Ukrainian Journalists describe in a bit more than a minute how they want to see the future of their country:
Press “CC” to get subtitles.
Some reading tips for the weekend.
» The internet is fucked
This is a pretty great text explaining why the loss of net neutrality would be a huge problem, and who is pushing it. Sometimes you simply need an attention-seeking headline.
» T-Mobile USA Turns an Industry on Its Ear
Because T-Mobile was not allowed to merge with AT&T, it decided to innovative instead. And now it is changing the U.S. mobile landscape.
» Uber Cab Confessions
Entertaining report about how it feels to be a driver for the ride-on-demand startup Uber.
» Welcome to Googletown
How Mountain View is changing due to the non-stop growth of Google’s headquarter.
» Berlin, Seriously?
Tyler Crowley, a Stockholm-based startup-event organizer originally from the U.S., says Stockholm is better for Startups than Berlin.
» Marc Andreessen Thinks the News Business Is About to Grow 1,000 Percent
Sometimes I think the always-optimistic Netscape founder randomly picks a trend/industry/topic and claims it will sky-rocket. But with his influence, this might even work.
» Inside Amtrak’s (Absolutely Awesome) Plan to Give Free Rides to Writers
I love that idea of having a mobile office on the train (in theory. I hardly take the train).
» These 11 Charts Show Everything That’s Wrong With The Modern Diet
It’s time to go back to simplicity and common sense in regards to food, it seems.
» Why Abercrombie is losing its shirt
I wasn’t aware that Abercrombie has that long of a history. But the clothing company is struggeling.
Some reading tips for the weekend.
» The Inside Story Of How Jan Koum Built WhatsApp Into Facebook’s New $19 Billion Baby
Great, highly interesting piece. Until now, not a lot was known about how WhatsApp came to be, since its founders avoided the press.
» WhatsApp, Scourge of Ultra-Orthodox Jewish Communities
The most exotic journalistic angle to the WhatsApp story so far: Conservative Jews debate about what WhatsApp is (and if it is morally ok for them to use it)
» New Zealand Prime Minister John Key denies he is a Shapeshifting Alien
The Minister said: “I’ve taken the unusual step of not only seeing a doctor but a vet, and both have confirmed I’m not a reptile.”
» Here’s why you shouldn’t buy a US-to-Europe flight more than two months in advance
Information that can save lots of money.
» A Networking Protocol For Labor
Not a stupid thought: Like there is a protocol for the Internet, there should be one for labor.
» Big Breakthroughs Come in Your Late 30s
I guess everybody who is younger than “late 30s” gets happy when reading this.
I can’t stop thinking about the Facebook-WhatsApp deal.
But that’s not weird considering that we are talking about the second biggest tech acquisition of all time!
Exactly: A service developed by only about 35 engineers that is nothing less or more than a free, well-working successor of SMS, that over and over again was suffering from major security holes and that lacks the lock-in effects which would prevent its users from getting value out of competing services, has become the second biggest tech acquisition of all time.
I have seen many people justifying the acquisition. Even after days of letting the news sinking in it is still impossible for me not to call this $19 billion price tag insane. Especially considering that in summer last year, it was valued at $1.5 billion.
But while the dust settles, I came to realize that WhatsApp has pulled of something remarkable: It has put Facebook into a situation where Facebook only could lose, no matter how it would have proceeded.
The way I see it, WhatsApp definitely became a major threat to Facebook, by taking away people’s attention and “eyeballs”. The more time users spend with chatting on WhatsApp (or other similar messenger services), the less times they can be shown ads powered by Facebook. For Facebook, under pressure to satisfy shareholders, this turned WhatsApp into an existential threat.
To understand this, one has to look at the different monetization models of both services: Unlike Facebook, WhatsApp with its yearly $1 fee and lack of ads is not cashing in on users’ attention. For WhatsApp, there is no difference whether a user spends a total of 1 hour a month with the app or 10 hours. The revenue per user stays the same, as long as the user at least shows enough activity to keep paying the yearly fee. Facebook’s business model on the other hand is built on the idea that the more a user interacts with Facebook (or Facebook-connected sites and apps), the more Facebook can earn, because it can present more ads.
Facebook was on its way to built a huge multibillion Dollar ad market that unexpectedly got disrupted by this small, first seemingly insignificant competitor. A competitor whose CEO does not appreciate the concept of “paying with data” and who instead chose the more traditional “pay with money”.
Facebook, unable to stop the growth of WhatsApp through own product-innovation (Messenger has good traction, but didn’t impact WhatsApp’s positive growth curve), had to do something. WhatsApp “steals” hundreds of millions of users’ valuable online minutes that Facebook planned to sell to advertisers and even leaves them completely unmonetized. Eventually that could have seriously hampered Facebook’s revenue-generating capabilities and destroyed all the prospects of Facebook being a money machine for many years or even decades to come.
Because of that, Facebook felt that it HAD to buy WhatsApp, to at least gain some control over how the chat app would impact its own business going forward. The problem is: If you feel that you HAVE to buy something and the seller knows it, then negotiations always work to the seller’s benefit.
So here we are, with Facebook being $4 billion in cash and $12 to $15 billion in stock “lighter” than before, but owning WhatsApp.
But that will likely not improve the situation for Facebook.
In order to prevent WhatsApp from continuously destroying the attention market that Facebook so desperately needs, Facebook would have to change the way WhatsApp works and generates money. But since the absence of ads, the simplicity and the promise of never “spying” on users for commercial reasons is the primary reason why 450 million people chose WhatsApp, this is pretty much impossible to pull of.
To summarize, Facebook felt forced to buy WhatsApp for a ridiculous high price but is now stuck with an app that keeps disrupting Facebook’s business model as long as it stays unchanged.
It’s quite a dilemma. By letting WhatsApp achieve today’s network effects and size, Facebook had already lost. If it would not have bought the chat service, it would have endangered its own business model. By buying WhatsApp, it surely has gained some control, but very likely would scare away many users if it would make the changes needed to turn WhatsApp into a “supporter” of Facebook’s attention-based business model.
The one and only solution out of the misery for Facebook would have been to buy and kill WhatsApp in its early days, I believe. Fortunately, it didn’t. The attention-centric business model has a big weakness in that it creates a gap between the users’ and the company’s needs. WhatsApp managed to align the users’ and the company’s needs (apart from the security holes, which most users did not care about though). By doing that, it might actually have changed the rules of the social web forever.
So Facebook will buy WhatsApp for a jaw-dropping $19 billion.
I think owning WhatsApp makes total sense for Facebook, if for nothing else then at least to “control” a potential threat and to hinder WhatsApp to be picked up by Google or another major competitor.
But I think shelling out between $16 billion and $19 billion (the latter is including the restricted stock options for the WhatsApp founders) is insane and a big mistake.
The network effect and the lock-in effect
The reason for my verdict is actually quite simple. There are two things that social web applications need in order to justify their gigantic valuations: the network effect and the lock-in effect. The network effect means that the more people use a service, the more fun it is for them and the more value they get out of using it. The lock-in effect makes sure that people won’t leave easily to a competitor even if they are fed up with the network they currently use. Because competitors are usually ghost towns. A feed with no updates from friends is boring as hell. Facebook benefits from both effects, and that’s the only reason why it was able to raise billions on the stock market. It’s all about expected financial growth over a long period which is more likely to happen when it gets hard for users to switch to the competition. They are locked in, whether they appreciate the service or not.
Chat apps lack the lock-in effect
If you look at WhatsApp, there is only the network effect, but no lock-in effect at work. One single buddy on a competing messaging service (of which there are dozens, some even pretty big) is enough for a WhatsApp user to get value out of a competing app. It won’t immediately lead this person to remove WhatsApp from his or her home-screen, but it is a start. And thanks to push messages, you will not forget this other app.
Myself, I use a couple of messaging apps simultaneously: WhatsApp, Kik, Line, Facebook Messenger and Threema. On each of them, I have at least a few active contacts, without this being any inconvenience for me. It’s also pretty easy to convince specific contacts to try out another app and to use it regularly. Because they receive a push every time I message them.
The way I see it, for bad or good, Facebook is a company that is here to stay, thanks to the lock-in effect (that is reinforced through the “login with Facebook” button that you see all over the web and in apps). Same goes for Instagram. WhatsApp on the other hand is a fad. A big one, yes. But still a fad. Facebook has just spend up to $19 billion on a fad.
P.S. it’s likely that Facebook will try to establish a lock-in effect for WhatsApp. Not sure though what that could be.
Most people never question the status quo. With a few exceptions (like when mass protests against governments occur), they believe that the way things are right now is how “it is supposed to be”. That is what is being considered “normal”.
Of course, there is not a lot of “normal”, and often the status quo will turn out to be a rather bad solution for a problem just a couple of decades later. That’s why photos or videos from past centuries often seem so amusing.
But somehow, humans are rather immune to the fact that the status quote right now, right at this second, might be seen as ridiculous in 20 years, too. Or they at least pretend to be immune to avoid the inconvenience of change.
However, one of the most effective ways of illustrating the absurdity of the status quo is to create a picture of an imaginary world where this very status quo is being introduced as a technological innovation.
This great post is doing exactly that, explaining the questions, concerns and risks that would come up in a scenario where a world relying on virtual money (like Bitcoin) would attempt to switch to cash money. It’s entertaining and enlightening.
It’s fun to come up with other aspects of today’s status quo that would look pretty silly when being watched through that kind of lense.
People replacing efficient machines with slavery-like, badly-paid jobs maybe?
I was very excited when I heard that T-Mobile USA even accepts people without U.S. social security number for their postpaid plans, as long as one has a Visa that is eligible.
As I am currently in the U.S and would love to use T-Mobile’s Simple Choice plans that include free data roaming in 100 countries (with EDGE speed), I decided to apply.
Unfortunately, after the store had faxed my Visa to the headquarter, I had to learn that my Visa class (journalist Visa valid until October 2018!) is not eligible, unlike other Visa types like student Visa.
I tried to learn more about that policy, but could not get any information either from the store staff nor after calling the support hotline.
I am rather disappointed about the policy. Not only because the two stores I went to did not seem to expect any issue and happily faxed my application away (the first store then never got back to me, which was weird). But also because it does not make sense to me. Why would T-Mobile think having a foreign student on a postpaid plan is “safer” than having a foreign citizen with a journalist visa.
Let’s not forget that the the Simple Choice plan is no annual contract. Instead, it can be terminated any time. So fear of me suddenly leaving the U.S. and not continuing to pay my bills can be ruled out as a reason.
T-Mobile is of course free to make this kind of discrimination of certain Visa-types. But it does not really fit to the image as rebel and rule-breaker that the company tries to establish in the U.S.
If anybody has more info on the background of this policy or knows a solution, please leave a comment.
Update: After contacting the PR department of T-Mobile USA, a company spokesperson informed me that they would make an exception and approve my Visa. He also mentioned that the company will look into the policy and might make changes in the future.
Some reading tips for the weekend.
» 10 Reasons Life May Be A Computer Simulation
I love to muse about this theory. It’s not less likely than every religious concept. Actually, it would explain people’s believe in “God”. Only problem: It leaves us with the question of who created those who created the simulation.
» Once the full stop meant a sentence was over – now it means you’re angry
Never thought about that before, but in a chat conversation, it is kinda true.
» Three Reasons Chipotle Is Destroying McDonald’s
One could say Chipotle vs McDonald’s is the new vs the old America. Both will keep existing.
» What Would Happen If You improved Everything by 1%: The Science of Marginal Gains
A pretty good “life hack”.
» Sheryl Sandberg Wants Stock-Photo Women to Lean In, Too
Subtle, but smart initiative to change old role models: Creating less stereotypical stock photo databases.
» Five Successful Startups That Started As Blogs
Blogging can definitely be a good way to start a business.
» World’s largest solar plant switches on in California
I saw it a couple of month ago while driving from the west coast to Vegas. Back then I wasn’t aware what that mysterious looking site was.
» Regulate the Internet like the real world or the real world like the Internet?
A very important thought. Many old-style regulations that made sense in the past might not be the best solution for the future.
» I wanted to work at Apple really bad, and now not so much
A bad boss can destroy a lot – even at Apple.
» U.S. airlines, unions say Norwegian Air plans to ‘Walmart’ the skies
This does not make sense since the U.S. airlines already have “walmarted” the domestic sky.
» Which Coding Language Is Right For You?
I hope one day I’ll find the motivation to learn coding. This list helps to make a choice of the right language.
» By September coding will be mandatory in British schools. What the hell, America?
In comparison, some of today’s kids will get coding skills served on a silver plate.
I’m reading a marvelous book right now, “The Righteous Mind – Why Good People are Divided by Politics and Religion” by Jonathan Haidt. While only half way through, it has really changed my look on discussions and conflicts between people.
Haidt explains why there is little rational thinking in debates about political, economical, social or other issues, and he tries to show that even when we believe we are completely rational, we are not.
What happens instead is this: Whenever being presented with a confronting view or opinion on an important topic, our intuition – which is fed by many sources, like life experience, principles, religion, other values – tells us that we disagree. Often within milliseconds. AFTER that, our thinking brain comes up with a bunch of arguments aimed at justifying what we feel, and at defeating the other person’s reasoning and explanation. We might totally believe that our arguments are the result of instant, objective and rational evaluations of the issue. But in reality, the decision about what we actually “think” about this or a similar issue has been made long time before. The thought process that starts while listening to the other person serves only the goal to find arguments to support our objection.
That phenomenon explains while people so often struggle to convince persons with opposing views, even though they thought to have come up with absolute killer arguments that would immediately make everybody side with them. And it also explains while, upon pressing really hard and properly questioning all counter-arguments, one gets to hear increasingly absurd things: During that kind of “exchange”, there really is hardly any real thinking and reflecting going on. It’s intuition against intuition, and there is no way even the most amazing, solid, statistically or scientifically proven argument would actually have its desired effect.
Understanding this has made me much more aware of my own intuition and thoughts. Now I can essentially observe how my intuition orders my brain to build specific arguments. It also enables me to actually halt this process and to question my intuition. Because it is not always right.
And of course, this insight makes it much easier to understand other people’s reactions. Because, if not trying really hard, everybody is affected by this, no matter how much status and intelligence they have, and how smart they believe they are.
I highly recommend to keep this in mind next time you are observing or participating in a debate about controversial, polarizing questions like climate change, going to war, nuclear power, privacy, gay marriage, abortion, capitalism, immigration etc. It’s quite enlightening to realize why the people representing different positions hardly are affected by what is being said, no matter how smart or convincing it is. The intuition is in charge, not the rational brain. If convincing is the goal, the intuition needs to be convinced.
The result of the Swiss citizens’ “stop mass immigration” voting has caused quite some outrage throughout Europe.
But to be honest, I want to express my respect to 49.7 percent of the Swiss voters who did not back the initiative to reintroduce immigration quotas with the European Union. Almost half of the voting population has decided for themselves that they are open for change. To me, that is quite remarkable.
The question of immigration is bascially a question of being pro or contra change. Immigration always means change and some degree of uncertanty for the locals (about how they’ll be affected).
Many humans in general are rather sceptic about change. If they have the choice between keeping things the way they are and creating a situation where changes with unclear consequences for their lifes might occur, many opt for the status quo – even if it would not be seen as ideal.
To me, a mere 50.3 percent support for the attempt to slow down or stop change is a suprise, because it basically shows that half of the Swiss people embrace change. I don’t think many other countries in Europe could beat that.
Because of the common, emotions-fueled change- and risk-aversion of humans, I don’t think a voting with that very question makes sense. But I understand that referendums are part of the Swiss identity and system. Now they have to deal with the unpleasant consequences.