Posts from August 2013

Physical vs Digital

As I was biking this morning, I was behind a black Ford truck that was delivering papers. I got to thinking that this was a very expensive way to get a paper to a reader. The driver's time, the depreciation on the truck, the gas, the printing press, the paper costs, etc. And that got me to thinking about what I would do if I was Bezos and just bought a business with a big cost structure around printing and distributing a physical product.

And speaking of Bezos and Amazon, I just read this Nicholas Carr post about the slowing growth of e-books relative to physical books. This jumped out at me:

E-book prices have not fallen the way many expected. There’s not a big price difference between an e-book and a paperback. (It’s possible, suggests one industry analyst, that Amazon is seeing a plateau in e-book sales and so is less motivated to take a loss on them for strategic reasons.)

So back to my bike ride. As I watched the truck deliver the paper to driveway after driveway, it occurred to me that many people prefer to get the paper in physical form. The Gotham Gal does and so does her sister. But my brother in law reads it on his iPad and our daughter Jessica reads it on her iPad mini. I prefer to read it on the web.

Different strokes for different folks. But clearly there is a large and important customer base for the physical product and it is not going away any time soon. Many of the early adopters of ebooks and tablets to read books and the newspaper have made their move. The diehards aren't going to make that move it seems, or they are going to take their time.

So what to do? The obvious move seems to me to price the physical product at a significant premium to the digital product reflecting that the marginal cost of a digital product is zero and the marginal cost of a physical product is not. That will either drive more adoption of the digital product where the profits are likely to be higher or it will drive the margins up on the physical product because the diehards will accept the price increase and keep reading the paper and/or book in physical form.

But we have not seen this happen in the book market and I am not sure we have seen this play out completely in the newspaper market. Is the market and the companies that make it up behaving rationally? Or are they protecting the physical market at the detriment of the digital market?

I realize things are never this simple. But that's the question I was wrestling with on my bike ride this morning. And so I thought I'd share it with all of you so we can discuss it. So let's do that.

#Books#mobile#Web/Tech

Video of the Week: Peter Thiel and Garry Kasparov

Tyrone sent me a link to this video sometime in the past week and I watched it yesterday morning. These are two fascinating guys talking about fascinating things. I enjoyed it very much. It's about 50 mins long so a good candidate to put on the big screen and play while you do other things. Thanks to Airplay and Chromecast, that's getting easier and easier to do these days.

#Science

Feature Friday: Gifting Bitcoins

When our kids were born, some of our friends and family gave them savings bonds. I think we still have those savings bonds somewhere in a file in my office. I should check on them.

What are this century's savings bonds? Bitcoins, of course. I have a friend who gives Bitcoin at Bar/Bat Mitzvahs. I love that move. I plan to do it myself.

So how does one give Bitcoins? Via our portfolio company Coinbase of course.

It's this simple.

1) Go to Coinbase and open an account

2) Connect your checking account to your Coinbase account like you do at Paypal

3) Buy Bitcoin and store them in your Coinbase account

4) When its time to give Bitcoin, you just send the Bitcoin via email to the lucky recipient. They click on the email and claim the Bitcoin in a their very own Coinbase account. 

Of course this lends itself to regifting without worrying that you are regifting something back to the person who originally gifted it to you. I have a friend who actually did that. Makes me laugh every time I think about it.

#hacking finance

Hobbyists (continued)

A while back I riffed on a Chris Dixon post on hobbyists and I was taken back to that topic this past week by the young people I have met who are doing Girls Who Code and CodeNow summer programs.

They ask me for advice on where to go with this new found skill. And this is what I tell them (taken from an email I just sent a young women I met on Tuesday):

My advice is to treat coding as a hobby like some people treat photography, painting or knitting

Make stuff and keep making stuff. You will get better, have fun, and, who knows, you might make the next Tumblr!

The more that society understands coding as a learned and honed skill like sculpting or painting, the easier it is going to be to get young people interested and excited about it. And by making it into a hobby as opposed to homework, good things can and will happen. As Chris says in his post:

Business people vote with their dollars, and are mostly trying to create near-term financial returns. Engineers vote with their time, and are mostly trying to invent interesting new things. Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.

So my hope is that all these young kids who are learning to code this summer keep coding when they go back to school this fall and treat it like playing the guitar, something they want to do when they get home after school, because its fun and because you can make awesome things with it.

#hacking education

Girls Who Code

One of the most pernicious problems in a space full of them (K12 CS Ed) is the lack of young women interested in and taking advantage of classes on software engineering. Thankfully there are some people doing things to attack and address this problem. Top on my list in this area are Reshma Saujani and Kristen Titus and their organization Girls Who Code.

Yesterday and my friend and colleague Evan Korth (who is on the Girls Who Code board) and I took a couple hours to visit with two of the summer school classes in NYC. These summer school classes take place in host companies. We visited classes at IAC and Goldman Sachs yesterday. There are eight host companies in total this year - Twitter, Intel, eBay, Goldman Sachs, GE, AT&T, Cornell Tech, and IAC. Kudos to all of them. Enlightened self interest in action. 

We started off at IAC. We talked with the young women for about 45 minutes.

Girls who code

Then we went down to Goldman and did the exact same thing.

I've been following Reshma and Kristen's efforts since they started Girls Who Code eighteen months ago, but this was the first time I've been able to attend clases and meet the young women. It was a fantastic experience. Here's what I learned:

1) Learning to code is not nearly as hard as they thought it was going to be.

2) Coding is creative and fun, not boring and hard which is what they thought it was going to be before they took the class.

3) Nobody encourages young women to go into software engineering. There are societal stereotypes that are working against them. Family members, teachers, guidance counselors, and many others tell them "that's not a good career for you."

4) Project based learning where you make things is very impactful and way more rewarding than teaching the test and taking the test which is what they encounter in their schools.

5) Very few of these young women have encountered a coding class in their high schools. Almost all of the women we met with are in the NYC public school system. If they were offered such classes, all of them said they would take them. Most wanted to take the AP CS class and go to college to study computer science.

I was blown away by the intelligence, confidence, and character of these young women. They are going to do amazing things in their lives. Many speak english as a second language. Most are underrepresented minorities in our top schools. But unlike some of the kids I encounter in my personal life, they can stand up, look you in the eye, and speak eloquently about why they are doing this and what it means to them. I love seeing that kind of thing.

There's a lot going on in K12 CS Ed right now and I am seeing many things developing, some of which I have written about here, some of which I will write about when the time is right. There is a important change happening and I am confident that across the US we will see a lot of progress in K12 CS in the next decade. It's an economic imperative and also a moral imperative. And seeing Girls Who Code in action gives me hope that we are going to get women to join this movement, maybe even lead it. There is no reason they should not be doing that.

#hacking education

Journalism plays a critical role in a free society

That's the money quote from Jeff Bezos' awesome letter to the employees of the Washington Post. The medium has changed from print to online and in the process so has the profitability of these important journalistic enterprises.

But the role of journalism in our society is more critical than ever, in particular good journalism which has struggled to make the transition from print to online. Jeff acknowledges this in his letter:

I would highlight two kinds of courage the Grahams have shown as owners that I hope to channel. The first is the courage to say wait, be sure, slow down, get another source. Real people and their reputations, livelihoods and families are at stake. The second is the courage to say follow the story, no matter the cost.

That's exactly right. Kudos to Jeff Bezos for using his capital to invest in something this important to our world. Super impressive move.

#Current Affairs

Focus

I finally picked up the Isaacson book on Steve Jobs. Figured enough time has passed to give the proper amount of perspective. It must be a big book because I've spent the past two weekends on it and I am only 50% through according to the Kindle app. As an aside, I am reading it on three devices at the same time, my Kindle Fire, my Nexus 7, and my HTC One. I love how the Kindle app syncs so you can do that easily.

My favorite part so far is how Jobs turned around Apple and did it pretty quickly. He did two primary things as far as I can tell. First, he got his people into the top jobs and got rid of the executives who had been calling the shots before he showed up. And second, he brought focus to the product line, and thus everything else.

There's this great scene in the book where Jobs draws a classic four quadrant chart, consumer and pro on one axis, desktop and laptop on the other. And he says "we are going to make one computer for each quadrant and we are going to kill all of the other product lines".

I am only half way through the book and I am certain that this book should be required reading for any and all entrepreneurs. Jobs is the quintessential entrepreneur and there is so much to be learned from him.

The power of focusing should be at the top of that list. When you focus, you can rid yourslef of extraneous expenses (Jobs laid off over 3,000 people in his turnaround of Apple), you can get your best people focused on the important projects, and you can bring clarity to your marketing and what you want the consumer/customer to think of you for.

Many entrepreneurs and CEOs misjudge how many things they and their team can do well. It is always less than you think. I once was involved in a 75 employee company that was in three different businesses. It took a difficult financing to convince the CEO to exit two of those businesses, but it was the best move that company made. The next three years were a time of explosive growth for that company.

Focus is critical when you are three people, when you are twenty-five people, five hundred people, and ten thousand people. You can always get farther faster by saying no to too many projects and too many priorities. Pick your shots carefully and hit them. That's what Jobs did to turn around Apple and that's what you can do with your company too.

#MBA Mondays

Locked Down Endpoints

Of all the great points made by Bruce Schneier in his talk at Google, the one that bugs me the most is locked down endpoints. So much so that I've got not one but two Firefox OS phones coming to me in the next week.

Through friends I connected with folks at Telefonica and they are sending me the new ZTE Open which runs Firefox OS.

And our friend Vruz sent me a link to this Peak+ phone which I promptly ordered.

I am also quite interested in trying out an Ubuntu phone but am not quite sure how to get one.

The truth is that Android isn't very locked down and that's why I have always preferred it. But when you think about the "cloud+locked down endpoints" picture Bruce paints, Google has me every which way but sunday right now and that's not particularly comforting.

So I am starting my quest for a truly open smartphone and focusing initially on Firefox OS. That has the added advantage of being an HTML5 based mobile OS which also has a bunch of advantages for "openness".

The challenge for me and everyone else will be the lack of apps for these phones. Twitter has a fantastic HTML5 version. I suspect gmail will work fine in HTML5 as well. But I know you can't check in via Foursquare's mobile web app. In fact, they don't really even have a mobile web app, you have to run their desktop web app if you want to run Foursquare on your mobile browser. I suspect that will be the case with many of the mobile apps I use everyday. And so that will be frustrating.

But I am going to try to make one of these phones work for me for a while this year. And I will probably go back to Android in frustration. But I will keep coming back in hopes that someone can make an HTML5 based phone work. Because if they do, it will represent an endpoint that can't be locked down. And that's a good thing for me, for the market, and for all of us.

#mobile

Snowden: Traitor or Hero?

In the spirit of fun friday, I thought we might have a debate here at AVC over the Snowden affair and particularly whether Snowden is a traitor or a hero.

My opinion is he's a bit of both, but more hero than traitor. 

What's yours?

#Politics