tech Tour is in Israel this week (well Israel qualifies for the Eurovision song contest so they get a bunch of VC's as well) The article is here from Forbes.

Not entirely sure how you are supposed to compare Israel with China and India. There may be some great technology in China and India, but its the spending power that drives deals there. Not many people in Israel but it would be the third most VC-active state in the US if it were a US state. Which is apolitical discussion that I am not even willing to start right now.

Theoretically Russia should compete with Israel more than India and China. However the article is right - we are not yet on the radar screen. Hopefully, an article in 3 years time will not make that mistake.

Skype

Following the post a few daysa ago on Skype and its need to link to physical network - here from BoingBoing is link to a ZDNet story that says the same thing. Skype via BoingBoing.

I stand by my earlier comments - its way more difficult than IT guys think. I'll buy Vonage anyday.

15 March 2004

VOIP Business Models
Om Malik reports here on Skype’s funding by DFJ and Index.  To quote; “Despite whatever the press might say, and how much fans of Skype might rave about the company, I still don’t see a business model.”

 

He’s right for two reasons; firstly because it’s voice over IP – not a new way of communicating, in the same way that the Internet spawned new ways of delivering content, but it was the same content – until blogging came along.  Secondly, because it’s a closed format.

 

The first is the most challengeable assumption.  In the case of VOIP the IP bit does not add much value to the voice; it just changes the way that the data (your voice) is carried.  IP networks allow end user services to be rolled out more quickly and cheaply.  (There are any number of forums over on Slashdot on building your own IP PBX.)  So “follow-me” or PAM services aren’t premium priced elite services only for Fortune 100 companies, they can be made available to everyone.  This has little to do with “voice over” and all to do with IP which is intelligence moving to the edge of the network.  However, I am willing to accept the charge that different delivery methods open up new business models that may not have been available previously.  It’s just that in this case I cannot see what they are. 

 

To my mind the greater reason for Skype to fail is that it is a closed format.  A not great analogy would be running fixed line networks next to mobile networks and not allowing for any interconnect.  Actually it’s worse than that; it’s running two GSM networks next to each other and not allowing any interconnect.  I understand that the plan is to allow connection to physical networks, for a price, along with plenty of other premium services.  For anyone born and brought up in the IT world go have a look at what it takes to build a SS7 stack, put it alongside a SIP stack, H523, MGCP (and the other 100 that I forget about just now) which is what it takes to make this service ubiquitous.  

 

All of the above notwithstanding, there is a reasonable chance that Skype will make its founders and investors money.  Someone will buy it and be left with financial egg on their face.

Is the US Declining?

Dan Gillmor's Sunday column hits on the issue well. Can Silicon Valley, U.S. Lead in New Global Economy?

The majority of the posters then wander off in to concerns about offshoring and outsourcing, which IMHO slightly misses the point. I think the issue here is about globalization. Pre-bubble (I prefer telecom to Internet) the Valley was THE center for innovation. Scientists and engineers both conceived new technological solutions and partnered with business teams that built the business models that executed them.

The Valley no longer has an exclusive license on new technological solutions. If you examine the geographical origins of the nano deals that Steve Jurvetson has led at DFJ you will find that very few, if any, originated in California. So much for no investing more than 2 hours away from Sand Hill Road. Nano investing is an example of innovations happening away from the core Valley, there are plenty of other examples. The Valley was a leading exporter of globalization - we all looked, admired, enjoyed the schadenfreude and then tried to emulate. In particular, we focused on being technologically better / different.

However, its not just about the technology, the business plan is fairly important as well. It strikes me that there is a fairly unique DNA that is fostered in the Valley / Bay Area (call it what you like) that encourages people to take risks. Not just risks with your personal life, but with business plans and approaches to business. Name a technology business (not a technology service business) in the last 15 years that was not born in the Valley that is a meaningful part of the NASDAQ composite. I am sure there are plenty, but not more than 20-30% of the index and probably less. That's an extra-ordinary concentration of meaningful business start-ups.

So what has this to do with Russian technology? Or what's the take away? Innovation is increasingly global, but the change is less marked in the business leaders who will make the technology in to a business. Which is why DFJ Nexus is being born.

05 March 2004

Russians Helped Iraq with WMD

An article culled by the FT from the NYT about Russians assisting Iraq with its long range balistic missile programme here.

Um well of course it did. The money provided by the US to fight Iran principally went to the USSR in buying weapons (at the height of the Cold War - go figure.) The French got in on the act as well, did not see anyone from Halliburton though. Just about all that was left of Iraq ballistic missile programme by the time of Iraq 2 were Scud Missiles (what's the difference between British Rail and a Scud Missile? British Rail actually kills people.)

Anyway they weren't really working for the Russian government but for a private company - probably was Halliburton after all. And of course the Russian government filled as it is by ex-KGB was not in the slightest interested in what its citizens were doing, especially those who undoubtedly still struggle to get an international passport.

What utter bullshit - surely the headline should be: Bush team floats reason why Iraq has no WMD.