What I'm Reading This Sunday Morning

A Capitalist's Dilemma by Clayton Christensen

The Money Quote:

The answer is that efficiency innovations are liberating capital, and in the United States this capital is being reinvested into still more efficiency innovations. In contrast, America is generating many fewer empowering innovations than in the past. We need to reset the balance between empowering and efficiency innovations.

The Doctrine of New Finance helped create this situation. The Republican intellectualGeorge F. Gilder taught us that we should husband resources that are scarce and costly, but can waste resources that are abundant and cheap. When the doctrine emerged in stages between the 1930s and the ‘50s, capital was relatively scarce in our economy. So we taught our students how to magnify every dollar put into a company, to get the most revenue and profit per dollar of capital deployed. To measure the efficiency of doing this, we redefined profit not as dollars, yen or renminbi, but as ratios like RONA (return on net assets), ROCE (return on capital employed) and I.R.R. (internal rate of return).

 

The Return Of The Capital Intensive Startup by Albert Wenger

The Money Quote:

Historically startups were capital intensive because they had to spend a lot of money to build the product and bring it to market before they were able to generate revenues.  Now it seems that everyone believes in network effects and the capital intensity comes from trying to build the biggest network faster than the competition.  The use of capital has thus shifted to customer and/or supplier acquisition or maybe more generally towards network growth.

 

The Network Effect Isn't Good Enough by Nir Eyal and Sangeet Paul Choudary

The Money Quote:

Creating a network effect is not what it used to be. Today, stored value created by the users reinforces the power of the network effect to retain users and grow market share. This dynamic makes creating user habits all the more important as investments of stored value only occur through successive passes through the user experience (see Nir’s previous article and video).

With the portability of the social graph and the fall of upfront costs to join a network, companies must leverage new ways of acquiring and retaining users. Business models that leverage a network effect plus stored value, hold the keys to the kingdom.

 

Show Me Your Badge by Kevin Carey

The Money Quote:

One of the most important functions of college degrees is signaling knowledge and skill to potential employers. Yet degrees and certificates often do a poor job of communicating detailed information about graduates. Grade inflation has steadily obscured the meaning of G.P.A.’s, and there’s no easy way to know what someone who got, for example, an A-minus in Econ 206 actually learned. A badge, on the other hand, is supposed to indicate specific knowledge and skills.

Stack Overflow, an Internet forum with 1.4 million registered users, awards members “reputation” points and a variety of badges based on answers to questions posed by fellow computer programmers. Some members devote hundreds of hours to writing and editing posts that are judged by the Stack Overflow community to display high levels of expertise. Tomasz Nurkiewicz, an Oslo software engineer and one of only 88 users to earn a “Legendary” Stack Overflow badge, writes, “I received numerous job offers from people who either saw my profile with reputation and all the badges, or were particularly impressed by one of my answers.”

#VC & Technology

Comments (Archived):

  1. Wavelengths

    “Today, stored value created by the users reinforces the power of the network effect to retain users and grow market share. This dynamic makes creating user habits all the more important …”Get the users to “love you,” and they keep coming back.

  2. Sangeet Paul Choudary

    Fred, Glad you liked our article on network effects. Have been a big fan of your blog for quite some time! Would love to hear your thoughts on the strength of network effects as a competitive advantage today.I feel competition among networked businesses isn’t purely between similar products but has actually moved to competition between fairly different products which compete for the same user attention and time. Pinterest, e.g., competes with Facebook because it’s actually taking user attention away from the latter even though it isn’t a “general purpose” social network. Instagram was competing in similar fashion (ironically growing leveraging Facebook’s social graph). It’s an interesting point where Facebook, Twitter etc. continue to grow stronger as “infrastructural” networks providing the plumbing but face stiff competition as “service” networks, ironically from the very startups they help gain traction.Sangeethttp://platformed.info

    1. FAKE GRIMLOCK

      HUMANS HAVE FIXED AMOUNT OF LEISURE.IF PRODUCT IS BOUGHT BY SPEND LEISURE, IT NOT MATTER WHAT PRODUCT DO, YOU COMPETE WITH EVERY OTHER THING IN UNIVERSE THAT CONSUME LEISURE.BUILD PRODUCT THAT CONSUME UTILITY, HAVE LESS COMPETITION.

    2. fredwilson

      i agree that we may be getting to the point where there is limited additional attention to tap into, at least in parts of the world where internet usage is most developed.however, i think the more specialized networks (twitter for news, tumblr for magazine like content, pinterest for shopping catalog content, instagram for photos, etc) are taking a fairly significant share of attention from Facebook.

    3. thinkdisruptive

      As the @FakeGrimlock:disqus says, everything competes with everything. Time is the only remaining scarce resource. But, it’s meaningless to describe eating competing with breathing or with working.The only meaningful comparison that defines real competitive alternatives is between the reasons why we make choices (i.e. the jobs to be done).As far as businesses that benefit from network effects, there are two meaningful numbers: the value I get from belonging to the network because of its size, and the switching cost. Even in the face of really painful side effects (e.g. compromised financial security through loss of privacy), networks can persist long past when they should based on these two numbers.

      1. Sangeet Paul Choudary

        Very pertinent point, @thinkdisruptive:disqus Jobs to be done is what really matters when figuring your competitor. Two very similar products (Hipstamatic vs. Instagram) may be doing completely different jobs while two very different products (Pinterest vs. Facebook) may be doing the same job.

    4. jason wright

      How are you measuring network effect?

  3. Aaron Klein

    A great set of posts. The last one struck me in particular. I’ve been pushing the community college whose board I sit on to measure success by post-college employment and actual skills demonstrated, rather than degrees and certificates granted.So far, measuring results isn’t too popular with the teacher’s unions.

    1. fredwilson

      Nothing innovative ever is

  4. Abdallah Al-Hakim

    Thanks for sharing Fred. I just bookmarked the NY times article and then saw it in your post so it is a must read for sure!

  5. T.J. Simmons

    The show me your badge link is broken

    1. fredwilson

      I will fix when I get to a computer

  6. nilb

    Hi Fred, sorry it is not about this specific post. I think there is a bug/feature in the site. Whenever I open the homepage (avc.com), it is opened in the middle of the page (or maybe it is more random – “Reflection on Sunday” – right now – maybe it is an anchor in the page…).I tried it over in IE, Chrome and Firefox – same results.When I enter into a specific post, it doesn’t recur.If you want/need more specific, please let me know

    1. bsoist

      Same behavior for me, started a few days ago I think. – Firefox and Chrome on OSX. I can try other OS/browser combos if you need me to.

    2. falicon

      I believe it’s a ‘focus’ setting on the graph or video shared on the Sandy post…once that moves off the homepage of ‘recent posts’ you will be back to normal…

    3. ShanaC

      same behavior for everyone – fixing it is sort of silly since the post is going to drop off the front page by the end of the week 🙂

    4. fredwilson

      Yup. I am aware of the issue. That post will be off the front page in a couple days and the issue will go away. I am sure I could fix it but I’ve been focused on other things

  7. Bryan Pendleton

    I hope you don’t actually believe that “One of the most important functions of college degrees is signaling knowledge and skill to potential employers.”? That’s such a cynical, depressing, and dis-spiriting way to look at the college experience. Please say you think there’s more to life than capitalism’s cavernous maw!

    1. Richard

      This is a great point. The authors (and regrettably most universities) are clearly conflating skill and knowledge. I dont think that it is capitalism that is that delineates the two. See, Nicholas Tesla et al.

      1. Avi Deitcher

        I was wondering about this with my wife the other day (she is almost done with her Doctorate in Education Psychology).She was lamenting how many people graduate high school with the inability to do grade 5 math, or college without the basic ability to reason.Is it possible that our policy makers do not have that ability as well, and thus, seeing that those with high school diplomas earn more than those without, those with college degrees earn more than those without, etc., and thus push for everyone to go to high school and college, for grade inflation and “social promotion”, not realizing that the earnings are because of the skills that such people (used to) have, rather than the degree itself?

        1. Richard

          Great point.  We need to get to a point where getting into and graduating from college is NOT a birthright.  I want to see 20% of college students flunk out (its even almost impossible to flunk out of medical school!) only then will the college experience return to the value proposition it was. What we have know is the equivalent of the housing bubble. 

          1. Avi Deitcher

            I don’t know it is necessary that that % (or any %) flunk out, just that a degree means something was learned – skills and thinking and liberal arts education (even for those of us with engineering degrees).

          2. thinkdisruptive

            Graduating is not a birthright, but a rule that says “20% should be flunked out” is just as ridiculous as “social passing” and giving everyone a degree just for showing up. If people do the work and show that they’ve acquired the knowledge and skills, they deserve the degree. Where we should be more restrictive is on who gets in, and the criteria for getting there. Standards have fallen abysmally low during my lifetime — what my kids get an A for, I wouldn’t have received a C. It’s not their fault, but it is definitely harming the US ability to compete on a world stage and signaling that working hard doesn’t matter any more.

        2. ShanaC

          exactly. but it also means we need to reshape education quite a bit…

          1. Avi Deitcher

            Which means the political system, which means vested interests, sigh…

      2. andyidsinga

        love that you brought out Nicholas Tesla!

    2. ShanaC

      It isn’t just me who saw that. I think a lot of people really need to reread Plato. Education of the sort that was college was inherently elite. Now it is a credential thing. Blech.

      1. Avi Deitcher

        I’ll see your Plato and raise you Aristotle, and the Bible, and Smith, and Virgil, and…How about “a lot of people need to read a lot”? 🙂

        1. FAKE GRIMLOCK

          AND SPIDER-MAN.BUT ONLY BY STAN LEE.

          1. Luke Chamberlin

            With great power…

          2. FAKE GRIMLOCK

            COMES AWESOME COSTUME?

        2. ShanaC

          So true! Read more people! Read better! Create discussions groups (then again, I always want to do a meetup of classics and business. We should read machiavelli together. And plato, and all sorts of thing, for ethics in business! and case study! ok, so I am a bit nuts about that idea….)

          1. Avi Deitcher

            Is there any research out there on what percentage of the populace reads, and given by socioeconomic group?

    3. Avi Deitcher

      I think it is *a* function. But my favourite is the quote over Earl Hall at my alma mater (Columbia U):Erected for the Students that Religion and Learning May Go Hand in Hand, and Character Grow with Knowledge.

    4. thinkdisruptive

      Of course there are general benefits to a college education, but the truth is that cost has become so outrageous that those soft benefits are not affordable to 70-80% of the population. Therefore, the meaningful benefit that either prospective students or their parents have to evaluate is likelihood of getting a decent paying job that will enable them to pay for the education. For that, signaling is not just one of the most important benefits, it’s critical. Until costs get more in line with reality, that’s the way it will be.Frankly, too many people are going on to post secondary education that they aren’t qualified for, and which doesn’t rub off in any meaningful way. They’d be better off going to a technical (skills-based) college, or doing volunteer work, or apprenticing in a real work environment, or traveling the world, or almost anything but wasting their time at university. But, the lack of an equivalency-based general credentialing system that values alternatives to a BA fairly, pushes people to make bad choices for themselves and for society. Maybe after doing some of these “alternative education programs”, they’d be better suited to a general liberal arts education and get better value from it, but I’d estimate that for at least half the kids at university, the only thing they care about is “getting a good job”, which makes signalling the most important benefit.

      1. ShanaC

        A lot of the programs you are talking about have been folded into the university system, with all the costs of a university going into the system.

        1. thinkdisruptive

          Not clear what you mean.

  8. awaldstein

    A good gift this Sunday morning. thanks.Took these to the gym in my head.Certainly barriers to entry to build are squashed.Agree with the idea that ‘network effect plus stored value’ is the key.Also think that while the barriers to build are gone…first point.The odds of acquiring that network effect plus….second point, is not easier but potentially more difficult odds wise to acquire.

  9. William Mougayar

    Nice common theme about the impact of the Network Effect on creating value, innovation, knowledge and competitive factors.The Christensen thesis is very insightful, but I’m not sure the political linkage to Nov 6th is as strongly significant as it was implied.Picking on the TC article. “Stored value” is nothing more than another term for user-generated content (UGC) that generates value in all its forms. The “stored” part is what remains of it as a “native” value. So, it’s another verbose essay that rehashes the same thing in a different way, just to be different.As for the Return of the Capital Intensive startup-, that sounds like an alarm bell. It would be worrying and seems reminiscent in some parts with bubble symptoms.

    1. ShanaC

      why is UGC inherently stored value? it seems that stored value is the first derivative of UGC – just because the content exist and is user generated doesn’t mean it has value – narrowing down on its use does.

      1. William Mougayar

        We agree completely. UGC is the first part of the value. What is done with it later adds more value to the network owner, to other users, to those that interact with the network, etc…

        1. ShanaC

          pain in the arse to measure though (but I like looking at that sort of stuff, call my strange)

    2. andyidsinga

      re “stored value” (aka UGC) – I thought that was implying that content stored in a given social network created increased lock-in for the user.I occasionally think about switching costs re social networks and UGC .. and I’m starting to form the opinion that switching costs are going to get smaller and smaller because users generate so much content they end up just not caring that much about it : “who cares if I leave those 1000 images / tweets / whatever behind on network X ..I’ll just create another 1000 anyhow”

      1. William Mougayar

        True, and back to Shana’s point. It’s what happens with the UGC that matter more and is more sticking. E.g. engagement around, derivative value, aggregate data, etc. I didn’t agree with the 4 segmentations that the TC article suggested. There are many more, and this is part of the business model innovation that startups go through. It’s not as simple as having categories. Looking in the rear view mirror and seeing 4 categories is one thing, but creating the next types of value is more difficult and not so easy.

  10. janetvp

    I’ve been following Kevin Carey on this topic for a while. Attaching a link to an article he wrote in The New Republic earlier this year on the emergence of new ways for employers to measure qualifications for jobs–this article and others like it were a catalyst to my current start-up CourseMaven.http://www.tnr.com/article/…Their monopoly over the credentialing function has allowed colleges to raise tuition and receive public support in the form of student loans without providing sufficient justification of value received. We believe there is absolutely a role in our society for traditional education as well as new, technology-supported and lower cost variations. We also believe that better ways of measuring qualficitions for employment will force colleges to justify value for dollars invested rather than relying on legacy reputational value–a positive development in our book. It’s an exciting time to be an education technology start-up!

  11. ShanaC

    That Professor Christensen article was super intriguing. I like the way he starts out, explaining the history of innovation and types, as well as his discussion about capital efficiency as doctrine. I don’t see how he jumps to his particular policy advice. Wouldn’t QE3 basically over time force capital to be very cheap and not a resource to hoard/measure as deeply? Isn’t basically what he is saying is that we need mild inflation to make it worthwhile to invest in capital intensive stuff?

    1. thinkdisruptive

      As you might guess, I generally admire Christensen’s work on disruptive innovation, but I think he’s off base here, and making things more complex than they really are. Things go in cycles that are self-correcting, as long as they aren’t distorted by external conditions or events. We are going through a period where there are myriad small innovations that improve efficiency, or organize things a bit better, as we assimilate the really big innovation that the internet as a global linking/communication technology enabled. After most homes were wired for electricity, we went through a similar phase where millions of little innovations involving appliances we could plug into those outlets happened. Many of those had very low capital intensity (relative to previous eras), but they made the big innovation of wired homes and power plants and distribution system more useful.While the current innovations that we can see are smallish and not particularly capital-intensive, we are also in a phase right now where many are looking for the next big problems to address (cleaning up the environment, decentralization of manufacturing, ways to manage the longer lives and increasing median age of the population, green power grid). There are many of these challenges that will be addressed in the coming years as we reach tipping points where either there are new technology enablers, or we have no choice but to address the problem. These are all capital intensive.The big societal problem we have now is whether the US will be where that innovation happens, or somewhere else. We are saddled by such huge debt that many decisions about where to allocate capital (and the return that will be achieved through that allocation) are significantly inhibited or distorted. I’m pretty sure that @kidmercury:disqus would agree with me on this one. This is one of the systemic issues that big debt has that is easy to overlook. It’s kind of like demographics — it’s so big an influence on the economy, it’s hard to see.

      1. ShanaC

        I’m weirdly not worried about the debt. As we see already from europe: Growing is more important to servicing debt than just servicing the debt by itself. because the market is still (and I think will be for a while) favorable to our debt, I think it is totally possible that if we get the political/social muscle to be innovative, we’ll grow out of the debt.The problem is that people are blinking when they shouldn’t be afraid.

        1. thinkdisruptive

          You ought to do some simple math. There is no way to grow fast enough to service a debt that is 7x the annual revenue, especially when on an annual basis we spend 50% more than we take in. If we grow jobs (increase revenue), which is exceedingly hard with the drag this debt load puts on the economy, we can’t grow them enough to either pay the annual deficit or pay down the debt, and that’s if politicians don’t decide to spend even more (which is inevitable).In perspective, if you had a 150K annual income, this is the equivalent to over 1M on your credit card. Most people with only 150K in annual income find it hard to pay off their student loans — how do you propose to eat, clothe yourself, have a place to live, and fund transportation while paying off a 1M credit card balance? If we did nothing but pay down debt (i.e. apply 100% of tax receipts to debt retirement), it would take over 10 years, if interest rates don’t rise. But, that means no military, no unemployment benefits, no healthcare, no courts, no people — nothing additional in expenses beyond debt. In any realistic scenario, we’re talking at least 40 years to pay it off, and that’s if we stop increasing it tomorrow.Of course, we could inflate the debt away, putting everyone on fixed incomes in harm’s way, killing off your grandparent’s social security benefits, decimating the currency and scaring off all those who fund our debt. Hardly a good solution either.You ought to be blinking. The thing to be afraid of is not being afraid.

  12. andyidsinga

    re “show me your badge” – that looks really interesting. Pretty much everything I’ve ever got hired for was because I could show (and describe ) a particular thing I’ve built or worked on.That doesn’t mean that college degrees are useless – it just means the attention is swinging to skills + doing vs rote book learning & theory.

  13. jason wright

    How is network effect measured?

    1. fredwilson

      Great question

  14. Donna Brewington White

    Gold, gold, gold. Thanks Fred.

  15. george

    Professor Christensen’s article is inspiring – my gosh, we need this thought provoking analysis to get us turning in the right direction. To add to his assessment of capital gains tax: although we are perhaps over investing in efficiency innovations, this still remains a much better option than reallocating resources through tax into our existing inefficient model of entitlement-spending.

    1. thinkdisruptive

      Christensen is wrong. Manipulation of tax policy is not going to solve any imagined problems with allocating capital to efficiency versus empowering innovation. All innovation is good, and the market should decide based on what people need and why they need it, not based on misguided tax policy. We are simply in a cyclic period where innovations are focused on leveraging the big (capital intensive) things we already did. Government policy has no business interfering in this — the systemic backlash, unintended consequences, and creation of things that we don’t need will come back to bite us with a vengeance.Most importantly, there is only one big issue that government can and should address — namely the debt albatross hanging around our necks. We need to stop spending more than we have yesterday, and start immediately and aggressively paying down the debt. Debt weakens the country in almost every imaginable way — we lack the capacity to defend ourselves, we’re vulnerable to foreign nations simply flooding the market with US debt and crashing the economy, we chase investment dollars out, we can’t fix big problems, we can’t pay the social security obligations — there isn’t any aspect of daily life, social policy, employment, defense, education, retirement planning, investment, etc that isn’t impacted by the debt. Debt is the number one, and only real problem that we should be worrying about today.

  16. takingpitches

    The last article misses the point.Alternate forms of talent validation – “badges” – are important where tied to an underlying network. The network powers what is truly revolutionary – new forms of talent elevation.That can happen where there is – to use your word of a couple of days ago – “commingling” of talent. The more commingling, the better. That requires commingling to happen without barriers that keep out authentic talent.When that talent intermingling is successfully enabled — like in stack overflow for its field — it provides a better way of finding, raising, and validating talent, a better and more authentic badge than current badges such as degree, etc (Not saying education is not important for other reasons).

    1. Luke Chamberlin

      To add to your point I think badges become valid when tied to a concrete skill or accomplishment.What would an economics badge even mean? The smartest, Nobel Prize winningest economists in the world can’t even agree on the fundamentals of the economy. Same with most Social Sciences and definitely the Humanities. What is the criteria for a Liberal Arts badge?On the other hand, StackOverflow questions usually have demonstrable solutions. When an answer works, it works and anyone can independently verify that it works.”Badges” make sense for some fields more than others.

    2. JamesHRH

      Not only that, but the whole idea of a resume is that it is a shorthand for capability.Badges, answers & the like are intensive for both the holder & the beholder. I think there is a middle ground…….

  17. kidmercury

    1. clayton christensen is a hero of mine and his work on disruptive theory has impacted by thinking and my life almost as much as my studies in kookology have. but his viewpoint is too complex and narrow here. the only problem in the economy is debt and the only solution is debt cancellation and a reform of how debt is created and managed. any idea that ignores this is dead on arrival.2. folks should read the blog post by andy after reading albert’s:http://blog.aweissman.com/2…. capital-intensive startups could be coming back but only those that are cognizant of what andy calls “the great fragmentation” will thrive, in my opinion. i believe these startups will those that spend money on deep vertical integration. fred did a blog post about scoot networks a while back; they build the vehicle and the app — that is the kind of vertical integration i’m talking about.3-4. i agree with the other two posts.5. i am a big fan of “what i’m reading” and fred if you need to do more template type stuff i think this is a great format.

    1. fredwilson

      Agreed

    2. Richard

      2 sounds similar to traditional firm theory.

  18. matthughes

    Clayton Christensen is a Jedi, right?

    1. fredwilson

      Absolutely

  19. Tom Labus

    The recovery time for each successive recession/depression from 1991 to now is progressively longer. This is a real wake up call!!Great Clay Christensen article

  20. Nathan Guo

    Surely some of the focus on the capital intensive startups is directly related to the low cost of capital…

  21. kidmercury

    ok folks tomorrow is the big day where you get to vote for (1) the white guy who’s going to increase debt, takeaway civil liberties, and perpetuate war that is bad for the environment, energy crisis, and the economy or (2) the half white guy who’s going to increase debt, takeaway civil liberties, and perpetuate war that is bad for the environment, energy crisis, and the economy. moreover as many of you have already acknowledged your vote is meaningless because of how the electoral college works. obama has already won but if it does come down to an actually close race ohio will be the most important state — again.if your vote is meaningless all you have left is your principles/values. if you give them up you have nothing save the embarrassment that you will face when you realize the folly of abandoning principles in favor of conformity. consider being a leader. be a part of the 5% that breaks the two party system.http://www.youtube.com/watc…9/11 was an inside job,kid mercury

  22. Mark Essel

    Props to the Legendary folks, I can’t quantify how many hours stack overflow has saved me by helping to focus and organize communal knowledge. Not surprisingly I prefer to comment there :).

  23. ShanaC

    do you have details on how the program works?

  24. Aaron Klein

    I’m just reporting on my situation locally, where it is entirely true. I have a very positive working relationship with our unions but they are pretty steadfastly against results-based metrics to measure success.

  25. Donna Brewington White

    With you on craving posts like these, but just as much for the comments elicited. I’m rushed this morning but will definitely be coming back to focus more attention here. This is GOLD!

  26. fredwilson

    I may do more of them. You can tell a story by what you are reading vs what you are writing

  27. raycote

    “over-celebrated network effect”Not so fast with the dismissive there Charlie ;-)Charlie, Ray and every other soul in this forum is strutting around the hubris power of a conscious persona all on the backs of the cellular network-effect.If a bunch of mere cells can dance up such a network-effect storm as consciousness then surely us humans have a lot of blue sky possibilities open to us?The whole world of biology is just setting there waiting for us to decipher its time tested cheat sheet on how to create an effective and accessibleClass Conscious Set ofNetwork-Effect – narratives – metaphors – languageThat make Network-Effect assemblage available to the rest of us.Translation – don’t be kicking my sacred cow!:-)

  28. William Mougayar

    It could be a Sunday feature.

  29. Abdallah Al-Hakim

    +100! that would be awesome

  30. Donna Brewington White

    vs? or rather…as well as what they are writing

  31. ShanaC

    i like this idea

  32. Ware Sykes

    Please do. I have learned a great deal by reading the same things that people I respect are reading. In other words, I like to learn more about topics by reading articles identified by mentors, colleagues, or experts – I can get to heart of the matter faster.

  33. raycote

    Point well taken !STILL – What human (nodes) lack in always on, ubiquitous, high availability they make up for in relentless volitional ambitions, self interest and neediness.

  34. Donna Brewington White

    will take a week to process all this

  35. ShanaC

    yup

  36. raycote

    I think we largely agree here Charlie!We are just focused on different levels of granularity regarding the nature of the network-effect.I love this forum because there are a lot of very smart, very knowledgeably sincerely good hearted soul that hang here. I’m an interloper here. I’m not a developer or VC. I’m just and old fart that is fascinated by the various attempts at a top down attributal framing of organic network-effect dynamics. A dynamic which I visualize as a networked synchronization-fabric capable of supporting a responsively animate living system at multiple nested platform levels form cellular on up to supra-national living systems all exhibiting some degree of operational class inheritance.On this forum I get the opportunity to learn a lot about the bottom up framing required to implement real world social networking functions.Mostly I try to shut up and learn around here but every once and a while my enthusiasm for top down organic level network-effect abstractions gets the best of me and I interlope redundantly.That is what I was doing here, coming at it from a top down organic perspective on the network-effect.I think that there is a reasonably good fit between the mounting layers of digital network-effect and its biological analogue.So here goes!At the fine grained sub-cellular platform-level genetic DNA/RNA network messaging is ubiquitous, highly available, always on to accurately transmit the cellular reproduction messages.One level up at the cellular platform-level the inter-cellular, nerve, hormones and other messaging systems required to synchronize the organism’s array of cellular sub-systems is ubiquitous, highly available, always on, a tiny bit fuzz but still very accurately transmits on demand synchronization(homeostasis) to all those critical cellular sub-systems.One more level up at the human-organism platform-level the inter human message-networking starts to get seriously fuzzy. Cultural things like education, ideology and religious beliefs as well as personal traits like language skills, attitudes and situational perspectives run serious interference on the ubiquity, availability, up time and accuracy of the messaging. Still despite the noise to signal ratio the relentless volitional redundancy with which human organic willfulness retransmits the message starts to compete for statistical dominance of that core message.Yet another level up at the cultural-meme platform level which ultimately shapes our cultural and economic behaviours the messaging becomes explosively fuzzy even willfully distorted.Think fuzzy communications like in statistical dominance. The reliable transmission of a social message/meme rides in on an organically-networked probability distribution curve like competing gene-swarms(DNA) competing to fill a cognitive survival niche. Yes cognitive survival behaviours(sense/analyze/respond) operate even below the cellular level.http://www.scribd.com/doc/1…It is this relentless social-echo-chamber effect, the amplifying network-effect of viral retransmission, that over time statistically shapes the reliable delivery of mass culture messages/memes. Sort of like the “the hidden hand” price signalling that is theoretically capable of messaging stability into a marketplace that on its surface would appear to be a chaotic jumble of cross threaded messages. Although I don”t buy the hidden hand of the market for other reasons.Edit: “Think fuzzy communications like in statistical dominance.”This is starting to creep into the OS/Language/Application fabric.A Microsoft job description for a software architect to help “lead development of our safe concurrent programming model” for the Midori team makes reference to some of the same work outlined in the OOPSLA paper:”This programming model is a core component of a new, novel operating system, 99% of which is written in type- and memory-safe C#. A core principle we add to managed code is that 1st class, statically enforced concurrency-safety must become a peer of type- and memory-safety. This role demands innovation at each layer of the software stack: programming model abstractions, scheduling (kernel and user-mode/runtime), message passing and asynchrony more generally, shared-memory, data and task parallelism, distributed parallelism, heterogeneity (including vectorization and GPGPU), interaction with processor architecture, feedback directed optimizations, and even language design and compiler implementation.”(Taken from a post by Mary Jo Foley)http://www.zdnet.com/micros…