Random Thoughts About Mary Meeker’s Internet Trends 2017 Presentation

Random thoughts regarding Mary Meeker's Internet Trends 2017 report:

Slide #5

The main question that popped in mind was where are the rest of the people? Today there are 3.4B internet users where the world has a population of 7.5B. Could be interesting to see who are the other non-digital 4 billion humans. Interesting for reasons such as understanding the growth potential of the internet user base (by the level of difficulty of penetrating the different remaining segments) as well as identifying unique social patterns in general. Understanding the social demographics of the 3.4B connected ones can be valuable as well as a baseline for understanding the rest of the statistics in the presentation. Another interesting fact is that global smartphones shipments grew by 3% while the growth in smartphones installed base was 12% - that gap represents the pace of the slowdown in the global smartphones market growth and can be used as a predictor for next years.

Slide #7

Interesting to see that the iOS market share in the smartphone world follows similar patterns to Mac in the PC world. In the smartphone world, Apple market share is a bit higher vs. the PC market share but still carries similar proportions.

Slide #13

The gap fill of ad spending vs. time spent in media across time follows nicely the physical law of conservation of mass. Print out, mobile in.

Slide #17

Measuring advertising ROI is still is a challenge even when advertising channels have become fully digital - a symptom of the offline/online divide in conversion tracking which has not been bridged yet.

Slide #18

It seems as if there is a connection between the massive popularity of ad blockers on mobile vs. the advertising potential on mobile. If there is such then the suggested potential can not be fulfilled due to the existence of ad blockers and the level of tolerance users have on mobile which is maybe the reason ad blockers are so popular on mobile in the first place.

Slide #25

99% accurately tracking is phenomenal though the question is whether it can scale as a business model - will a big enough audience opt-in for such tracking and what will be done about the battery drain resultant of such tracking. This hyper monitoring if achieved on a global scale will become an interesting privacy and regulation debate.

Slide #47

Amazon Echo numbers are still small regardless of the hype level. Could be fascinating to see the level of usage of skills. The number of skills is very impressive but maybe misleading (many find a resemblance to the hyper growth in apps). The increase in the apps world was not only in the number of apps created but also in the explosive growth in usage (downloads, buys) - here we see only the inventory.

Slide #48

This, of course, is a serious turning point in the world of user interfaces and will be reflected in many areas, not only in home assistants.

Slide #81

2.4B Gamers?!? The fine print says that you need to play a game at least once in three months which is not a gamer by my definition.

Slide #181

Do these numbers include shadow IT in the cloud or does it reflect concrete usage of cloud resources by the enterprise? There is a big difference between an organization deploying data center workload into the cloud vs. using a product which is behind the scenes partially hosted in the cloud such as Salesforce. Totally different state of mind in terms of overcoming cloud inhibitions.

Slide #183

The reduction in concerns about data security in the cloud is a good sign of maturity and adoption. Cloud can be as secure as any data center application and even much more though still many are afraid of that uncertainty.

Slide #190

The reasons cloud applications are categorized as not enterprise-ready is not necessarily due to their security weakness. The adoption of cloud products inside the enterprise follow other paths such as level of integration into other systems, customization fit to the specific industry, etc...

Slide #191

The reason for the weaponization of spam is simply due to the higher revenue potential for spam botnets operators. Sending plain spam can earn you money, sending a malware can make you much more.

Slide #347

Remarkable to see that the founders of the largest tech companies are 2nd and 3rd generation of immigrants. That's all for now.

The Not So Peculiar Case of A Diamond in The Rough

IBM stock was hit severely in recent month, mostly due to the disappointment from the recent earnings report. It wasn't a real disappointment, but IBM had a buildup of expectations from their ongoing turnaround, and the recent earnings announcement has poured cold water on the growing enthusiasm. This post is about IBM's story but carries a morale which applies to many other companies going through disruption in their industry. IBM is an enormous business with many product lines, intellectual property reserves, large customers/partners ecosystems and a big pile of cash reserves. IBM has been disrupted in the recent decade by various megatrends including cloud, mobile computing, software as a service and others. IBM started a turnaround which became visible to the investors' community at the beginning of 2016, a significant change executed quite efficiently across different product lines. This disruption found many other tech companies unprepared, a classic tech disruption where new entrants need to focus only on next generation products and established players play catch up. A seemingly unfair situation where the big players carry the burden of what was previously defined as fresh and innovative, not so long time ago. IBM turnaround was about refocusing into cognitive computing a.k.a AI and although the turnaround is executed very professionally the shackles of the past prevent them from pleasing the impatient investors' community.

Can Every Business Turn Around?

A turnaround, or a pivot as coined in the startup world, means to change the business plan of an existing enterprise towards a new market/audience requiring a different set of skills/products/technologies. Pivoting in the startup world is a private case of a general business turnaround. In a nutshell, every business at any point in time owns a different set of offerings (products/technologies) and cash reserves. Each offering has customers, prospects, partners and the costs incurred of the creation and the delivery of the offerings to the market. In an industry which is not disrupted the equation of success is quite simple, the money you make on sales of your offerings should be higher than the attached costs. In the early phases of new market creation, it makes sense to wait for that equation to get into play by investing more cash in building the right product as well as establish excellent access to the market. Disruption is first spotted when it's hard to grow at the same or higher rate, and fundamental change is required to the offerings such as rebuilding the offering from scratch. This happens when new entrants/startups have an economic advantage in entering the market or by creating a new overlapping market. When a market is in its early days of disruption the large enterprises are mostly watching and hoping for the new trends to fade away. Once the winds of change are blowing too strong, then a new thinking is required.

A Disruption is Happening - Now What

Once the changes in the market ring the alarm bell at the top floors, management can take one or more of the following courses of actions:
  • Buy into the trend by acquiring technologies/products/teams/early market footprints. The challenges in this course are an efficient absorption of the acquired assets as well as an adaptation of the existing operations towards a new direction based on the newly acquired capabilities.
  • Create a new line of products and technologies in-house from scratch realigning existing operations into a dual mode of operation - maintaining the old vs. building the new. Dual offerings that co-exist until a successful internal transfer of leadership to the new product lines take place.
  • Build/Invest in a new external entity that is set to create the future offering in a detached manner. The ultimate and contradicting goal of the new business is to eventually cannibalize the existing product lines towards leadership in the market. A controlled competitor.
Each path creates a multitude of opportunities and challenges. Eventually, a gameplan should be devised based on the particular posture of the company and the target market supply chain.

Contemplating About A Turnaround

From a bird's eye view, all forms of turnarounds have common patterns. Every turnaround has costs. Direct costs of the investment in new products and technologies as well as indirect costs created due to the organizational transformation. Expenses incurred on top of keeping the existing business lines healthy and growing. These additional costs are taken from the cash reserves or it is new capital raised from investors. Either way, it is a limited pool of capital which requires a well balanced and aggressive plan with almost no room for mistakes. Any mistake will either hurt the innovation efforts or the margins of the current lines of business and for public companies neither is forgivable. Time is also critical here, and fast execution is key. If mistakes happen, the path can turn into a slippery slope very quickly. Besides the financial challenges in running a successful turnaround, there is a multitude of psychological, emotional and organizational issues hanging in the air. First and foremost is the feeling of loss around sunk cost. Usually, before a turnaround is grasped there are many efforts to revive existing business lines with different investment options such as linear evolution in products, reorganizations, rebranding and new partnerships. These cost a lot of money and until the understanding that it is not going to work finally sinks the burden of sunk costs has grown very fast. The second big issue is the impact of a turnaround on the organizational chart. People tend not to like changes and turnarounds. The top management is hyper-motivated thanks to the optimistic change consultants, but the employees who make the hierarchies do not necessarily see the full picture nor care about it. It goes down to every single individual who is part of the change, their thoughts about the impact on their career as well as their personal likings and aspirations. Spreading the change across the organization is kind of black magic and the ones who know how to do that are very rare. The key to a successful organizational change is to have change agents coming from within and not letting the change being driven by the consultants who are anyway perceived as overnight guests. The third strategic concern is the underlying fear of cannibalization. Many times the successful path of a turnaround is death to existing business lines and getting support for that across the board is somewhat problematic.

Should IBM Divest?

A tough question for an outsider like me and I guess pretty challenging even if you are an insider. My point of view is that IBM has reached a firm stance in AI, a position that it is becoming more challenging to maintain over time. AI has in magnitude more potential then the rest of the business and these unique assets should be freed from the burden of the other lines of business. IBM should maintain the strategic connections to the other divisions as they are probably the best distribution channels for those cognitive capabilities.

The Private Case of Startup Pivots

A pivot in startups is tricky and risky. First, there is the psychological barrier of admitting that the direction is wrong. Contradicting the general atmosphere of boundless startup optimism is a challenge. On top of that, there will always be enough naysayers that will complain that there is not sufficient proof that the startup is indeed in the wrong direction. Needless to talk about the disbelievers that will require seeing evidence before going into the new direction. Quite difficult to rationalize plans when decision making is anyway full of intuitions with minimal history. Since the history of many startups is quite limited and their existence at the early stages is dependent on cash infusion then the act of pivot even if right and justified is many times a killer. There aren't too many people in general who have the mental flexibility for a pivot, and you need everyone in the startup on board. The very few pivots I saw that were successful did well thanks to incredible leadership which made everyone follow it half blindly -  a leap of faith. Food for thought - How come we rarely see disruptors buying established disrupted players to gain fast market footprint?

Is Web 3.0 The Right Name for The Next Internet Uphill?

I get to see here and there the term '3.0' used in reference to the next internet/technology revolution and somehow it does not feel right to me. I am not sure about this but for me the coined term '2.0' was a metaphor belonging to the concept of software versioning. If the the first internet era where infrastructure was established is called '1.0' implying the first version of a product then what we had recently was a '2.0' where the product, hence the internet, has become more streamlined towards users in terms of services, ease of use and diversity. As in software there are always other versions such as 3.0 and 4.0 etc... but none of these compares to the unique characteristics '1.0' and '2.0' have.

In software usually the 1.0 includes basic infrastructure for enabling core functionality as well as diverse set of features coming from the delirious minds of the developers and maybe potential customers. It is usually very spread out and less focused though very appealing thanks to the creative sense of it. The 2.0 usually is an organized effort to address the needs of specific audiences after getting real feedback and real experience with the 1.0 version. I believe the internet did behave in correspondence with this lifecycle during last two uphills.

If we try to envision the next uphill (assuming there will be one, hopefully) then it can come in two flavors (or more I have to be humble): The '3.0' style where the product/internet becomes less creative and spread out while maturing current capabilities and extending them to address more perfectly different users' needs. The second option is to have a spinoff on the '2.0' product series but actually to create something new which can and should be called '1.0' again.

I personally prefer option 2:)

Everyone focus now on revenues and efficiency as opposed to last year efforts?

End of year is full of posts about how all startups and CEOs (now after the market meltdown) are going to be focused in 2009 on revenues, efficiency, listening to customers, making better products and more...

Just the other day I read Some startup CEOs’ New Years resolutions where most resolutions sound like boiler plated stuff. It is not that I don't appreciate efficiency and revenues, don't get me wrong, but still one has to ask what was the focus last year? I understand the pressures these companies have on them, especially from some of their investors whom would like to see results (what are results when you try to build up something?) but these responses seem to only satisfy the eager investor ears and nothing more.

In general every time the market goes either up or down new mantras are invented - or reused. Usually when the market goes up you are required as an entrepreneur to make sure you see for the long strategic term, have a scalable technology that can cope with potential huge market adoption, build a solid and endurable team and infrastructure as a company as well as others. Actions whom usually take long time, cost a lot and do not bring near term financial results. When the market is down then you should forget about all the nonsense (just previously advised) and now refocus on making money and spending less.

Although the down trend creates suggestions that seem logical, I am not sure new companies being created, if one considers a new company as a growing living entity, can be bent towards people's wishes just based on the current weather or market trend. There are companies or products with no revenues in nature - twitter up to the moment, and there are those who require heavy investment in R&D. Sometimes, changing the strategic goals for venture at a certain point of time can mean end of life. Everyone wants a cash cow eventuallt but how can you milk a calf that was just born? Or grow him with minimal food?

Prepare yourself before you meet VCs

I found this excellent list on "CEO Bloggers Club: US VC Insights"

  1. Do your homework, and contact the right person

  2. Be on time

  3. Tease, don't overwhelm

  4. Know your audience

  5. Create the "Aha" early

  6. Explain the idea by analogy to, or contrast with, older ideas

  7. Go with 13 or less slides

  8. Know what you don't know -- and admit it

  9. Be like Goldilocks, when it comes to competition

  10. Control the meeting -- but be smart about it

State of Innovation in the Blogosphere

I have read the post on "Bubblegeneration - Evil Corporations Only" that discusses some of the and have taken recently. The post discusses the consequences of these moves towards the future of these companies in the evolving surrounding the the enabling / concept. I have to admit that I am not very fluent with the history of the blogsphere but still I wanted to make a newcomer's comment.

I think it is too early to predict what kind of influence specific moves of early movers will have on their specific future as well as on the part blogging will take in our future life (Both as businesses and consumers). The simple reason is the new applications and new profound concepts that are invented and tested every day nowadays in the blogging world, ideas that can change dramatically the way the future surrounding s will look like (As it happens in the emergence stage of new markets that are based on new enabling technological concepts). Few examples are , conversations, information relevancy, s, new journalism and more.

If we examine the tags concept for example then it is really the first time web publishers can easily "highlight" important concepts in their content in a machine readable format. Aggregation and processing of this new type of meta data can lead to many different applications when imagining a futuristic scenario where the majority of the public web content is tagged (It is in a way some kind of a decentralized public taxonomy). We can see what a very basic concept of processing web link ranking has done to the search world. Tags, if adopted by the mainstream can create a new layer of meta data that maps public content in a new fashion - a new type of information that seems to be as a very good ground for innovation.

I think that blogging in general enables people to communicate in ways that didn't exist before and that means simply the creation of new information that didn't exist before. Although the need for businesses to capitalize on their newly built assets is very high and that is understandable in reality's point of view, still it is a totally green field opportunity and I think that it is the right time to explore and test new tools and ideas that can sometimes fall through or may not lead immediately to financial strength but still will contribute tremendously to the evolution of the industry as whole - both in terms of new applications and new s. Although the words "new business models" are risky to pronounce nowadays, still I think that well adopted concepts that bring real value to their users find their way eventually towards a financial reward (i.e. ) and should not necessarily be based on the known way of building a userbase and selling ads. Enforcing this conventional business model (That is the basis for many many successful and respectable businesses) at this stage will limit innovators ability to see other inherent that exist and are waiting to be explored.

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