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Dave Walters

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Crowdsourcing Movies: Can Amazon Really Change Hollywood?

Wednesday, 01 December 2010 03:32 Published in Technology

It was the week before Thanksgiving, and one of the stranger stories I’d seen in a while flew through my tweetstream: Amazon has created a movie studio called – brilliantly enough – Amazon Studios. I literally scratched my head for a couple days trying to figure out why, and am just now coming to some conclusions. While I can understand the play on a couple levels, I think some of their ‘innovations’ aren’t going to go over well. But perhaps that’s the point; change the rules of the game altogether. At a minimum, they have an interesting take.

On first examination, the venture looks a lot like any other slightly random co-marketing deal undertaken by a category leader. Amazon has a first look deal with Warner Bros. Pictures, which kinda says traditional Hollywood movie-making tactics but Amazon Studios is bringing some rather unconventional web-style collaboration dynamics into play. In what I think is the venture's oddest aspect, Amazon Studios requires a ‘test movie’ or script be uploaded, and then opened for all users to comment and edit – regardless of one’s credentials. I found the answer to my biggest question to be rather amazing:

Q: Can I make it so that no one else can revise my original work?

A: No. But if someone makes changes that are bad, their version is not likely to get a lot of attention. And if someone comes along and makes your work better, you're more likely to win a prize and get your project made. Sometimes other people can bring a different viewpoint or a different set of skills that take the story in a new direction or add new elements that make it even more compelling. The Amazon Studios process is designed to facilitate and reward these contributions.

Now I’m no screenwriter, but it would seem to me if one wanted collaboration partners they might select them personally in advance of writing.  And yes the insinuation above is correct: the prize money is split between the original author and any subsequent ‘contributors’ whereby the prize money could be split up to 50-50 between the original author and any subsequent editors.

On its best day, it seems the Amazon Studios process creates a whole new style of film-making that has the potential to be faster, smarter and create better movies than are seen today. On its worst day, it seems to be a place for professional screenwriters to co-op outsider’s core ideas and turn them into the next ‘The Last Airbender’ (overproduced crap for those not immediately familar with the flick). Either way, the same market forces  – Hollywood execs who chair the prize committees and Warner Bros.’ first look deal – determine what gets made and what doesn’t, so I’m not sure how revolutionary it will end up being.

From an Amazon perspective, I can see this as another interesting affinity-level move into entertainment. They’ve done a decent job of keeping iTunes honest with MP3 Downloads, and Jeff Bezos was certainly visible during the announcement of Kleiner Perkins’ sFund – even giving away a ton of S3 access to social-powered startups.

And you can imagine the move to full-length films being streamed (like the latest Netflix sans-DVD product offering, or the Amazon Movies on Demand service on my TiVo right now) calls for a solid foothold with independent filmmakers. But let’s be real, the total prize budget for Amazon Studios is $2.7M, which is probably about 4.62 minutes of profit during the Holiday Season. And finding fresh young scripts or directors isn’t exactly so difficult it requires herculean new strategies – the Hollywood machine has consistently shown it’d rather back Scream 4 than the next incarnation of ‘The Brothers McMullen’.

In the grand scheme of things, it’s just as likely the whole exercise is an elaborate way for Amazon to get preferential pricing or access to the remainder of the Harry Potter movies. Or maybe they will remake a decades-old method by which movies are made.

For the record, my bet is this falls dead flat but I’d love to hear your thoughts below…

Damn, My Ears Are Happy: Girl Talk Drops ‘All Day’

Thursday, 18 November 2010 04:42 Published in Entertainment

I started seeing random tweets sometime after 2a last night, and woke up to the full-on realization that – to quote Ice Cube – today was a good day. Girl Talk, the stage name behind the guy I’d consider our generation’s most important mash-up DJ, has just released a brand new full-length album called ‘All Day’, which is available for free download (more on that later). And the album title about sums up how long I’ve had my Grado SR-60s strapped to my head… And wow, my boy Gregg Gillis has killed it again!

For the uninitiated, Girl Talk slams together music of many genres, but the backbeat is normally hip-hop and R&B classics from the last 10 years. He layers all kinds of crazy unexpected beats and riffs in and out of the music like you can’t imagine. For example, I’m listening to cut #6 (On and On) right now, and it begins with the guitar riff from Cream’s ‘Sunshine of Your Love’, the vocal is Biggie’s ‘Nasty Girl’, and there’s a little Doug E. Fresh-like ‘uh’ poppin’ in the background. And then the vocal blows by Ke$ha for 10 seconds and on to Lil’ Wayne. And then the music fades to New Order’s ‘Bizarre Love Triangle’. And by 4:25 into the song, it’s Twista vocals over U2’s ‘With or Without You’. Sounds insane, but you gotta hear it for yourself.

The bottom line: this album is absolutely EPIC to listen to, and it gets better with every listen. But the question of copyright comes up every time Girl Talk releases a new album. In what might be the best artist description ever, The New York Times Magazine Girl Talk’s music “a lawsuit waiting to happen.” I’d guarantee that’s why Gregg gives it away – to keep himself well inside the white lines of Fair Use.

As an example of how utterly insane Girl Talk’s mixes get, I compiled this list for a 2008 blog post when Girl Talk’s last studio album ‘Feed The Animals’ was released. This is the sample list from one cut on the CD, ‘Hands In The Air’, and the video below gives you the final product.


Tag Team

'Whoomp! (There It Is)'


Big Country

'In a Big Country'





Afrika Bambaataa & The Soulsonic Force

'Planet Rock'


The Cardigans



Hot Chip

'Ready For The Floor'


Flo Rida



The Velvet Underground

'Sunday Morning'


Justin Timberlake

'My Love'



'The Way I Are'


Yo Majesty

'Club Action'



'Music Sounds Better With You'



'Invisible Touch'


Michael Jackson

'Wanna Be Startin’ Somethin’'


Sly and the Family Stone

'Dance to the Music'


The Gap Band

'You Dropped a Bomb on Me'


Edgar Winter Band

'Free Ride'


So what the hell are you doing still reading this post? Go download Girl Talk’s ‘All Day’ and thank me later. Mash on!

While everyone in my tweet stream is clamoring about the digerati’s opinions from the Web 2.0 Summit, the Beatles invading iTunes or girls’ youth soccer drama, I was pleasantly surprised to read the news on Isis today. And who’s Isis you ask? Just a mobile payments company that’s joint-owned by AT&T, Verizon Wireless and T-Mobile, and who just announced mobile payments are coming to your smartphone. Yeah, this ain’t some obscure startup promising (yet again) to crack mobile payments – this is the big boys making it happen. So let’s look at how this might play out.

First, it’s logical to look at Japan and South Korea as predecessors in the uptake of mobile payments. The folks at the Federal Reserve Bank of Kansas (of all places) produced a nice historical roadmap a couple years back. In short, the Number 3 cell carrier market-wise in South Korea (LG) partnered with the country’s largest bank (Kookmin) in 2002 to launch the first mobile phone to include an integrated circuit card (ICC, which is effectively ‘smart cards’). LG went on to gain major market share on the back of payments, and the rest of the mobile industry soon followed suit into ICCs after a series of early failures. According the report, “financial institutions were heavily involved in the eventual success of mobile proximity payments in South Korea.”

So how’s it going down in the US? The details are still a bit sketchy but rumors have indicated the key players are Discover Financial Services (currently #4 in the US market) from a payment networks perspective and UK-based Barclays Bank as the financial institution. These are both second-tier competitors in the US space, and each could use a nice high-profile win. Isis has also tapped former GE Capital CMO Michael Abbott as the company’s CEO, and rumors abound that Atlanta will be included in the early geographic trials.

The consumer experience will feel much like today’s MasterCard PayPass you may have seen at retail. Users will wave the phone near a scan pad, and near-field communications (NFC) will take over. There’s plenty of debate around the current pace of NFC roll-out, but I’d expect the big mobile players to be able to positively impact that dynamic. And in another limiting factor, almost no current-generation cell phones have NFC built-in, but iPhone 5 and next year’s Blackberry models are widely expected to contain the necessary gear. An interim solution could be as simple as an ICC-enabled sticker for your smartphone case.

So are seamless mobile payments coming to town tomorrow? Not really, but we just found out today who will bring them. And it seems like the direct involvement of Barclays bodes well historically for the success of the venture. Of course, Visa and MasterCard both have their own strategies (and have discounted today’s news) but ask yourself one question: Has it ever been an option for you? My guess is most consumers will demand the functionality from their cell phone, but will always take whatever card product their issuing bank gives them. Welcome to the intensely personal relationship we all have with our phones…

Dear Steve: I Rip My Beatles CDs Every Two Years

Tuesday, 16 November 2010 04:12 Published in Entertainment

So tomorrow is clearly set to be a watershed day for iTunes – as anyone can see by the Apple home page. For a whole host of reasons, logic dictates it’s the announcement that Apple and Apple have finally made up, and the Beatles catalog will now be available on iTunes. My question is simple: Who cares? The Beatles in my iTunes ain’t exactly breaking news. Follow my logic here…

If you’re enough of a Beatles fan to own the majority of their music during the pre-iTunes era (gasp!), then you’ve probably already ripped them in at a VBR-enabled 256 or 320 kbps and have them enshrined in their own playlist – not that I do or anything. And that’s just for guys like me who can get their ears around lossy rips. There’s a whole subculture of people who think I’m the ultimate proletarian for daring to not go full lossless. For me, as the title indicates, I actually rip the CDs every couple years to keep up with the latest bit rates and codecs. So short of new remasters or some still-unknown recordings, I got all the Beatles I need. So what can iTunes do for Dave?

The answer is the same for me and countless millions: Let me pay you MORE money to stream my music to any damn device I can dream of! I’ve got every piece of the technology puzzle, except enough disk space for my whole library across all the devices in my life – iPhone, iPad, AppleTV, MacBook Pro, TiVo, etc. My TimeCapsule chucks out a 5Ghz N wireless network that can easily handle everything in the house. But clearly the mobile side of the equation is a bit hairier. To start, I’d settle for an interim solution like iTunes streaming only over WiFi first so the Death Star’s data network doesn’t implode yet again. (If I were really a conspiracy theorist, I might contend AT&T would want everyone streaming music over their no-longer-unlimited data packages.) Apple could literally save me days off the end of my life if I didn’t have to create, organize and sync playlists across my enterprise.

I get there are lots of moving parts to this solution – including the Lala acquisition, a billion-dollar datacenter in North Carolina and a potential acquisition of Spotify, but here’s the point: we’d pay money. Hell, right now I pay $60/year just to have my library backed-up to the cloud via Mozy. They’d still get my document backup business in the new streaming iTunes world, but I’d still drop $100 a year for the Apple service. In fact, here’s a product pro tip for Cupertino: shoot MobileMe square in the forehead, and morph the whole damn thing into iTunes Cloud. It’s not like Dropbox hasn’t won the shared file battle, and syncing Safari bookmarks across my Macs isn’t enough to get another $99 out of me for next year.

So I suppose tomorrow will come and go, and all I’ll get is a bunch more content I can buy. You want to really get my attention without announcing streaming iTunes? Include a set of 320 kbps tracks from Danger Mouse’s The Grey Album with the Beatles catalog. You’d be my hero forever, Steve!

It’s just plain fun having cool, innovative sponsors around the TechDrawl Cave. I was cruising my tweet stream last night and ran across one of the smarter iPhone app plays I’ve seen in a long time: MailChimp’s soon-to-hit Pyow! It essentially rolls up 100% of the functionality needed to run QR codes baked right into your MailChimp campaigns – and with a style that’s unmistakably MailChimp. So for all you marketers who didn’t know where to start with QR codes, or were too scared to ask your agency to price out a pilot program, that was the sound of a starter’s pistol you just heard…

In short, QR codes are those square barcode-looking things you’ve seen on shop windows and in the occasional print ad. Like a traditional bar code, they bake specific info into the image that’s then displayed when read by a camera and the correct software. And that’s been the whole problem with QR codes; the redemption process assumes every user has some special app. But by turning the process inside out, MailChimp now only requires the merchant to have the reader (since the QR code is delivered in an email to the end user).

The customer can then trot into their favorite shop and flash the message from their inbox to the cashier. The decoding is done on the merchant’s iPhone via the Pyow! app, and all the metrics are rolled-up in the standard MailChimp reporting metrics. Hell, they even do countdown redemptions where you can limit the number of times a specific QR code can be used – or set that number to triple digits to encourage viral sharing. Not exactly beginner-level stuff.

As a recovering corporate and agency marketer, I can tell you having this technology in-hand to pilot test QR codes is amazingly cool – especially when you can leverage the free MailChimp account to test drive the whole solution. Bravo!

MailChimp reports the app will submitted very soon to the iTunes App Store, and you can sign up for their Mobile Newsletter to be among the first to find out. To see a preview, check out this video.

And just in case you thought this functionality stuff was the coolest thing on the MailChimp blog, all the business folk should definitely read Ben Chesnut’s post on the topic of freemium. He gives every gory detail in the process, including how a sometimes-misunderstood pricing strategy drove their customers up over 5X in one year, and increased profit over 650%. A great read if you’re considering freemium.

Viva la Chimp!

Now Is The Time: Vote No On Amendment One!

Monday, 01 November 2010 04:33 Published in Startups

It’s been amazing to watch what a single comment on TechDrawl by Paul Freet has turned into since August 7. From a personal standpoint, the minute I read that DLA Piper alert, I smelled a railroading of the public coming. I’ve covered many of the negative impacts to entrepreneurs and startups over the last three months (see below), but I’m going back to the genesis of this fraud for my final post: the absurd verbiage that’s appearing on ballots across our state this Tuesday.

How broken is our system when language like this can be viewed as not leading?

"Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"

I can outline two specific arguments based on deconstructing these fraudulent 23 words. Firstly, the use of the word ‘reasonable’ here is utterly ridiculous. How could the average voter understand what is or is not reasonable without doing serious research before entering the voting booth? And I’ve heard very few non-paid voices that would call this amendment reasonable. Secondly, there is absolutely zero evidence this would “make Georgia more economically competitive.” At the risk of being repetitive, I’ll once again link to the Harvard study that completely debunks this theory. Are we really going to believe some crack lobbyist organization over Harvard University?

And while I’m in the question-asking mood, I’d really love to know why the Amendment's sponsor Rep. Kevin Levitas qualified for – but then decided against – running for a third term this November. (Another random Democrat is again running unopposed in House District 82 in DeKalb County.) As it turns out, Levitas is trying to leave us with the worst parting gift ever in Amendment One – while his second most popular industry for contributions just happened to be ‘lawyers and lobbyists’ in the last election cycle. According to the AJC, he “has been pushing for years a constitutional amendment” to increase the bite of non-compete clauses in Georgia. The most cynical among us (me included) might think the Representative thinks he’s done all he can on the topic, so it’s back to the private sector.

Let’s all prove him wrong. Vote NO on Amendment One this Tuesday!

Previous Articles:

Kill Georgia’s Amendment One: The Death Of The Tech Startup

KillHB173: T Minus 22 Days

KillHB173: So Long Professional Services

KillHB173: How Natural Selection Should Punish Crappy Employers

KillHB173: How To Guarantee Another Startup Cluster Never Happens

KillHB173: Are You In The Crosshairs?

Employees Chained And Restrained: Why We The People Must Defend GA's Constitution Against HB173

We’re now less than a week away from what could be the most important election in recent memory – particularly for those working in innovation-driven industries like tech startups. The ebb and flow of Georgia politics has a momentum all its own, including a who-knows-who’s-funding-them run of negative ads that have made this election season extra-gross for me personally. But at least voters get a crack at changing leadership every four years. If Amendment One passes this November 2, it will never be rolled back ­– mark my words. Regardless of which side of the aisle you prefer (or even if ‘None of the Above’ seems like the best option), next Tuesday needs to begin with a NO vote on Amendment One. Your future earning potential is absolutely at stake.


An Enemy By Any Name

Yep, the dreaded Georgia Restrictive Covenant Act (HB173) has taken its slot as Amendment One on this year’s ballot. Just to review the pure evilness of this effort, let’s look at the verbiage that’s on the ballot:

"Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"

Damn, that just steams me every time I read it while knowing there’s absolutely no proof that reducing employees’ rights to change jobs leads to economic competiveness – especially using Michigan as a case study. And the argument it incents more companies to relocate to Georgia has been debunked by arguably one of our town’s most successful relo rainmakers, Nick Masino of the Gwinnett Chamber of Commerce. The good news is I’ve seen a fair amount of negative press around this outrageous language, so my hope is the general public has at least heard something critical about the amendment.


Bye, Bye Tech Startups

So if these Draconian rules come into effect, expect two primary types of startup entrepreneurs: 1) kids straight out of college and 2) those with a cash-laden exit event behind them. These will be the only two groups who won’t have the stain of one of these non-competes on them. The big problem is that creates some serious issues for an already-struggling startup ecosystem.

The first is I would contend the success percentage of first-time, under-25 entrepreneurs is a fraction of what a more seasoned executive could pull off. In fact, primary research from my Duke University professor buddy Vivek Wadhwa shows the average entrepreneur is just about 40, married and has kids. Not for long if Amendment One passes. Starting a company is massively hard work, and takes every experience gained over a lifetime of professional experience. It probably goes without saying, but kids like Mark Zuckerberg and Shawn Fanning who remake industries are the exception more than the rule.

And for those fortunate enough to engineer an exit under the old rules, navigating these new restrictions is likely more important than continuing their path of innovation. For their sakes, I hope they made enough money so that working for someone else never comes into play again in their career. That probably means 4-5 successful startups over a career without any necessity to stop-over in a corporate gig with a guaranteed paycheck and benefits. It’s good work if you can get it, but that’s a tall order.

Everyone else in between – especially those who are now employed in corporate with an eye toward starting their own company one day – is just flat screwed. The more innovation you’re creating for your employer, the more likely they are to show up with a new agreement for you to sign. In other words, I’d expect the best of the best to get screwed the fastest. Is it just me, or does this just seem un-American?

So there’s one simple question: with Amendment One as law, do you have the opportunity to be a startup CEO? I’d call it a travesty if you can’t control your own destiny and prosperity in this arena. If you’re ready to risk it all to create better technology, new jobs, more tax revenue, and a better life for your family, why should some pro-big business lobbyist decide you couldn’t by deceiving the electorate into voting in favor of Amendment One?


A Well-Informed Voice of Reason

I’m going to conclude my penultimate article on this topic by doing something relatively rare – reprinting an entire opinion piece from the Cordele Dispatch written by Ed Buckley and Tom Stubbs. Ed has consistently rallied against the passage of Amendment One, and makes a great series of arguments from the real-life position of a labor lawyer.

Georgians should vote 'no'
By Edward D. Buckley and Tom Stubbs

Cordele Dispatch

Cordele — (This editorial written by two Atlanta area attorneys is reprinted at the request of Cordele attorney James Hurt).

Georgia voters will soon be asked to vote on an amendment to the state constitution which is intentionally phrased to deceive them.

The language reads: "Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?"

This language is a lie on its face. The amendment does not make Georgia more competitive; it makes us less competitive by restricting the free flow of labor upon which that capitalism depends.

The proposed constitutional amendment will shackle employees to businesses, and strangle the present rights of employees to go out and work for competitors or start new competing businesses.

Voters who are employees of any kind, be they doctors, news people, engineers, mechanics or salespeople should rise up and vote "No" to this radical change to our state constitution.

You'd never know it by reading the ballot question, but the proposed constitutional amendment relates to "non-compete agreements." Employers may already force non-compete agreements on employees -- as long as the agreements are reasonably limited in time, geography and job description.

Under the Georgia Constitution, if an employer imposes unreasonable restrictions, such as banning former employees from working in their field of choice forever or everywhere or in all kinds of jobs, then our courts are required to strike the entire agreement. That process obviously encourages employers to err on the side of keeping the restrictions contained in non-competes reasonable and limited.

This legal framework has worked well for decades. For every non-compete that you see challenged and overturned due to its being overly broad in time, geography or job definition, hundreds, if not thousands, of properly and reasonably limited non-compete agreements are entered and enforced without a hitch every year.

Indeed, business-oriented publications such as Entrepreneur, Forbes, Chief Executive Magazine, and others have consistently ranked Georgia as one of the top states in the country for business. So, current law has worked well for business.

Big Business wants more, however. They want to erode even this minimal protection for employees. How? The proposed constitutional amendment -- drafted by lawyers who work only for management -- permits judges to edit, not just strike, overly broad non-compete agreements.

This innocent-sounding change totally tilts the table on non-competes to favor employers. If this proposed amendment passes, employers will be able to write every non-compete agreement overly broadly, because there is no threat of the entire agreement being stricken anymore.

The worst that can happen is that, at some distant time in the future, a judge may make the employer use more reasonable restrictions in its non-compete agreement. In the meantime, employers can require an employee to sign these overly broad agreements or get fired, then fire them anyway.

The end result? Overly broad non-compete agreements dictate how and where many employees work. The economy loses because labor is prevented from flowing to the place where it is most productive. Consumers lose because entrepreneurs are prevented from leaving mediocre jobs to start their own businesses that offer better products and services.

Employees who don't leave lose because they are stuck at jobs making less than they could make elsewhere. Employees who dare to make a break for new employment are likely to lose, as well. They will have to live under the overly broad restrictions for months, if not years, on the thin hope that the attorney they have to hire -- at great expense -- will some day get those restrictions eased.

The gain? Our already clogged courts gain even more lawsuits, and our judges gain power to become activists who make up and insert completely new terms into contracts.

Georgians should not surrender their constitutional rights to make way for this one-sided, pro-employer and anti-employee new law. This proposed amendment makes no sense whatsoever, but, at a time when unemployment is at record levels, it is especially wrongheaded.

Vote "no" to deceit. Vote "no" to anti-employee legislation. Vote "no" to Amendment One.

It's a lie told to Georgia voters, and it's a lie told to employees at a time when jobs are scarce. Free competition is a sacred American right. Vote "no" to Amendment One to preserve this right.

Look for my final call-to-arms on this topic on Monday, and please do press this topic into conversation at your weekend Halloween festivities. I know I’ll be foregoing the standard neighborhood discussions like stray cats and homeowners associations in favor of educating a few more voters on the topic before Tuesday. You should absolutely do the same!

Previous Articles on the Topic:

KillHB173: T Minus 22 Days

KillHB173: So Long Professional Services

KillHB173: How Natural Selection Should Punish Crappy Employers

KillHB173: How To Guarantee Another Startup Cluster Never Happens

KillHB173: Are You In The Crosshairs?

Employees Chained And Restrained: Why We The People Must Defend GA's Constitution Against HB173

Or is he? By all accounts, the epic (and wildly profitable) growth of gaming powerhouse Zynga crystallized the concept of today’s newly announced sFund that’s being led by Kleiner Perkins Caufield & Byers, which legendary VC John Doerr is calling "a quarter-billion dollar party." And the sFund concept has its DNA in another KCPB innovation: the iFund, which began life in 2008 with $100M that was quickly deployed, and then doubled in March 2010 to drive continued growth. So like the last generation’s EF Hutton: when he speaks, people listen – including the biggest players on the planet. And in case you're keeping track: that's over half a billion dollars in just over two years on mobile and social ventures!

And who’s coming to party (and co-investing) is among the most interesting aspects of the new sFund. Following on the Apple pairing for iFund, the KPCB guys have convinced Facebook to bring their platform and 500M users to the party as the ultimate audience aggregation point. While Doerr is quick to point out it’s not all about Facebook (which is why it isn’t call ‘fbFund’), inside access to an enterprise like Facebook can only be a boon for funded companies. And Zuckerberg is smart enough to recognize that maintaining their position as the dominant social network will require way more ideation, development and products than their teams alone could ever bring to market.

Just as interesting, was the presence of Amazon’s Jeff Bezos on-stage. Their AWS platform has become the weapon of choice for companies trying to manage huge spikes in user growth and usage – which is an all-new hallmark of this new social experience. Think back to the old days of package software; the limitations were typically CD duplication and an iron-fisted distribution channel. Today, an iPad application like Flipboard (another KPCB portfolio company) can come to market one day, and be literally crushed by customer demand at the server level. I’ve not seen any reliable numbers (Robert Scoble hazarded a guess in the 65,000 range for Day One), but the stories of Flipboard begging not to be featured in the App Store the day after launch seem completely plausible. Amazon is hoping every sFund company takes them up on the free AWS offer and grows into the next behemoth customer. In fact, Bezos notes: “The top three companies that develop for Facebook all use AWS.” News flash: the cloud is here to stay.

But for me, the most interesting quote of the day came from John Doerr himself: “We’re just getting started. This is the early innings, if you will, of social and I can’t wait to see how far it goes over the next decade.” Going into TechCrunch Disrupt a couple weeks ago, I was already convinced his ‘Third Wave’ framework provided a great backdrop to view all the companies. It’s all about the collision of social, mobile and commerce – and how those three represent a new paradigm. At the show, Eric Schmidt spoke and shared a similar vision from Google’s perspective, and added a fourth element Doerr seems to have gravitated toward quickly: cloud.

And with those building blocks, it seems obvious there will be radical new products coming to market. Zynga’s Mark Pincus called one out today: a travel app that has full insight into bookings, cancellations, destination information, your own cloud, etc. You can also imagine the radical new approaches to entertainment (music and movies in particular) that can be powered by a smartphone, ubiquitous connectivity and 1TB of cloud storage. While Pincus points to Pandora as the odds-on winner in the music space, I have to disagree. I don’t want someone else creating my playlists the same way I don’t necessarily like curated blogs. I’ll put the effort in so I create the ultimate personalized experience.

But the mind can still run wild if you consider the current social tools the appetizer to the main meal. Facebook amassing 500M users (and pointed toward 1B) is interesting, but the real question is what will they do on Facebook 3-5 years from now? My bet is photo sharing will always be big, but think about event planning or voter registration or pandemic disease education. You can do a lot when all your friends and colleagues are aggregated in a small number of social networks, which leads to my final thought.

I fully believe we’ll see a harmonization of the social graph over the next 3-5 years, which we’ve already starting seeing with development tools like RPX. Using your Facebook credentials to login to a site like TechDrawl simplifies the experience for the user, and has solid benefits for the site owner (automated pictures, no expensive development of your own login tool, etc.). So how long do you think only your avatar will be shared among those sites? Who will lead the way in allowing users to customize their social graph across multiple mainstream and affinity sites? Why would I tweet something that was relevant to my dating life (apologies to my beautiful wife for the analogy) and not have it cross-pollinated to Match or eHarmony? Why wouldn’t my Blippy purchases be automatically posted to the rewards programs of each retailer without having to carry around another crappy key fob?

The questions abound, but KPCB seems sure of one thing: entrepreneurs will innovate on the platform of their choice, and those products will change the social world as we know it. I couldn’t agree more, and am confident the sFund will draw out entirely new sets of ideas and companies that will blow us all away. I can’t wait for the ride!

Savior Or Enemy? The Many Faces Of Groupon

Friday, 15 October 2010 07:46 Published in Startups

Every time I end up in a conversation about coupons, there’s the inevitable one-liner delivered about how retailers hate Groupon – even though the wait list has been reported to be six months. Love ‘em or hate ‘em, but let’s call Groupon what it is: an on-demand, money-making fire hose of coupon customers. And therein lies the problem for both Groupon and the retailers. If either screws up their end of the bargain, the whole experience sucks – and it hurts BAD.

So what do the two players here need to consider before inking the deal? Firstly, Groupon has to do a yeoman’s job of coaching their prospects to understand the utter pain of having 10-15x the customers in a very short burst. And they need to help these retailers be really honest with themselves about their ability to deliver the product or service. For the retailer, it’s even easier: just don’t be greedy.

The economics are simple: if you’re a retailer, you need two things to be true. You need a cost-of-goods below 25%, and you need the ability to scale. The 25% is based on Groupon’s requirement of a minimum 50% consumer-facing discount, with the other 50% split evenly between the retailer and Groupon. Where Groupon hit the homerun was taking control of the transaction. Imagine a world without receivables, and where you’re driving additional profit by managing the float. That’s what gets you a billion-dollar valuation and a couple hundred imitators every week.

But back to the retailer, since this is the ‘horror story’ that really irritates me. Many local companies – especially restaurants – are well-adjusted to local advertising programs like Variety Entertainment. Conventional thinking has always assumed these programs drove trial and perhaps picked-up a few regulars along the way. But Groupon is trial marketing on steroids, and any business owner who doesn’t know upfront is just plain ignorant. So once you sign-up, you immediately lose the ability to cry foul like “Groupon killed my business” or “I couldn’t handle all the business.”

While consumers get great deals, the reality is Groupon is a big risk for most small retailers. Having the pricing flexibility doesn’t guarantee you can pull off the service side of the equation. In fact, if you have that much open capacity you may be closer to closing doors than you’d like to admit anyway.

So what does all this mean for the future of Groupon? I think you’ll see retailers begin to get a lot smarter about deploying the fire hose. And the offers will steadily become more service-oriented – specifically in high-volume businesses that have open capacity every single day like restaurants and hotels. At the same time, I’d expect to see progressively fewer products offered since fulfillment and inventory can become big issues very quickly. I’m not saying Groupon will melt away into Variety Entertainment-type player, but I do believe the hype cycle has just about maxed out, and we all see the signs of the backlash coming. From here on, that business becomes more Amazon-style in its focus on cost-per-customer-acquisition and e-commerce share-of-wallet. Perhaps it's time to break the business back to nice old simple models behind e-commerce.

KillHB173: T Minus 22 Days

Monday, 11 October 2010 04:57 Published in Startups

Now that we’re inside a month from Election Day, it’s time to really circle the wagons on the opposition to the Georgia Restrictive Covenant Act (HB173). At some point in the last week or so, someone asked if there was a Facebook page to point people to: the answer is now yes. Here’s the page, which I’d encourage everyone to Like and share with all their colleagues and friends.

And if you really want to get ahead of the curve, Early Voting is now open in most counties so you could even register your No vote today! Make sure to visit the My Voter Page at the Secretary of State’s office to check your registration status, see a sample ballot, and locate both your early and regular voting locations.

I’ve also gotten emails and voicemails from people about other media outlets covering the story. After some good old-fashioned Google time, here’s a sampling of the coverage with synopsis quotes from each article:

11Alive: Amendment One: "It's a Damned Lie"

“Well known Atlanta labor attorney Ed Buckley has a strong opinion of Amendment One: ‘It's a damned lie.’

Amendment One "Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements? () YES () NO"

Buckley says the wording on the ballot is deceptive and completely misleading. 'The referendum says nothing about non-competitive agreements and says nothing about the impact on workers who will not be able to pursue their occupations if they quit or are laid off by their employer because they signed a form in order to get a job,' Buckley said.”

Savannah Morning News: Amendment 1: No

“Georgia voters who foresee starting their own businesses or simply going to work for a different employer in their current fields should vote "No" on Amendment 1. If for no other reason, Georgians should object to this measure based on the fraudulent wording of the ballot item.”

Atlanta Journal Constitution: Amendment One: Making Georgia less competitive

“A 2009 study by the Harvard School of Business focused on Michigan, which in 1985 passed a law much like that now on the Georgia ballot. By tracking patents, the study found that job mobility for inventors in Michigan fell significantly once the law changed.”

In These Times: Big Business Backs Anti-Worker Amendment 1 in Georgia

“Amendment 1 is an attempted power grab by monied interests. It paradoxically proposes to make Georgia more competitive by stifling competition.”

Peach Pundit: Amendment #1

Comment: “The only purpose to a 2-year non-compete in such fields (or ANY field, really) is to trap workers in their jobs… taking an at-will relationship and making the at-will aspect entirely one-sided. The only two types of people who could conceivably support such a thing are: (1) business owners who know exactly what it means, or (2) fools.”

Atlanta Journal Constitution: Pro & Con: Shall voters change workplace noncompete agreements?

“The end result if Amendment 1 is approved? Overly broad non-compete agreements will dictate how and where many employees work. The economy loses because labor is prevented from flowing to the place where it is most productive. The gain? Our already clogged courts gain even more lawsuits, and our judges gain power to become activists who make up and insert completely new terms into contracts. Georgians should not surrender their rights to make way for this one-sided, pro-employer and anti-employee law at any time. But at a time when unemployment is at record levels it is especially wrongheaded.”

Charlton County Herald: Pay attention the constitutional amendments

“The Georgia Libertarian Party, which opposes the passage of Amendment 1, described it this way: ‘This amendment would stifle growth of the economy by providing a barrier to entry to smaller, more agile firms wishing to compete in the marketplace, should they choose to employ those previously employed by a firm in that industry. While employment contracts can be an important part of an employer-employee relationship, they should not be used to punish those who seek to grow the market outside the established firms.’” Could Amendment #1 on the Georgia ballot harm employees?

“The employee seems to become a pawn in that should they get laid off, fired, or just no longer wish to remain with a certain company, they could not pursue their current occupation with someone else.  Once an amendment becomes part of the Constitution, it is near to impossible to rescind it.”

But if you’re not of the predisposition to believe everything you read in the media, there are also two critical university studies that should be the final nail in the coffin of HB173: one from the University of Toronto in 2008, and one from Harvard University in 2009. And these are not overly theoretical works – the Harvard research examines the specific case study of Michigan repealed such a law in 1985. The effect was a 15% decline in mobility for “individuals who had firm-specific skills or who specialized in a narrow range of technologies” and an 8.1% decline in the mobility of inventors (measured by patent filings.)

So let’s make sure to have all those last-minute conversations. The more any employee knows about the details of this amendment (including its incredibly deceptive language), the better we’ll all be.


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