$100 laptops, $2500 cars

In this morning’s post I mentioned low cost cars coming from India. Today Business Week reported that Ratan Tata’s new $2,500 car, called the Nano, is being met with “extreme enthusiasm” and is going to put India on the map in the auto world. CrunchGear indicates that Tata plans to introduce the Nano to other low income areas like Africa and South America in the next four years.

Maybe they should bundle the $100 laptop from OLPC foundation with the vehicle, so the kids can have something to do in the back seat? (I know it’s more like $199 in quantities of 10,000 right now, but I’m sure prices will drop over time.)

Imagine how fun it would be for kids to play multi-users games over the XO mesh network in the back seat of the Nano while racing down India’s highways. Someone could build some great software for that.

Seriously, could Tata be the Henry Ford of the 21st Century? Will the Nano, the world’s least expensive car, sell more units than any other car in this century. India is poised to become the world’s most populous nation after all.

“The Model T was a great commercial success, and by the time Henry made his 10 millionth car, 9 out of 10 of all cars in the entire world were Fords. In fact, it was so successful that Ford did not purchase any advertising between 1917 and 1923; in total, more than 15 million Model Ts were manufactured, more than any other model of automobile for almost a century.” (Wikipedia)

The model T Ford cost $850 in 1909 and prices dropped over time as the assembly line lower manufacturing costs. (According to Wikipedia, “The assembly line was introduced to Ford by William C. Klann upon his return from visiting a slaughterhouse at Chicago’s Union Stock Yards and viewing what was referred to the “disassembly line” where animals were butchered as they moved along a conveyor. The efficiency of one person removing the same piece over and over caught his attention.”)

By 1915, Model T Ford’s cost only $440, and Ford was paying his workers $5.00 per day. He hoped that any of his factory workers could afford a car. “In 1914, an assembly line worker could buy a Model T with four months’ pay.” (Wikipedia)

Ford sold 15 million Model Ts from 1907 to 1927. The U.S. Population reached 123 million by 1930, so Ford sold to about 8% of the U.S. population. (I don’t know how many were sold outside of the U.S.)

India’s population will hit 1.3 billion by 2020. And the Nano costs less than the Model T did by the 1920s, adjusted for inflation. Wikipedia says: “By the 1920s, the price had fallen to $300 (about $3,400 in 2006 inflation-adjusted dollars) because of increasing efficiencies of assembly line technique and volume.”

If Tata can sell to 8% of the Indian population over the next 20 years, it would sell about 104 million units. Those numbers are staggering.

According to the Guardian, the Indian middle class will grow from 50 million now to 583 million by 2025, so anything is possible. But Tata projects selling up to a million Nanos per year. The initial manufacturing capacity is only 250,000 units per year from a factory near Calcutta.

After low cost laptops and cars, what industry do you think will be revolutionized next by a legitimate low-cost manufacturer that is building products for the poor in developing nations?

Notes from Nicholas Negroponte Keynote at CES (1-9-08)

Thanks to my brother Curt who taught me to be inspired by visionaries, I always make an effort to hear the great thinkers and movers and shakers in person. It is so much different and better than hearing about it later. Nothing, for example, was better than attending the Facebook Platform launch event in May 2007, and even meeting Mark Zuckerberg afterwards in person. I’ve heard Marc Andreesen in person (2001), Bill Gates (2003ish), Larry Page (2005), Jerry Yang, Guy Kawasaki multiple times, Mary Meeker (2000), Bill Joy (2001), and many other influential VCs and entrepreneurs.

One of my former college students actually took me seriously when I suggested that he take all his tuition money for four years and invest it instead in meeting all of the industry’s thought leaders in person and learning from them directly when they speak, and also buying all their books and tapes, and that it would be a better use of money than sitting in the classroom for 4 years learning from academics. I’ll have to see if he is actually following through with this. He’s probably too busy working. For future entrepreneurs, this advice may actually be good. If you’re going to spend tens of thousands of dollars on a 4-year education, why not make the world your classroom and handpick all your instructors?

Anyway, the highlight of my CES trip was hearing Nicholas Negroponte discuss the purpose and progress of the One Laptop Per Child foundation, which he spun out of MIT Media labs about 3 years ago, I think, and which is now manufacturing laptops which are being sold by the millions into the developing world.

I have heard a lot of hearsay about the OLPC effort, mostly skepticism and disbelief in media reports, but Negroponte’s talk blew me away. I think this may be one of the most important initiatives in the modern era, with amazing consequences.

He gave credit to Seymour Papert for inspiring the idea. The overriding goal of the project is to leverage children to bring the world out of poverty. He has observed (as have nearly all parents that I know) how our current education system takes bright kindergarten and first-grade children whose faces are bright, and who are eager to learn, and by the fourth grade they are bored with school and not interesting in learning–they can’t wait for recess. I know there are magical schools and teachers that are good counter-examples, but as a whole, I think he is right.

I don’t believe just giving computers to kids will solve this problem, and neither does he. (He gives examples in the developing world where the only software on the computers is Word, Excel, and Powerpoint–which he thinks is ridiculous.) I think his approach is a holistic and open approach that will attract a lot of companies and individuals to the cause. Making OLPC a non-profit was the best move they ever made, he said, because heads of state know the real motive and it melts away resistance.

The most interesting thing I heard him say, and I’m going to be thinking about this for a very long time, is that the biggest failure of modern education in this country is not teaching kids computer programming at a young age, because that is a superb way to teach kids how to think and how to learn learning. Debugging a simple computer program that you wrote to draw a circle, will help a kid learn more about circleness than anything else.

I learned Basic programming when I was 12 or 13, when my Dad bought us an Apple II computer, with a cassette player as its memory. I remember my first “Hello, World” program that I learned from the Basic computer book he bought me. I remember all the Goto commands that I used to use. My magnum opus was a 2800 line Dungeons and Dragons program. I stopped programming a year or two later, but picked it up again in 1988 and wrote utilities for data preparation for about 6 more years.

Programming definitely changed my world.

Negroponte doesn’t understand why kids can’t all learn to write simple programs, so that they can learn learning. There was a programming language for kids called Logos developed in the 1960s. For some reason, we stopped teaching programming in this country and maybe around the world.

His lecture was very eye-opening and mind-expanding. There are a lot of disruptive technologies that were developed for the XO Laptop that the foundation is producing. The fact that a non-profit will be building tens of millions of laptops for the developing world is certainly disruptive. I bet one of the most popular web sites that these millions of kids will be accessing will be from another non-profit that created Wikipedia, in most languages. I like how these two projects will work together to provide knowledge for children worldwide.

Negroponte talks about how for-profit computer manufacturers are driven every year to bloat their machines with the latest of everything, so that they can keep the prices relatively high, rather than letting Moore’s law driving prices down by 50% per year. It took a non-profit with a goal to manufacture a $100 laptop to start causing some disruption. The prices still need to come down, but I see no reason to think that they won’t do it.

He highlighted a similar problem with auto manufacturers. Instead of a simple vehicle that focuses on transporting people from one place to another, now cars expend most of their fuel in transporting the vehicle itself. Reminds me of a contest I read about a few months ago where a (100hp souped up) 1921 Model T driven by a 70 year old man beat a Hummer H2 in an uphill race with its low horsepower, because the weight to power ratio was so much in favor of the Model T.

Makes you wonder if anyone will ever create a non-profit One Car Per Family foundation to manufacture a low-cost self-reparable vehicle that uses very little fuel to provide transportation for families in the developing world. I remember reading something about an Indian auto manufacturer that was aiming to build cars for a few thousand dollars.

There are so many industries ripe for the kind of disruption that will come when the developing world is the target of the innovation. I refer you to the excellent book, The Fortune at the Bottom of the Pyramid. If I recall, it describes the business opportunity for for-profit companies, not non-profits.

Here are my complete notes. Sorry they are so rough. (About half of Negroponte’s slides were just a few words in a list on a white background. Interesting way to do a powerpoint. I’ve tried to capture the content of those slides when I just list a few words/topics in a row.)

Nicholas Negroponte, author of “Being Digital”, board of Motorola, partner in VC firm, founder of MIT Labs, angel for more than 40 startups

Purpose of One Laptop Per Child:

The world doesn’t look great right now, not just wars, terrorism, etc–but the promise is a bit gloomy if you look at children as being the greatest resource. Pakistan and Nigeria–50% of the children don’t go to school. Education outlook is pretty bleak. If you look at any big problem: poverty, war, environment–part of the solution includes education. Sometimes it can be done with just education. I can’t think of anything that can be done without an element of education. After years of the MIT Lab and seeing how children learn, we decided to spin it out of the labs and focus on a particular kind of learning.

Goal: eliminating poverty

Means: Education
Learning learning

This gets misinterpreted as meaning that our PCs are anti-school….that is not right. In the world, first grade classes, eyes are wide open. There is in the room a kind of eagerness in their eyes; by the 4th or 5th grade, the kids will be excited because you come in, but in general the heads are down and kids are waiting for recess. A little bit of the passion is taken out. When we think kids in the developing world are dropping out of school to help the family financially, care for younger children, that’s part of the story, but school is actually boring and quite irrelevant.

Time machine
Hard fun vs drill and practice
Relevance
Programming
Leveraging children
Immunization against ignorance

If you take a time machine that can go back in time and look at something like medicine, 150 years back and look at operating theory, whatever doctor was performing that operation and bring them forward to today–that person wouldn’t recognize a single thing except the human body. If you play that same game and bring a teacher forward 150 years, in any country, that teacher could be a substitute teacher, they would recognize everything. Nothing has changed. What is changing is what kids are doing outside of school, not in. Maine state program was quite good 7 years ago, but kids there now say they have another real computer at home. The school supplied laptops are left in the dust.

Computers should be fun but hard work, like kids learning to program VCRs.

To me the biggest tragedy that has happened in education worldwide is that kids aren’t introduced to computer programming anymore. In 1968, logo computer language was developed for children. It wasn’t just simple, but it used basic elements that led kids to think about thinking. It’s not so you can be a computer programmer. The act of programming is the act of learning learning. Example: if you write a computer program to draw a circle, it turns out that child will understand circleness in a much deeper way than you and I did. We learned about circles in an abstract way. When you write a program that draws a circle, it will have bugs, so what does the child do. You debug the program.

What happened? In the 1970s, we found the children who engaged in that kind of programming transferred some of the concepts to their own learning. We saw this in spelling bees. If I got 8 of 10 words right I was happy. That was a B. The debuggers were fascinated by the two that they got wrong–they didn’t sweep them under the rug like I did. Their passion was for the two they got wrong.

In most developing countries school is two shifts, 7-12 (with few recesses). Average child spends 12-13 hours per week in the classroom. That is not many hours.

1982: first year that Seymore Pappart and I tried to bring computers to developing country schools. Steve Jobs gave us several hundred Apples. These kids from Dakar (Senegal?) had more computing power than the government.

My family helped set up a school in Cambodia in 1999. In 2001 my son was living in Italy and had girlfriend and startup problems, his name is Dmitri, I said if you can suffer the indignity of working for your father, why don’t you go to Cambodia and wire this school and I’ll send laptops. I bought laptops on eBay. The kids started taking these computers home. First english word was “google.” When they took the laptops home, the parents asked the kids not to open the laptop because they looked expensive and fragile–every one. Dmitri had notes for them to take home the next night–so the kids were able to open their laptops at home. The parents loved them because they were the brightest lights in the house (no electricity.) Parents started getting the kids to do things for them. The second year of this school–100% more children showed up for first grade. The kids told other kids how cool school was. Every child who started 7 years ago is continuing.

I think connectivity is coming in the developing world; but what bothered me is the laptop issues. Prices of electronics keep dropping, but if you keep handing savings to the consumer, then there won’t be a high price or margins. So manufacturers keep adding features, so the price can stay the same. Laptops, cell phones, etc. So an obesity occurs and turns most things into SUVs. Most of the gasoline is used to move the car, not the person. So we said, can we revisit this? 1) not be an SUV any more. 2) make something that is child-centric. What do kids do? They are not office workers.

If you see 6 and 7 year-olds in villages, they are learning Word, Excel and Powerpoint. They shouldn’t be learning particular programs, but learning to learn.

One Laptop Per Child
XO computer
A non-profit was our best decision we made. We were advised from day one not to be. We were told to make a lot of money and give it away. Or to follow the Paul Newman model. We said we needed to be a non-profit to keep the moral purpose absolutely clear. When I visit a head of state or minister of education, there is no question in that person’s mind what the project is about. We have no shareholders. It makes no difference if a country launches 1 or 2 million. We need numbers to get the price down; but when the volume is there, there is no reporting to shareholders. Kofi Annan announced this 26 months ago. We presented a strategy to get the bigger countries to launch it and the smalle rones to follow.

Everyone who saw the original model remembered only the pencil yellow crank. Today’s model has a crank, pedal, solar. 50% of the children in this world have no electricity at home or at school. If you are really serious about laptops and learning, you can’t use the power regimes.

4 things we really had to do:

1) <2 W
2) Dual mode, sunlight display
3) WiFi mesh network
4) Rugged

Why less than 2 watts? Your laptop is somewhere between 30 and 40 watts. How much power can a child’s upper body generate? At peak with major movements, you can generate 10 watts, but if you have a 10-1 ratio , 1 minute of cranking, 10 minutes of usage, it’s pretty good.

When I’m outdoors my laptop is impossible to use. Many of the kids we’re talking about go to school under a tree. Mary Lou, our CTO, invented some display technology that reads very well outdoors. I prefer to use it outdoors and in bright light, the resolution is higher.

People are fascinated by Facebook. Kids have to be able to have their own network, independent of the internet. If you open the laptop, they all make a network. Yes, the technologies are all somewhat disruptive, but the main thing is thinking about the kids and learning.

Rugged goes without saying.

Design matters. Two ways to make something inexpensive. Most common is to take 3 components: cheap labor, cheap components, cheap design and make a cheap laptop. Second approach is to take very advanced manufacturing, very large scale numbers, very cool design, and poor chemicals in one end and spew out ipods on the other end. We’ve gone in that direction.

You can’t have holes in this. USB and PCMCIA. Think of dust, sand, mud. There is one hole in it, to plug in the crank, or solar panel or AC adapter. When it converts into a games machine or electronic book, you are using it in a very different way. Games, ebooks is at the foothills. It is going to have an impact in several years that is quite large and quite unexplored. If folds up and become a laptop. Everyone smiles when the little ears go up. They are the wifi, network. By being steerable you get very good reception. I have been in meetings where 20 laptops come up, and no one gets a signal, but I do, because of the steerable ears.

Quanta is the manufacturer of the laptop–they make 40% of the world’s laptops. Having a partner like them is very important. 18 months ago people said they can’t do it, or it couldn’t be done. When Quanta raised hands and said we’ll build it, the questions went away completely.

3000 people; minus open source is 500; minus partners help is about 60.

Brightstar (mobile phone company) is doing the distribution/logistics from HQ in Florida.

Maintenance: how do you do this?
Design for it.
Laptop hospitals.
Wiki’s
Teacher preparation

The display is 50% of the parts cost of almost any laptop. In the case of the XO, you take out 4 screws and take out a bar of LED lights, that cost less than $1, and you have a new display.

The XO has to be a little bit more like an auto was designed 20 years ago. You could see things and make repairs. Today you have to hook it up to the computer to diagnose.

In Nigeria we developed idea of laptop hospitals run by kids. 95% of the maintenance and repair can be done by the kids themselves.

Most products have labels or messages–if you open this up, warranty no longer valid. I’d like to label ours: warranty not valid until such time as you open this up!

Most companies ask visitors to sign a non-disclosure agreement. We ask you to sign a disclosure agreement! We want to get the word out!

Wiki’s are people supporting each other. We released it in this country a few weeks ago; that was daring. It wasn’t designed for kids in this country. There is a growing community of wikis with kids supporting each other.

Our Chief Education office is in Argentina.

Teacher preparation not training. When someone says, who is going to train the teachers to train the children, I wonder what planet they are from, because there’s no a person in the room who doesn’t ask their child about their computer, cell phone, etc.

1,000 kids can share a satellite dish

Laptops are always connected

If a kid bicycles home or walks 3-4 miles, they will lose contact; so there are devices you can nail to a tree and boost the signal that cost $10.

Software on the laptop is designed with social networks in mind, it looks as children as friends, buddies.

12 keyboards in hand: english, arabic, thai, west african (nigeria), portugues, spanish, amharic (ethiopia), urdu, cyrillic, mongolian, devanagari, kazakh

6 more keyboards coming. Two weeks from design to being deployed.

Current launch countries: Uruguay was first, Peru, Rwanda, Ethiopia, Mongolia, Afghanistan, Cambodia

Peru understands constructionism, is a student of it as well.

We launched Give One Get One as a financing mechanism. It ended Dec 31st. 162,000 laptops were sold.

The Intel fracas gets a lot of attention, but we have other great partners and the foundation will continue on.

Partners:
AMD, Marvell, Google, eBay, Nortel, Red Hat, Brightstar, News Corp, Citicorp, SES/Astra, two others

www.laptop.org

One of the fastest growing websites, the wikis in particular. The community growing around it is in multiple languages!!! The mishaps of last week have caused a lot of press to come out. If you look at the laptop or more importantly at education, more widely than just the classroom. It doesn’t mean you’re anti-classroom. If you ask how you leverage children, you can’t do it just in the class hours.

Update from Washington, DC

I’m in Washington, DC for the American Library Association Annual Conference & Exhibition. I started an MLS program back in 1990 (Masters of Library Science), but had to drop out because my CD ROM publishing company needed my full attention. But I have the deepest admiration for librarians, particularly reference librarians, who are vastly underrated. They don’t know everything, but they know where to find the answers, probably better than any other profession.

So I’m hanging out with 30,000 librarians and service providers. (Someone told me normally 25,000 attend, but DC is a big draw, so they’re expecting more this year.) There are 1,600 exhibitors–pretty impressive. Yesterday I spent 5 hours at the National Archives listening to some of the premiere genealogists in the country talk about using the National Archives to find records of your ancestors.

I’ve been travelling a lot lately, and often getting cheap last minute fares, and I suppose because of that, my luggage was lost for the third consecutive time. What I’m learning is that if a travel site books one segment on one airline and then hands you off to another airline for the next segment, often you make the connection but your luggage does not. A few months back I used LinkedIn Answers to get about 40 wonderful suggestions on how to get cheap fairs with short notice for international flights. Now I think I need to use LI Answers to figure out ways to travel cheap without losing baggage. I used to travel with one carry on and my laptop bag, and I could go for a few days with just that, but since the ban on liquids and stuff, I just check my baggage and carry on my laptop bag. I suppose I could try the plastic bag approach and put my contact lens stuff in one of those and still carry it on. But it is such a pain.

If you wonder why I’m blogging about such mundane and personal things, check out Mark Cuban’s recent *very* personal blog post on getting a colonoscopy. (or you can just google “cuban and colon” and he ranks #1 in google. I think the Colon Cancer Testing Industry should adopt his “it’s easy and breezy” tag line for their advertising. He clearly doesn’t think personal fears should get in the way of having this important screening done.

I had my first physical exam in 20 years last year, and it was a bit uncomfortable and I never would have blogged the details–but then again, I’m not Mark Cuban, and I suppose I do still care what people think of me. I admire Mark in a lot of ways. I love the Mavs, and was sorry to see them lose in the first round of the playoffs this year.

Okay, so back to business.

This afternoon I get to hear a lecture from Google and five major libraries about how the Google Books Project is coming. I’m very excited to get a firsthand update. In various places I’ve read that it only costs Google about $10 per book to scan and OCR a book, they use some kind of modified open source OCR program. As a long time content publisher, I’m eager to know both how to keep costs down on scanning and indexing projects, as well as to see whether Google is just going to digitize all the world’s information and make it free, making it more difficult for anyone else to be an information provider.

But even if all the books in the world were free online (and they won’t be, because of copyright issues), there would still be a role for indexers, librarians, and organizers of that free information, and people would still pay for that added value, because it would save them time and make them more effective.

If open source applications commoditize some software, and force developers to work on top of the LAMP stack, then I think in the library industry, the open sourcing of the world’s books will force professional information workers to add value on top of the “stacks” of free books, as well. (There’s a pun in here somewhere with the open source “stack” and “stacks” of books.) Disruption always opens doors to new opportunities, and those who make the transition by gaining new skill sets and providing new services can do very well.

Yesterday I heard an industry leader in preservation say they now have technology to simultaneously digitize and microfilm the things they are scanning. That is cool.

This morning I hope to hear Ken Burns speak in one of the keynotes. But I’ll be late because I lost my blackberry recharger yesterday, and have to check with the hotel’s lost and found when they open at 9 am to see if they have it, and if they don’t, I have to go two blocks to a cell phone store when it opens and buy a new one. I am always losing laptop power cords and my phone rechargers. Can’t wait for wireless recharging, a technology that several companies are now working on.

Speaking of blackberries, it’s true that you see a ton of them in DC.

This week I’ve spoken with several decision makers about Facebook Platform. After my Paul Revere style midnight ride post–“Facebook is coming, Facebook is coming”–of four weeks ago, the night of the f8 launch event, one commenter called me the “hypiest” blogger he had ever read. I think the hype was legit.

In the last four weeks and one day, 945 applications have launched on Facebook, and it was reported this week that 1,000 developers per day are signing up to become Facebook Developers.

More impressive, 17 applications have more than a million users already, and six have more than 3 million users. Can you imagine getting that many users in a month, without spending a penny on advertising?

I finally signed up for Twitter last week, and hope to get in the habit of using it often. I think it will help me fill in the long (unfortunately) gaps in my blogging, because I don’t have nearly as much time to blog this year since I’m running World Vital Records. When I was in London two months ago, a little article on Twitter was on the front page of the Financial Times.

But the most interesting use, for me, of Twitter, is for parents and children to use it to stay in touch with each other. I think I’ll start experimenting with that. How often do you wonder what your kids are doing at any given time, who they are with, what their plans are? Not that kids will want to use Twitter to keep their parents up to the minute, but I think there might be some ways to pull that off. I’m all for finding ways to use technology to strengthen families, and a Family Twitter would go a long way.

Tim Russert has been promoting his book “Wisdom of our Fathers” and in an interview I saw this morning, he talked about his relationship to his father, and his relationship to his son. He told some wonderful stories (you can find the clip on Truveo) about his son, and expressed very well how family relationships are more important than anything else in life.

If you know any parents that use Twitter to keep up with their kids and vice versa, please let me know. I may write a Connect Magazine article about this in the next few months.

Predictably, my upcoming Connect Magazine article will be on how the Facebook Platform is changing everything in social networking.

I think I saw something yesterday about Ning enabling Facebook apps now.

I’m heading to London tonight and will be there for business meetings on Monday and Tuesday.

My airplane reading is a 600 page book on Germanic Genealogy that was just published this year. I have consumed books on genealogy sources in the UK, US, Germany, England, Sweden and Italy this year, and plan to do the same with every recently published sourcebook on genealogy for every country in the world, just as soon as I can.

Ten years ago, when running Ancestry.com, I had some wonderful subject matter experts to focus on acquiring genealogy records, and I focused on internet marketing and strategy. But this time around, I intend to do both, and to see what wonderful insights and product design ideas come from understanding the records of the world as well as trying to make them accessible to more people.

One more thing: two more entrants into the family social networking space, Famillion out of Israel, and Zooof out of the UK, both have funding, both are doing good things.

And finally, when I have an hour, I want to write a thoughtful post on genetic genealogy, with Google’s founder funding 23andme.com, and Ancestry.com rekindling an old business relationship with Sorenson Genomics, perhaps in response to what Google might do. More and more genealogists are talking about DNA testing these days, and I think it will become mainstream in the next few years. I’ve been interested in this subject since reading the Decode genetics S-1 back in 1999, and trying to acquire a DNA testing company for MyFamily.com shortly thereafter (I couldn’t convince others that it was strategic), so I have a lot of thoughts to share on the topic. Just not enough time.

Prediction: Facebook will be the largest social network in the world

I saw history in the making today.

For some reason, I was lucky enough to be in San Francisco for the Facebook f8 Platform launch event. This announcement was at least an 8.0 on the Richter scale. It was a whopper.

In fact, I haven’t come away from an event so excited since September 21, 1995, after attending the Online Developers II conference, also in San Francisco, when it hit me that my CD ROM publishing days were ending, and that I would soon become an internet entrepreneur. In the next five years, our team quickly shifted from publishing to online, launched Ancestry.com and MyFamily.com, and then went on to raise $90 million, acquire Rootsweb (and later Family Tree Maker / Genealogy.com) starting what has since become the largest genealogy company in the world. (Note: I left the company in Feb 2002 and have recently started a competing firm, with two properties: WorldVitalRecords.com and FamilyLink.com)

For me, that journey all started at Online Developers II.

That story doesn’t necessarily have a happy ending for any of the company’s founders or even its early employees or investors. Like Ray Noorda used to say, “Finders Keepers, Founders Weepers.” Crossing The Chasm by Geoffrey Moore explains why pioneers (company founders and innovators) don’t often do well in the end, while settlers (who are usually better are operations) do. I’m actually fine with that, and reading that in Moore’s book was one of a dozen things that helped me move on emotionally.

Today felt just like September 1995 to me.

And it makes me wonder what the next 10 years might bring.

I sat on the third row and drank deeply of the kool-aid as Mark Zuckerberg, who turned 23 years old just 11 days ago, presented what may be the best business opportunity for internet entrepreneurs in the past ten years.

A huge new opportunity was presented to the few hundred people in the room, including 65 companies that have spent the last few weeks developing applications for the launch of Facebook Platform.

Facebook is inviting anyone to develop applications for their users on top of what Mark calls their “social graph”–the core of their service which basically keeps track of real people and their real connections to each other.

Facebook has 24 million active users (meaning they’ve used the site in the last 30 days–I like how they aren’t overstating numbers like SecondLife) and 50% of them login each day. Mark says the next most active social network is not more than 15%.

Last fall as I taught Internet Marketing at BYU we learned that a UCLA survey showed that 50% of college age females said Facebook was their #1 most important web site (even more than Google, Wikipedia, or anything else) and that 1/3 of college age males said it was their #1.

Look how many “addicts” Facebook has, according to Quantcast. 63% of visits are from addicts. eBay is only 56%.

Facebook is adding 100,000 new users per day. That’s 3% growth per month. And the fastest growing segment is over age 25. At this rate, they’ll have 50 million users by the end of this year, and 75% of them will be out of college. I read just on paidcontent.org that Facebook is the fastest growing social network in the UK, and today Mark said that 10% of Canada’s population is using it.

With 40 billion pages view per month, Facebook has passed eBay in page views, and is now in 6th place, just behind Google.

So this is no small thing for a 3 year old web site. Facebook is absolutely for real. I like Facebook a lot; while I can’t stand MySpace. Facebook is clean and nicely designed and architected. MySpace in my opinion is messy and mostly full of garbage. Facebook is a real social network for real people. And it is really, really popular.

And it’s growth will be dramatically accelerated by the Platform announcement. If Facebook is adding 100,000 new users per day with its own few simple applications (like its photo sharing, a very simple service that has given Facebook twice as many photos as all other photo sharing sites combined), what will happen when thousands or tens of thousands of developers start building apps in Facebook and marketing them to more users?

Facebook will reach 50 million, then 100 million, then 200 million users, and beyond.

Rather than continue to try to develop features within its own proprietary, closed network, basically keeping all of its users to itself (and kicking out widgets they don’t like, like MySpace does), Facebook intuitively gets the concepts that are so brilliantly discussed in Wikinomics (which are so non-intuitive to old school business types), and has chosen to open up its network for all to participate in. Because they embrace the winning philosophy, they will win.

Application developers can now have access to core Facebook features, such as user profiles and user connections, and even publishing to the News Feed, all with the control and permission of Facebook users. So if a Facebook user chooses your app, it will show up on their profile for all their friends to see, and they can enable that app with a single click, and so your application can spread virally to the 24 million other users.

When Facebook has 100 million users, in the not too distant future, having the ability to develop an App in their system will almost be like being able to get a link on Google’s own home page.

Can you imagine Google ever doing that? No way. They have too much at stake. Their $147 billion market cap couldn’t take it. Google’s philosophy was to not be evil. But I think Facebook’s philosophy is a decade fresher and even more in line with where things need to go than even Google–a company that I admire more than any other.

When Clayton Christenson spoke at the first Open Source Business Conference (again in San Francisco) about three years ago, he spoke about how the LAMP stack has provided a powerful low-cost platform for companies to develop applications on top of. Linux, Apache, MySQL, and PHP enable companies to develop applications that used to cost millions, but by building on top of all these projects, companies could move “up the stack” and focus on providing unique value that wasn’t in the stack already.

There are more and more free layers being added to the stack all the time, powerful services that can be embedded in your own new applications, like Skype, Maps from Google or Microsoft, storage and utility computing from Amazon, and video layers like YouTube and Google Video.

When anyone develops an application on top of the LAMP stack, like a CRM system for example, they always risk being disrupted by someone who provides that for free on top of the already existing stack.

Any new open source application or creative commons layer can be added to the stack, which might commoditize that application and put some companies out of business, but then that enables everyone else to again add more value on top of the stack.

This process continues, and all the while the consumer benefits greatly, and developers can continue developing innovative and valuable services on top of the ever-growing application stack.

The way I view the Facebook Platform announcement is this: the LAMP stack has just been extended by the huge and growing “social graph” that Facebook is opening up to the world. (It’s not completely open, because you have to develop apps within Facebook, but it’s a start in the right direction.)

Now, instead of application developers having to each build their own web site and try to get people to find it and use it and share it, the viral marketing of any good application site will come right from the Facebook interface itself. As users adopt new apps, they will spread quickly through the network.

Mark made three big announcements. 1) Applications can be deeply integrated with Facebook 2) Distribution of the applications will occur through the network, and 3) The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.

Now that is the true spirit of Wikinomics.

VPs from Microsoft and Amazon were present to express their support for the Facebook Platform. Microsoft will enable application develop with Silverlight and Popfly, and Amazon discussed how its web services enable Facebook Platform apps.

The CEO of Slide mentioned that the Platform developer wins big, but that applications developers also have a huge business opportunity here.

Microsoft’s market cap is $280 billion. But the top three application developers on Microsoft’s platform have a combined market cap of $40 billion.

I don’t think Facebook’s market cap vs it’s application developers will be nearly that lopsided. In fact, the way they are treating their own applications versus Platform applications makes it a pretty level playing field. Facebook users can deselect apps they don’t want to use–even Facebook’s own apps–and sign up to any other.

The core asset Facebook wants to own, extend, and leverage, is the social graph–who is connected to whom.

It is even possible that some future Facebook app developers could end up with a greater market cap than Facebook–if they permanently maintain the 100% of revenue going to the partner model. For example, a MMORP game built into Facebook might someday have 10 million users paying $10 per month, or $1 billion in revenue, when Facebook might at that point have $500 million in advertising revenue. (Reportedly it will make $150 million this year.)

Okay, not likely, but maybe possible.

The cool thing is that the marketing costs for these application developers will be basically nothing. All viral. All courtesy of Facebook’s users.

One of the self-serving reasons why companies like Google and Amazon create so many APIs and web services is to get a vast community of developers doing R&D for them and prototyping applications to see what works best. Then, they acquire the ones the like best.

Facebook will certainly be in a strong position, once it has a liquid currency, to acquire some of the most interesting application developers using its Platform.

If you haven’t read it recently, read Chapter 7 of Wikinomics, “Platforms for Participation” in the context of today’s announcement.

Here are a couple quotes.

“The winners in this evolution will be companies that can create the most comprehensive incentive frameworks to adequately reward all stakeholders.” (p. 207)

How about letting them keep 100% of their ad and transaction revenue? That’s quite an incentive.

“Winning in a world of cocreation and combinatorial innovation is all about building a loyal base of innovators that make your ecosystem stronger.” (p. 210)

Like I said at the beginning, I felt very lucky to be invited to this event. I got the invitation because we invested in YackPack last year, which is one of the companies that is launching its application within Facebook.

I didn’t see anyone else from Utah there, partly because every internet entrepreneur and marketer in the state was probably attending Seth Godin’s speech in Salt Lake City, which was probably very good.

If you are from Utah and went to the Facebook f8 event, please comment here or email me. I really want to connect. I think we need a Facebook Platform Developer Community here in Utah.

I searched LinkedIn tonight and found 140 Facebook employees, board members, etc, on LinkedIn. I’m 2 degrees away from many of them. But then I searched for “facebook api” to see how many people in my 2 million + network have any experience developing for Facebook and only 1 person came up.

Hopefully there will be some developer forums that emerge quickly so that more people can get guidance on how to proceed.

So here is my final thought. I’ve been pretty fortunate in my career to kind of see the big waves and trends coming and to get positioned to take advantage of them. I think I have pretty good instincts, because my brother Curt taught me to read everything (and he buys me new books from Amazon almost every month) and to go to conferences all the time. I already mentioned the transition from CD ROM publisher to Internet Publisher. After reading Net.Gain in 1998, we created Ancestry.com’s user generated content strategy (it became our most popular database) and launched MyFamily.com which was really an early social network for families. At our peak we were adding 20-30,000 new users per day. Unfortunately, our investors stopped supporting that free site because it wasn’t making money. Doh.

After reading an article in Industry Standard in 1998, I decided to attend the first ever affiliate summit held in New York City, where Commission Junction, Be Free, and LinkShare all presented. We chose Be Free, launched our affiliate program, and over the next few years, affiliate marketing was our #1 source of new customers at Ancestry.com.

In the last few years, I blogged before Google’s IPO that it would disrupt Microsoft by offering free software (including Office apps) and said it will one day pass Microsoft in market cap. And, more recently, in my latest example of prescience, I blogged about Lindsay Campbell of Wallstrip after her first day as anchor, and suggested that she might one day rank up there with Soledad O’Brian and Diana Sawyer, and now CBS paid $5 million for Wallstrip, and Lindsay’s career will soar. Way to go, Lindsay!

The only reason I’m reciting these past predictions is to try to lend a little weight to my next prediction: that Facebook will become the #1 social network worldwide (and the first to get 1 billion users–I love Facebook mobile, by the way) and that thousands of entrepreneurs will become extremely successful by developing to this new platform.

I hope that Facebook won’t be acquired. I hope it will go public and become the next major Internet company along with Google, Yahoo, Amazon and eBay. Another hugely profitable company that can potentially acquire lots of other great smaller companies.

I like Mark Zuckerberg a lot. I met him tonight as he was just visiting with lots of the individual companies supporting the launch event, and thanking them for their support. He was very genuine. I can see him in 10 years with the influence of the Google founders and in 20 years with the influence of Bill Gates. He is just getting started. At the recent Startup School, he advised startups to hire coders — even in the marketing department — and he talked about time he spends thinking about philosophies and how at this young age his life is not cluttered with things and family responsibilities.

Can you imagine in a couple years when Facebook has 200 million users worldwide, with half of them logging in every day, and a 25 year old will be CEO of this company? I can’t think of a parallel in world history where someone this young had this much influence. Oh wait. Alexander the Great.

Ok. I’ll stop now. It’s 2:40 am. And my post is going on and on and on, and all over the place.

But I’m serious about this Facebook Platform. Check it out. Mark’s philosophy of openness is an open invitation to co-create something remarkable with him and his 24 million users.

Quantcast getting better and better

I’m a huge fan of Quantcast. I’ve blogged before that it may be the best free tool for online marketers.

And now it’s even better.

Two weeks someone showed me that whenever you are looking at a web site, to see how much traffic it has, that there are two arrows that PREVIOUS and NEXT, so if you are looking at the 100th most popular web site, you can click on NEXT and see the 101st most popular.

So I spend a couple hours scrolling through the 200 most popular web sites, looking for those that appeal to an the demographic our company is targeting. So I wanted to find very high traffic sites that we could advertise on, or partner with somehow.

I found a dozen excellent sites that I had not heard of before.

But now, on the Quantcast home page, you can now easily see the top 100 highest traffic web sites, and then the next hundred, the next hundred, and so forth.

I can’t wait till Quantcast allows you to enter in your audience profile and have it show you all the sites that match your audience that you should be advertising on, and then enable you to purchase ads quickly on those sites.

I wish Quantcast would buy the old Top9.com web site, with its thousands of helpful categories, and update it with their current data. Top9.com became one of the very popular web sites for marketers years ago. It was powered by data from PCData.com, then it disappeared. Here is a snapshot of Top9.com from the Way Back Machine.

When I worked at MyFamily.com and our properties were ranked us as one of the top 50 web sites in the world, we had plenty of capital to pay for services like Media Metrix, Netratings, and later Comscore. These services cost tens of thousands of dollars per year, but gave us tremendous insights into media buying and affiliate recruiting possibilities, as well as some competitive intelligence. I especially liked the reports on Netratings that could show us where our competitors were getting their web site traffic from.

A couple years ago I blogged about Five Things Most Entrepreneurs Can’t Afford. This was one of my most popular posts that year. The second item on the list was “third party measurement services” like those I’ve mentioned above.

Amazingly, Quantcast provides most of the value that these super expensive measurement services offer, and it is disrupting the industry at the perfect time–Comscore has filed to go public and Hitwise was just acquired by Experian for $250 million.

Quantcast isn’t going to make money selling their measurement data. Paul Sutter, the cofounder of Quantcast says that audience measurement is a few hundred million dollar market, but media buying is a few hundred billion. Quantcast is planning to help marketers reach their niche target markets through the use of their data. And I’m sure they’ll get a portion of the media buys, as marketers and web site publishers use their tools.

This is going to be very exciting to watch.

With Quantcast raising $5.7 million in venture capital in March, and with thousands of sites signing up for their free “quantified publishers” program, their data gets better and better.

Comscore has filed to raise $86 million in their IPO (see the Comscore S-1 ). I wonder how hard that will be given what Quantcast is now doing to the industry. I suppose Comscore could change its business model, and do the same thing Quantcast is planning to do. But it is always harder to steer a large ship in a different direction. So in the new world, Quantcast would clearly have the advantage since they’ve been designing this business model from the ground up.

Smart entrepreneurs will spend many hours mining the Quantcast data looking for marketing/advertising opportunities among the thousands of high traffic web sites whose demographics and psychographics match their own.

These are good times for entrepreneurs.

(One other fun web site, a mashup called Attention Meter, lets you see data from Quantcast, Alexa, Compete, and Technorati.)

Sweden opens embassy in Second Life

http://www.thelocal.se/6219/. This article says Second Life is approaching 3 million users, a third of them having joined in the last 60 days. A lot of companies are jumping on the Second Life bandwagon, but this is even more interesting.

Imagine being an embassy employee assigned to interact with people in Second Life. Embassies are so large, imposing, and intimidating–they don’t welcome visitors to come in and just chat. This virtual Swedish embassy may be the best opportunity in world history for an embassy to “get to know its customer” through casual conversations with potentially hundreds or thousands of people each day.

Next headline to look for: 2008 Presidential Campaign for _________ opens office in Second Life, welcomes all visitors to come and meet the candidate.

Google is rumored to be building their own immersive world and may be buying AdScape to become a player in in-game advertising.

I’m not a fan of Second Life yet (although Jeff Barr is helping me realize how real business can actually be conducted in the virtual world, not by just wandering around, but by planning events or attending planned events). But as these kinds of online worlds start attracting businesses and governments and millions of new users, there will definitely be business opportunities opening up left and right for savvy entrepreneurs.

As a former Dungeons & Dragons player (I quit cold turkey at age 13 or 14 after a full year addiction) I can see the appeal of games like World of Warcraft, Everquest, and now SecondLife, which some people don’t call a game, but which certainly has a lot of appeal for gamers. As an entrepreneur, I see huge opportunities emerging here. In business, you need to go where the eyeballs are, and if million join immersive 3D worlds, then you better find a way to play there.

I think a Google immersive world built on Google Earth will be far more interesting than Second Life, and I hope the rumors are true.

The best free tool for internet marketers in years

My friend Spencer sent me a link to Quantcast.com this morning and I tried it out and then made in the centerpiece of my training today at the Provo Labs Academy.

This is an incredibly powerful tool that provides demographic information on the visitors who visit your site, your competitor’s sites and any one of 20 million other web sites. It’s like the wonderful free Alexa tool combined with the extremely expensive data that comes from high end internet traffic companies like Comscore or Hitwise–but the Quantcast service is free.

You can see the age, gender, income, and education level of your site visitors. The power here, of course, is not to just get free data about your own site visitors, but to use this tool to find hundreds of other sites with similar demographics for media planning and buying purposes.

It also includes keyword research. You can see the keywords your site visitors are likely to search for. You can find other web sites that your site visitors tend to visit.

I know I will be spending many, many hours using this service.

At the Academy, one of the members expressed concern about how Quantcast would make money. I have no doubt that hundreds of thousands of internet marketers will get addicted to their free services, so that if they roll out premium services, they’ll have a willing audience to sell to.

I’m not sure a more important free service has launched since Goto.com (later Overture and now Yahoo Search Marketing) started providing its free keyword suggestion tool for search engine marketers.

This takes that concept to an entirely new level. I applaud the team behind this incredible new Quantcast service and predict that it will spread very quickly. The user interface is excellent. It’s fast and easy to use.

My first hope is that their premium service will provide access to “more….” data under each category that they track. But for now, I’m very excited to use Quincast for genealogy purposes, and to encourage all the Provo Labs portfolio companies to use it as well.

In our Academy training today we also discussed direct mail list brokers who can provide extremely targeted mailing lists for promotional purposes. We discussed Microsoft’s efforts to one-up Google with better demographic targeting and behavioral targeting on AdCenter, which is possibly because they have some demographic data on their 263 million Hotmail users, and they combine it with search engine query histories for each customer.

A few other topics we covered include:

  • Microsoft getting into Web Analytics with a free service to compete with Google Analytics
  • How to use Clickatell‘s SMS services to provide your customers with valuable opt-in SMS alerts. We discussed some potential uses of this service.
  • How some merchants are using Google’s $10 bonus for new Google Checkout customers to advertise “$10 off of our product when you sign up for Google Checkout.” (NY Times article from December).
  • Netflix is now letting its customers stream 1,000 movies as it finally launches its online movie rental service. Netflix has 70,000 DVDs in its rental library.
  • Skype’s founders are backing the launch of a potentially industry changing online peer-to-peer television platform called Joost. It’s been code-named “The Venice Project” for some time now; but Joost is now in beta. Based on this week’s Alexa chart for Joost, I would say this project has the most hype potential and therefore may be the single most disruptive play in online video to date. Skype’s founders first launched KaZaa, then Skype (sold to eBay for $2.6 billion plus.) The chances are good that this company will sell for even more than Skype after it gets its 50-100 million users; after all television is a much sexier industry than telecommunications. It’s too early to tell for sure, but I wouldn’t bet against this company and its backers.

I wanted to talk about several other things, but we ran out of time. They included:

  • Google may someday put advertising kiosks in Malls to compete with the OnSpot Digital Network.
  • Millennial Media, a mobile advertising network raised venture funding this week. It will compete with AdMobs (the leader I think) and Third Screen Media.
  • Geni.com launched this week with a very cool web 2.0 family tree builder application. They got TechCrunched and got a huge spike in traffic. (See the Alexa Chart for Geni. Also, see the 5-year chart for MyFamily.com and Geni.) It will be very interesting to see how much stickiness they have over time.
  • Bloglines may still be the most used RSS reader, but Google Reader may be catching up.
  • Popular Science’s best of CES 2007 included the Nokia N800 internet tablet, the Ion iProjector (plug in your video ipod and project!), the OQO Model 02, and the Garmin Astro 220 (used by hunters to track the location within 10 miles of their hunting dogs, who have mini trasmitters on them. Would this work with kids?)
  • MTVu acquired RateMyProfessors.com (900,000 professors rated, 10 million annual student visitors). They now have the 2nd highest trafficked college interest network.
  • Microsoft will be embedding hyperlinks in online video by this summer.
  • How Flixster got 5 million registered users for its social network around movies.
  • This week was an especially good week with news and announcements for internet entrepreneurs. It’s impossible to keep track of all of them, but with the help of my Google Reader and it’s 100 RSS feeds and my network of hundreds of business friends who pass along news, and my Blackberry which I can use any time to search Google News, we do a pretty good job at the Academy of covering the major ones.

Search U.S. Patents with new Google patent search

For nearly 20 years I’ve dreamed of an easy to use search engine that would index all US Patents and make it easy for any inventor or entrepreneur to do sophisticated patent research.

As an employee of Folio Corporation in the late 1980s, my job was to index huge data collections, such as AICPA content, all the IRS publications, and the US Code for our reference publishers who licensed our search engine technology. We looked at patent data several times, but it was never a project that actually got a sponsor.

With its introduction of Patent Search (in beta), Google has taken another large swath of content and made it more accessible and useful than ever before.

This will be a tremendous boon to inventors and entrepreneurs. Patent attorneys will still have to help the lay person understand what they are finding; but like individuals who do online medical research before going to the doctor, the individuals paying the patent attorneys will be more active in the conversation and more intelligent. Patent law will be less of a secret art and more open to all of us. I think this will have significant positive ramifications to business and entrepreneurship.

For information entrepreneurs like me, check another project off my list of things to do. Google is taking over the information world one large step at a time. Earlier this year Provo Labs kicked off a project to index all the SEC documents that are critical for anyone in the stock market to understand. We were able to easily download and index a large number of public filings. We did it because like the USPTO.gov site, the SEC.gov site is horrible, and all the SEC search engine sites that used to be free (during the bubble) have switched over to subscription models. Like my friend John Bresee says, an advertising model could be disruptive to these companies.

Judd Bagley suggested we launch our annual and quarterly reports search engine under the name 10qverymuch.com. So we bought that domain. But like some of our other vertical search engine ideas, we didn’t get very far along with this project. I’m glad we didn’t attempt a patent search engine; and now I’m just wondering when Google will launch it’s own SEC fillings search engine.

The SEC recently awarded $54 million in contracts, primarily to Keane, to update its Edgar database system over the next few years. I’m not sure that was necessary. Why not let one of the Google employees do this on their 20% time?

Okay, the overhaul is probably still needed; but if part of the contract is for a public-facing search engine upgrade on the SEC.gov web site, that would be completely unnecessary because Google will do this sooner or later.

I would hate to be Edgar Online right now, with Google on the prowl to index all the world’s content and make it free. Imagine the hit to the EDGR stock if and when Google unveils its SEC search engine. Ouch.

I would also hate to be 10kwizards.com, a company that I have admired.

I’m glad that Provo Labs didn’t fully fund and develop an SEC search engine, a plan which I blogged about in February, because there is no doubt in my mind that someone at Google is working on this right now.

It’s like trying to be Encyclopedia Britannica with Wikipedia around. What in the world would you do to survive? I just don’t think it’s possible.

Fortunately, for internet entrepreneurs, Google is great at search but not yet so good at community. And that leaves opportunities for information entrepreneurs who empower people to connect with each other as well as with the information they need.

But the window will close quickly. Google’s acquisition spree continues and its two latest purchases, JotSpot and YouTube are squarely in the community space. They join earlier acquisitions Pyra Labs (creator of Blogger.com) and Dodgeball, which gave Google the world’s largest blogging network and a mobile application for social networking.

Clayton Christensen, speaker at the first Open Source Business Conference in San Francisco (I can’t remember if it was 2004 or 2005) said that technology entrepreneurs had to add value to the LAMP stack (Linux, Apache, MySQL and Php) and all the other open source software and web services that are freely available by doing something innovative on top of the stack.

This is really good news for entrepreneurs. Milions of dollars of development work has already been done for us, and we just have to add something new on top of the stack, in order to create value for customers.

With information entrepreneurs, I think we need to accept the fact that Google and other companies will be indexing virtually all the data in the world and providing most of it for free to everyone. As Christensen says, we’ll have to build something valueable on top of this free stack of data. It might be organizing it in a particular way, or building online communities around it, or providing online learning that takes advantage of the free information, or providing tools that help people utilize it and apply information better in their daily work, such as mobile or smart apps that are location aware or sensitive to what you are doing, so they intelligently bring the right information to you at the right time.

I believe there are more opportunities than ever before for entrepreneurs. They’re just a few notches higher on the value stack than they used to be.

Skype Out Unlimited for $30 per year ($15 if you sign up soon)

I love subscription business models and I think Skype has a chance to sign up millions of paying subscribers with their new unlimited calling subscription plan. You can call any number in the US or Canada. So do you go Vonage at $24.95 per month for the residential unlimited plan or Skype for $14.95 per year? (Yes, you can buy a Skype-enabled phone that you can carry around the house like a regular phone and make calls via your computer/internet connection.)

Check it out.

(I wonder if spammy marketers will now create bots that will dial every number in the U.S. that is NOT on the do-not-call list and leave a marketing message. I’m guessing this would violate the Skype terms of service…. Or if not, like the FAX blasting marketers of the past, some legal restrictions will probably prohibit this sooner or later.)