The imminence of Facebook’s IPO (looking for 99 times earnings, the top 1% multiple in the S&P as of today) marks an apogee of sorts in the world of technology and social internet-fuelled innovation. And that means it’s the perfect time to offer a contrarian and deflationary observation. I suggest to you that much of the post-dot-com collapse crop of innovations in software technology we currently celebrate are, at their core, fundamentals at the same level of innovation as LOL Cats
Founded by the Cheezburger Network 2007 and its sister sites work on a simple principle that is very similar to many of the ‘hot’ so-called innovations we see monopolizing meander today.
- Get lots of people to give you free stuff
- Package it. Then sell it back to them
Perfect. Brilliant. Like Tom Sawyer getting other people to paint his fence. There are lots of precedents for this, IRI Nielsen for example aggregates consumer spending data on everything everyone buys in grocery stores, consolidates the data, analyzes it, and sells it back to the industry. Business directories didn’t exist until opportunistic publishers took publicly available telephone listings, pulled out the freely available business numbers and made their own book, changed it up (yellow pages) and added advertising. People give you free stuff. Sell it back.
In academic publishing, the number of times an article of research is cited by other academics is used by peers to “rank” the inferred merit of the research. Sound familiar? It should, it was the original source for Google founders’ idea to do the same thing for web pages, Stanford University’s original ‘PageRank’ (U.S. Patent 6,285,999). Of course Google’s algorithm was more complicated since it could not count on the honor system of self-policing academics to prevent people from gaming the system. But ultimately, tracking our web preferences without our consent or compensation is, like our cute pictures of cats with their heads stuck through pieces of white bread, free stuff. Google takes our free stuff, tells us what we did, and voila. Honestly? Google's real contribution is the massively parallel Internet it has created and the extensive re-engineering of operating systems and other technologies, essentially replicating and caching, all that free stuff in an optimized manner. A great infrastructure contribution to optimize our internet experience resulting in their on-going need for energy (they should just buy Iceland and its vast reserves of thermal energy), but the core innovation upon which the company is based is hardly, I respectfully submit, a radical innovation.
Facebook and LinkedIn are similar examples. You and I know people, we have social connections, and we have, by the tens of millions, voluntarily given this information to these companies to repackage it and sell it back to us. Admittedly, Facebook introduced a breakthrough technique of editing a live web page without going to the underlying code. That was cool. This changed things in terms of people's expectations. The reader now becomes the author. Teaching millions of people that they can communicate on the web without learning specialized technical tools, or participating in a classic design-build-publish cycle, helped to fuel a compelling sense of immediacy that now characterizes our culture. But the core business innovation value? Strictly LOL: free stuff, freely given, sold back at a profit.
LinkedIn is the same, except in a business suit. All the information you used to post on to specialized job boards and resume sites now put into a publicly accessible community. I will admit they have transformed how people look for jobs, find candidates, and keep in touch with friends and long-lost colleagues and family members. Still it does not break the LOL Cats model for technology innovation. Facebook with so many millions of members will have difficulty in customer service. The Customer Service Scorecard has Facebook customer service as ranked “#531 out of the 534 companies that have a CustomerServiceScoreboard.com rating with an overall score of 14.25 out of a possible 200 based upon 2111 ratings. This score rates Facebook customer service and customer support as Terrible.”
YouTube and Flickr and the billion-dollar surprise Instagram all follow this same principle. We give them free stuff, they package it, in the case of Instagram make it look like a bad Polaroid from the 70s, then sell it back to us.
Groupon? No new idea here. Coupons have been around forever, but most mature coupon companies such as Valassis, know that there needs to be a win-win balance in the ecosystem of offers. Suppliers and consumers both need to see a sustainable value. Groupon has no such compunction and merely parasitically feeds on free stuff (manufacturer discounts) sold back to us. (By the way look for my new company to be starting soon, Groupoff will make sure that you never get another unsolicited and wholly inappropriate discount offer ever. )
Twitter elegantly simplified batch SMS and RSS over a new channel. They made it easy, they made it fun, and they made it global. A terrific repackaging effort, again taking freely offered opinions and preferences, and monetizing it. We all enjoy it, and in subtle contradiction to my larger point, of course I will tweet about this blog and post its presence on Facebook. I am not arguing with social media, I'm just looking for a different level of innovation from those who use and build today's technology.
It seems some days that the main technology news is either another iteration of the LOL model, or a feeding frenzy of lawsuits regarding patents for things we all thought were generically available building blocks.
But there is lots of great innovation around -- it just doesn’t make the news. What’s not to love about HP’s 3D integrated photonic chips? How about all the creative use of map-reduce and Hadoop (thank you Google and Yahoo) to break past the Victorian corset of out-dated relational data models (sorry Oracle and IBM)? How about that brilliant retinal display on the new (want the new “fair trade” model) iPad? How about integrating voice, face and motion detection into a computer interface such as is popularized by the Xbox Kinnect? How about the introduction of a totally implantable cochlear implant to eliminate deafness even in babies as young as five months? And how about what happens when business people get empowered to create and evolve their own critical business systems? Dramatically improving airport efficiency pushing on-time departures up over 20%? Cutting training time for new call center operators by 40-50%? Improving offer acceptance rates to 55%+ using predictive analytics? Reducing the cost, risk and contingency of legacy systems with a wrap and renew strategy which can help to sunset and eliminate unnecessary servers? Eliminating manual coding for critical business systems (not just your fan page J)? Now those are innovations and revolutions I can get behind!
I don’t have anything against cats, but we’re better than LOL Cats. We have tremendous assets to work with, the speed of computing is increasing, the cost of storage is dropping, Moore’s law states that the power of computing doubles every two years. But I think in a Build for Change world innovative ideas put smart technology to work in new and exciting ways -- our critical business systems can adapt, now evolve and improve every two weeks. Way better than cats with their heads stuck through slices bread…