The Interview Question Every Entrepreneur Should Be Asked


The question that unlocks the real key to their success, the deep-rooted, honest answer — and what you should ask yourself.

“What was the most pivotal accident, or unexpected discovery you made towards your success?”

I, as I would imagine every other entrepreneur or successful business person would agree have not been completely successful due to my own conscious decisions. Habits can generate success, yes. Honing your actions day in and day out, and working your ever-living ass off can have its results — yes.

But every entrepreneur could probably attest that something that they did, seemingly unnoticeably, or without much conscious thought led to a gaping chasm of success in their career. There is always a massive amount of hard work that goes into every successful career, but there is almost always some pivotal, cornerstone moment, decision or thought that generates a massive reward. I would wager that 80% of entrepreneurs could level with this question, and the answer would be remarkable.

The good interviewers know how to speak from the level of whom they’re interviewing, they understand their psyche. To get a really humble answer out of somebody, that can really give a beautiful emotional result, you have to ask the question that really plays on their mind.

“Successful” entrepreneurs are nearly always put on a pedestal, and the humble ones understand that they shouldn’t be. They understand that there is something that they did, some way they worked or some decision they made that led to that “success” and they don’t believe they can take all of the credit.

The answer might typically be something seemingly small, but that’s how all major revelations are made — that’s always the kind of change that sparks some landslide, one that is made without much conscious thought — because it’s an “ah hah!” moment, but more like an “oh, duh..” moment. It’s noticing something that should have been there all along, like a final piece to the puzzle, and when it’s slid into place it makes everything fall together.

Most successful people know there was a moment like that in their career, in the product they made, perhaps it was even an employee they hired. They made some really good decision, that they don’t want to take full credit for, almost like a guilty pleasure — if they are humble they will admit it. If they aren’t, it’s a question that should be asked anyways.

So what was your most pivotal accident? Your unexpected discovery? Your “oh duh” moment?

This is the kind of thing we (other entrepreneurs) want to know, it’s the kind of real, humble inspirational insight that we love to hear about businesses.

Everyone started out somewhere, if someone can reach to such heights and attain them, we all can — this is the kind of insight that reminds us of that. That we are all foulable and also all able to attain greatness, even if by accident.

Further Reading

7 Step Process to Repeat Success

 — Do you want to “scale”? You need systems, a process. If Apple’s creativity can be routinized, your success can be (should be) too.

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Bringing business back to the UK


We have set out a long-term economic plan to secure our country’s economic future and our economy is growing. Just this week, the IMF upgraded its growth forecasts for Britain by more than any other G7 country and we have also seen the largest quarterly increase in employment since records began.

The key challenge for politicians and business leaders in Europe is how we make a success of globalisation. For years the West has been written off. People say that we are facing some sort of inevitable decline. They say we can’t make anything anymore.

I don’t believe it has to be this way.

Of course, we cannot be starry eyed about globalisation – it presents huge challenges as our economies and societies try to adapt. But neither should we take this pessimistic view.

Indeed if we make the right decisions, we may also see more of what has been a small but discernible trend where some jobs that were once offshored are coming back from East to West.

In recent years there has been a practice of offshoring where companies move production facilities to low cost countries. But there is now an opportunity for some of those jobs to come back.

A recent survey of small and medium sized businesses found that more than 1 in 10 has brought back to Britain some production in the past year – more than double the proportion sending production in the opposite direction. From food processing to fashion, from cars to computer-makers. It’s not just one sector; it’s across all sectors of the economy.

The food manufacturer Symington’s is moving its factory from China to Leeds.

Hornby the model train manufacturer is bringing some of its manufacturing from India to Britain.

Raspberry Pi computers have shipped production to Wales.

A company I visited yesterday morning – Vent-Axia – has shipped jobs from China to Crawley.

One recent forecast suggests millions of jobs could be available for re-shoring globally. To win these jobs we need to understand what is driving these changes.

Part of the story is about rising costs in the emerging markets, a natural consequence of these economies developing and their people becoming wealthier.

At the same time, there are a number of factors pulling companies back home. Some companies are choosing to locate production nearer to their consumer markets in the West. By shortening their supply chains, they can develop new products and react more quickly to changing consumer demand.

There is no doubt that when it comes to re-shoring in the US, one of the most important factors has been the development of shale gas, which is flooring US energy prices with billions of dollars of energy cost savings predicted over the next decade.

Taken together, I believe these trends have the ability to be a fresh driver of growth in Europe too. I want Britain to seize these opportunities. I think there is a chance for Britain to become the Re-Shore Nation. For years we have had UKTI out there helping our businesses to export and encouraging inward investment. Now I want to give that same dedicated specific support to helping businesses re-shore. So we are setting up a one stop shop to help businesses capitalise on the opportunities of re-shoring.

I am not saying that our economic success depends on winning some kind of race to the bottom nor should we be engaged in one. Getting decent, well-paid jobs at every level is what we are aiming for. And I believe that’s what we can get – and that re-shoring can help. When mobile network company EE recently decided to move 300 call centre jobs from the Philippines to Northern Ireland, they didn’t do it because wages were lower. They did it because productivity was higher and because the company decided it would be more successful by having a more local call centre for its customers. And as they make this move, they aren’t just creating jobs for telephone operators. They are creating jobs for managers, lawyers and technicians too.

Right now, economies in Europe have a unique opportunity to accelerate this new trend of jobs coming back home. And we should be confident that we can do this. As we do so, we should never forget one of our most important strengths. We should never undersell the core values of our liberal democracy; the rule of law, the freedom of speech and freedom of the media, property rights and accountable institutions, all vital foundations for long-term stability and commercial success.

But for re-shoring to happen we need to build on those foundations. That means settling once and for all two key arguments that risk undermining our competitiveness.

First, on the overall business environment. We need an unashamedly pro-business regulatory environment – with labour market flexibility, low jobs taxes and a willingness to pave the way for new business and new business models. We have to maintain the flexibility for companies to grow and expand.

And second, on the need for cheap and predictable sources of energy. Yes, we need renewables – these are a vital part of our future. We need nuclear as part of that energy mix too. But we also need to explore the opportunity represented by shale gas. Now I understand the concerns some people have. We need the right regulations and governments need to reassure people that nothing would go ahead if there were environmental dangers. But if this is done properly, shale gas can actually have lower emissions than imported gas.

The Confederation of British Industry and Business Europe are coming together to launch a “Blueprint for Industrial Competitiveness”. Their message is clear. Act now to seize the opportunities of re-shoring. Deal with our debts. Roll back the unnecessary regulation. And embrace the opportunities of shale gas.

Business is making the case. If we act now we can ensure our businesses, our peoples and our societies can benefit from the next phases of globalisation. The security, stability and peace of mind that those we serve yearn for can only be delivered by facing the difficult choices. We must not fail them.

Posted by:David Cameron

PricePanda Raises $3M From German Retail Group Tengelmann


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PricePanda, the Rocket Internet-backed price comparison site, has raised $3 million in new funding from the German retail major Tengelmann Group. This new funding will be used to expand PricePanda in other South Asian markets, the company said.

Rocket Internet and AB Kinnevik are among existing investors of PricePanda.

E-commerce is booming in Asia, especially with more first time Internet users shopping on their mobile phones. Many of them are increasingly turning to sites such as PricePanda that helps them compare prices of different products available on the e-commerce sites. Since it was launched in 2012, PricePanda has redirected 1 million users to buy online from other partner sites.

Earlier this month, when PricePanda announced redirecting 1 million users to partner sites, the startup’s co-founder Christian Schiller said the growth of mobile commerce in South East Asia was the key.

“This year, we can expect to scale rapidly and reach further milestones. And converting 1M people to our partner shops is just the beginning,” Schiller had said.

“One and a half years later we can say: we made it. With more than 70,000 products and 1M people redirected to other stores’ websites, we have already gained a strong competitive edge in South East Asia,” Schiller added.

PricePanda did not share the total funding received before raising the latest capital from Tengelmann. But according to this story in TechCrunch, PricaPanda was rumored to be backed with $12.8 million when it was launched in 2012.

http://techcrunch.com/2014/01/26/pricepanda-raises-3m-from-german-retail-group-tengelmann/

Sense And Nonsense Of Davos: Do We Really Need A World Economic Forum?


“The Reshaping of the World: Consequences for Society, Politics and Business” was the thematic focus of this year´s World Economic Forum Annual Meeting which ended in the Swiss resort town Davos a couple of days ago.

No doubt, it is the premiere gathering for elite businesspeople, leaders, well-known academics, celebrities, and international bureaucrats. Still, I´m wondering more than ever if the world really needs such a giant networking event where 2,500 plus so-called leaders gather to possibly visit one or more of 250 sessions to discuss the world´s problems. Don´t there exist more effective and inclusive ways in today´s world?

Founded in 1971 by German-born Klaus Schwab, then Professor of Business Policy at the University of Geneva, over the last 20 years the Forum has evolved beyond business to a global sphere, stipulating that political, business and civil society leaders must work together to address the challenges of a globally interconnected world.

Participation in the Annual Meeting is by invitation only for CEOs of the Forum´s 1,000 member companies (typically global enterprises with more than five billion dollars in turnover; and paying membership fees), political leaders (usually from the G20 countries), heads of international organizations, technology pioneers, spiritual and cultural leaders, and some more carefully chosen ones.

Before coming across as too sceptical, let´s have a look at the 2014 highlights of the Forum:

  • Hassan Rouhani, President of the Islamic Republic of Iran, delivered a speech that combined themes of conciliation, moderation and investment
  • US Secretary of State John Kerry spoke about diplomacy in the Middle East
  • Israel´s President Shimon Peres accepted an award
  • Bono talked capitalism (the only Davos Man whose tough love other delegates crave)
  • UN Secretary-General Ban Ki-moon and former US Vice President Al Gore discussed climate change
  • German Finance Minister Wolfgang Schaeuble had harsh criticism for EU Economic and Monetary Affairs
  • International Monetary Fund Managing Director Christine Lagarde said that euro zone inflation is “way below target” making deflation a potential risk
  • Brazil’s President Dilma Rousseff brushed off Soccer World Cup worries
  • Japanese Primer Minister Shinzo Abe took the chance to remind everyone that Asia has become the growth engine of the world
  • American actress Goldie Hawn explained if she would return to acting or not
  • Mexico’s president expressed hopes to expand federal presence to combat drug cartel violence Audi´s CEO announced that the company would invest €22 billion in the coming years in technology and new innovations (especially driverless cars)
  • London mayor Boris Johnson flew in to Davos in search of investors. By the way, it is the same Boris Johnson who once had dubbed the Forum as “a constellation of egos in an orgy of adulation.“

So, what exactly were the precise topic and specific action points? Hm…

Don´t get me wrong. I think it´s excellent and permanently needed looking at the causes of global instability, climate change, growing rates of youth unemployment, poverty, nationalism, privacy concerns and other pressing problems.

In addition, I also like the ambivalence of such gatherings, i.e. influential people discussing and trying to resolve the world´s issues (among themselves). And by doing so becoming more visible as leaders. Certainly the Forum offers its participants a great opportunity to meet and learn from a huge variety of personalities, encounters, and workshops within a trustful environment.

Saying that, the sheer size and ambitious scope of the event makes you wonder how thoroughly topics can be worked upon. Instead we´re hearing a lot of populistic speeches, bold promises, and not seeing approachability, transparency, and actions. Personally, I can´t recall any major and sucessfully implemented initiative coming from the Forum which would have had e.g. a positive impact on the world´s prosperity. And whilst those leaders at the Forum might exchange rationally and emotionally and – sometimes – during fabulous parties, the world’s elite have twisted laws in their own favour, undermined democracy and created inequality across the globe.

What do YOU think about the Forum? Which other ways do YOU see to substantially resolve the world´s most pressing problems and challenges?

Andreas von der Heydt is the Country Manager of Amazon BuyVIP in Germany. Before that he hold senior management positions at L’Oréal. He´s a leadership expert, executive coach and NLP master. He also founded Consumer Goods Club. Andreas worked and lived in Europe, the U.S. and Asia.

Please click ‘Follow’ if you would like to hear more from Andreas in the future. Feel free to also connect via his LinkedIn Groups Coaching or Consumer Goods, or via Twitter and Facebook.

Other recent posts by Andreas von der Heydt:
How Apple, Disney & Co. Delight Customers
What The Best Brands Will Do In 2014
What The Fitch Is Going On At Abercrombie
The 17 Qualities and Views of Great Leaders
The Art of Breeding Intrapreneurs
The Most Underestimated Skill of A Great Leader
The Power Of Being A Realistic Optimist
Are Great Leaders Great Coaches?

Photo: istock

Posted by:Andreas von der Heydt

Google Acquires Artificial Intelligence Startup DeepMind For $400M


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Google will pay $400 million to buy London-based artificial intelligence company DeepMind. The deal, but not the exact price, was confirmed to Re/code by Google. We’ve emailed Google and DeepMind for comment.

DeepMind was founded by neuroscientist Demis Hassabis, a former child prodigy in chess, Skype and Kazaa developer Jaan Tallin, and researcher Shane Legg.

This is the latest move by Google to fill out its roster of artificial intelligence experts, and the acquisition was reportedly led by Google CEO Larry Page. In December 2012, Google hired inventor, entrepreneur, author, and futurist Ray Kurzweil as a director of engineering focused on machine learning and language processing. Kurzweil has said that he wants to build a search engine so advanced that it could act like a “cybernetic friend.”

Google’s hiring of Deepmind will help it compete against other major tech companies as they all try to gain business advantages by focusing on deep learning. For example, Facebook recently hired NYU professor Yann LeCunn to lead its new artificial intelligence lab, IBM’s Watson supercomputer is now working on deep learning, and Yahoo recently acquired photo analysis startup LookFlow to lead its new deep learning group.

DeepMind’s site currently only has a landing page, which says that it is “a cutting edge artificial intelligence company” to build general-purpose learning algorithms for simulations, e-commerce, and games.

In 2012, Carnegie Mellon professor Larry Wasserman wrote that the “startup is trying to build a system that thinks. This was the original dream of AI. As Shane [Legg] explained to me, there has been huge progress in both neuroscience and ML and their goal is to bring these things together. I thought it sounded crazy until he told me the list of famous billionaires who have invested in the company.”

Deepmind was started about three years ago, according to LinkedIn profiles. Re/code reports that Founders Fund and Horizons Ventures are both major investors in the startup.

http://techcrunch.com/2014/01/26/google-deepmind/

The End of Facebook


 

 

 

 

 

 

 

 

2008 in historical digital terms feels like eons ago. That was the year when I first began writing an essay about the Facebook ‘Like’ button; a feel-good-click-once-and-move-on action. I published it to a blog I ran at Nemo Design in 2009, and posted an updated version to the NORTH blog in 2010. It is titled Facebook Likes Are not Engaging.

Looking back at it now, I realize the premise of my essay was simple; clicking a button to show your followers a brand preference was a shallow action. It merely formed a weak link.

I was somewhat prescient when I wrote: Facebook may well be around for some time, in one form or another, yet brands and marketers should watch closely the actions it takes, and those of its users, for hints of when it takes a step in the wrong direction one too many times. Or loses its relevance.

There is nothing new about web users abandoning online social networks (OSNs) as we have seen with MySpace. Relevance though, is extremely important to the OSN user – how does Facebook remain relevant to more then one billion users?

Now we learn that as Facebook approaches the end of its first decade, researchers at Princeton University have released a paper that forecasts it will lose 80% of its peak user base within the next three years.

We have heard of the coming demise of Facebook before, but what is new about the Princeton paper is that the paper’s authors used epidemiological models to explain user adoption and abandonment of OSNs. It’s an interesting approach. For instance they model the adoption and abandonment in OSN’s alongside diseases where there are infection and recovery phases. In their paper they consider adoption as analogous to infection and abandonment as analogous to recovery:

We modify the traditional SIR model of disease spread by incorporating infectious recovery dynamics such that contact
between a recovered and infected member of the population is required for recovery. The proposed infectious recovery SIR model (irSIR model) is validated using publicly available Google search query data for “MySpace” as a case study of an OSN that has exhibited both adoption and abandonment phases. The irSIR model is then applied to search query data for “Facebook,” which is just beginning to show the onset of an abandonment phase.

Extrapolating the best fit model into the future suggests that Facebook will undergo a rapid decline in the coming years, losing 80% of its peak user base between 2015 and 2017.

By 2017 then we may see Facebook turning into a different company. I say that because even if it is abandoned by a very large portion of its users it still holds an enormous amount of data willingly provided to the company by those users. What those datum points show will be of immense value in the future.

Other OSNs have changed their colors in the past. Friendster is one example. Friendster, formed in 2002, was considered one of the original OSNs. In 2003 it turned down a $30 million offer from Google a move that was considered a mistake at the time. It was acquired in 2009 and is now a social gaming site.

I wrote here last week about complexity theory and how the science behind it should be studied by social media community managers and the owners of online music streaming services, to help them understand the behavior of their users.

This new study shows a lot of parallels to complexity theory and complex systems science. Epidemics, mass migrations, infection and recovery, complex systems and structures, are all intertwined in nature. As the Princeton paper shows, when certain user actions are extrapolated into OSNs or into music streaming services with many commonalities, we begin to understand how online systems are not immune to “infectious diseases.”

The only thing that is hard to predict is human behavior.

Image: Reuters

Posted by:Dave Allen

Two sides to every story


The world needs a new way of publishing and distributing longform journalism. We’re still stuck in the era in which the default mindset is that the “bundle” is the best way to share good stories with other people. Magazines, newspapers, homepages, blogs — these concepts make less sense than ever. Today, stories come to us in an ever diversifying number of ways: through email, Twitter, Facebook, community sites, newsletters, chat apps.

Stories that find us in these ways are necessarily dislocated from some of the context that would surround them in their “home” environments. They must therefore be strong enough to stand on their own, with nothing but the recommender’s credibility, the author’s byline, and the publisher’s imprimatur as a first-glance indicator of quality.

A couple of years ago, I suggested that the future of magazine journalism should look like Spotify. I proposed a platform that collects and distributes stories, a centralized, personalized, and socialized reading hub for anyone interested in journalism. Readability, which now has a follow graph and curated recommendations, has come pretty close to that vision, to the point where it has become like a Twitter for longform journalism.

But in this world, it’s not just the concept of the bundle that has to evolve — it’s also the way the stories themselves are published.

We find ourselves in a situation in which traditional models, usually involving a mix of advertising, subscriptions, and events, can no longer be relied upon to sustain quality, independent journalism. In particular, if stories are coming to us as isolated units, publishers face even more challenges in making their pursuits profitable.

The answer, I think, is that publishers need to shift their emphasis to individual story units. The stories themselves must become platforms. Once the story is realized as the central force for reader attention, you can build an experience around it. That experience might include ads, but it might also include software applications, shopping opportunities, financial transactions, and donations.

How?

My idea is that each story should be published on a HTML5 “card” that has two sides. On the front side of that card would be the story itself, with no bells and whistles. It would just be headline, byline, text, and perhaps a large image. That stripped-back experience would encourage uninterrupted reading, which I think is an undervalued quality.

Recently, we’ve all been going crazy Snow Falling the crap out of everything while forgetting that the best reading experience is one that lets you get lost in a narrative; one that induces a state of flow. If you don’t believe that an uninterrupted, plain-text reading environment is optimal, I suggest you pick up a book. Those things are essentially a few hundred pages of nothing but text. And yet, they seem to have done alright over the years.

However, as a reader, I love extra context when I get to the end of a story. If I’ve been moved by a piece of journalism, I’ll often look up the Wikipedia entry for the story’s subject or the chief protagonist. I’ll go to YouTube to see footage of the event in question. I’ll look for other work by the same author, and perhaps even buy one of her books. I might even listen to a podcast interview with the author to find out what she was thinking while she wrote the story. And sometimes, moved by the protagonist’s plight, I’ll donate money to the cause.

All this stuff could live on the back side of the story card. Once you’re done reading the story, you could flip it over, like a record, to find what’s on the other side. So, on the back of a story about a group of hippy surfers who ran a drug-smuggling operation in the 1970s, you might find: a Wikipedia excerpt about the kingpin; a Soundcloud embed of an interview with the author; an Amazon ad for a book written by the same guy; an image gallery showing what the surfers looked like then and now; a Reddit thread that presents a discussion of the crime; and a link to a petition to legalize marijuana. There are other possibilities to include, too, including tweets, Instagram photos, videos, documents, and whatever else you can think of. Each of these elements could themselves exist in cards, all of which could be expandable.

This back side of the card would be the platform part of the product, and it would lend itself to money-making in several ways. For a start, it could host straight-up ads, but that would be the least interesting path. Instead, there could be buttons for donations, to either the author or the cause. There could be cards that show off books, movies, tickets, flights, hotels, allowing purchases to be made right there on the back of the story.

A publisher might also choose to open the back side of the card to third-party developers who might build relevant widgets or apps. Another possibility is that the entire back side of the card could be given over to institutions or schools as a template, so they can plug in specific elements that are relevant to whatever story is on the front side. For example, a teacher might put in a quiz relevant to whatever story they’re teaching a class on. And all of these elements could be dynamic, so content could be added and removed as a story evolves over time.

What we’d be left with is a publishing technology that respects the primacy of the narrative while fully taking advantage of the distributive advantages and rich media potential of the web. It would be a reading experience designed for today, not one forced to fit the economic parameters of yesterday’s media business.

Would it be more profitable than the status quo? Ultimately, maybe not. But it would be more pleasurable. And now, as they watch their newsrooms shrink and their subscriptions shrivel, is the perfect time for media organizations to experiment. They might as well try it before someone else does.

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Funny, I Don’t Feel All That Fatigued With Twitter


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In a recent piece in The New York Times, Jenna Wortham says she’s becoming fatigued with Twitter. Basically, she uses all the Twitter discussion around Justin Bieber’s arrest as a springboard for a broader argument about how the service has become less about finding useful, relevant information and more about competing for attention.

As you’d expect, the piece saw its share of praise and criticism. The most common critique seems to be some variant of, “Dude, just unfollow people who are annoying,” but as Wortham and others have noted, that’s easier said than done, because it can be embarrassing or awkward to unfollow someone, even if you’re really tired of their tweets.

There’s another reason why the “just unfollow” argument falls a little flat for me. Wortham is, I think, careful to use the word “we,” particularly in the article’s best passage:

It feels as if we’re all trying to be a cheeky guest on a late-night show, a reality show contestant or a toddler with a tiara on Twitter — delivering the performance of a lifetime, via a hot, rapid-fire string of commentary, GIFs or responses that help us stand out from the crowd. We’re sold on the idea that if we’re good enough, it could be our ticket to success, landing us a fleeting spot in a round-up on BuzzFeed or The Huffington Post, or at best, a writing gig. But more often than not, it translates to standing on a collective soapbox, elbowing each other for room, in the hopes of being credited with delivering the cleverest one-liner or reaction. Much of that ensues in hilarity. Perhaps an equal amount ensues in exhaustion.

In the ensuing discussion, “we” seemed to get transformed into “other people” — sure, Jenna, other people can be annoying on Twitter, so why don’t you unfollow them? The default assumption that it must be other people who are Doing It Wrong on Twitter is … interesting.

Personally, I found the article valuable because I immediately recognized the behavior that Wortham was talking about, and not just in other people, but in myself. I suspect that my default mode on seeing a broader conversation on Twitter is, “How can I say something funny so that everyone will talk about meeeeeee?” (Note also that Wortham isn’t condemning this behavior outright — she admits that it can be entertaining, but also exhausting.)

So as a description of personal experience, I found Wortham’s words to be a valuable reminder to try, at least, to be less self-promotional and less self-absorbed.

On the other hand, as a broader description of “Twitter’s Achilles’ heel” I found the article to be less convincing. As others have noted, Wortham is a reporter who follows nearly 4,000 people and has more than 500,000 followers, so her experience is almost certainly atypical. She actually addresses this in the article itself, arguing, “I think the number of followers you have is often irrelevant,” but I’m dubious. With my own much smaller Twitter following, the dynamics changed as my audience grew, even if the change wasn’t quite as dramatic as I’d expected, and ditto the amount of noise as I started to follow more people.

Yes, Wortham is absolutely making some very interesting anecdotal points, but her piece suffers in my eyes from trying to transform those points into a Big Idea. Has Twitter become less informative and more self-promotional? In my experience, it has always been a mix, and I’m not sure that mix has changed all that significantly. But again, we’re just mashing random pieces of personal experience together and pretending it means something about the company as a whole. That way lies madness. (And by “madness” I mean “asking teenagers what they think about Facebook“.)

But hey, since we’re sharing about anecdotal evidence, I will offer this: Where did I first hear about Wortham’s article? And where did I first see most of the ideas, pro and con, expressed in this post? On Twitter, of course.

[image via Flickr/Twitter]

http://techcrunch.com/2014/01/26/twitter-fatigue-what-twitter-fatigue/

Reverse Network Effects: How internet startups lose value with greater traction


The challenges of scaling online communities and marketplaces

Network effects are the most exciting aspect of building an internet startup.

Most online platforms have very little or no value of their own. The value is created by users and as more users join in, more value is created, which over time sets up a positive feedback loop. Hence, the more an online platform scales, the more valuable it becomes. YouTube is more useful with more videos, Facebook is more useful when more of your friends use it, eBay is more useful to buyers when there are more sellers, and vice versa.

However, as I’ve written earlier, Reverse Network Effects may sometimes set in with scale i.e. online networks may become less useful as they scale. I do not imply that all online platforms lose value as they grow. However, in the absence of robust curation, online platforms may lose value as they grow.

Under what conditions do online platforms lose value as they scale?

Since the participants on an online platform create value, an online platform loses value with scale when the participants it allows in OR the information/value that they create are not curated appropriately. Poor curation leads to greater noise which makes the platform less useful.

Let’s look at a few factors that increase noise and drive down the value of online platforms as they scale.

#1 – LESS SOPHISTICATED PARTICIPANTS ENTERING THE SYSTEM DILUTE VALUE

Every online platform is as valuable as the participants it connects. Quora, a popular Q&A site found rapid adoption in Silicon Valley as it connected highly successful early tech adopters, who were experts in their field. Quora’s strong curation mechanism also ensures that the best answers get showcased invariably.

The Quora community has created a deep repository of knowledge, thanks to these experts. However, as Quora scales, many worry that less sophisticated users, entering the system, may increase noise leading to a rapid depletion of value for existing users.

This starts a reverse feedback loop because current experts start abandoning the system owing to the poor quality, which leads to further loss of quality, which in turn leads to other experts leaving. If a loop like that is set into motion, the quality of interactions and of the content created can witness an exponential drop.

We’ve seen this reverse feedback loop work out in the case of ChatRoulette, a network of video chatters that connects you with anyone across the world at random. Since ChatRoulette had absolutely no checks and balances to screen users, it ended up with The Naked Hairy Men Problem. As the network grew, unpoliced, an increasing number of naked hairy men joined in leading to an exodus of other users. As legitimate users fled, the relative noise on the platform increased further leading to a feedback loop that saw the site lose traction at nearly the skyrocketing pace that it had gained it.

Solution: There are two solutions: Either choose who gets access to the platform (Curation of access) or scale the ability of the system to curate content as the system grows larger (Curation of contributions). The former is easier to implement. Quibb, in fact, has built a very high signal community through manual curation. Dating sites like CupidCurated do this too, by curating the men who get access to the site. Platforms like Quora, which do not curate access need extremely sophisticated curation of contributions to scale well and not set the reverse feedback loop in motion.

#2 – INCREASE IN ABUSE WITH SCALE

Wikipedia demonstrates that any online platform is open to abuse. Incorrect Wikipedia articles demonstrate the vulnerability of a user-created platform as much as the volume of the correct ones demonstrate the strength.

The problem of incorrect articles (noise) increases as networks scale as policing these platforms becomes more complicated with scale. In a world of community-created knowledge, who gets access to the community ultimately impacts the knowledge that is created.

Solution: Few systems have succeeded in scaling quality. Wikipedia is a rare example. Monitoring and user privileges were scaled slowly at Wikipedia. This ensures that moderators have a track record of desirable behavior. However, few have replicated Wikipedia’s success which shows how difficult it is to scale such systems.

#3 – ONLINE COMMUNITIES TEND TO BECOME ECHO CHAMBERS OVER TIME

When exposed to a lot of information, we are likely to read what we agree with. Online systems use filters to personalize the information served to each participant. These filters are often created based on the participant’s past behavior. Over time, this personalization can lead to inadvertent reinforcement of what we already believe in.

YouTube, for example, serves us videos based on what we’ve viewed in the past. Facebook’s news feed works on similar parameters.

As a system scales, this over-personalization can lead to a constant firehose of information that is catered to what we already believe in, not what we need. This can prevent those seeking a solution, from being served a solution that is radically different (and effective) and may over-serve obvious solutions.

Solution: The solution is technological and requires constant tweaking of the algorithms that match information to participants, to prevent the formation of an echo chamber.

#4 – A CLOSED COMMUNITY CAN DEVELOP A HIVE MIND

Another problem that stems from reinforcement is the Hive mind. If certain forms of behavior are encouraged on a platform during the early days and certain others are discouraged, it runs the risk of leading to a Hive mind as the network scales where certain behaviors get reinforced and established as the desirable behaviors. Reddit is an online network, whose community is often criticized for having a Hive mind.

This can lead to an online community getting too inward and insular (and, hence, of lower overall value) and failing to incorporate the value that diverse participants bring.

Solution: Curation of online behavior is very important during the early days of the community. Under-curation can lead to noise and over-curation can lead to selection bias, leading to a hive mind. Curation needs to be appropriately balanced.

#5 – LOWER QUALITY THROUGH INADVERTENT ACCEPTANCE

On the internet, value is often conferred by community. E.g. The best answer to a question on Quora is decided by the community through upvotes and downvotes. Value is dynamic and constantly evolving, best exemplified by a Wikipedia article which is in constant flux.

For all its advantages, this dynamic and community-shaped creation of value is also open to inadvertent acceptance. If enough number of participants accept something as true, it becomes the new truth, even if it isn’t. The answer that bubbles to the top and the latest version of an article are all decided by the community, and are a function of the quality of the community.

Solution: This problem is avoided by curating the community through policing who joins the network. Some dating sites curate the men joining the network to mitigate the common problem of women being stalked. Also, platforms like Wikipedia confer greater authority and curation power on power users. Hence, curation at the point of access may be required for some systems.

#6 – CHALLENGE OF CONFERRING AUTHORITY

Consider an online platform that enables sharing of knowledge globally and helps those looking for an answer to connect with those who have the answer. The best contributions don’t always come from existing experts, neither do the existing experts understand the context of needs in remote areas. Hence, micro-experts are needed to deal with the long tail of problems.

The creation of new niche experts, requires a curation model that effectively separates the best from the rest. Creation of experts, traditionally, has been done on the basis of achievements or affiliations with certain trusted bodies. Creating that trust on an online platform is extremely important if one is to create new experts.

This curation of micro-experts is non-trivial. Not only are they more in number than any team of traditional experts, they need to be curated by the community for the model to be scalable. Quora, for example, creates new experts, largely relying on community voting.

As the network scales, it often finds it increasingly difficult to identify new experts as community sentiment tends to be biased towards early participants. Early users on Quora and Twitter tend to have orders of magnitude higher followers than those who joined in late, not only because they had more time, but also because:

  1. Follower count follows a rich-becomes- richer dynamic and those with higher counts attract even more followers
  2. The platform, itself, tends to feature the users with greater social proof and recommends new users to follow them.

The community’s power to curate depends on two aspects:

  1. Quality of community members
  2. Strength of curation tools

#7 – SCALING TRUST AND AUTHORITY MANAGEMENT SYSTEMS MORE CHALLENGING WITH SCALE

Every platform has its own way of building authority and/or trust. Ebay and AirBnB do it through ratings, Wikipedia through edit wars, Quora through votes. A network needs a fool-proof model for building participant authority to ensure that the right opinions are served for consumption.

However, as a network scales, trust and authority systems become more difficult to scale as well. It becomes much more difficult to identify the corner cases.

The systems that survive are the ones that scale. For every Reddit and Quora out there, there are a thousand attempts that gained traction but failed to scale because they failed at curation.

#8 – THE LONG TAIL ABUSE

For all its efforts at scaling, Wikipedia successfully controls the quality of only the top 20% articles that lead to 80% views. As any platform scales, curation methods tend to work very effectively for the ‘Head’ but not for the long tail of user contributions. This runs the risk of long tail abuse. While it can be argued that the majority doesn’t get affected by such abuse, the minority that does get affected increases as the network scales and as the curation problem itself gets exacerbated.

In summary, appropriate quality controls are required to control production and appropriate filters are required to control consumption. And both these components need to scale as the network scales.


This post captures ideas from my upcoming book “Platform Thinking”. More on my blog. You can sign up for a FREE digital copy of that book here.

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The Bitcoin crowd needs a new strategy


Today there are a number of conflicting news angles on the Bitcoin phenomenon, and everyone is talking about it, but I think they are talking about the wrong thing. On one hand we see Wells Fargo coming out with tacit support for Bitcoin, on the other hand JP Morgan Chase is canning it. We see news that theWorld’s first Bitcoin ATM (http://blog.al.com/wire/2014/01/worlds_first_bitcoin_atm_proce.html) has processed $1m in transactions around Bitcoin in December 2013. You have the NY Times proclaiming that “Bitcoin is Not Yet Ready For the Real World” (http://dealbook.nytimes.com/2014/01/24/bitcoin-is-not-yet-ready-for-the-real-world/?_php=true&_type=blogs&_r=0).

However, despite all of this confusion the followers or supporters of Bitcoin are some of the most committed individuals you will ever meet, and they span the globe and the most diverse aggregate demographics, gender and technical competencies you’re likely to see in a group like this. They are online, empowered and passionate for Bitcoin’s success. The problem is that right now the data is telling us that they are focusing on the wrong problem. Significantly the conversation within many groups on Reddit, Facebook Twitter, etc about Bitcoin tends not to be as much about acceptance of the ‘currency’ in the retail commerce environment, as much as what value Bitcoin will reach and the argument of why you should be buying more. You don’t need to tell participants in these discussions to buy Bitcoin, almost all of them have — the issue is how to get the public to start using or demanding the use of it as a alternate currency that will push it beyond a niche asset class for speculative investment.

What Google Trend data tells us is that geographically, despite Bitcoin’s incredible cross-border suitability as a currency for frictionless commerce, awareness of Bitcoin is extremely limited. While the US, Canada, Australia and Russia show big awarness, and other digitally competent economies like Hong Kong, Estonia (one of the fastest growing adopters of internet and smartphone banking in Europe), Netherlands, etc are talking Bitcoin, global awareness is still low. However, more troubling for the community of Bitcoin enthusiasts is that we’re focusing on the wrong messages or discussion when it comes to changing that dynamic.

The overwhelming data suggests that the crowd is more focused on making money out of trading and mining Bitcoin than actually raising awareness of Bitcoin as a currency, or allowing Bitcoin to be used more broadly in day-to-day commerce.

If you want to create an alternative currency that is used by everyday Joes, then talking up the value of Bitcoin, arguing that it will get to $1m in value in 3 years, or that the Winklevoss twins are investing in Bitcoin exchanges won’t get you there.

We need people to buy Bitcoin for the purpose of buying other stuff. That’s the problem Bitcoin enthusiasts need to solve if you love Bitcoin and want to see a real alternative, digital, crypto-currency gain market acceptance.

Stop talking about what value Bitcoin has in the market (or will have), or the size and volume of the trading market, and start creating a currency that has value as a utility in the market.

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