Post-Facebook – Micro Social Networks

I am on Facebook, but not an active user at all. Also I am reluctant to share too much personal stuff with friends. Then there are long-lost friends and family members popping up with Facebook requests to connect. I do not feel anxious to connect as it would increase more “gossip” time I want to avoid.

But then, Facebook with 900 million users is heading for it’s much-anticipated IPO in 2 weeks. The prediction is that it will be a $100B valuation on the first day of treading. Now people like me who are less enthusiastic users have some alternative choices appearing. Three such companies have started attracting users – Path, FamilyLeaf, and Pair. These micro-social network sites foster “sharing that is intimate by design”.

Let us talk about the anthropologist Robin Dunbar of Oxford University, who has done research on social behavior of humans. He says, social networks are like concentric circles and 150 seems to be the outer bound, meaning that is the effective neurological limit the human brain can handle. In other words, 150 is the maximum number of “friends” and this is called the “Dunbar Number”. Then he says 50 is the number of “trusted friends”, 15 are “good friends”, and 5 are “best friends”.

An average Facebook user in the US has 245 friends, well above the Dunbar number. Then this number gets mixed up with family members, friends, and workplace colleagues. Users sometimes share stuff to certain friends they did not want to.

This has led to the creation of a new start-up called Path by Dave Morin, ex Facebook employee. He says, “Facebook has made socializing on the Internet normal. But now there is an opportunity to return to intimate socializing.” He started with an upper limit of 50 friends per user and last year increased it to 150. It is available only on smart-phones and boasts over one million users already. Its user has an average of 40 friends.

FamilyLeaf is restricted to family members only and even more restrictive. Pair, started by Canadians just connects to one friend, hence the name. It is available only on smart-phones. These two companies were funded by Y Combinator from Silicon valley.

It is interesting to see how the social networking is entering its next phase.

My Brief Bangalore Visit

I just spent 3 days in Bangalore for a board meeting. Staying in south Bangalore around JP Nagar and Jayanagar area feels like the old Bangalore of yesteryears – greenery all around, spring flowers, no high rise apartment buildings, and comparatively more tranquil ambiance. Once I went to north, around Whitefield area, the new Bangalore intimidates you – huge apartment complexes, no trees, chaotic traffic and what not. All over town, one notices the construction of the new metro – the overhangs spoil the beauty of the city. Of course the area around electronic city is all concrete jungle and heavy traffic. The airport is so far away, it takes at least 1.5 to 2 hours in mild traffic to get to the city. Moving around the city is non-trivial and everyone warns you of the rush hours in the morning and evening.

We looked at some new ventures to get services to the people using the Internet – how can goods and services come to people rather than people going to them. Suddenly the value of such services seem so high. One gentleman described how he shopped for a Samsung smart-phone for his son and went to three stores spending over 3 hours, ultimately not finding the model he wanted. He then ordered the phone on Flipkart (Amazon-like Indian company selling books and other goods over the net) and found it to be cheaper and with home delivery in couple of days. Residents of large apartment complexes can use many services via the Internet without going out of their buildings.

Innovation is happening in India, albeit at slower pace than anticipated. There are several hurdles, the most important being the change in mind-set. Young people still go for jobs in the service sector, rather than starting their own company. Investment community has not shown great interest in early start-ups. The IT services giants such as Infosys, Wipro and TCS do not foster innovation as a culture. The success of Flipkart like companies is motivation for more consumer-oriented start-ups. One hopes this will pick up speed, more out of necessity than anything else. The mobile-transaction sector seems to have great promise with the rapid proliferation of mobile devices. As someone said – there are more cell phones than toilets in India.

Traveling to Delhi reminds one of the growth in the aviation sector in the country during last twenty years. It is a common sight to see young people using their smart-phones and tablets on flight. Facebook and Twitter have the largest growth in the Indian market. Given the advantages of cloud computing, India can get into the innovation game with much lower capital expenses. But unlike the silicon valley, the motivation and required infrastructure are still lacking. There is no Stanford or UC-Berkeley that fosters innovation.

For India 2.0 to emerge, it needs much more focus and attention all around.

This is crazy – Facebook acquires Instagram for $1B

This morning, Facebook acquired the little start-up Instagram for $1B. What does Instagarm do if you have not heard about it? This is what the website says - Snap a picture, choose a filter to transform its look and feel, then post to Instagram. Share to Facebook, Twitter, and Tumblr too – it’s as easy as pie. It’s photo sharing, reinvented. In other words, it’s a fast, beautiful and fun way to share your photos with friends and family. Users also can comment on photos and “like” them. Some people describe the app as a visual version of Twitter, where it is heavily used to share photos.

But one billion dollars? Only last week, Instagram closed a round of funding ($50m) at a valuation of $500M. So the investors just doubled their stake! This is very very rare, that the executives were raising money while the acquisition talks were going on.

This is what the Wall Street Journal said:  The deal presents a quick bonanza for the startup, which was founded in the fall of 2010 by two Stanford University graduates and has just over a dozen employees. The company’s software, which is free and until recently only available on the iPhone, allows users to touch up and share photos with followers on Instagram or other social networks, such as Facebook.

Instagram is one of a cohort of young startups that have built products around smartphones and have registered incredibly fast growth in a short period of time. On March 11, Instagram founder and CEO Kevin Systrom gave a keynote talk at the South by Southwest conference in Austin, where he announced that the company’s iPhone app had nearly doubled its number of registered users since December, going from 15 million users to 27 million users.

I guess that is the secret these days – how fast can you grow your user base? Last week, it launched its application on Android and quickly added more users. Now it claims 30m registered users.

I am not sure if there is any monetization (like revenue) yet. But the new world values eyeballs more than dollars. This is also interesting when Facebook is couple of months away from its much-touted IPO, where it aims to raise $10B at a valuation of $100B. Wow. Good for the Stanford kids who founded Instagram and the investors. It’s Disneyland come true.

 

The Fourth Paradigm in Science

We all remember the late Jim Gray, the great computer scientist and Turing award winner. During the last several years of his research work at Microsoft, he focused on data-intensive computing and called it the Fourth Paradigm in scientific discovery. In a special book dedicated to the memory of Jim, Bill Gates commented, “The impact of Jim Gray’s thinking is continuing to get people to think in a new way about how data and software are redefining what it means to do science.”

So what is the Fourth Paradigm? Here is the explanation.

1. Thousand years ago – Experimental Science
– Description of natural phenomena
2. Last few hundred years – Theoretical Science
– Newton’s Laws, Maxwell’s Equations…
3. Last few decades – Computational Science
– Simulation of complex phenomena
4. Today – Data-Intensive Science (unify theory, experiment, & simulation)

Scientists are overwhelmed with data sets from many different sources such as data captured by instruments, data generated by simulations, and data generated by sensor networks.

Jim Gray named it “eScience’ where IT (Information Technology) meets Science. It is the set of tools and technologies to support data federation and collaboration for analysis, data mining, data visualization and exploration, and for scholarly communication and dissemination. He laid out the principles, fondly called Gray’s law of data engineering:

• —Scientific computing is revolving around data
• —Need scale-out solution for analysis
• —Take the analysis to the data!
• —Start with “20 queries”
• —Go from “working to working”

Interestingly, all these apply to the commercial world of Big Data. Only the scientific world has been grappling with these problems longer. Given the proliferation of devices and incoming data in petabytes, the need for tools to do analytics is of the highest priority. No wonder, 2012′s biggest buzzword is Big Data.

We miss you Jim and your pioneering thoughts on DISC (Data Intensive Scalable Computing)!

When your email gets hacked!

Yes, that happened last week to my yahoo mail (ATT) account. On a fine morning, my first instant message from a friend warned me that my email account has been hacked and security compromised. That was followed by several calls and mail messages. The intruder was sending a fake email in my name about me being in distress in London and asking for financial help. Hundreds of my contacts got this mail. Most of them knew such spams and ignored it, but some got alarmed and called to check if everything was ok.

I immediately changed my password and the email was accessible, but to my horror, all the contacts and mail folders were gone! My inbox was empty with no messages. It was like starting from scratch. I tried to call Yahoo and AT&T repeatedly, one sending me to the other in a loop, with no clear answer to recovering my lost contacts and mail folders. AT&T has to rank as the worst in customer support and their outsourced help-desk folks must have the lowest IQ. All they can do is to help you change your password! When I asked Yahoo about recovering the folders and contacts from a backup copy, I was explained very carefully that such things evaporate from the server never to be found again! Are we in 2012 or what? For now, my respect for PC-based mail like Outlook has gone up. 

For web-mails, another idea is to back up the folders and contacts into a cloud-storage product such as Dropbox, so that recovery is possible. I did recover my contacts from this MacBook’s address book (thank God, it was backed up there when I bought my new MacBook Air). Losing several folders with important mails feels like your home has been burglarized.  The agony of changing passwords to many other financial accounts is daunting. Fraud prevention and identity protection have to be the new hot category.

I was also advised that Gmail may be lot safer in that respect and Yahoo mail seems to be frequently subject to hacker attacks. One positive outcome is that I am much more sensitive to security management and alternative backups.

Land of Contradictions

During October I visited India for over two weeks. I think this may be the very first time since I left India 40 years back, that I was there during Diwali, a huge annual celebrations of lights and fire-crackers. The real essence of Diwali is to reflect within ourselves and eliminate all negative qualities (darkness) with the light of knowledge – that we are all one and infinite in our true nature.

During my stay, like every time, I saw India as a land of contradictions. There is abject poverty next to an iPhone user. More expensive cars abound, but roads are clogged like never before, with chaotic traffic all around. Modernity coupled with a lot of superstitions.

I observe two Indias – one that belongs to the youth who are well educated, of the Facebook and Twitter culture, and the other that refuses to grow up, the corrupt politicians, bureaucrats, and con-men. While the second kind uses modern gadgetry, they continue to take bribes, tell lies, and are extremely selfish without any care for the country and its people. Many of these are the rulers of modern India. In recent months, there have been huge scams involving many politicians and bureaucrats (some of them are in jail). But the average Indian shakes his head with a denial that anything will ever change and such corruptions are here to stay.

Upon visiting a place near Delhi called Gurgaon, I am reminded of Sao Paolo in Brazil, a concrete jungle with never-ending construction all around. My friends tell me how their real estate investment has been appreciating over 30% every year over last 7-8 years. It’s more expensive than any place in the USA. Then when I spoke with someone in charge of urban planning for the Government of India, I am told that there is no sewerage or proper power infrastructure planned for this entire area. The building permits were given illegally (thanks to bribes) without consideration for the necessary infrastructure needs.

The industrial scene is still dominated by family-owned businesses with the only exception of Infosys. Young people willing to start a  company are sneered at. So they all prefer to take a job. Costs have gone up and food inflation is very high. Many items seemed much more expensive than here in the US. Labor costs have been going up, making India a less attractive place for outsourcing (skills become the attraction not cost savings).

Like Gandhi said, “India lives in its villages”. I visited several rural areas and nothing much has changed. The technology stuff is yet to reach the interior. The poor is becoming poorer with high inflation. Visiting big cities does not give one a real perspective of the real India. The GDP growth is also slowing down from its heady days of 9% and up.

But it is one of the biggest consumers of cell phones, televisions, and other electronic gadgets. There is an Amazon-like company called Flipkart that ships books to your door step. You can pay by cash on delivery also if you don’t have a credit card for web purchase. The middle class with spendable income is larger than the population of the USA.

One hopes the first India wins eventually, with better efficiency and transparency. That will elevate the poor masses also.

HP CEO Circus

HP just announced a new CEO, Meg Whitman after ousting Leo Apotheker who served less that a year as CEO.  During Leo’s time, HP’s market value went down by 44%. It is hard to believe HP’s market valuation hovers around $50B.

Mark Hurd rescued HP after Carly Fiorina was kicked out by the board. Under her watch, HP made the biggest acquisition (Compaq). Mark cut costs and tightened operations to show better profitability. But innovation for which HP is known from the start, took a back seat. Last year Mark Hurd had to leave for inappropriate conduct. The board quickly appointed Leo Apotheker, a software executive from SAP to lead the company. During last eleven months, much confusion was created. First HP said it will promote the tablet based on Palm’s operating system WebOS. Then 3 months later, the tablet was abandoned. HP also said it will spin-off the PC unit, which caused much confusion to competitor’s delight. Lastly an acquisition of a British software company called Autonomy at highly inflated price of $10B (revenue less than $1B) was heavily criticized by experts. These mis-steps have caused steady decline in revenue and share value. The board was forced to fire Leo Apotheker.

But why Meg Whitman? She joined the HP board after losing to California’s governorship to Jerry Brown. Previously she served as the CEO of eBay, a consumer good exchange company. What makes Meg the right leader for HP at this juncture? She has no enterprise-hardware-software experience. Under Leo, and with the board’s approval, HP has been shifting more towards a software and services company much like IBM and Oracle. It is unclear if Meg Whitman can steer HP towards that goal. Why not Ann Livermore, who served at HP as a senior executive for decades? She definitely understands HP’s core competency and DNA better than any outsider.

Let us watch over next six months if Meg Whitman will be that turn-around leader at HP.

Big Data

The phrase “Big Data” is thrown around a lot these days. What exactly is referred to by this phrase? When I was part of IBM’s DB2 development team, the largest size limit of a DB2 Table was 64 Gigabytes (GB) and I thought who on earth can use this size of a database. Thirty years later, that number looks so small. Now you can buy a 1 Terabyte external drive for less than $100.

Let us start with a level set on the unit of storage. In multiples of 1000, we go from Byte – Kilobyte (KB) – Megabyte (MB) – Gigabyte (GB) – Terabyte (TB) – Petabyte (PB) – Exabyte (EB) – Zettabyte (ZB) – Yottabyte (YB). The last one YB is 10 to the power of 24. A typed page is 2KB. The entire book collection at the US Library of Congress is 15TB. The amount of data processed in one hour at Google is 1PB. The total amount of information in existence is around 1.27ZB. Now you get some context to these numbers.

When we say Big Data, we enter the petabyte space (1000 Terabytes). There is talk of “personal petabyte” to store all your audio, video, and pictures. The cost has come down from $2M in 2002 to $2K in 2012 – real Moore’s law in disk storage technology here. This is not the stuff for current commercial database products such as DB2 or Oracle or SQLServer. Such RDBMS’s handle maximum of 10 to 100 Terabyte sizes. Anything bigger would cause serious performance nightmares. These large databases are mostly in the decision support and data warehousing applications. Walmart is known to have its main retail transaction data warehouse at 100 plus terabytes in a Teradata DBMS system.

Most of the growth in data is in “files”, not in DBMS. Now we see huge volumes of data in social networking sites like Facebook. At the beginning of 2010, Facebook was handling more than 4TB per day (compressed). Now that it has gone to 750M users, that number is at least 50% more. The new Zuck’s (Zuckerberg) law is , “Shared contents double every 24 months”. The question is how to deal with such volumes.

Google pioneered the algorithm called MapReduce to process massive amounts of data via parallel processing through hundreds of thousands of commodity servers. A simple Google query you type, probably touches 700 to 1000 servers to yield that half-second response time. MapReduce was made an open source under the Apache umbrella and was released as Hadoop (by Doug Cutting, former Xerox Parc, Apple, now at Cloudera). Hadoop has a file store called HDFS besides the MapReduce computational process. Hadoop therefore is a “flexible and available architecture for large scale computation and data processing on a network of commodity servers”. What is Redhat to Linux is Cloudera (new VC funded company) to Hadoop.

While Hadoop is becoming a defacto standard for big data, it’s pedigree is batch. For near-real-time analytics, better answers are needed. Yahoo, for example, has a real time analytics project called S4. Several other innovations are happening in this area of realtime or near realtime analytics. Visualization is another hot area for big data.

Big Data offers many opportunities for innovation in next few years.

The Gang of Four

Yesterday at the Wall Street Journal’s “All Things Digital (D9) conference” in Rancho Palos Verdes, Eric Schmidt, the ex-CEO of Google was the first to be interviewed by Walt Mossberg and Kara Swisher. He made some interesting points which made it clear that Facebook is Google’s number 1 competition now. He admitted that he made a mistake by not taking the Facebook threat seriously four years ago.

He talked about the “Gang of Four” meaning – Google, Facebook, Amazon, and Apple (hey, no mention of Microsoft). These four have common characteristics in that they are all exploring platform strategies, and they all focus on a consumer brand with aggressive scaling and globalization as key themes. The unique part of Facebook is their hold over the consumer “identity” by connecting to friends and relatives.

Eric  acknowledged that he and other executives failed to take Facebook seriously four years ago when the social networking site had around 20m active users. Today, with more than 500 million users and growing, Facebook has become a magnet for online advertising, and continues to stunt Google’s financial growth.

Mr Schmidt said that Google, with co-founder Larry Page now at the helm, is pushing to develop more ways to connect people with their friends and family. “I think the industry as a whole would benefit from an alternative [to Facebook],” Mr Schmidt said.

He added that attempts by Google to negotiate a partnership with Facebook were repeatedly turned down, with the networking site preferring to partner up with rival Microsoft, which owns a 1.6pc stake in the company. Google also has ties to Facebook. One of its former executives, Sheryl Sandberg, is Facebook’s chief operating officer.

Facebook poses another problem to Google, as much of the information on Facebook’s website cannot be indexed by Google’s search engine. This restriction threatens to make Google less useful as more people form social circles online which could make it more difficult for it to understand a user’s personal preferences, which benefits advertisers.

Apple’s platform tends to be more proprietary, but it has built a huge franchise of developers for its iPad and iPhone applications. Google’s Android is much more open and is rapidly building a huge developer community for tablet applications. Amazon pioneered  the cloud computing infrastructure and hence provides the elaborate AWS (Amazon Web Services) platform for ts infrastructure.

The lack of mention of Microsoft in the Gang of Four is  interesting, as it lags the consumer brand of internet and seems to move more towards enterprise computing. I am sure the leaders at Microsoft would disagree with this characterization.

Microsoft – The new realities!

How times have changed in our business?  Turn back the clock to ten plus years and remember how powerful Microsoft was. The largest tech company in valuation, growth and what not. However, see this comment by one of the largest hedge fund manager David Einhorn yesterday, asking Steve Ballmer to step down. The fund manager, who made his name warning about Lehman Brothers’ financial health before the investment bank’s collapse, accused Ballmer on Wednesday of being stuck in the past, launching the sharpest attack yet by a high-profile investor against the company’s leadership.

Today,  Apple (second most valued company in the world) and IBM have overtaken Microsoft in value. It is no longer  seen as a dominating force in technology after a failure to capitalize on Internet and mobile markets. It’s stock value has been static for last ten years.

The online services unit, which runs the Bing search engine and MSN Web portal, had a loss of $726 million last quarter and has now lost $7 billion in four years.

“What it boils down to is that Microsoft has had a load of initiatives which haven’t shown traction yet,” said one U.S. equity fund manager at an investment house featuring on the list of Microsoft’s top 40 largest shareholders. “The most recent one is to buy Skype, and the perception on that is that it is over-valued. We won’t know what revenue synergies are until 2,3 years down the road.”

The Skype acquisition is considered highly over-priced and a lot of doubts have been cast on its value-add. It is all about leadership and taking bold bets on a changing technology and market landscape. No one has shown this better than Steve Jobs at Apple, where he keeps creating brand new categories with each product, shaking up the market and bringing huge revenues and profit. Microsoft has to look forward in a non “Windows-Office-centric” lens to fight the forces of a new Apple, Google, and many new entrants.

Mr. John Chambers, are you listening also?