Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

Archive for July, 2008

Web Innovation: Have we seen the best or is it still to come?

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More and more posts about the web I come across seem to lament over the state of the web these days. Specifically these posts suggest that we aren’t trying hard enough to innovate. Some also suggest that we really aren’t innovating on the web anymore, that we’re just creating small iterations on what already exists. In fact Mark Cuban said as much in a post the other day:

Personally, I think Web 2.0 already is tired. When social networking or Twittering applications that are nice to have, but not a need to have, are the best we can do. We ain’t doing much. Lets get real. As much fun as Twittering can be, shouldn’t we all be able to agree that if its the latest and greatest application, the Internet has Jumped the Shark ?

When I first read that section of Cuban’s post I was floored. Then I started to think about it and wondered if he may be on to something. I started to agree with him. There are bigger problems to solve with technology. Why are we spending so much time, money, energy and intelligence on things like Twitter? Do services like Twitter really matter?

After thinking on that for a bit I came to realize that we may simply be in an innovation valley right now. If you were to look at innovation over time you would see that bursts of innovation hit followed by a lull and then another burst. Innovation is cyclical in the way that evolution is. Bursts followed by relatively long lulls, etc., etc.

So maybe the web hasn’t “Jumped the Shark.” Maybe we haven’t reached the limits of what the web can do. Perhaps we’re just in a valley, in the midst of a lull which will head into another burst of innovation.

Looking at things another way I also realized that innovations like Twitter could be the way the web, and computers in general, we meant to evolve from the very beginning. After all in the early 1960s, Robert Fano, at the time MIT’s Ford Professor of Engineering, organized Project MAC at MIT to demonstrate the feasibility of “general-purpose, independent, on-line use of computers by a large number of people” (cite: MIT’s Technology Review Magazine - July/Aug 2008 - p.96).

Fano organized the project because he believed that the power of computers didn’t necessarily lie in their computational power, he believed the power of computers could be found in their ability to connect people and allow for collaboration and the sharing of information. Aren’t these same high level goals that services like Twitter carry forward? I’d say so.

While Twitter may not be a technological marvel it is furthering how we communicate and that is really what computers and the web do best.

Are we in a lull? Perhaps. Are we simply taking the next steps toward better electronic communication? Sure. So, perhaps the future of the web isn’t as bleak as people like Cuban suggest. Of course only time will tell.

Side note: What is disturbing is the lack (and continual cutting) of spending on science here in the United States. Without more research funding we will fall behind and could see our society begin to decline (as many other societies in history have when they promote decadence and push furthering science and learning aside). We need to get money to the people who are working on the breakthroughs that really change the world.

Written by Eric Olson

July 11th, 2008 at 6:03 pm

Posted in Innovation, Web

The Long Tail: Long and Fat or Just Long?

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Anita Elberse, an associate professor at Harvard Business School, recently published a new study in the Harvard Business Review that challenges Chris Anderson’s Long Tail theory. Elberse’s main claim is that the positive feedback loop created by hits will continually perpetuate media companies (movies, music, etc.), and companies like them, as hits-based businesses whereas Anderson’s Long Tail theory suggests that more and more sales will be derived from niche products that make up the tail.

Myself and others in the business have had the inking for some time now that the Long Tail may not be as interesting or profitable as once expected. A lot of startups that launched with the Long Tail as a premise for their businesses haven’t reaped the profits they thought they would (yet at least) and the hits still seem to be a bigger part of business like media as people are able to communicate more efficiently and effectively about the hits. After all, as Elberse suggests, the hits are hits because they appeal to the masses and the stuff in the tail is in the tail because it only appeals to a small base. Put another way, people like to talk about common things when together and if they were consuming more and more from the tail the social nature of consumption would be lost.

I was ready to write a long piece about this phenomenon. About how the Long Tail seems to make a lot of sense given what the internet has enabled but, if one thinks about it, the long tail may not be what the people really want. They may still want common experiences so that they can connect with their fellow people. Thus, hits will continue to dominate sales and, while growth of sales in the tail will continue as well, the growth won’t be as significant as once thought.

As I sat down to write just that a post came up that intrigued me. The post was written by Anand Rajaraman and summarized both Anderson’s and Elberse’s arguments very nicely which is why I am not going to jump into a similar analysis here (his post is well worth the read). However, Rajaraman doesn’t just summarize both sides, he also proposes that the internet may not create the fat long tail of consumption Anderson talks about in his book. Rajaraman instead theorizes that the internet may actually create a fat long tail of influence.

A long tail of influence. That is an interesting idea and one that can been seen in action throughout a myriad of examples in recent time. It is also something that makes sense when taken in the context of what the internet was designed to do: facilitate communication, collaboration and the easy exchange of data.

Since the internet allows us to be hyper-communicative and easily share our voice with the world it means that any one of us at any time have the ability to be an influencer. This is the power of the web.

This power also taps into Elberse’s data. She found that we tend to perpetuate more hits as time goes on (and that these hits generate more and more of the overall sales) and that only heavy consumers of a particular item will dive into the tail (but those users don’t derive as much pleasure from the tail than from the head - the hits).

It seems that Elberse and Rajaraman’s theories, when put together, may yield some interesting insight into what the web really enables. We can all agree that the long tail on consumption still exists but it is uncertain if it will ever be as fat (i.e. garner as much of the sales) as Anderson theorized. I am leaning more toward Elberse and Rajaraman at this point and am looking forward to seeing more research on the subject.

Side note: See Anderson’s rebuttal to Elberse’s work for his side of the story (Anderson seems to argue that the issue between Elberse’s theory and his has a lot to do with semantics). Also, Elberse makes a point in favor of hits still being overly important where she uses Anderson’s own book as an example of a hit that made a publisher’s year and spawned a whole discussion that people passionately participate in as much today as back when the book was out (bottom line: people like to talk about common experiences with each other and that is just fundamental human behavior).

Written by Eric Olson

July 11th, 2008 at 5:17 pm

Posted in Business, Web

Extension 720 on WGN Radio: The Web 2.0 Show

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Just a quick note to inform all of you Olson’s Observations readers out there that I will be making some observations on WGN radio this Friday from 9pm - 11pm on Extension 720 hosted by Milt Rosenberg. Since I am unsure if a lot of you out there are listening to AM radio (and because a lot of you are located outside Chicago) I want to point out that you can listen live online as well.

This show has had a lot of prestigious guests over the years and Milt Rosenberg is known as one of the top interviewers around so I am very excited, honored and humbled to be asked to come on the show. I should note that this is a panel discussion though, not an interview, so I will be on with a few other top notch guests making the show that much more interesting.

This will be my first time on the air since I stopped doing a radio show with my friends back in high school on the local college radio station (95.1 FM WNRC baby!) and I am looking forward to it. I have always loved radio as a way to communicate and talking about what Web 2.0 has done in terms of revolutionizing communication via one of our oldest communication technologies will be a treat. Who knows, maybe we can even get Milt to start podcasting his shows!

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Editor’s note: I have bee lax in writing on this blog lately due to my new gig, TECH cocktail and my studying for the GMAT. That said, I plan to overhaul the site over the next couple months and start writing more frequently again so stay tuned and thanks for your support over the years.

Written by Eric Olson

July 8th, 2008 at 8:00 pm

Posted in Business, Chicago, Web, Web 2.0