Why Barcelona has no Uber

Mobile World Taxi

Barcelona is one of the few major European cities where Uber, the mobile phone application-based ride sharing and taxi service, does not operate. Of comparably populous cities only Hamburg is currently Uber-less. Doubly confusing as Barcelona prides itself as host of the world’s largest gathering of the mobile technology industry, the World Mobile Congress. An irony not lost on visiting journalists as they queued at the airport for insufficient taxis. Continue reading “Why Barcelona has no Uber”

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Alex van Someren’s Lucky Acorns

Alex van Someren. Alex van Someren is one of those rare people, without whom our modern world would probably be a little bit different. From writing the first book about programming ARM architecture, the computer processor which now sits at the core of almost every mobile phone on the planet. To providing the technology that made Secure Socket Layer (SSL) more commercially viable, and helped enable the ecommerce internet revolution of the late 1990s.

Yet his story is fascinating because it is a definitive study in luck: Not just pure chance. But the type of luck that comes from a combination of unusual personal interests, social circumstance, and the active pursuit of something different.

It’s a reality that few “successful” entrepreneurial people acknowledge, because it’s an uncomfortable reality: It doesn’t fit neatly into a 5-point plan for instant fame and fortune [also see box below]. And it leaves a nagging doubt that the outcome could easily have been unsuccessful. And while I suspect that Alex isn’t comfortable with pure chance, he provides ample examples of how other elements of luck can be biased. How the odds can be improved. The dice loaded more favourably.

Those examples make Alex van Someren worth understanding. This article is based on a talk he gave to the Edinburgh Informatics Forum. Continue reading “Alex van Someren’s Lucky Acorns”

Iterative Video Development

The internet allows products and services to be rapidly improved based on user feedback. So rapid, that iterative design should become the primary method of designing internet-based services. Not just as an Agile-like method of working, but as a method of specifying the product itself.

Partly it isn’t because creators haven’t adjusted their methods to match the new technology – we’re still wedded to a single start-to-finish process, with one outcome at the end. Partly it isn’t because feedback can be hard to gather and digest, and even hard to act upon.

An iterative method has become one of the defining characteristics of how I like to write, organise, and present text on the internet. At least, beyond this domain. But until now, I’ve struggled to apply it to internet-based video.

This article introduces internet-based iterative design, and uses YouTube’s “Hot Spot” analysis to show how we can start to apply an iterative approach to video and movie-making. Continue reading “Iterative Video Development”

De-Analysing Blizzard’s Add-On Policy

Blizzard Entertainment’s new add-on policy has been discussed by everyone from Lum to Slashdot. The number of developers directly affected by the change is small, since only a few add-ons are popular enough to be considered commercial ventures. The policy is more significant because it changes a lot of established conventions, and goes to the heart of how Blizzard embraces (or increasingly, shuns) the talent within its player community. This article is an attempt to analyse the real motivations behind the policy, and highlight the apparent contradiction in policy between in-game add-ons and web-based services. Continue reading “De-Analysing Blizzard’s Add-On Policy”

Peeking Into Blizzard’s Development Process

Initial concept plan for Lake Wintergrasp. Basic... Blizzard Entertainment have a reputation for being “tight lipped”, and not announcing details about the games they develop. And since Blizzard have a lot more freedom than the developers that are closely regulated by their publishers, they should be able to talk openly.

But having listened to many of their senior developers talk during the recent Paris “WorldWide Invitational“, I suspect actually, they just don’t know yet.

Increasingly publisher-driven games tend to be heavily pre-produced, then implemented by programmers who work for hire: The details are known a long time before release, and the only reason not to talk about them is competitive. But if you don’t have such a precise battle-plan, you can’t release information with any real certainty. So you either get a reputation for saying little, or get a reputation for producing games that ultimately exclude many “expected” features.

Blizzard are one of the most successful game developers, so they must be doing something right. It is interesting to try and understand how they develop games. Continue reading “Peeking Into Blizzard’s Development Process”

David Law on Design as a Competitive Advantage

David Law has successfully launched and run a number of influential design businesses, including Speck Design. His work ranges from iPod skins to “camera armor” to video conferencing environments. David spoke to a small group at the University of Edinburgh on 26th March 2008. He proposed that design should be at the core of a modern business, as a competitive advantage to differentiate a business from others. This article summarises David’s argument, describing why there is a need to differentiate, his approach to design, targeting of niches, and how to stay ahead.

Design to Differentiate

Things are getting easier to make. There has never been a more informed consumer. Markets for consumer products are highly competitive, with little barrier to entry. All this means that popular designs are likely to be emulated, eroding prices downward. The aim of most manufacturing is simply to reduce cost to remain competitive.

The solution? Differentiation. A small company cannot differentiate products through marketing, but it can differentiate through good design.

Approach to Design

David sees design as “supercharged problem solving”. The aim is to satisfy a user need.

How is that need found? Observe users. Don’t ask them, watch them. Find where they get mad, and design a product that takes away their pain.

Then create lots of prototypes quickly. For real. CAD is too slow and lacks realism. Better to create a paper mock-up, which can be seen and handled. Keep on iterating until the design is right.

Development Triangle

The development process behind a new product can be weighted between three objectives:

  • Speed
  • Innovation
  • Cost

For example, a project might be orientated towards speed, with a new product developed in a few weeks. Other projects might be highly cost sensitive. David believes that most companies never consider the balance of objectives, and so tend to end up “somewhere in the middle”.

The Niche

The mantra “always start in a niche” goes against the instinct of many entrepreneurs, who tend to gravitate towards the biggest problem or market, since the reward from success are greater there.

However, niches have a number of distinct advantages:

  • Higher margins
  • Lower competition
  • Easier to “get in to” and find needs within
  • Appreciate audience.

David used the example of Camera Armor: Products that protect SLR equipment while in use. SLRs are a niche within a larger camera market. From this niche it was possible to develop into the larger market for smaller digital cameras – creating innovative cases and a rather dinky little tripod that snaps out from the bottom of the camera when needed.

Staying Ahead

David Law’s teams consists of a small number of designers. All their products are manufactured elsewhere (in China). The manufacturing process is simple – the real value of what they do is in design.

Could China produce good design? David argued that design needs proximity to the market. However, he did cite the example of Samsung: Historically a manufacturer competing on price alone, they have successfully developed a design-orientated approach, and are increasingly producing genuinely good designs in the vein of companies such as Sony or Apple. [It is possible that eventually Chinese manufacturers will follow this path, and become more design-orientated themselves.]

But if it is easy to copy products, how can value be maintained in good design? It depends on the product:

  • Where a key part of the design can be patented, a successful design will pay a long term dividend.
  • Where a design cannot be patented (most common), the method is simple: Keep on innovating, and always keep a step ahead.

Bill Urschel on Internet Advertising Innovation

Bill Urschel is the CEO of the internet advertising exchange, AdECN. William spoke to a Edinburgh Entrepreneurship Club/Edinburgh-Stanford Link gathering on 14 November 2007, about the development of AdECN, its role as an exchange market for internet advertising space, and the future of internet advertising. This article is based on Bill’s talk, which he gave in a personal capacity.

Development of AdECN

William Urschel first realising the market potential for computer/internet ventures when writing computer books. He has started a number of software/internet businesses since, and looks for three things in a new venture:

  1. Market: Something to address of a manageable size, with an overall growth trend (“the rising tide lifts all boats”).
  2. People: 1-5 people with either technology or business backgrounds, and the correct attitude and work ethic.
  3. Product: Address a need… and it is nice if it works.

Historically, advertisers would pay an advertising network, who would then display adverts using the advertising inventory on publishers’ websites. It was common for the network the advertiser dealt with to run adverts across multiple networks. Often business flowed from network to network to network, before an advert actually appeared on a publisher’s site. This resulted in reduced revenue for the publisher, as each network “middleman” took their share: Perhaps for every $1 of advertiser’s money spent, just $0.18 would reach publishers. Waste still existed in the market: Half of the display advertising market was either going unsold or “under-sold” (sold for a significantly lower value than it could attain, simply to fill the space).

How AdECN Works

AdECN was launched in 2002, but didn’t “get moving” until 2004. Its role is to act as a stock exchange for network-to-network advertising deals. The ECN part of the name, meaning Electronic Communication Network, is derived from financial stock markets.

Networks continue to deal directly with their own advertisers and their own publishers. The process will first try and match an advertiser’s demand to a publisher’s inventory within the same network. When advertising demand and publisher inventory within the first network are mismatched, AdECN steps in to broker a deal between different networks. The result is that advertisers get their adverts published, and publishers fill their inventory with paying adverts. The whole auction process takes place in 6-7ms, at the time the publisher’s page is viewed.

AdECN has been careful to make itself an ally of the networks, not a competitor to them:

  • It does not deal directly with advertisers or publishers – it has a distinct role in providing the infrastructure for the exchange.
  • Networks split the commission on the deals between them, just like stock brokers.
  • AdECN levies a flat fee, so is neutral to whoever wins or losses the auction.

The neutrality of AdECN is seen as their main competitive advantage over Yahoo and Google: AdECN isn’t an advertising network in its own right. [Although as described later, AdECN may simply be becoming the new breed of advertising network, in a marketplace where advertisers will increasingly deal directly with publishers. I did not get the chance to query this apparent contradiction.]

Contextual and Behavioral Data

Adverts can be targeted contextually or behaviorally:

  • Context considers simple variables such as time of day or location (typically the country viewer is resident in).
  • Behavior (or, behaviour, or “profile”) considers variables such as the age of the viewer and their search patterns.

Currently 95% of all targeting is contextual because it has historically been difficult to match behavioral information in a fast and ethical manner. In the next “3-5 years”, behavioral advertising will move to dominate 80% of online [display?] advertising.

AdECN capture a lot of data, which is increasingly the added value it can offer networks. By design it does not store data: Data is used only in the (near-instant) auction process. Individual networks/advertisers can bolt on their own “black boxes” to AdECN – bespoke software they design to utilise auction data so that their advertising spend is optimised. The most common use of black boxes is to split Cost per Click (CPC – advertiser pays when someone click the advert) and Cost per Action (CPA – advertiser pays when an action is completed, such as an enquiry form completed, or product sold).

Privacy remains a key issue. Self-regulation is seen as the way forward. This is based on not keeping personal data, and instead focusing on core questions like “what is the consumer going to buy?” The history of Gator (spyware installed which monitored browsing habits) shows that consumer pressure will eventually win over advertising network which don’t stick to reputable privacy practices.

In Hindsight

For the first two years of the venture, AdECN did not perform well. For an internet startup, two years is a long time. In the early years, AdECN’s team were “too abstract and too technical”. The software was eventually rewritten. Fortunately the venture’s backers were able to see the long-term potential. The lack of barriers to entry into the exchange did allow many networks to trial it, which allowed business to slowly build.

By 2004 they were “in the right place, at the right time”. They were bought by Microsoft. Bill Urschel couldn’t reveal specifics, but stated that there was “no b” in the price paid. His final round of investors received a x9.7 return over four months, so nobody was complaining. They sold “too early”, but in practice they had to sell: Similar (although William claims not actually exchanges) competitors Rightmedia and Doubleclick sold to Yahoo and Google respectively. It became inevitable that Microsoft had to buy an exchange.

The Future

The underlying market is expanding, and forecast to continue to grow. Critically:

  • Online advertising accounts for only 7% of total advertising spend, yet occupies more than 7% of consumers’ time: Advertisers are behind the trend, and will logically seek to catch up.
  • Display advertising (on publishers’ sites) is growing faster than search advertising (on sites such as Google search results).
  • With exchanges such as AdECN, display advertising now has the same data/targeting advantages search had 6-7 years ago. Real-time auctions and targetting have taken much longer.

The industry itself will like change, particularly what is meant by the term “ad network”: Advertising agencies can now deal with publishers directly, and use the exchange to handle excess supply or demand – there is no need for the old middlemen, the advertising networks.

The average CPM (Cost per Mile, where a mile is a thousand advert impressions) rates are likely to remain the same where already high (for example, rates around $25 will see little change). However, targeting will allow undersold inventory to be utilised much more effectively, so space sold closer to $0.25 will increase in value. As noted earlier, behavioral/profile targeting is likely to develop such that it dominates within 3-5 years.

Could exchanges move into the television and print advertising arena? Current systems could be improved, but the exchange really needs real-time auctions to flourish.