Thought Starters: venture capital’s global hubs, blockchains and Facebook’s ups and downs and Amazon as more than just a retailer (and we’re not talking about AWS)

Thought Starters provides me with a chance to look through the articles, research and opinion pieces I’ve read, highlighting interesting trends, developments and changes in the world you and I live in. This edition looks at the global hubs for venture capital, blockchains ups and downs, Facebook’s success and challenges and Amazon’s move from retailer to service provider among other trends and insights.

A profile of Martin Prosperity Institute points to the dominance the US has in venture capital with London ranking 7th among metropolitan centres:

Venture capital investment by metropolitan area

There’s been a lot of talk of the potential for blockchain technologies to upend the incumbents in the financial services sector, but the major banks are beginning to make themselves known. Tanaya Macheel profiles different blockchain based initiatives by some of the major American banks which includes attempts to patent innovations in a sector previously associated closely with open source technology:

Blocking off the Blockchain

Keeping on the blockchain theme, Timothy B. Lee profiles the growing pains that Bitcoin is experiencing as growing demand challenges the infrastructure of the technology as it currently stands:

The Bitcoin community is currently locked in a debate about whether to follow that same trajectory: whether to grow quickly at the cost of possibly becoming more centralized. The difference is that the way the Bitcoin network works means that early adopters have an effective veto over further growth. If a critical mass of Bitcoin stakeholders refuse to accept larger blocks, the Bitcoin network could be stuck with its current, limited capacity for years to come.

WhatsApp has done a great job of expanding its reach which has seen it recently pass the 1 billion user maker despite having only 57 engineers. What the mobile messaging platform has been less successful in doing is monetising its user base compared to Line and WeChat as Terence Lee reports although there are indications this is likely to change:

WhatsApp Statistics

Amazon is one organisation that has done a great job of monetising its platform, moving from a bare bones online retailer to a dominant player in retail providing a range of ecommerce related services to third parties (see illustration below). This ties in nicely with a recent Jan Dawson blog post where he stresses the need for providers to absorb as many activities as possible (eg Facebook) or alternatively be on as many domains as possible (eg Uber):

Amazon ecommerce value chain

An interesting recent development in Amazon’s strategy is its experiment with the opening of a physical store in Seattle with reports that they plan on rolling out 300 to 400 stores across the US in the future.

Tal Shachar with Liam Boluk point to the growing glut of content that consumers face across a range of media and with this comes the growing issue of discovery and opportunities for content curation. Sentiments further echoed in a recent post by Benedict Evans:

WeAreSocial have recently published the Digital in 2016 report, providing a range of digital benchmark statistics including internet, mobile internet, social media and mobile app usage along with a range of other indicators. Well worth bookmarking for future use:

It’s financial results season in the US with recent announcements from Apple, Alphabet and Facebook. One of the interesting points to emerge from Facebook’s results is how well the company has transitioned to a mobile first company since 2010 as Alice Truong reports:

Facebook's mobile users as percentage of all active users

Where Facebook has been less successful is in the launch of its Free Basics offering in India. The service looks to offer free access to limited selection of mobile optimised content to mobile users but has come into fierce opposition from net neutrality campaigners in India according to Lauren Smiley’s report:

Free Basics only serves a tiny Facebook-endorsed portion of the Internet to users for free — a “walled garden” as opponents call it — while users must pay to access anything else on the web. As Backchannel has been chronicling for some time, they see it as a violation of the principle of net neutrality, that all things on the internet should be treated the same to preserve competition: no faster data connection for deep-pocketed companies, no charging consumers for some sites but not others, no cordoning off slices of the internet by private companies.

Sometimes the internet doesn’t prove quite as virtual as you’d imagine. Dan Wang profiles the physical delivery of data to servers around the world by content delivery networks (CDNs) as a means of speeding up the delivery of content to internet users in a curious mix of the physical and the virtual:

So instead of using the Internet to transfer big pieces of data, companies have turned to the global freight network. High-traffic websites copy data onto hard drives (which are no bigger than what you’d use to back up your laptop), pack them into cardboard boxes, and then fly them around the world. They can be in a box in the belly of a passenger plane, right beside cartons full of iPhones.

Business Insider profiles the digital habits of American teens. Whilst the sample size of 60 is a far from representative sample, it does provide some interesting insights into the habits of younger consumers:

Most Important Social Networks Among Teens

Alexander J. Motyl warns of a Russian collapse, fueled by an economy hamstrung by its dependence on a declining petroleum market and a political system resistant to change and reform:

The problem for Putin—and for Russia—is that the political–economic system is resistant to change. Such a dysfunctional economy is sustainable only if it is controlled by a self-serving bureaucratic caste that places its own interests above those of the country. In turn, a deeply corrupt authoritarian system needs to have a dictator at its core, one who coordinates and balances elite interests and appetites. Putin’s innovation is to have transformed himself into a cult-like figure whose legitimacy depends on his seemingly boundless youth and vigor. Such leaders, though, eventually become victims of their own personality cult and, like Stalin, Hitler, Mao, and Mussolini, do not leave office voluntarily. Russia is thus trapped between the Scylla of systemic decay and the Charybdis of systemic stasis. Under such conditions, Putin will draw increasingly on Russian chauvinism, imperialism, and ethnocentrism for legitimacy.

Ben Judah recently published This is London: Life and Death in the World Citytaking the approach of a foreign correspondent to reporting on the experience of immigrants in his home city.  His interview in London School of Economics’ lecture series is well worth a listen for anyone interested in the experience and impact of London’s many immigrant communities:

The featured image is a CT mural from Torino published in ekosystem.

Thought Starters: Facebook grows, software as the new oil and the music industry evolves

The following is a look through articles, research and opinion pieces highlighting interesting trends, developments and changes in the world you and I live in, with an emphasis on technology.

Facebook’s release of quarterly financials point to strong growth in mobile users and video although costs grew at as faster rate than revenue. This seen a reshuffling of the S&P 500 in the US with the social networking overtaking a still healthy General Electric and Amazon.

Biggest S&P 500 Companies by Market Cap

Venture capitalist Fred Wilson points to software as taking the place of oil in securing a disproportionate share of the global economy’s economic surplus going forward:

“Companies that control the software infrastructure of the information revolution will sit back and collect the economic surplus of the information revolution and that will be a path to vast wealth and economic power. It has already happened but I think we are just beginning to see the operating leverage of these software based business models.”

We’ve seen a growing number of startups pass the $1bn valuation mark in recent years but a much smaller number have chosen to expose themselves to closer scrutiny and take themselves public. One of the enablers of this has been the availability of venture capital which is looking more and more like traditional debt financing:

“This is hardly an equity instrument at all,” says Altman. “Investors are buying debt but dressing it up close enough to equity to maintain their venture capital fund exemption status. In a world of 0 percent interest rates, people become pretty focused on finding new sources for fixed income.”

Consumers’ media consumption habits are inevitably changing when faced with a growing array of choices. Traditional television channels have up until recently managed to hold its own but Liam Boluk’s analysis points a substantial drop in viewing habits among younger consumers in the US:

Change in Time Spent Watching Television in the US

Content marketing appeared to provide an obvious choice for many brands looking to engage with their audiences providing relevant content in return for consumers’ attention. As Greg Satell points out, it’s not quite that easy as a growing glut of content is making it harder for companies to get their brand noticed unless your content really stands out:

“Yet despite these scattered successes, there is mounting evidence that most marketers’ content efforts are failing.  The Content Marketing Institute reports that although the majority of B2B and B2C marketers have some kind of content marketing program, less than 40% find those efforts effective.  Clearly, things need to improve.”

Songkick’s Ian Hogarth points to the convergence of radio, on-demand music and concert ticketing as reshaping the music industry, with data enabling musicians to foster a closer connections with their audiences:

“The integration of these three, previously distinct industries will produce a richer experience for artists and fans, unlock a ton of additional subscription, ticketing and advertising revenue for artists and create a better experience for fans. It will resolve the central tension between fans, artists and technology companies that so much ink has been spilled about.”

David Pakman argues strongly that as the automotive sector evolves with the introduction of electrification, software and data, traditional manufacturers will be poorly placed to fend off competition from new entrants:

“I am confident many of the existing automotive companies will produce cars with autonomous features. And some of them will be quite good. And eventually they will produce some fully autonomous electric cars too. In the meantime, there are many super-strong, thoughtful entrepreneurs with lots of incredible hardware and software experience working to fundamentally redefine what consumers should expect from cars.”

Chrissie Giles provides a fascinating look at Britain’s changing relationship with alcohol as the industry adapted to changing societal norms and trends which saw UK reach ‘peak booze’ in 2004:

“As the new century began, alcohol was easier to access, cheaper to buy and more enthusiastically marketed than it had been for decades. By 2004, Brits were drinking well over twice as much as they had been half a century earlier. The nation stood atop Peak Booze, and my generation was drinking the most.”

There’s a general expectation that we should see health statistics improve over time with advancements in healthcare seeing many problems either addressed or mitigated.  So it’s rather shocking to see research from Anne Case and Angus Deaton point to growing mortality among non-hispanic middle aged males in the US:

America's middle-aged mortality

The featured image is by Argentinean artist Pastel in Playa del Carmen, México published in StreetArtNews.

Thought Starters: WeChat, Android fragmentation, media consumption and Ethereum

The following is a collection of articles and thought pieces highlighting interesting trends and changes in the world you and I live in, with an emphasis on technology.

Connie Chan’s profile of WeChat for Andreessen Horowitz is a strong reminder that there’s plenty of tech innovation outside Silicon Valley which can change the world.

The significance of WeChat can be seen in Benedict Evans’ analysis of the growing dominance of mobile and more specifically smartphone. As handsets increasingly come to dominate the digital landscape there’s been a flow on effect on a range of new tech innovations that are leveraging associated hardware and software innovations:

Growing scale of smartphones

Cities around the world are competing to be seen as the most friendly for internet startups. Startup Compass have looked to rank cities by their performance, funding, market reach, talent and startup experience in the 2015 Global Startup Ecosystem Ranking. It’s no surprise that Silicon Valley comes out on top:

Startup Ecosystem Ranking

OpenSignal have updated their findings on fragmentation within the Android ecosystem which provides an illustration of the broad array of devices and challenges in adapting to the operating system:

Android Fragmentation

Ofcom’s Communications Market report provides a valuable window into the changing media and technology usage of UK consumers. A great starting point if you’re doing research into use of TV, video, radio, telecoms and web based content.

Liam Boluk looks at consumers’ changing consumption of music in the US and how the industry is attempting to adapt to new business models:

Consumer Spend on Recorded Music

Ethereum has launched its blockchain based cryptocurrency out into the public realm incorporating a virtual machine and smart contracts. This along with other blockchain based platforms will push the internet into new realms inside and outside the financial sector. Check out the video below, Vinay Gupta’s introduction and Ethereum Frontier Guide if you want to get more actively involved.

Big news this week was Google’s announcement of a restructure that has seen the creation of Alphabet as a holding company with various subsidiaries for its various business arms. Ben Thompson takes a closer look at the motivations and likely implications of the move.

Marco Arment takes a critical look at the increasingly intrusive online media sector.  He goes on to argue (despite being a publisher himself) that this approach provides growing justification for consumers’ use of ad blocking software despite the negative effects this is likely to have on media creators:

“All of that tracking and data collection is done without your knowledge, and — critically — without your consent. Because of how the web and web browsers work, the involuntary data collection starts if you simply follow a link. There’s no opportunity for disclosure, negotiation, or reconsideration. By following any link, you unwittingly opt into whatever the target site, and any number of embedded scripts from other sites and tracking networks, wants to collect, track, analyze, and sell about you.”

The featured image is Cesarea, a piece by Bosoletti in Casarano, Italy and published in StreetArtNews.