Master of 500 Hats

Gordon Gekko 2.0: Flipping is GOOD. (aka Memo to Jason Fried: Sorry, You're Fucking Wrong.)

[clarification: i was a private angel investor in Mint's A round back in early 2007, when i was also doing some marketing consulting for the company. i was not directly involved in the Founders Fund investment in Mint's C round a few months ago. the comments below are primarily drawn from my personal experience with the company before i joined Founders Fund]

[disclosure: the views expressed below are my own, and do not in any way represent the official position or perspective of either Mint.com or Founders Fund.]

Dear Jason Fried:

Sorry, You're Fucking Wrong.

    Flipping is GOOD.

Let me explain...

In a poorly-researched post titled "The Next Generation Bends Over" (cute) penned a few weeks ago by Jason Fried, founder/CEO of 37 Signals, the author attempts to make the case that:

1) VCs behind Mint.com forced founder/CEO Aaron Patzer into $170M acquisition by Intuit

2) it's a growing trend "indicative of VC-induced cancer that’s infecting our industry and killing off the next generation"

3) young entrepreneurs should be more bold, audacious, go all-in on their vision, in order to "kick the ass" of the collective incumbents / dominant players

In order, these assertions are:

1) Fucking Wrong, and Irresponsible Conjecture & Hyperbole

2) Completely Wrong, and in fact Exactly the Opposite trend is going on, and finally

3) Wrong in most cases & crap advice for young entrepreneurs.

I'll now address each point specifically, and explain why Jason Fried -- although in his own right, an accomplished entrepreneur, whose products i use and respect -- is full of shit in this particular instance.

The VCs behind Mint.com Did NOT Force a Sale. Do Your Damn Homework Before You Speak.

First & foremost, while i respect Jason's opinion and right to post whatever the fuck he feels like, his article was -- by his own admission -- not based on any fact-checking.  At the beginning of his post, Jason states "i don't know the full back story, but i bet this sale was encouraged by a Mint investor."  IMHO, this is just incredibly irresponsible: you're a *very* visible figure ripping other folks on mere conjecture.

Perhaps you might want to contact one of these investors -- who, like me, are all publicly listed in Mint's entry on Crunchbase -- and ASK one of them, before you blow such a wild assertion out of your ass? You probably know several of them, and certainly through your connections it would be fairly easy to reach one of them to confirm or deny your suspicion. While i don't expect folks who aren't breaking-news bloggers to follow basic journalistic principles, making such an accusation without the tiniest shred of evidence is lazy at best, and borderline slanderous at worst.

Or, if you're simply too damn lazy to do some basic research, maybe you could just ask any experienced entrepreneur or venture investor why in the hell would it make any fucking sense for Series B investor Benchmark to encourage a sale that's likely only 4-5x its investment, or Series C investors who just put money in 30 days ago?  or do you somehow think the seed or A round investors were controlling Aaron's actions with a car battery attached to his balls? if you had any knowledge of Aaron whatsoever, you would know that he is one confident sonuvabitch who RARELY lets anyone force him into doing anything.

In short, your logic here is not only faulty, it's piss-poor and reveals your absolute ignorance of what goes on in the venture world.  Sure, you're absolutely correct there are some VCs that might force an entrepreneur's hand -- however, in most cases IT'S IN EXACTLY THE OPPOSITE SCENARIO of what you suggest. They usually want the entrepreneur to stay in the game, NOT sell, and aim for a larger / later win -- typically by FORGOING an acquisition and instead taking a round of capital -- which, in fact, was exactly what Twitter did when you were hypocritically whining about them last week.

Although there may indeed be examples of VCs forcing an entrepreneur to sell to get liquidity to investors, it's not at all typical and usually the opposite of institutional investor motivations.

The "Growing Trend" in Internet deals is towards More & Smaller Acquisitions.  But it's not because of VCs, or the Financial Crisis, or Sarbanes-Oxley.  It's because the Web is Maturing, and Internet Platform Giants are outsourcing / buying Innovation.

The second point that Fried asserts is that this is somehow a growing trend, and that VCs are changing the industry, "killing off the next generation" of entrepreneurs by forcing premature acquisitions. Again, nothing could be further from the truth... and in fact, the EXACT opposite is the notable trend going on in the industry right now.

First it should be noted that M&A have always outnumbered IPOs, but regardless IPOs basically shut down in tech after 2001 due to the dot-com blowup.  Subsequently, many armchair analysts have stated that Sarbanes-Oxley legislation has made it more expensive to go public. Others have noted the financial crisis ending as a reason for more acquisitions.  Still other conspiracy-theorists like Jason think VCs seeking liquidity for investments are at fault.

While any of these may be contributing factors, the more basic trend is this: there are now tens, if not hundreds, of large online platform companies with millions of users and positive cashflow.  In addition to Google, Yahoo, & Microsoft, there are also eBay, Apple, Amazon, News Corp, Facebook, AOL, CBS Interactive, ComCast, IAC, etc, etc, etc. There are tens of companies that can pull the trigger on a <$500M deal, and 100s that can do a <$100M deal.

What's fundamentally different in the last ten years is that most big companies didn't have a need or facility for acquiring web startups.  They didn't understand them, and couldn't figure out how to integrate them into their business.  However, as the Internet has matured, ALMOST EVERY company is now a web company, and the Internet is both a primary and low-cost distribution channel.  It is now very easy to integrate a web-based acquisition [at least from a technical standpoint... might be more challenging re: politics & fiefdoms].  And since most innovation doesn't happen at big companies, it's almost guaranteed that we'll see more acquisitions of small startups to help grow larger company platform strategies. 

In fact, as more platform companies compete for deals, you'll likely see deal size go down as they try and acquire products & talent ever earlier in the startup lifecycle.  There's no need to wait for companies to become $1billion-dollar powerhouses -- it's much more capital efficient to acquire them after they've proven out basic technology & gotten a little elbow in their customer adoption.  Why buy it for $500M a few years later, if you can buy it for $50M now?  I'm sure this was part of Intuit's thinking about Mint... as soon as they saw the Series C deal go down, they realized if they waited another 2-3 years, the pricetag might go up even further.  So they cut a deal now.

This particular trend is what is scaring the shit out of big VCs right now.  Both lower capital costs for startups and lower average exits for acquisitions are screwing up large VC firm strategy.  Fred Wilson and others have written about this, & experienced investors like Alan Patricof have downsized funds to under $100M to make them more manageable in this "small-ball" environment.

While this trend may negatively affect some VCs, it's actually a very positive trend for angel investors and smaller VC funds, and it's an especially GOOD trend for entrepreneurs.  This creates a great market environment for small investment / small exit deals that are exactly what Web 2.0 entrepreneurs are serving up. In other words: the Future is Bright, Time to Buy Sunglasses.

Why Flipping is GOOD, & Why Young Entrepreneurs Should Probably Sell Their Startup Sooner than Later.

Finally, i'll make an intentionally controversial stmt:

 Young Entrepreneurs Should Sell Out Early (and not Late or Never)

Why?  For the same reason Why Dogs Lick Their Balls -- BECAUSE THEY CAN.

Look, i'm not trying to get anyone to sell their grand vision short.  If you've got a great business to build, by all means give it your all and run it forever.  However, for most entrepreneurs it's not going to be the only business they do in their lives.  And for the young entrepreneur -- particularly those under 30 who've never done it before -- the single best thing you can do to ensure your future success is TO GET A DEAL DONE. It's heroic and glamorous to "go all in", but realize that many times that means you may come away with NOTHING.  Playing well sometimes means you take a single or a double instead of getting thrown out trying to steal home.  And sometimes it means just taking 4 balls and getting on base.  However you play the game, swinging for the fences every damn time may work for Babe Ruth and Albert Pujols, but i'm personally more a fan of Ichiro Suzuki and Billy Beane. Small-ball and MoneyBall can be just as beautiful as a homerun.

it almost doesn't matter how large or small it is (altho firesale acquisitions don't count), the ability for an entrepreneur to have future success is typically judged by historical metrics.  and since most startups FAIL, the fact that you can take a startup to ANY size exit proves you can beat the odds, and that you may have the ability to do it again.  Once you have a deal under your belt -- whether it's a $3M deal, a $30M deal, or a $300M deal, you are bankable.  People will bet on you again. Investors, Partners, Employees, Reporters, etc will all believe you can do it (sometimes to their detriment, because again the odds are most startups fail -- even those by previously-successful entrepreneurs).

In addition, contrary to all these haterz who paint acquisitions as a bad deal or a sell-out, i actually think it's a great thing -- imagine being able to take 3-5 years to build a product, develop it to some level of usefulness, grow customers, build revenue, and then sell to a larger organization that decides it could use that innovation to help their business where it sees new opportunities.  Isn't that awesome?  Isn't that a vision fulfilled?  How about the fact that you can perhaps after a few years go back out & do that again?  Why is it that no one seems to think switching jobs every 3-5 years is a bad thing, but somehow think that selling your business to someone who really wants it and will grow it isn't terrific?

More Transactions Grow The Market. Startup Ecosystem Efficiency Raises All Boats.

Lastly, here's the thing i really want to stress, more than peeing all over Jason's post: more transactions of any kind or size help improve overall startup ecosystem health.

Fact is, startups operate in a financial system that is inefficient, illiquid, and challenging to manage.

Venture Capital exists because startups are generally deemed too risky for debt capital, or for traditional financing. This item is often overlooked by entrepreneurs (and investors) who view the VC field as glamorous and confident, when it fact it is mostly ignorant and risk-averse.  VCs like to maintain asymmetric information advantages over their competitors, and sometimes even over entrepreneurs.  Keeping competing VCs, and even sometimes their own LPs & entrepreneurs in the dark about value and pricing is sometimes in their best interest -- it KEEPS PRICES DOWN.  However, infrequent financing round / transactions and lack of objective pricing actually don't serve the interests of entrepreneurs.  As with most markets, liquidity and transparency provide the enabling mechanisms to grow the market larger and to reward market participants more richly.

This is a non-obvious point. 

More & smaller transactions in the market actually improve ecosystem efficiency, and provide better pricing transparency.  In the long-run, it benefits all system participants for small transactions to occur, because it makes the overall market more knowledgeable -- this in turn, reduces risk and encourages greater investment... which also encourages greater [overall] returns.

In summary, the benefits of selling startups early -- or simply when a transaction is available -- may be a smart strategy for both entrepreneurs and VCs to help improve the market, and reward themselves at the same time.  It may not be the best strategy for Bill Gates, Steve Jobs, Mark Zuckerberg, or other titans of industry, but it might be a reasonable strategy for 1st-time entrepreneurs under 30 looking to establish their careers & ensure that future endeavors are more likely.

And Jason: now that i've ripped you a new one, i'd like to apologize for all the harsh commentary and say that altho i disagree with you on this issue, i still think you're an amazing entrepreneur, and i still use your products. Happy to buy you a beer and shoot the shit anytime.

Hit it Gordon:

Taking "Me, Inc." Public: Market Caps for Individuals

I occasionally dabble in speculative (some might even say imaginary) asset classes.  One that doesn't really exist yet is the market for securitizing individuals, or groups of individuals. 

While this market does conceptually exist in various forms -- credit cards & microfinance provide unsecured debt, the real estate market is sort of a proxy for individual incomes, and government bonds are perhaps the largest aggregation of groups of individuals within geographic boundaries -- as yet there isn't a market for taking individuals (or groups of individuals) public.

While there are a few notable folks like David Bowie, the Beatles, or Michael Jackson who have executed a form of intellectual property securitization, these are infrequent & unusual examples.

(UPDATE & CLARIFICATION: many folks in the comments are focusing on the literal interpretation of my headline, namely taking *one* individual public.  while i'm neither for or against that concept, what i'm really talking about here is more likely the creation of a derivative instrument that maps to the future income of an *aggregate group* of individuals. i severely doubt any one person is going to be enslaved as a result of an individual IPO, but regardless that's not really what i'm getting at... the calculation for an individual market cap below is merely an exercise by which to arrive at an estimated value for the asset class.)

If we were to create an asset class for "human capital" securities, how might we calculate it?  

Well, we would probably add up the total market cap of all "stocks" in this potential market... which would be the equivalent of the collective market cap of ~6 billion people. 

So what is the market cap for an individual?

Let's assume the following:

• in developed economies, average wage earner makes ~$25K/yr
• the average individual works for ~40 years during their lifetime
• they save an avg of ~10% of income per yr (probably optimistic)
• their savings earns ~6% and inflation is ~2% (net int. rate = 4%)

Ok, so now the average wage earner in a developed economy might earn a cool million in revenue during their lifetime ($25,000/yr * 40 yrs = $1,000,000).  If they saved 10% of their income, they'd be able to put away $100K, which if invested appropriately might be worth ~$250K by the beginning of their retirement.  finally, let's assume that a present value (PV) calculation for that $250K using a discount rate of 4% results in a value of $50K at the beginning of the wage earner's working career. 

If this is a reasonable way to calculate it (not sure if i've made any obvious errors here; please comment if so and i'll revise), then the market cap for an individual might be around $50,000.  if you wanted to be generous, it might even be north of $100K.  if you're pessimistic on the savings rate, then it could be as low as $10-25K (or even zero i guess?).

anyway, i think i'm close enough to go on record in saying the Atomic Unit of Happiness = The Value of an Average Human Life = $50,000 (roughly).

if this is correct, then the overall market value of the asset class representing Individual Income Futures is $50,000 * 6 Billion people = $300T (T=Trillion)

now here is where it gets interesting...if we assume that at least a 1/3 of the world isn't earnng $25K per year, but perhaps only around $5K per year, and another 1/3 might only be making $500/yr or less (the Bottom of the Pyramid, or BOP), then what we're really saying is that the overall asset class is currently only worth around $100T, and is undervalued by about $200T due to the current state of healthcare, education, housing, and overall economic opportunities for 4 billion of the world's 6 billion people. 

imagine then if you could invest in the undervalued portion of the asset class, and then enable access to healthcare, education, and housing for those $4B people.  you'd have one of the best and largest investment opportunities ever.

Fifty thousand here, two hundred trillion there... pretty soon you're talking real money.

hope to see some of you folks at Social Capital Markets 2009 :)

(included below is my previous presentation on Securitizing Happiness):

Securitizing Happiness: Solving the World's Problems by Making Trillion-Dollar Markets for Individuals, Small Business, & Natural Resources

View more documents from Dave McClure.

Securitizing Happiness: Hacking Human Suffering thru Financial Engineering (TEDxShanghai, June 2009)

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:

Securitizing Happiness: Solving the World's Problems by Making Trillion-Dollar Markets for Individuals, Small Business, & Natural Resources

View more OpenOffice presentations from Dave McClure.

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.

The Faces, the *FACES*... it's *ALL* about the Motherf**king FACES! (+ Avatars, Icons, & Big Butts.)

DISCLAIMER: i've never really had any professional training in user interface design... and i'm sure that's obvious from my blog fonts & colors. However, i started designing & developing applications over 25 years ago, back in high-school when i developed some payroll reports one summer for my mom's company.  Since 1991 or so, around when Object Builder and Visual Basic came out, most apps i've built or worked with have been in windows-based or browser-based graphical UI environments. And for the last 5-8 years or so, most startups & applications i've been involved and investing in are based on social networks & platforms. So whether or not i have any fucking clue what i'm doing, let's just say i've seen my fair share of designing visual user interfaces & interacting with social platforms.

I Like Big Butt(ons)

If there's one thing i've learned from all that geeking around, it's that UI typically works best when it's butt-simple.  As a famous PayPal colleague of mine once stated succinctly: 

"Users are Stupid... give them something to click on."

Wise words.  You'll do well not to forget them, Young Jedi.

However it's not always enough to simply give people underlined text links to click on... rather, it's important to have strong associated visual cues that encourage users to take action.  Sometimes that can be as simple as just creating a beveled, slightly rounded, 3D-looking button with a color offset and some text that identifies a Call-To-Action (CTA).  Many people have become trained thru years of working with operating systems to click on things that look like buttons.  particularly BIG buttons.  particularly BIG buttons with pictures or icons.  they are almost irresistible.  Go on.  Click it!  you know you want to!

But -- and i do mean butt -- even big buttons with big graphics aren't always going to capture user attention. What has gradually happened over the past 10 years is that online consumer interfaces have started to zero in on basic human behaviors, recognition systems, and patterns. many of those offline interactions start with the simplest of human interactions -- looking at someone's face.

In fact, you could argue that much of the online experience these days is less about reading text, and a lot more about looking at faces, icons, and other visual representations of people.

"The FACES, You Idiot... It's ALL About The F**KING FACES!"

About 2-3 weeks ago, i was meeting with a startup about some new widget workflow they were creating.  The company shall remain nameless, but they were trying to develop a new UI around people exploring other people.  However, the interface was still mostly comprised of text explanations and directives.  Although it was being built as a social platform, they were missing the social part.  

And of course this cuts right to the heart of the matter.  

As the startup founder and i were discussing alternatives, i happened to check my inbox (because i think it had been at least 2-3 minutes since my last fix), and i noticed a new LinkedIn Network Updates email -- who got a new job, who made a new connection, etc.  And i thought it was curious that there weren't any visual images in the email.

Now believe me, i am a HUGE FAN of LinkedIn, and i'm friends of a lot of folks over there.  And they are making a LOT of money, and are very likely to be an IPO candidate way before Facebook.  But i *do* think they have done some things fundamentally wrong over the years, and possibly the prime evidence of that is their very late adoption of user photos almost 4 years after launching and the overall sparse use of faces within a social networking platform.  LinkedIn is about *professional* social networking, but i don't think being professional means you have to be boring or not engaged.  in any case, LinkedIn is doing just fine but i'd strongly suggest they are missing out by not making their platform more visual, more social, more viral, more engaged, and more group-oriented.  but perhaps that's a longer discussion for another post.  i'm still hoping they get there soon.

there was at least one other example of FAIL that i can't remember that pushed me over the edge, and i finally had to scream and just tweet out:

for many folks, the state of the art in consumer internet development is to design big beautiful fonts and flash animations and green-blue web 2.0 colors.  and for Google (at least until recently with Wave), the most advanced design elements they seem to come up with were still almostly exclusively text-driven.  

IMHO, the two popular companies that have actually done the best job with user interface design optimization are YouTube and Facebook.  and of those two, the one that has CLEARLY done the best job around UI for social platforms has been Facebook. 

YouTube iterated furiously over the years to optimize UI elements & buttons, and while not always a success from a monetization standpoint, sheer usage & adoption has been nothing short of astonishing.  Obviously they were doing something right.  there was an incredible amount of iterative development, and an emphasis on UI element overlays on videos, and embeds on other sites, all of which led to massive distribution, engagement, retention, etc.  the thing i thought was always smart about YouTube was that the interface was largely about browse-selecting one image from among several options. it was mostly a picture-driven UI.  and guess what?  many of those pictures are of people's faces.

Facebook -- hey, wonder whether *they* thought much about Faces? -- was started almost exclusively as a collection game around visual images.  as it grew & morphed, the profile pages & pictures remained hugely important, however the subsequent innovations around NewsFeed -- again, extremely visual, lots of faces -- and also the overall Facebook Platform, and associated user invitation dialogs, all created interesting & engaging ways for users to click around, into, and on top of interesting visual data (usually faces).  they continue to find interesting ways to personalize the user experience, and i don't see them slowing down at all.

that said, i do think there hasn't been much innovation around the user invitation dialogs, and that this is a place where i think a lot of interesting work could be done to a) select LESS # of people, b) who i CARE about more, c) make the faces BIGGER, and d) constrained by the CONTEXT of the current conversation keywords.  altho the dialog below is about faces, it's still too many for me.

interestingly, Google Wave takes a MUCH different approach and utilizes a very graphic / picture-rich environment, and a relatively complex UI.  while i haven't played with it yet, it does look pretty cool. still, i wonder if this isn't about 3 years late in the making... Google seems to be bragging about how the product has been in the making since 2007 or even 2004, but that seems like a bit of FAIL there... i mean, that's either an engineering fail for taking several years to get a product out the door (which still isn't live yet), or a management fail for not pushing them to get it done sooner.  anyway, i guess i shouldn't shit on their innovation even if it's a little johnny-come-lately, but i would have to say it seems more like a reaction to the recent News feed & activity stream innovation that's been happening at Facebook & Twitter than original thinking.  but maybe i'm being too harsh.  what i will say is that gmail / gTalk already has some useful features based on simply associating faces with email & IM conversations.  however, i'll also say that when i used to work with Jawed Karim at PayPal, before he went off to create YouTube he was showing me a visual IM client way back in 2004.  perhaps the interesting & minimalist elements of Wave are derived from this very basic association... and if so then i'll be eager to see what they've put together when it ships.  in any case, it's clear that Wave is emphasizing faces in a way that has never before been done at Google.

Twitter is another company that i might suggest has done some basic things right with face representations, altho the UI is rather spartan (unless you're using a Twitter client of one sort or other).  and before Twitter, i thought MyBlogLog had done some interesting things with faces as well.

As i almost always suggest, the reference presentation for many of these ideas is something called "Putting the Fun in Functional" by Amy Jo Kim, Shufflebrain.  AJ does a great job of explaining why the basic human psychology around collection behavior are well-suited for "collecting faces", and how this makes it easier for people to take the actions you want them to.

Fun in Functional 2009

View more OpenOffice presentations from amyjokim.

Brad Feld (& others) recently picked up my tweet and wrote his own piece on "all about the faces", however i think in that post he was discussing a somewhat different subject around whether faces or avatar icons work better in certain social environments.  i think he also comes to the conclusion that faces are important, altho i also think warm, fuzzy, familiar avatar icons can also function in positive, user-engaging ways just like faces can.

anyway, this post has now gone on quite long enough, but the primary point i was trying to make is that many consumer internet applications can improve their UI & conversion by simply:

1) Keeping the overall UI simple

2) Use big, high-contrast 3D buttons with simple call-to-action text 

3) Use large graphics & icons, and in particular use hi-quality zoomed-in faces

and of course, all of this should be done with rapid, iterative, a/b testing to measure results.

alright this really hasn't hit all the points i wanted to cover yet, but i'll stop here.

at some point in the future i'd like to talk more about how to improve invitation UI dialogs by filtering the available people & friends to focus on smaller subsets with larger facial representations.  in other words, less people, who i care more about, with bigger pictures. 

or then again, maybe just a big-ass picture of someone's butt would work just as well.

Sir Mix Alot- Baby Got Back

Reid Hoffman Kicks Ass, Takes Names, Envisions Future.

Not many people labeled as Visionary really deserve the title.  

Reid Hoffman definitely does.  

He's proven it multiple times, both as an EVP at PayPal & founder/CEO/Chairman at LinkedIn, and as an insightful & early angel investor at Facebook, Digg, Friendster, Flickr and over 60 other startups.

Here's a recent video interview below Reid did with Charlie Rose (who seems to be meeting with all the top geeks in Silicon Valley lately), and also a link to Reid's op-ed piece in the Washington Post on the proposed Stimulus bill ("It's The Startups, Stupid").

i've had the privilege to work with Reid briefly at PayPal, at Simply Hired as a LinkedIn partner, and more recently as a "friend of the company" at LinkedIn (not to mention an incredibly addicted user). Reid has always been thoughtful & generous with his ideas, and very kind to offer some great advice & feedback the few times i've been lucky to receive his mentorship.

hope i get the opportunity to stay within his occasional circle of influence in the future; he's really an amazing person on so many levels... thanks Reid!

Best of DMC / Master of 500 Hats: The "Greatest Hats" Album

Finally got around to organizing some of my older / favorite blog posts... here you go:

Best of DMC / Master of 500 Hats blog: The "Greatest Hats" posts

(see http://500hats.typepad.com/greatest_hats/)

Successful Developer Platforms Have 3 Things: Features, Users, Money.

[note: this post was originally a comment on TechCrunch post summarizing Max Levchin's panel on web platforms from the Web 2.0 Summit, with Facebook, MySpace, Google, & Microsoft.  i decided since my comment went past 3 paragraphs, i should probably expand it on my own blog...]

this is gross over-generalization/simplification, but platforms are successful if/when they have:
1) code libraries / feature abstraction -- so developers don't have to build everything
2) customer distribution -- so developers don't have to market everything
3) monetization -- so developers don't have to implement/collect payment

it's arguable there are many other platform issues & requirements -- security, scalability, standards, metrics, user authentication & support, etc.  however these 3 primary aspects are what make platforms tick.  sometimes platforms can be successful if only 1 or 2 of the items above are working, altho if you want a dominant platform it's helpful to have all 3.

Here are my incredibly unscientific and from-the-gut "Platform Bookmaker Odds" on Dominant Future Platforms:

Facebook (3:1) has arguably been the platform leader in the past year or so, at least in terms of innovation & inspiration.  They've done an excellent job with the first 2 points, but largely failed in terms of monetization to date.  And because their distribution incentives were creating a negative user experience backlash, they decided to dial back distribution & revise User Profiles in ways that dramatically limited the # of platform app winners (but there are still winners).  Also, until FB has payments in place, and has setup aligned monetization with their developer community, they are likely to be reluctant to really open the floodgates on distribution.  If/when they have payments rolled out, expect them to spin up distribution again, probably through 3rd-party news feed stories.  And people still underestimate how much power they can bring to bear if Facebook Connect starts working.  People were too hyped up on Facebook when they launched (maybe me too), but now they're too pessimistic.  Facebook will start kicking ass once they get Connect & Payments figured out... tho might be mid-2009 before that starts happening.  But the DNA of this company is all about Platforms & Developers... i'd be very surprised if they don't do very well over the long-run.

Microsoft (5:1) altho the platform Godfather historically, is far from having a functional web platform, primarily because they have not figured out a web distribution story for 3rd parties (nor a monetization story either, tho that's fixable quickly via acquisition or partnership).  while they have tremendous reach via Windows and the Web, they have not translated that into consumer internet platform distribution opportunities.  they also do not have a payments story (good reason to buy eBay/PayPal or Amazon, but don't hold your breath).  Still, given Microsoft's historical dominance & belief in platforms & developers, i'd expect them to get there eventually... but it may take years.  expect them to be a player, but i'd guess it may take a lot of acquisitions & luck for them to maintain the app dominance they had in the 90's.  They'll be around, but they're not leading the way right now. (update: Ballmer sez MSFT is planning to copy Apple's app store... not a bad idea.  again, like the GOOG, MSFT can KILL if they simply enable 3rd-party access to their amazing distribution & reach).

Google (2:1) certainly has the cojones & brainpower to do platforms, and they kick ass on features, but up until last year they were pretty piss-poor at developer evangelism.  However, you could argue Google's biggest "platform" is really just search (& indirectly SEO/SEM, and also analytics).   while they are a juggernaut in search, and their potential distribution is phenomenal, their initial platform efforts left a good bit to be desired.  But like Microsoft, Google certainly understands the benefits of a developer / platform strategy and there is good reason to be optimistic for the future.  OpenSocial has a long way to go, AppEngine is still fairly new, but Google is now headed in the right direction... and if Google ever *does* open up properties like YouTube and Gmail and the main search platform to developers, the sky's the limit.  Google has no lack of distribution, but again like MSFT it's mostly direct, not on behalf of 3rd-party developers.  Google also has Checkout for monetization when they get their shit together.  Expect them to put a lot of horsepower behind catching up to Facebook's surprising early platform leadership, and steamrolling ahead to a dominant position.  They're playing a bit of catchup, but they are certainly the odds-on favorite horse to win the long-term race.

MySpace (7:1) does seem to be following cautiously in Facebook's footsteps, and given their existing footprint in music & entertainment (not to mention their already significant spam issues with user communication), it seems appropriate for them to move slowly.  But they have shown progress over time, and if/when they implement payments they will likely attract a good deal of developer attention (and in fact, since FB dialed down distribution, MySpace has already drawn some of that audience in).  While i expect MySpace to primarily focus on their successful entertainment verticals in Music, Movies, Television, and perhaps an emerging presence in Games, they will likely do quite well due to their excellent distribution & monetization opportunities in those areas.  While everyone thinks Facebook is pulling ahead of MySpace, in fact MySpace is a much safer vertical play in entertainment.  They may only be successful in selected areas, but they will likely do quite well there.

not present on Max's panel / not mentioned in TC article or my analysis above: Amazon (2:1), Apple (3:1), SalesForce (4:1), YouTube (4:1), Yahoo (4:1), Mozilla (7:1), LinkedIn (10:1), Wordpress / Automattic (10:1), Twitter (10:1), FriendFeed (12:1), multiple other blogging platforms / social networks (15:1) Typepad, Blogger, Hi5, Bebo, Friendster, Orkut, other international players.  I'm sure i'm forgetting a lot here, but this piece wasn't meant to be completely comprehensive.

A few brief thumbnails on the other main contenders:

Amazon is the defacto platform leader in 3rd-party infrastructure.  They have yet to tie this back into the consumer Amazon platform in interesting ways -- largely AWS is completely disparate from Amazon.com -- but if they ever do, then watch out.  Amazon has been the quiet leader in personalization & e-commerce for the past 10 years.  If they decide to platform-ize that expertise, they will absolutely continue to be a very valuable company.  Only question is -- why in the hell haven't they been bought out by Google or Microsoft ?!?  They'd be SO much more valuable in either of those 2 larger players empires.  Answer?  Jeff Bezos isn't done having fun yet.  If he ever tires of that job, and decides to put the company up on the block, expect the mother of all battles by MSFT & GOOG to acquire that jewel.

Apple is kicking ass, but remains to be seen if they can parlay initial success in music & mobile into larger app platform success.  They don't have a terrific platform history, but the last 5-7 years they've done a great job on distribution, and recently on features & monetization.  Assuming they don't decide to screw the developer community into oblivion at some point -- always possible with a mercenary like Jobs -- then Apple will likely remain a force in consumer communication & entertainment platforms.

I'm not an expert on SalesForce, but they seem to be the leading player for hosted business platforms.  I'll refrain from much analysis since i don't follow them closely.  Yahoo continues to choke on both feet planted firmly next to its own tonsils, but they still do some great work on platforms & developer communities.  If only they can show a little business leadership & stability, they'll be around.  YouTube is a surprise here, and i list them separate from Google because they really are such a separately dominant player in video.  And like Facebook, the DNA of YouTube is all about developers.  They haven't really needed to do much since they are so far ahead of everyone else (in video), but i'm bullish they will figure out the monetization and as they do make it available to all of their developer community.  Mozilla has platform potential, if only due to an amazing ability to grab browser market share from MSFT.  LinkedIn has been a relatively plodding platform, but due to their audience specialization & demographics, they will be highly attractive to developers if they ever decide to open up more significantly (& revenue potential there is off the charts).  Of all the blogging platforms, Wordpress / Automattic is the most exciting & interesting... more to be revealed there, particularly if they continue on their recent micro-acquisition strategy.  Twitter is rocking these days, and i expect Ev & Biz & team to roll out some cool platforms stuff in 2009.  FriendFeed has so much potential it's not even funny, but i'd be surprised if they don't get swallowed back up by the GOOG before long.  Several other social networks have also embraced platform strategies, and may have modest success within selected geographies & demographics.

my apologies for any significant oversights or inaccuracies on the above.  and the "odds-on" stuff is really more for entertainment than serious discussion -- most all of these companies will be successful to some extent, tho they have widely-varying attention to platform issues. i'll try to make a few updates to this piece as my more-informed readers upbraid & correct me in the comments.

for more discussion of Platform dynamics, see Max Levchin's excellent masterpiece here (max: if you're reading this, please write more often!) : Developer Incentives in Social Networking Platforms

Andrew Chen also has many terrific articles on platform dynamics too numerous too count... i simply recommend you read as many articles on his blog as you can: http://andrewchenblog.com 

for praise / criticism of Facebook platform, and a few others on business models for social networks, integrating email & e-commerce platforms with social networking, etc see my previous posts here:

• Facebook's Problem isn't Privacy, It's Monetization
• Web 3.0 isn't the Semantic Web, it's Hailstorm 2.0
• Business Models for Social Networks: Monetizing Social Capital & the Long Tail of Cool
• Memo to GOOG, MSFT, YHOO, AOL: How to Turn 500M email logins into Facebook Platform (& a crapload of revenue)

Barack Obama: American Stories, American Solutions

a Story of Hope & Change, from the 44th President of the United States of America:

Help Make His Story, Our Story.

Help Make History.

Startup Metrics: The 1-Page Business Model

The 1-Page Business Model
Originally uploaded by davemc500hats

i'm flying to London today to do an new version of Startup Metrics for Pirates at SeedCamp 2008.

i've been refining a few ideas, and i'll be using this example "1-Page Business Model" to describe how startups should design  & prioritize features & development process.

TonchiDot Sekai Camera (aka World Camera): "Look Up, Not Down! We Have Patent! Imagine... Join Us!"

TonchiDot Sekai Camera was without a doubt the most amazing & hysterical presentation at TechCrunch50 this year... never seen anything like that demo, or the Q&A that came after. 

The entire room was spellbound, then laughing uncontrollably at the Q&A responses ("Look Up, Not Down!  We Have Patent!  Imagine!  Join Us!").  Almost never see Jason Calacanis & Michael Arrington speechless, but it happened.  Several audience members gave the presenters a standing O.