December 29, 2008

The Middle East crisis

We're currently in Rio De Janeiro for the Christmas break. As a tumultuous year comes to a close - that witnessed a historic election in the U.S.A., Beijing 2008 Olympics spectacle, the worst global financial crisis since the Great Depression, and the deadly terrorist attacks in Mumbai - the global community would have preferred the year to end on some positive note instead of the developing crisis in the Middle East. What we've been watching on the BBC at our hotel over the last three days is shocking, to say the least. Israel on Saturday launched its deadliest attacks ever in Gaza against Hamas targets. The three days of heavy air attacks by Israeli warplanes have claimed over 300 lives, including dozens of innocent women and children.

A serious humanitarian crisis is emerging due to lack of medicine, doctors, food, and other necessary basic supplies that cannot reach the Palestinian refugees in Gaza caused by Israeli air strikes and blocked borders.

Photo Source: Alyson Hurt/NPR
Gaza Strip is one of the most densely populated areas in the world, with over 1.5M Palestinians living in this narrow strip of land bordering the Mediterranean Sea. It's therefore bound to result in heavy collateral damage in the face of such an indiscriminate, all-out Israeli air attacks. Israel claims it was provoked by Hamas rocket attacks into its territory, which came at the end of the six-month long ceasefire between the two parties. I however feel that the Israeli response to the Hamas rocket attacks, even if it's true, is extremely disproportionate.

Israel is defeating its own cause and inciting further terrorism by causing severe civilian casualties, that certain reporters are calling as "massacre." Hamas may be a terrorist organization for Israel, but they are freedom fighters against Israeli occupation for Palestinians. Keep in mind that Hamas won landslide victory in democratic elections in Gaza couple of years back. Similar Israeli military actions earlier against Hezbollah north of its borders emboldened that organization and made it stronger and more popular in Syria & Lebanon. Israel should learn from its past mistakes and modify its strategy. Same actions will bring in same results, and keep dragging this long conflict painfully further.

Israel has a right to protect its citizens by all means, but it is expected to act more responsibly and not buckle under populism demand of certain sections of its population. Such indiscriminate attack by one of the world's most sophisticated military powers against a defenseless group is only going to create more hatred and anger against Israel in Middle East and across the world. It'll also create cynicism towards Israel's claimed preference for a peaceful settlement to the Palestinian issue, which as we all know will only get resolved through diplomacy, rather than militarily.

Already there has been a strong outpouring of support for affected Palestinians by world leaders, who are demanding an immediate cease-fire by Israel.

There are strong parallels to the situation in Israel with that in Kashmir, where decades of armed conflict between India and Pakistan to control this border region has only resulted in loss of thousands of lives and misery for innocent civilians without any solution.

I made my first trip to Israel last year to meet digital media startups. It's amazing that a small country like Israel can be a hub for technology innovation on such a scale. I met over a dozen startups and maybe half a dozen VC firms in four days. I took some time off to also tour through the area, as I definitely needed an education to the region's absolutely fascinating history.

I took a guided tour of the walled city of Old Jerusalem (Old City), that is housed within the current Jerusalem. My guide was a Canadian Jew who had migrated and settled in Jerusalem. He was terrific. He gave me a lesson in history ranging back to the age of Abraham and the birth of Christianity, Judaism and Islam - the three main religions of the world - from this small city less than half a square mile large.

But I wanted the Palestinian view as well, in order to get a balanced perspective. I was lucky to find a Palestinian employee at the hotel concierge, who drove a taxi in his spare time. He agreed to be my guide for the whole of next day, and drive me back to Tel Aviv, from where I had to fly back to New York.

He told me that it's much more lucrative to be a guide for the historic Old City, but complained that it's virtually impossible for him to get that job - almost all those guides are Jews. Israel apparently wants to control the version of the history told to foreign tourists about the disputed land that is claimed by members of all the three religions.

I enjoyed the driving tour by my Palestinian guide almost as much, if not more, than the walking tour of the religiously-rich Old City. I drove through the north and east region immediately outside the Old City; saw the so called "Berlin Wall" around Jerusalem that is being built by Israel to control Palestinian movement into Jerusalem; visited Israeli settlements around Jerusalem and the West Bank; went up to Masada and heard its incredible story; saw the caves of the Dead Sea Scrolls; and took a dip in the salty waters of the Dead Sea.

It's extremely unfortunate that a region with such an amazing history has been mired in a protracted conflict that has lost so many lives. I hope better sense will prevail, and concerted efforts are made towards a speedy and peaceful resolution of the conflict between Israel and Palestine, the sentiments of which affect the entire region of Middle East.

I strongly feel that no solution to this conflict can be reached without an active mediation from the United States. The current Bush administration in this regard failed miserably during its eight years in office - they have no progress to show for. The ongoing conflict in Gaza will necessitate President-elect Obama to add Israel/Palestine peace process to his growing list of "urgent issue to address" once he takes the oath of Office on January 20th, if it was not already on his agenda.

I want to leave the readers with this picture that I took during my recent visit to Israel of the graffiti on the "Berlin Wall" that Israel has built around Jerusalem. It captures the sentiments of affected civilians and the unfortunate story of the region.

Photo Source: Sab Kanaujia

December 1, 2008

Quote of the day

"Washington will bail out those who shower before work, but not those who shower afterwards" - Leo Gerard, President, Steelworkers Union.

Gerard was commenting on U.S. Congress' seemingly double standard in providing massive Federal help to rich banks and its white collar employees while erecting stricter hurdles in order to help the Detroit auto industry that supports millions of blue collar workers.

Congress last week drove Detroit's Big Three CEOs out of Washington, D.C., ordering them not to return with their tin cups until they could guarantee that their auto companies will be viable if provided a $25 billion Federal bailout. In contrast, Citigroup was approved a $20 billion government loan just days later, within 48 hours of making that request to Federal officials. In October, the bank had already received its first $25 billion from the government, which this time also backed $306 billion worth of Citigroup's risky loans and securities.

Washington, D.C. is a white collar town. Several prominent figures in the banking industry - Citigroup's Robert Rubin, a former Secretary of the Treasury, and UBS's Phil Gramm, a former Texas Senator - previously worked in Washington and have the potential to influence its policies. It's not surprising that Congress is therefore seen more sympathetic to the cause of the banking industry compared to that of the auto industry in Detroit, a blue collar town, by contrast.

November 27, 2008

Terrorist attacks in Mumbai

While we celebrate Thanksgiving during this long holiday weekend in the U.S., half way across the globe, the largest democracy in the world faces its toughest challenge yet in its war against terrorism. What has been unfolding over the past 36 hours in Mumbai (formerly, Bombay), India's largest metropolitan city with a population of 19M and the hub of its commercial and entertainment industries, is outrageously shocking. Terrorists had literally taken seize of South Mumbai, the city's richest and most popular area, and went on the rampage with indiscriminate shootings and bombings with a focus on city's several symbolic targets. The last count of casualties showed 134 dead and 308 injured, including 12 foreigners and Mumbai's Anti-Terrorism police chief. At this hour, some terrorists are still holding out their positions with sufficient armaments inside the Taj Mahal Palace hotel, arguably the city's most popular spot amongst rich, celebrities and foreign tourists.

I extend my solemn condolences for all who lost their loved ones. My wife is from South Mumbai, but fortunately everyone from her family is safe. Her relatives live in and around Colaba, which was the ground zero for the deadly attacks. But some of my wife's friends and relatives have been directly affected.

The map below shows a timeline of the synchronized terrorist attacks and affected areas of Mumbai. Click on the map to enlarge it.

Source: NDTV.com

While Mumbai has been repeatedly hit by terrorism in recent years, the difference in the attacks this time is the scale of coordination across simultaneous multiple locations, targeting of foreigners, and the choice of the picked iconic landmarks in the city. Another major difference, a disturbing one, is the possible emergence of internal Islamic terrorist groups aligned with al-Qaeda and its agenda from within India, the home to 140M Muslims, third largest in the world. A little known Indian group by the name of Deccan Mujahideen has claimed responsibility for the Mumbai attacks, but we cannot be assured whether these claims are true and/or other external terrorist groups are not involved. India has a history of being targeted by Islamic fundamentalist terrorist groups based in Pakistan, Afghanistan and Middle East.

I hope the Indian government takes tough, concrete actions this time. It has been rather soft after previous terrorist attacks on its soil, when despite having definitive proof of the involvement of specific groups based in Pakistan and Pakistan-occupied Kashmir (PoK), the Indian government, sometimes under pressure from the U.S., restrained from retaliatory actions due to the fear of escalating wider tensions with Pakistan. But the time has come when Pakistan has to match its rhetoric against terrorism with actions on the ground. It got to fully cooperate with India in investigating the Mumbai attacks, and aggressively go after every terrorist group in Pakistan that may be involved in these deadly attacks.

In parallel, India will need to work extremely hard in restoring the confidence, especially overseas, in its ability to keep its cities and people safe and secure. The psychological damage to the country's reputation cannot be overstated. With the Indian economy already slowing down amidst the ongoing global recession, the timing of these terrorist attacks on India's commercial capital could not have been worse.

November 21, 2008

Death of Investment Banking - The New Wall Street

September 21, 2008 will be etched on the tombstone of the investment banking industry. The day marked the death of investment banks in America. On that day, the last two remaining independent U.S. investment banks, Goldman Sachs and Morgan Stanley, converted themselves into commercial banks, which take consumer deposits, a more conservative source of money. With the move, Wall Street as it has long been known - a closed group of independent financial institutions which advise clients, buy and sell securities, provide brokerage services, etc, and are less regulated than traditional, old-fashioned banks - will cease to exist.

Goldman & Morgan will now be under stricter Federal regulations that govern bank holding companies. This followed the earlier transforming events with the other three major Wall Street investment banks: Merrill Lynch, Lehman Brothers and Bear Stearns sought bankruptcy protection or merged into larger commercial banks. The immediate motivating factor for the move by Goldman & Morgan, given their precarious financial health, was to gain eligibility for the Federal financial support that is available only to commercial banks.

The two main reasons, in my opinion, that brought the end of investment banks were:
  • High financial leverage: Banks operated by borrowing extremely high level of debt compared to their asset value. Lehman Brothers financial leverage was 32 to 1 when it was swallowed from the brink of bankruptcy by Barclays Capital - meaning, Lehman held $32 of debt on its balance sheet for every dollar of equity. Bear Stearns' leverage was 33 to 1 when it failed, and during the last quarter, Goldman Sachs and Morgan Stanley had leverage ratios of 24:1 and 25:1, respectively.
  • Playing with complex derivative securities: Banks engineered complex financial derivatives - securities that derive their intrinsic value from other underlying assets - which were too difficult to fully comprehend, and hence manage. As it turns out, some of my undergrad engineering classmates from IIT were among the architects of these financial instruments. In recent years, many investment banks had hired a slew of mathematicians and engineers with PhDs and other advanced technical degrees to design new, complex financial derivatives in order to spread risk of their bets and increase liquidity. These derivatives were openly traded, changed hands several times over, and ended up finding home into the balance sheets of banks and even some non-financial institutions all over the world. The process got so deep rooted, that at some point it became impossible to estimate the true risk exposure of institutions holding these securities. Risk management function therefore got severely compromised. So, when the underlying assets of these derivatives, the U.S. real estate, crashed in value, there was a domino effect across all entities holding assets tied to it.
Let me share a personal account about my own career decision. In the summer of 1996, I did two internships while I was in the business school. I had moved to the U.S. from India a year earlier for my MBA, and had never worked before in the U.S. I therefore wanted to maximize my industry exposure in the country before picking up my career field upon graduation. One internship was in investment banking with Smith Barney, and the other was with an Internet start-up. Smith Barney paid me three times more money than what the start-up could, but I had at least three times more fun with my start-up gig. I felt I added significantly more value at the start-up - I helped it grow revenue by 50%+ and played a key role in its successful IPO later that winter. Upon graduation, I chose a career in the Internet/technology space. Investment banking, a much more financially rewarding career, was however never going to be personally as fulfilling for me.

Investment banking is a support industry that provides services for corporations which build real products for the consumers. That notion somehow got lost in the era of excess over the last couple of decades, when investment bankers took home obscene amounts of cash by taking unduly high risk with other people's money. Twenty-something years old making seven figures trading mortgage-backed securities was an example of such excesses.

Risk taking was encouraged, with limited downside. If your bet worked, you could make several multiples of your base salary in bonus. If your bet failed, you could still walk away with the salary, loosing just the bonus. That is assuming the results of the failure showed up during the same period when the bet was made - in many cases, the incentive structure allowed bankers to postpone repercussions of their actions sometime in the future while reaping the rewards today.

This mismatch in the real world between activities that allowed accumulation of significant personal wealth and activities that created and sustained real value in the economy obviously affected how young students made their career decisions. Investment banking became the most sought-after and glorified job in business school campuses.

I don't have any objection with, for example, hedge fund managers making ten figures - that's right, over billion dollars a year - gambling with rich people's money (only high net worth individuals or institutions are allowed to participate in hedge funds). Until, of course, hedge funds become "too big to fail" and taxpayers have to bail them out (remember Long Term Capital Management), but that's a debate for some other time. The investment bankers however were playing around with funds tied to the Main Street, e.g., pension funds and 401ks of the common man. No wonder there is a huge public outrage with current bail-outs being handed out at taxpayers' expense to the Wall Street.

In a related distortion, CEOs of corporate America started demanding higher salary seeing tens of hundreds of million dollar payouts to their Wall Street counterparts. In 1970, CEOs in America were paid 28 times more than the salary of an average worker (vs. lowest paid worker) in the country. By 2005, the salary gap had ballooned up to 485. That's right, a CEO got paid more in one day than what an average worker earned during the entire year.

So, what will change now. The new Wall Street is going to look very different. The industry will be much smaller. Excess risk taking is a thing of the past. Since high risk enables high rewards, executive payouts on the Wall Street will reduce substantially. The party is over. Many old functions and practices will no longer exist.

The most important change however will be in the new funding architecture of financial institutions. Until now, banks operated in a totally free market funding environment that provided plenty of sources with just-in-time capital availability and extreme liquidity. That will change. In the current crisis environment, central banks globally have become the sole source for large funding needs of financial institutions. FDIC insurance is needed if large debt has to be raised in the U.S. This is, obviously, not sustainable.

The President-elect Barack Obama's new administration will need to work with financial institutions to establish the norms of a new funding architecture for the industry. Given the global nature of today's capital markets which enable global access and movement of capital, a level playing field will need to be created across different jurisdictions globally. The G-20 countries will need to work together to ensure this. The joint communique issued by the G-20 leaders during this month's hastily arranged economic summit by President Bush in Washington D.C. seems to be a good start, but real work has been postponed until April 2009, in order to let Barack Obama settle down in the Office after assuming the U.S. Presidency in January. Lastly, the new Wall Street will have to settle for much greater Federal regulations, and higher transparency, at least to the regulators who will provide the oversight.

November 11, 2008

Web 2.0 Summit 2008

I attended the Web 2.0 Summit in San Francisco last week. Despite the name, the conference has now broadened to cover everything and anything about digital media, consumer Internet, Enterprise software, cloud computing, clean technology, and, of course, Web 2.0.

Here are some quotes and facts from the conference that I found worth sharing, though I would admit that I did not sit through most of the sessions inside conference rooms. Given the wide attendance at the Summit, I mostly go to meet folks from the industry, catch-up with partner firms, see interesting startups, and network, which happens outside in the lobby. In fact, many just show up for the "lobbycon" - hob-nobbing in the lobby for free, instead of doling out a few grands on the conference pass.

Al Gore, the former Vice President of the U.S., presenter of the Oscar-winning environmental documentary, The Inconvenient Truth, and the Noble laureate, urging for a higher purpose of Web 2.0:
“The purpose, I would urge all of you — as many of you as are willing to take it up — is to bring about a higher level of consciousness about our planet and the imminent danger and opportunity we face because of the radical transformation in the relationship between human beings and the Earth.”
Talking about his crusade on preserving our environment, Gore said:
“I feel, in a sense, I’ve failed badly.” “Because even though there’s a greater sense of awareness, there is not anything anywhere close to an appropriate sense of urgency. This is an existential threat.”

Mark Zuckerberg, the CEO of Facebook, presented his Web 2.0 corollary to the famous Moore's law (the processing power of chips double every two years):
“I would expect that next year, people will share twice as much information as they share this year, and next year, they will be sharing twice as much as they did the year before,” he said. “That means that people are using Facebook, and the applications and the ecosystem, more and more.”
I don't think anybody will dis-agree with the above position. The social media revolution will involve more and more people sharing more and more of their thoughts and experiences using Internet as a medium and leveraging its various tools (Facebook/MySpace, Flickr, Twitter, YouTube, Tumblr, etc.). I'd submit that the pace of information sharing may in fact more than double every year as the ubiquity of broadband access, Internet and the means/devices to access it spreads globally. It definitely has in my case.

Ariana Huffington, Editor-in-Chief of the The Huffington Post:
“Were it not for the Internet, Barack Obama would not be president. Were it not for the Internet, Barack Obama would not have been the nominee.”

John Doerr, Venture Capitalist, Kleiner Perkins Caufield & Byers (KPCB), was interviewed by John Heilemann, a contributing editor at the New York magazine, who had been covering the election campaign of the President-elect Barack Obama.

Q: Who should Barack Obama select for the position of the Chief Technology Officer, Unites States, a position that Obama has promised to create?
A: John Doerr suggested Bill Joy, Partner, KPCB, and the co-founder of Sun Microsystems, in which Doerr had invested.

Q: Will Mr. Doerr ask Senator John McCain or Governor Sarah Palin to join KPCB, given the company's history of hiring former politicians like former Vice President Al Gore and former Secretary of State Colin Powell?
A: “If you put lipstick on that, it still won’t work at Kleiner.” John Doerr is a politically active Democrat.

November 8, 2008

America is ready for a revolution...

As my plane landed in New York at ~5:00AM today after a red-eye flight back from San Francisco, I opened my eyes and looked through the window. It suddenly sank through what this nation, and the world, had witnessed this week. The Unites States of America had overwhelming elected a black man named Barack Hussein Obama as its next president. I was indeed looking at the dawn of a new era.

On Tuesday night, while packing for my next day's early morning flight to San Francisco, I was twittering away as poll results started trending decisively towards Obama by 9:30PM. I went to bed after my last twitter at 11:03PM - Obama wins! Take a moment to reflect - history is made today!! It was however me who did not get a chance to reflect amidst the last three days of meetings and the Web 2.0 Summit in San Francisco. Until this morning.

Senator Obama's landslide victory is historic and a source of much needed hope on several counts, but I'll let the press and political historians ponder through that. Many feel that the most significant outcome of the Obama Presidency will be the final end of America's Civil Rights movement. I'm not so sure about that. I think Obama's victory is mostly a symbolic proof of the change on the race front that has already been happening in the U.S. for the past several decades. Today, for most part, race is a non-issue for the majority of Americans. The three main reasons why I supported Obama did not include race. Tom Friedman argued the same in his Op-Ed column in The New York Times after the victory. He wrote:
"But my gut tells me that of all the changes that will be ushered in by an Obama presidency, breaking with our racial past may turn out to be the least of them."
My biggest fear now is the loss of the momentum after Obama's victory. The momentum amongst millions of citizens who came out to vote for the first time, hoping for a change, and willing to devote their time, energy, and even careers. The work has just started. That is probably the reason why I thought President-elect Obama was so somber in his victory address Tuesday night at the Grant Park in Chicago (below is the video). While almost quarter of a million Americans cheered and celebrated (some in tears), there were hardly any triumphant or festive signs in Obama's tone or gestures as he delivered an inspiring speech. He apparently canceled the fireworks planned at the Park. The weight of all the expectations and the responsibilities ahead probably robbed Obama of even a brief moment of public celebration with his supporters after a historic victory.




I think this country is ready for a revolution - led by young and old who hope for a change, and want to live a purpose-driven life. The crumbling of the rampant greed-driven, unfettered free market-spurred, investment banking industry (more on that later) is watched by young Americans who are getting ready to make their career choices. A message of hope, inspired by a young leader, is reverberating through the air at the same time. Several long-impacting, critical issues loom in front of them (environment, energy, economy, terrorism, etc.). I think a perfect storm is brewing...the groundwork is done, and the recipe for change is there. Time has come to lay out the mission.

I heard Al Gore speak last evening at the Web 2.0 Summit in San Francisco. He provided an interesting factoid. When President John F. Kennedy presented a bold challenge to the American people forty seven years ago - America should, within that decade, land a man on the moon and return him safely home - many derided the dream as lunacy. Eight years later when Neil Armstrong stepped on the surface of the moon, the team that cheered the achievement at the Houston mission control center had an average age of 26 years. Many of those engineers were less than 18 years old when JFK inspired them to "dream" the moon mission in 1961. That's what leaders do.

President-elect Obama, who has often been compared to JFK, needs to now lay out the mission for his eager "troops," who are thirsty to make a difference.

November 4, 2008

Election day

Today is election day. Please vote.

We just got back home after voting at Ward 1, District 1-2 in West New York. They had moved the election booth at the last minute from its original location (a school) to the lobby of a high-rise apartment building across the street, so it took us a bit to locate it. But otherwise the process was smooth. As newly minted U.S. citizens, we were voting for the first time, but we found the new electronic voting machines pretty simple to use. They could have however posted clear, step-wise, voting instructions at the top of the machine inside the booth. But they had a helper standing right outside each booth for any questions.

We were in and out in ~20 minutes. I'm not an early morning person, but I think going early was a good idea...no lines.


November 2, 2008

SNL continues to deliver - John McCain & Sarah Palin (Fey)

It's safe to say that the U.S. Presidential election campaign has been the biggest reality show on the TV over the past few months. All three Presidential debates, the sole Vice Presidential debate, Senator Barack Obama's 30-min, prime-time TV commercial this past Wednesday, and candidates' appearances, interviews and sketches during various talk shows have all achieved unprecedented ratings bonanza compared to those from previous elections. These shows have also beaten ratings of regular entertainment TV programming during the same time slots.

No other show in my opinion has benefited more than the Saturday Night Live, a cultural & comedy icon whose ratings otherwise have been on the decline for past several years. Presidential elections, a new breed of talented writers, and Tina Fey have catapulted SNL to a point where it has a perfect opportunity to regain its lost glory in a sustainable manner well beyond the elections. Tina Fey's SNL sketches mimicking Governor Sarah Palin, the Republican Vice Presidential nominee, have been instant hits on the Internet almost every single weekend.

Below is the sketch from yesterday's SNL. It's hilarious. I wish Senator John McCain looked this relaxed during his entire campaign.



Here are my few other favorite election-themed SNL clips.

Gov. Palin and Senator Clinton address the nation:


Gov. Palin and Katie Couric get real and adorable:


Governor Palin pays a visit to SNL:


President Bush endorses McCain and Palin:

November 1, 2008

U.S. Presidential election - I support Barack Obama

Readers of this blog must have guessed it by now that I support Senator Barack Obama to become the next President of the United States. If not, here is my unambiguous support for his candidacy.


The 2008 U.S. Presidential election, and the last 21 months of campaigning by the two major parties, has been truly historic for several reasons. Millions of voters participated in an unprecedented Democratic party primary. And now, history will be made irrespective of who wins the election on Tuesday, Nov. 4th. We'll either have the first-ever African-American President in the U.S., or its first-ever female Vice President.

The great news is that even if the Republican candidate Senator John McCain wins, which is looking increasingly unlikely, we'll be better off than the last eight years of his party's U.S. presidency under President George W. Bush.

I guess candidates during every U.S. Presidential election claim that "stakes are the highest," but I truly believe it is true this time. While I support Obama's candidacy for several reasons, here are the three most important ones:
  • Foreign policy: Today we live in a global, connected village, where several aspects of our daily lives can be impacted by decisions taken thousands of miles away in countries on the other side of the planet. The ongoing global financial crisis provides a perfect example of this phenomenon. Senator Obama's foreign policies, temperament, and deliberative approach are the best hope for America to regain the admiration and leadership this country enjoyed throughout the world before September 11, 2001. There were always differences on specific issues, but overall, U.S. enjoyed a very positive image globally, which unfortunately has taken a severe beating during the last eight years of President Bush's administration. America remains the sole super power on the earth, and is also its largest economy. It therefore has the opportunity to be a global leader on critical issues whose impact go beyond national boundaries. With leadership and power, however, comes the responsibility. Even though Senator McCain has better foreign policy credentials and clear advantage in experience over Senator Obama, it's Obama who got widespread endorsements worldwide, not just by global leaders but also by the masses. I believe Obama is the better candidate to heal relations and be the real change agent the world needs at this crucial hour when we're going through a severe global financial crisis, energy shortage, rising food prices, spreading terrorism, and an environmental catastrophe.
Senator Obama addressing a rally in Berlin, Germany on July 24, 2008. Almost ~200,000 Germans showed up. Photo: Jae C. Hong/Associated Press
  • Economy: Senator Obama's economic policies, in my opinion, are more progressive and will achieve a greater balance in creating opportunities and wealth for everyone. Relying solely on the free markets to affect the trickle-down economic benefits has simply not worked. U.S. is the richest country in the world, but while the growth in the U.S economy over the years has been impressive, the fruits of this wealth have not benefited everyone equally. There is now almost an universal acknowledgment that our nation (and planet) are pulling apart economically. The divide between rich and poor has been growing dramatically over the past several decades. By some measure, in real-terms (adjusting for inflation), poor have actually become poorer. If we look at the total wealth, the richest 1% of U.S. households now owns 34.3% of the nation's private wealth, more than the combined wealth of the bottom 90%.
Source: Economic Policy Institute, State of Working America 2006-07, Table 5.1, citing Wolff (2006).
  • Stronger American democracy: The right to vote is probably one of the most important fundamental rights for citizens in a democracy. This is one time when they get a chance to ensure that folks setting and administering policies in their society represent its citizens' interests. However, almost half of the total eligible voters in the U.S. typically do not vote. They don't feel their politicians work for them anymore, and have somewhat lost faith in their government. Senator Obama has energized the masses and provided hope to millions of citizens across the country like not seen in decades. We've witnessed massive surge in new voter registrations all over the country. The picture is especially encouraging amongst young voters, who represent the country's future, and had historically been more dis-enchanted with the electoral process. Higher voter turnout during elections will ensure that the elected President and Congress members represent a greater proportion of our population. This will go a long way in strengthening the U.S. democracy even further.

I lived in the largest democracy in the world (India) for over twenty years before moving to the most effective democracy in the world (U.S.) thirteen years back. This country has provided me tremendous opportunities, and I proudly chose to become a U.S. citizen last year. I am looking forward to casting my first vote in America on Tuesday. I want this government to work for me. I'm sure you also want the same. I therefore urge you to go out, and cast your ballot on Tuesday. If you don't, you lose your right to complain if your leaders disappoint you in how they run the country.

October 26, 2008

"Wassup" guys are back - From beer to Obama

The characters that starred in "Wassup," the hit Budweiser beer ad campaign from 1999 that boosted its sales and also added a new phrase in the global pop-culture lexicon, are back. However, instead of beer, this time their video is promoting Barack Obama's U.S. presidential bid.

The parody video, created by Charles Stone III, who conceived the original Budweiser ads, was posted on YouTube two days back, and is already on its way to become a viral hit.

This is what creators have to say about their new video:
Its been eight long years since the boys said wassup to each other. Even with the effects of a down economy and imminent change in the White House, the boys are still able to come together and stay true to what really matters.
The video is posted below:




The original Budweiser commercial is below:




Budweiser's maker Anheuser-Busch and its ad agency, Omnicom Group's DDB Chicago, may be in a quandary because they cannot do much to stop the new video's distribution. Neither of them own the "Wassup" concept or the slogan. The brewer paid Charles Stone ~$37,000 to license the idea for five years, and signed him up to direct and appear with his buddies in the Budweiser Wassup commercials, which went on to win several awards. That deal expired three years ago.

October 24, 2008

As live sports on the Internet gain momentum, cricket can provide some pointers

2008 will be remembered as a banner year for live sports streaming on the Internet. Future looks promising as both the user demand and the profit potential seem to have crossed critical thresholds.

Since TV networks don't add to their production costs by simulcasting the coverage online, eyeballs picked up online are incremental gravy for their advertisers. Networks are also convinced that online simulcast won't cannibalize the big bucks tied up in TV, figuring you'll watch online only if you can't get to a TV set, or you'll log on as you watch TV.

Sports programmers therefore want to provide an answer to their fans' demand and keep up with the surge in user consumption of TV broadcast online. The Conference Board/TNS research show that about 20% of U.S. Internet households now watch online TV broadcasts — double the 2006 level.

Here are some major live sporting events streamed online this year and associated metrics, where available:

  • Beijing Olympics: The summer Olympics this year will be distinguished by, among other things, the first truly digital games in its history. In the U.S., NBC, the exclusive rights holder, recorded 1.3 billion page views, 53MM unique users, 75.5MM video streams, and approximately 10MM hours of total video consumed online. Metrics from other countries were equally impressive:

In Europe, over 30 EBU broadcasters offered Olympic content on their respective websites, complemented by the EBU aggregated live video portal www.eurovisionsports.tv/olympics, which delivered over 180 million broadband video streams, primarily generated by live event viewing to a unique audience of over 51 million, with a cumulative total of over 22 million hours viewed.

In China, over the 17 days of the Olympic Games, 153 million people watched live broadcast of the Olympic Games online, with 237 million watching video-on-demand footage and an average 20 million page views per day on the mobile phone platform provided by CCTV.com.

In Latin America, rights holder Terra made 13 online channels available to allow subscribers to choose which events to watch with over 300 hours of available action from all competitions. Terra's Olympic site registered 29 million video streams and over 10 million video-on-demand downloads over the period of the Games.

In Australia, since the Games began, over 32 million page views have been seen by over 2.3 million users, with more than 4 million live and on-demand videos streams watched on Yahoo!7 Olympics.

  • March Madness: 4.8MM unique visitors throughout the two-week U.S. college basketball tournament streamed live by CBS.
  • U.S. Open Golf Finals: 5.2MM streams were served by NBC and the USGA, spurred by Tiger Woods’ down-to-the-wire victory in the playoff that got pushed to Monday - most of these viewers were therefore watching online at work.
  • Wimbledon: 1MM live streams and 4MM video-on-demand streams.
  • Pocono 500: 712,000 streams were watched at NASCAR.com.
All the four major professional sports leagues in the U.S. have also jumped on the live online streaming bandwagon.
  • National Basketball Association Western Conference Finals: 3MM live streams were served by TNT.
  • Major League Baseball: 1.0 to 1.5MM viewers watch a live game each day.
  • National Football League: NFL, the biggest and the most popular sports league in the U.S., in partnership with its broadcasting partner NBC Sports, has for the first time started streaming 17 regular-season games live on the Internet in the U.S. this season that started last month.
  • National Hockey League: Earlier this month, NHL launched NHL GameCenter Live, its new online subscription service that stream live NHL games. Available for $159 for the whole season, or in monthly installments of $19.95, the service is targeted at avid fans as well as, per NHL, nearly 50% of fans who live away from their favorite team's local television market and therefore do not have access to some games on the TV. GameCenter Live does have some blackout restrictions, but allows users to view up to four games at once, choose from multiple camera angles, check stats and chat with one another.
I tested the NHL streaming (the season-opening weekend was free), and think their experience is pretty good because it leverages the uniqueness of the Internet medium in terms of its interactivity, social and non-linear nature.

While most of the above initiatives are recent, cricket, one of the most obscure sports for American and most European sports fans, has been using Internet to reach its TV-coverage-starved fans globally for almost ten years now.

I am one of those fans. I first started watching live cricket online back in 1998, and Internet remains my primary source for live cricket even today.

In 1998, cricket was one of the reasons why I opted to participate as a trial customer for @Home's broadband rollout in Connecticut. Remember @Home, the broadband ISP that was hailed as
the "new media network for the 21st century" after its $6.7Bn merger with the portal Excite in 1999. Excite@Home became bankrupt two years later, another example of a failed merger due to mismatch in the management cultures of the two firms and horribly executed integration.

I've been a close, first-hand witness of the improvement in cricket's live online streaming experience over the past ten years.

During the late nineties, even though I was on broadband, live cricket streaming provided a ton of buffering and a start/stop experience. There were no quality branded service providers that carried rights for online cricket in the U.S. I probably was using one of the online "hack-services" to buy cricket packages, because there were no easy alternatives available. Cricket was obviously not shown on the broadcast/cable TV in the U.S., and the only available satellite option from Dish Networks required installing a separate dish that had to point to its satellite providing international programming - if you wanted regular U.S. TV channels, a second dish pointing to a different satellite was needed. I could not
install one, leave-alone two dishes, because my landlord objected to dishes hanging out from balconies. On one occasion when the landlord conceded, sympathetic to my passion for the game, I could not get a clear line-of-sight to Dish Network's international satellite from my balcony.

The Internet helped fill this market gap in 2003, when
Willow TV, a Sunnywale, CA based startup was launched by, you guessed it, a bunch of Indian immigrants. Willow TV provides live streams of cricket matches on a pay-per-view or subscription basis. I've been a regular customer of Willow TV since the company's inception.



Willow TV has gradually acquired the live online streaming rights for small markets (e.g., U.S., Canada, etc.) from international cricket boards, for whom it was all incremental revenue, providing no conflict with their existing TV deals which were limited to big cricket markets. Last year, the site carried over 90% of the cricket matches live. It has over one million registered users, almost 75% of them in North America.

The company has apparently been profitable from the very beginning.
Because the size of its target audience is relatively small in the markets Willow TV operates, the ad-supported free streaming business model is not feasible. The niche and ethnic nature of the audience also limits the type and number of advertisers that may be interested in reaching them specifically. Willow has therefore only operated on a pay-per-view or subscription basis. Packages range from $5 per game up to $200 for a series. Streaming is offered from 400 kbps to 700 kbps levels, and they apparently have plans to increase that to 1MBps next year.

I've seen their technology improve over the past five years, with almost TV-like experience today. I hook up my laptop to my 42" plasma when I'm watching at home. I'm also able to place-shift my package and watch live cricket while I'm on the road - the main reason why I don't buy TV packages from Dish Networks and DirecTV, both of which have now started offering pay-per-view cricket packages.

With the introduction of Twenty20, a shorter version of cricket launched to expand its popularity and adoption (game finishes in 2.5 to 3 hrs), and the mega success of the Indian Premier League, the inaugural domestic Twenty20 competition in India earlier this year, cricket is taking off globally in a major way. Reliance ADA, the largest media company in India, therefore made a swift strategic move in investing $60 to $70MM for a 75% stake in Willow TV. Elsewhere, ESPN paid almost $1Bn for the global rights to the Twenty20 Champions League, the world's richest cricket competition, in a 10-year deal.

As live sports streaming on the Internet becomes mainstream, cricket, with over ten years of experience, can definitely provide lessons on successful business models, targeting niche fans and satisfying their needs in a manner that is complimentary to TV broadcast, which will remain the primary revenue generator in sports for the foreseeable future.

October 17, 2008

Internet radio is the sole bright spot in the declining radio industry

Radio industry in the U.S. has been in a decline phase for some time now. Listeners, specially younger ones under 35 yrs. of age, have less reasons to tune in amidst a plethora of choices. The broadcast radio has pushed them away with one bad decision after another that has led to diminishing quality in programming, songs, and commercials.

Any recovery in the radio business will need to understand the potential of digital media, adjust programming for today's consumer, and deliver to advertisers something that is unique and very different from what they've received in the past.

Digital media has been the only silver lining for the radio industry. Internet radio has seen impressive growth in both audience and advertising over the past five years. Ability to target and track ads online vs. terrestrial radio is the obvious reason for increased advertiser interest. While at AOL, I was involved in launching one of the largest radio service on the Internet with a base of ~14M monthly listeners through a partnership between AOL Radio and XM Satellite Radio. AOL recently ended that XM relationship and replaced it with a broader deal with CBS Radio. The AOL/CBS deal also brought together synergies for both party's advertising inventory and streaming ad sales partners. TargetSpot, a CBS-backed startup that sells targeted local advertising for online-radio stations, and Ronning Lipset Radio, AOL's partner for over four years that sells national advertising, gained access to the combined AOL/CBS inventory.

According to yesterday's Wall Street Journal, TargetSpot has acquired Ronning Lipset Radio. The deal makes sense because the two companies bring complimentary capabilities to the table (local plus national advertising). Additionally, increased scale will help TargetSpot to better capitalize on the fast growing mobile advertising market. Its audio advertising solutions will be highly relevant & effective for streaming radio services for mobile devices, whose popularity will only increase with the full rollout of the 3G network, increase in the number of streaming mobile devices and their adoption.

I've included some numbers on the radio industry's advertising figures from the WSJ article.
U.S. advertising revenue in general will probably shrink 0.8% this year, says Wachovia analyst John Janedis. The radio industry seems on track for an even worse performance. Local spot radio advertising revenue, the medium's bread-and- butter, has declined every month this year compared with a year earlier, with August's decline reaching 11%, according to the Radio Advertising Bureau.

Last week, CBS Corp., one of the nation's largest radio-station owners, revised its full-year business outlook because of declining advertising.

But online radio advertising -- much of it the audio ads listeners hear when they tune into a station on the Internet -- is rising at a double-digit pace. Last year, radio sold $21.3 billion in advertising, including about $1.7 billion in the "off air" category that is chiefly online advertising.

The detailed full-year industry revenue comparison for 2007 vs. 2006 from the Radio Advertising Bureau can be found here.

October 14, 2008

Republicans' desperate tactics will be counter-productive

Two leading national polls this week show Barack Obama, the Democratic U.S. presidential candidate, widening his lead over the Republican candidate John McCain. Obama is ahead by 14% (53% to 39%) in a New York Times/CBS News poll, and by 9% (50% to 41%) in a Los Angeles Times/Bloomberg poll.

The McCain campaign, in a desperate effort to halt the slide, has unfortunately adopted tactics to instill fear/hate amongst voters for Obama, as opposed to convincing them why they should prefer McCain. Below is a picture from a McCain-Palin rally in Virgina this week. Their supporters are holding signs to suggest an equivalence between Obama and the Islamic terrorists responsible for the brutal 9/11 attacks in the U.S. This is extremely deplorable.


Source: Chip Somodevilla/AFP/Getty

I doubt such fear tactics, which unfortunately became mainstream during the current Bush administration, are going to work. A message of hope and optimism, especially during the current economic gloom and doom, is what voters need. If the McCain campaign continues down this path, and does not instead focus on selling how their candidate is better than Barack Obama on critical policy issues, we may see the Democratic lead widening even further.

September 30, 2008

Today's Wall Street crash

Quote of the day:

“This is a huge cow patty with a piece of marshmallow stuck in the middle of it and I am not going to eat that cow patty,” said Representative Paul Broun, Republican of Georgia.

The U.S. House of Representatives today rejected the $700 billion financial rescue plan, resulting in the Dow plummeting by 777 points, its largest single-day drop ever. The market lost $1.2 trillion in value. Just 1/3rd of Republicans voting backed the plan, which was proposed by their own President Bush.

Part of the reason for the failure in my opinion was wrong messaging. The rescue package was treated as a bailout for the wealthy Wall Street bankers at the expense of taxpayers. This is not entirely true. Credit squeeze due to toxic mortgage assets on the balance sheet of banks will affect the common person, at some level, more than wealthy bankers who have resources available for a rainy day. If banks freeze their lending, it'll impact car loans, small business loans, college tuition loans, and may also cause serious layoffs as firms cut projects due to capital shortage.

I believe some sort of rescue plan will be passed eventually. But the Federal rescue package in itself, though required, does not guarantee a sustainable recovery. My fear is that the American financial turmoil would spread over to Europe, which seems to be where the U.S. was a year back, and maybe the rest of the world. Though several emerging economies (BRIC nations) have domestic markets to sustain some of their growth - the "de-coupling" theory between developed and developing world markets that economists talk about - America and Europe are still the primary drivers of the global economy. If they sneeze, rest of the world will catch cold. U.S. mortgage-backed securities also found their way into the books of several global banks, not just those of Wall St firms. And many European banks are just too big for their individual governments to be able to bail them out. And a pan-European rescue, existence of the European Central Bank & European Union structure notwithstanding, would be extremely difficult due to the complexity of working through different regulations and political issues of individual countries.

Japan took more than two decades to recover from its similar real estate collapse driven economic meltdown of the 80s. I suspect U.S. will face the same fate, but we're clearly entering a highly uncertain economic environment.

September 29, 2008

Tracking Chrome's adoption

Google launched its Web browser Chrome, one of its most important products ever, on September 2, 2008. As users study and test Chrome's features, I'm going to regularly start tracking its user adoption over two-week periods using the browser traffic source to my blog.

For the first data point, I'm picking the two-week period starting one week after the Chrome was launched. Chrome has already gained a 3.4% browser market share amongst my blog's readers. Since most of them obviously belong to the digital media/consumer Internet industry, they're expected to be early adopters. Still, I think these results are impressive. We'll see if Chrome's numbers are sustainable.

Percentage, by browsers, of the total visits to this blog
Period: Sept 9, 2008 - Sept 22, 2008

  1. Firefox 61.0%
  2. Internet Explorer 30.5%
  3. Chrome 3.4%
  4. Safari 1.7%
  5. Others 3.4%
To keep things in perspective, here is the global market share for browsers:

Source: Net Applications, August 2008

September 27, 2008

Quote of the day on Sarah Palin

Jimmy Kimmel:

"John McCain showed up (for the Washington DC meeting to discuss the financial rescue package) without running mate Sarah Palin, which is a shame because she actually has a lot of experience with financial matters. You know, she lives right next to a bank."

Kimmel obviously is doing his job as a comedian. People will however continue to poke fun at Palin's questionable qualifications as McCain's vice presidential nominee as long as she continues to outrageously claim that one of her main foreign policy credentials is the fact that she can see Russia from Alaska.

September 24, 2008

Scenes from India

The Boston Globe has tried to convey the spirit of India and its fascinating diversity through 34 pictures. While it's impossible to capture the essence of a huge and complex country like India in 34 pictures, these images are nevertheless impressive.

Few selected ones, mostly depicting the country's religious diversity, are below:


Devotees carry a statue of the Hindu elephant god Ganesh, the deity of prosperity, for immersion in the sea, on the last day of "Ganesh Chaturthi", in Mumbai September 14, 2008. Clay statues of Ganesh are made two to three months before this popular religious festival in India. The idols are taken through the streets in a procession accompanied with dancing and singing, to be immersed in a river symbolizing a ritual sendoff on his journey towards his home. (REUTERS/Punit Paranjpe).



Catholic nuns from the Missionaries of Charity order sing hymns for a special prayer during the eleventh anniversary of the death of Mother Teresa in the eastern Indian city of Kolkata September 5, 2008. Mother Teresa was a Nobel Peace Prize-winning nun who died in 1997, and was beatified by Pope John Paul II in 2003 at the Vatican. (REUTERS/Jayanta Shaw)



Hindu devotees, try to form a human pyramid to break an earthen pot filled with honey, milk and curd, as part of festivities to celebrate Janmashthmi, or the birth anniversary of Lord Krishna, in Mumbai, India, Sunday, Aug. 24, 2008. (AP Photo/Rajanish Kakade)



A view of the illuminated Golden Temple, Sikhs holiest shrine, in Amritsar, India, Monday, Sept. 1, 2008. This year, Sikhs mark the 404th anniversary of the installation of the Guru Granth Sahib, the sacred book of the Sikhs. (AP Photo/Aman Sharma)



Performers dressed as tigers take part in Pulikali, or tiger dance, during festivities in Trichur city, in the southern Indian state of Kerala, September 15, 2008. The ceremony was organised to mark the end of the annual harvest festival, "Onam". (REUTERS/Sivaram V)



Forestry workers look on as a male Royal Bengal Tiger leaps off a boat into the water after being released back into the wild in The Chamta Forest District of The Sunderbans, in India, on September 4, 2008. The tiger was declared fit for release by veterinarians after it was recently rescued from a nearby village. (HO/AFP/Getty Images)

September 10, 2008

Ambient Awareness - Social scientists explain Facebook & Twitter

Clive Thompson at The New York Times has provided a sociological & psychological analysis of microblogging tools popularized by Facebook and Twitter in his wonderful essay Brave New World of Digital Intimacy.

I'd highly recommend everyone, whether you lead a digital life or not, to read the full article - especially older people (over thirty) who are puzzled by the phenomenal success of microblogging.

Here are my highlights from the article, though it does not capture the storytelling essence that the full article would provide:

Social scientists have a name for this sort of incessant online contact. They call it "ambient awareness." It is, they say, very much like being physically near someone and picking up on his mood through the little things he does — body language, sighs, stray comments — out of the corner of your eye. Facebook is no longer alone in offering this sort of interaction online...

For many people — particularly anyone over the age of 30 — the idea of describing your blow-by-blow activities in such detail is absurd. Why would you subject your friends to your daily minutiae? And conversely, how much of their trivia can you absorb? The growth of ambient intimacy can seem like modern narcissism taken to a new, supermetabolic extreme — the ultimate expression of a generation of celebrity-addled youths who believe their every utterance is fascinating and ought to be shared with the world...

This is the paradox of ambient awareness. Each little update — each individual bit of social information — is insignificant on its own, even supremely mundane. But taken together, over time, the little snippets coalesce into a surprisingly sophisticated portrait of your friends' and family members' lives, like thousands of dots making a pointillist painting. This was never before possible, because in the real world, no friend would bother to call you up and detail the sandwiches she was eating.

Facebook and Twitter may have pushed things into overdrive, but the idea of using communication tools as a form of "co-presence" has been around for a while. The Japanese sociologist Mizuko Ito first noticed it with mobile phones: lovers who were working in different cities would send text messages back and forth all night — tiny updates like "enjoying a glass of wine now" or "watching TV while lying on the couch." They were doing it partly because talking for hours on mobile phones isn't very comfortable (or affordable). But they also discovered that the little Ping-Ponging messages felt even more intimate than a phone call.

"It's an aggregate phenomenon," Marc Davis, a chief scientist at Yahoo! and former professor of information science at the University of California at Berkeley, told me. "No message is the single-most-important message. It's sort of like when you're sitting with someone and you look over and they smile at you. You're sitting here reading the paper, and you're doing your side-by-side thing, and you just sort of let people know you're aware of them." Yet it is also why it can be extremely hard to understand the phenomenon until you've experienced it. Merely looking at a stranger's Twitter or Facebook feed isn't interesting, because it seems like blather. Follow it for a day, though, and it begins to feel like a short story; follow it for a month, and it's a novel.You could also regard the growing popularity of online awareness as a reaction to social isolation, the modern American disconnectedness that Robert Putnam explored in his book "Bowling Alone." The mobile workforce requires people to travel more frequently for work, leaving friends and family behind, and members of the growing army of the self-employed often spend their days in solitude. Ambient intimacy becomes a way to "feel less alone," as more than one Facebook and Twitter user told me.

Online awareness inevitably leads to a curious question: What sort of relationships are these? What does it mean to have hundreds of "friends" on Facebook? What kind of friends are they, anyway?

In 1998, the anthropologist Robin Dunbar argued that each human has a hard-wired upper limit on the number of people he or she can personally know at one time...psychological studies have confirmed that human groupings naturally tail off at around 150 people: the "Dunbar number," as it is known. Are people who use Facebook and Twitter increasing their Dunbar number, because they can so easily keep track of so many more people?

Many maintained that their circle of true intimates, their very close friends and family, had not become bigger. Constant online contact had made those ties immeasurably richer, but it hadn't actually increased the number of them; deep relationships are still predicated on face time, and there are only so many hours in the day for that.

But where their sociality had truly exploded was in their "weak ties" — loose acquaintances, people they knew less well. It might be someone they met at a conference, or someone from high school who recently "friended" them on Facebook, or somebody from last year's holiday party. In their pre-Internet lives, these sorts of acquaintances would have quickly faded from their attention. But when one of these far-flung people suddenly posts a personal note to your feed, it is essentially a reminder that they exist.

This rapid growth of weak ties can be a very good thing. Sociologists have long found that "weak ties" greatly expand your ability to solve problems. For example, if you're looking for a job and ask your friends, they won't be much help; they're too similar to you, and thus probably won't have any leads that you don't already have yourself. Remote acquaintances will be much more useful, because they're farther afield, yet still socially intimate enough to want to help you out. Many avid Twitter users — the ones who fire off witty posts hourly and wind up with thousands of intrigued followers — explicitly milk this dynamic for all it's worth, using their large online followings as a way to quickly answer almost any question.


It is also possible, though, that this profusion of weak ties can become a problem. If you're reading daily updates from hundreds of people about whom they're dating and whether they're happy, it might, some critics worry, spread your emotional energy too thin, leaving less for true intimate relationships. Psychologists have long known that people can engage in "parasocial" relationships with fictional characters, like those on TV shows or in books, or with remote celebrities we read about in magazines. Parasocial relationships can use up some of the emotional space in our Dunbar number, crowding out real-life people.

Psychologists and sociologists spent years wondering how humanity would adjust to the anonymity of life in the city, the wrenching upheavals of mobile immigrant labor — a world of lonely people ripped from their social ties. We now have precisely the opposite problem. Indeed, our modern awareness tools reverse the original conceit of the Internet. When cyberspace came along in the early '90s, it was celebrated as a place where you could reinvent your identity — become someone new.

"If anything, it's identity-constraining now," Tufekci told me. "You can't play with your identity if your audience is always checking up on you.

...Leisa Reichelt, a consultant in London who writes regularly about ambient tools, put it to me: "Can you imagine a Facebook for children in kindergarten, and they never lose touch with those kids for the rest of their lives? What's that going to do to them?" Young people today are already developing an attitude toward their privacy that is simultaneously vigilant and laissez-faire. They curate their online personas as carefully as possible, knowing that everyone is watching — but they have also learned to shrug and accept the limits of what they can control.

It is easy to become unsettled by privacy-eroding aspects of awareness tools. But there is another — quite different — result of all this incessant updating: a culture of people who know much more about themselves... The act of stopping several times a day to observe what you're feeling or thinking can become, after weeks and weeks, a sort of philosophical act. It's like the Greek dictum to "know thyself," or the therapeutic concept of mindfulness.

Laura Fitton, the social-media consultant, argues that her constant status updating has made her "a happier person, a calmer person" because the process of, say, describing a horrid morning at work forces her to look at it objectively. "It drags you out of your own head," she added. In an age of awareness, perhaps the person you see most clearly is yourself.

September 3, 2008

Google Chrome may re-ignite the Web browser war

Google yesterday launched its Web browser called Chrome. Compared to dozens of products that Google now offers in its mission "to organize the world's information and make it universally accessible and useful," Chrome may be one of the company's most significant launches since Google Search, the company's debut product which generated 99% of its total revenue of $16.6Bn last year.

If Internet is the revolutionary land of new opportunity, browser is the "car" everyone needs to explore the "land" and enjoy the journey. The Web browser therefore is the ultimate Trojan horse a company can use to influence users' online experience and introduce new products & services. Chrome will enable Google to tie together its major products into a seamless user-friendly experience (e.g., Search, Gmail, maps, docs, analytics, etc). Some of its products will work more efficiently with Chrome. For example, Google Analytics has relied on server-side information to provide analytics data to clients. Chrome will allow Google to gather and provide much stronger analytics data by grabbing browsing information from the client side.

Additionally, by developing its own browser, Google can speed up releases of its own Web software, which have always hinged on working with Internet Explorer and were therefore dependent on Microsoft's development cycles. Now, Google can release new applications that initially run just with Chrome, providing it an alternative product launch platform, and simultaneously driving Chrome's adoption through popular Google applications.

On aggregate, Chrome should increase adoption of other Google products and significantly boost its revenue potential beyond Search. The ultimate mission for Google is to optimize revenue streams by having all of users' data all the time - search data, publisher ad-serving data (thru DoubleClick) and now browser data.

Why now? While above reasons sound quite compelling, some may wonder why did not Google develop a browser sooner. There are new browsers on the market and in development (Microsoft's Internet Explorer 8) which give consumers the option to surf the Web in anonymity. Anonymous browsing, which allows users to have an online experience without leaving any trace/digital footprints, is probably the single biggest threat to Google's monetization model. Its revenue generation is based on its ability to collect information from its users as they search, and serve them targeted ads and search results.

Microsoft IE 8, expected to launch in Q1 09, has developed "InPrivate Browsing," a feature that allows users to surf in private. There has been a long-expected threat that Microsoft (IE) or Apple (Safari) could mess with the Web cookies that are critical to the functioning of online advertising networks/exchanges, such as DoubleClick (now owned by Google). Competitive threat, including recent U.S. government efforts to make a stink about Google's privacy policies, probably pushed Google to make a proactive effort in launching Chrome and including its own "incognito mode" in the browser.

Chrome in all likelihood will be the default browser on Google's soon-to-be-released Android mobile operating system. The launch timing therefore makes perfect sense.

Google apparently had been working on the browser for two years, and the launch over the long weekend was leaked through its comic explaining the product rationale.

Chrome, an open-source Web browser, faces a tough market with three players currently controlling 98%+ of the browser market. Microsoft's Internet Explorer (IE) has a dominating 72%+ share, which has however decreased from over 90% share during the past three-four years due to the success of Mozilla's open-source Firefox browser.


Source: Net Applications, August 2008

I know a bit about the Web browser space. I led the marketing and distribution of AOL's Web browser (one of my several roles at that "constantly transforming" firm).

Yes, AOL did launch a Web browser in late 2004. The goal was to promote AOL.com when AOL opened its content walled garden for free consumption through an open portal. The secondary goal for AOL Browser was to generate search revenue through AOL Search. Microsoft's IE at the time commanded a powerful 90%+ global market share (post Netscape's demise), but had not introduced a major new version after IE 6 for over three years - a lifetime in the Web world. That's what monopoly does. The AOL Browser was built on the IE 6 rendering engine, given IE's ubiquity, and a royalty free license that AOL won from Microsoft. AOL introduced several industry leading features in its browser - a separate search box, tabbed browsing, back/forward preview button, arguably the fastest speed for browser launch and page rendering, separate pull-out side panel for bookmark management & previews, etc. Initially Microsoft openly encouraged AOL to innovate, and later on copied most of the AOL Browser features when it rolled out IE 7 almost a year and half later - a typical Microsoft response.

Power of default: The best way to distribute a new, free, utility software is to make it the default application on the hardware users buy to use that software. Web browser is a classic example of such a software. The majority of users don't actively pick their Web browser - it's an utility application to surf the Internet, and as long as the default browser on their PC does an OK job, users do not actively download and try a new browser. And the default browser on almost 100% of PCs is Microsoft's IE. Even though the U.S. Justice Department has clearly mandated that Microsoft cannot use its monopoly power in one area, say, the Windows Operating System, to bundle new Microsoft products in a manner that limits competition, PC OEMs, who have 100% freedom to choose the software they bundle with new PCs, hesitate to take on Microsoft head-on unless the stakes are very high. Almost all PC OEMs therefore make the Microsoft IE the default browser, not least because its monopoly power is self sustaining - since IE is the dominant browsing platform, all Web sites and third party applications are designed to work on IE, which is not true even for Firefox, the #2 browser. Even if OEMs bundle a new browser, it is added as the second browser to IE, and IE is the default browser, the definition of which is the browser launched by default if the user, say, clicks on a Web link in a Word document. Some PC OEMs let users choose their default browser (if more than one are bundled) during the set-up process of their new PC when it's taken out of the box.

Since browser is a free product (ever since Microsoft started distributing IE for free in order to kill Netscape, the first Web browser), its distribution economics are governed by Web search generated through the browser. We had built a separate search box in the AOL Browser chrome. Revenue share with OEMs for distribution was therefore based on search revenue through the browser. Having a persistent and separate search box right at your finger tips on the browser chrome was a big convenience for users (no need to open another window and go to, say, google.com), and the default search engine in that box ended up being a big winner (again, the power of default). Even though users could change the default search to the search engine of their choice, most never did. Google therefore made a huge fuss when Microsoft made its MSN Search as the default search engine in IE 7 when it was launched in 2006.

It'll therefore be interesting to see how Microsoft responds to Google making its search as the default search on Chrome, which has also merged the browser address and search box into one. We should not expect any complaints from Microsoft until Chrome gets some traction.

While Chrome may seem a threat to Microsoft given IE's 72% market share, I believe Chrome's adoption, at least initially, will come at Firefox's expense. As discussed above, only tech savvy users will experiment with Chrome in the beginning - the kind of users who switched to Firefox from IE at the first place.


On my first use, Chrome provides a very clean experience and appears fast. While Google may offer better features rolled out with faster frequency, better technology does not necessarily guarantee a win in the browser war (remember, Netscape). The power of default as discussed above and the entrenched distribution of IE present a tough hurdle.

While Google has not discussed Chrome in relation to social networking, where Google has been a laggard in the U.S., making a user's "social graph" (network of contacts) as part of the browser, and allowing 3rd party plug-ins and applications can be an easy product extension. Users potentially can access their social graph from a variety of Web services such as Facebook, MySpace, Flickr, Twitter, etc., all hooked into the browser itself. Chrome can shift the battle for the default Web platform from social networks to Web browsers.

Theoretically, a browser is a better platform compared to social networking sites like Facebook to aggregate various Web services. But it still faces all the basic challenges discussed earlier, that have to be overcome in order for browser to become the default platform on the Internet. However, Chrome's attempt to become users' and developers' common platform on which Web applications & services can be aggregated and built on may be another of those futile efforts from companies that have tried their proprietary products to become the common standard on the Internet. As argued earlier, the Web itself is the ultimate Internet platform, that is open and free for anyone and everyone without any potential conflict of interests. Having said that, Chrome may have a better shot than any other product thus far to become the Web operating system.