Below are slides from my talk on "Securitizing Happiness" at TEDxShanghai later today. This presentation is a slight update to the original talk i gave back in March 2008 at the O'Reilly Collective Intelligence FOO Camp, held at Google HQ in Mountain View:
Note: many of these concepts are still fairly raw, and since i'm not really a financial engineering expert they could certainly use further refinement... so your feedback and comments are appreciated. That said, i'm optimistic the basic ideas here are viable, worthwhile and can have substantial economic impact on society in the future.
hopefully i didn't end up looking like too much of an idiot, but
regardless it was great for me to finally get this out in the public
domain and get some reactions. appreciate any feedback or thoughts on the concepts & proposed solutions, and particularly any good hacks you think i've overlooked...
Now I don't believe everything David says is correct, but he's a pretty brilliant guy and someone i'd never want to face across the table at either a poker game or a chess match. Anybody who can get a $100M valuation on their second round of funding certainly deserves, as Ali G sez, my re-SPECK. And David has proven twice before that he definitely knows how to make money.
Much of his article focuses on how social networks use trust & relationships to produce higher-quality information, and why Facebook is becoming an incredibly valuable property not so much because of the content (aka "the Peanut Butter"), but because of the infrastructure built around the social graph (aka "the Bread"). No wonder Yahoo was interested to the tune of $1.5B; but as David notes... also no wonder either Facebook wasn't. Unfortunately for Yahoo, they just don't have that kind of bread. (heh)
Bread & circuses aside, Mr. Sacks is likely correct that Facebook is quickly becoming THE dominant social network, and he even goes so far as to say Web 2.0 will be rebuilt in the image of Facebook:
The potential for Facebook to layer on any feature whose value
increases with the participation of friends is an incredibly broad
canvas for a portal. Moreover, as each new application gains
acceptance, it enriches the overall value of the network and makes it
incrementally more likely that the next application will be tried. Much
of what we know as “Web 2.0″ will eventually be rebuilt on top of
Pretty strong words, and a pretty big endorsement for Facebook Platform (other folks think so too). While i don't believe Facebook will kill all other social networks, it isn't too hard to imagine them becoming the de facto "social" social network, and a very powerful platform for developing social applications. Dave Morin and team over at Facebook have certainly created a great new opportunity for developers looking for a big pool to wade into.
Still, call me skeptical that Facebook will completely replace my "business" social network (LinkedIn), or my "family" social network (Geni), or my "photos" social network (Flickr), or my "porn" social network… er, ahem… ok, let’s just stop right there. Anyway my point is I won’t always share all of my info in the same social network -- even if Facebook is the biggest one -- and there will likely be a "long tail of social networks" that provide niche content & context, in addition to the more popular ones like MySpace & Facebook & LinkedIn. And altho i'm biased, I might suggest a service like Spock.com could be a useful way to track & manage all the different social networks in which people participate.
But i do think there is some truth to what David says about social networks providing a trust-based way to communicate higher-quality information:
Not only Digg, but virtually all Web 2.0 applications which are based on the wisdom of crowds can be reconceived as Facebook apps based on the wisdom (or trust) of friends. To the extent that these services cater to publishers who seek a mass audience, such as YouTube or Flickr, the social graph will not threaten their business. But to the extent they publish content intended for friends, or if the value of their service increases with the participation of friends, these applications face only two choices: get each user to recreate his or her friendship network on their own site or migrate their service to the Facebook platform lest someone else does it first.
While i might quibble about the interpretation of Surowiecki's Wisdom of Crowds in this context, i'd agree there is likely a method of combining social networks & prediction markets that enables powerful new ways to derive information from "vertical communities".
In fact, I wrote an article on this topic last month for O'Reilly in Release 2.0 called "Channeling Crowds" (excerpt linked). Whether or not this type of community occurs on Facebook or on other niche-focused social networks, there are whole new classes of websites & applications which can be created by using the community's social context as infrastructure. And if i'm a betting man, my prediction is one of the more successful of these will be Geni.com. (Best of luck, Mr. Sacks :)
damn. damn those smart-ass alpha geeks all to hell i say!
to be more specific: Adrian posted a more intelligent summary of structured content than i ever could, and suddenly i had a lot less to get up on a soapbox about. (for a few examples of my more famous soapbox posts, see my doozies on GoogleBase World Domination and ye old infamous Vertical Walled Gardens i wrote while at SimplyHired, replete with images from All Your Base, Highlander, and Guns Germs & Steel... damn, can i plagiarize and steal licensed imagery, or what?!?)
so, in lieu of some glorious rambling long post where i reveal the True Nature of the Universe (A: 42), i'll take the "mathematical approach" (cough) here and see if i can compress my thinking into a few short sentequations for the rest of you Mortals to consume... here goes.
What Publishing 2.0 is, and what it is not.
Publishing 2.01.5 is about going online, lowering costs, aggregating audience, and a million little GigaOm, TechCrunch, and Seeking Alphas beating up on Publishing 1.0 dinosaur empires
Publishing 2.0 is NOT about the above, it's about Structured Content
Structured Content = Structured Data
Structured Data -> Vertical Applications
Vertical Applications -> Vertical Community
Vertical Community + Viral Marketing = Network Effects
[All of Above] = Vertical Prediction Markets for Best-in-Class “Whatever”
In summary: Publishing 2.0 is about using structured data to create vertical applications for domain-specific communities, and ultimately to create domain-specific contentnetworks that discover / promote the best & most valuable "whatever" in the world… and with enough community & transaction data, can predict what's likely best & most valuable in the future.