Category Archives: Observer

The truth about Facebook

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My take on the Facebook IPO. From this morning’s Observer

There are two classes of share – A and B. Each class B share carries 10 times the voting rights of its class A counterpart. Zuck owns 27.1% of the class B shares outright and the company’s pre-IPO filings to the Securities and Exchange Commission revealed agreements with other owners of class B shares to assign their voting rights to him. The net result is that he has voting control over at least 57.1% of the class B shares. In other words, he’s omnipotent.

This would be a problem even if Zuck had the brains of Einstein and the wisdom of Solomon. But, alas, he doesn’t. He is undoubtedly a smart and talented guy, but he also happens to have a megalomaniacal obsession – that everything has to be social, ie public. And if you’re a Facebook user and don’t like that – well, tough.

So we now have another powerful media company with a shareholding structure that renders its charismatic, single-minded founder immune from shareholder pressure. Remind you of anyone? Hint: it begins with “News”.

Taming the email monster

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This morning’s Observer column.

Email has become the central communications channel of all modern organisations, to the point where none of them could now function without it. But there’s increasing evidence – both anecdotal and empirical – that it has become dysfunctional. It eats into people’s working and thinking time, for example, distracts them from doing “real” work and generates guilt feelings that ratchet up stress levels to unsustainable levels.

In the old world of desktop PCs, you could at least leave it behind when you left the office. But the advent of the smartphone changed all that. Email has now infiltrated leisure time, family time – even sleep time. It’s become a monster that’s destroying our lives.

Deep down, most of us know this. But we daren’t talk about it out loud, for fear of seeming inadequate…

Black magic or white?

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This morning’s Observer column.

What comes irresistibly to mind the first time one sees a 3D printer in action is Arthur C Clarke’s famous observation that “any sufficiently advanced technology is indistinguishable from magic”. You’re sitting there watching the machine busily going about its business and then, suddenly, there’s a complex, fully functional object with moving parts – for example the roller-bearings that are an essential component in every thing that runs on wheels. And then you realise that this is not a technology for making toys and garden gnomes, but something that could transform manufacturing.

Why txt is gr8

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This morning’s Observer column.

Here’s a question: what’s bigger and far more important than Facebook? Hint: it’s very low-tech and doesn’t need a smartphone or even an internet connection. And this year marks its 20th birthday, which means that in internet time it’s 140 years old. Oh, and it doesn’t involve LOLcats either.

Got it yet? It’s SMS – text messaging to you and me. Or txt msng, if you prefer. Two-thirds of the world’s population – that’s over 4 billion people – have access to it because that’s the number of people who have mobile phones, and even the cheapest, clunkiest handset can send SMS messages. It’s had a much bigger impact on people’s lives than anything dreamed up in Silicon Valley.

Interestingly, Silicon Valley played almost no role in it. SMS emerged on our side of the Atlantic and was the brainchild of the kind of European intergovernmental initiative that drives Ukip nuts…

Running out of new ideas

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This morning’s Observer column.

We’re now at the stage where we should be getting the next wave of disruptive surprises. But – guess what? – they’re nowhere to be seen. Instead, we’re getting an endless stream of incremental changes and me-tooism. If I see one more proposal for a photo-sharing or location-based web service, anything with “app” in it, or anything that invites me to “rate” something, I’ll scream.

We’re stuck. We’re clean out of ideas. And if you want evidence of that, just look at the nauseating epidemic of patent wars that now disfigures the entire world of information technology. The first thing a start-up has to do now is to hire a patent attorney. I had a fascinating conversation recently with someone who’s good at getting the pin-ups of the industry – the bosses of Google, Facebook, Amazon et al – into one room. He recounted how at a recent such gathering, he suddenly realised that everyone present was currently suing or being sued for patent infringement by one or more of the others.

How have we got ourselves into this mess?

So what exactly did Facebook buy for a billion dollars?

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This morning’s Observer column.

So Facebook has bought Instagram, a company with a single product – a photosharing app – for $1bn in cash and (FB) shares. Just to put that in context, Instagram has been in existence for 18 months, employs 13 people, has 30 million users and has had a grand total of $7m in investment funding. Oh, and it has precisely zero dollars in revenue.

Sound familiar?

There’s been lots of really interesting commentary about the Instagram deal. Writing in the FT, John Gapper made two interesting points:

  • The deal looks much more like the kind of thing companies do after they go public and start to run out of steam. The fact that Instagram was snapped up (if that is the right way to describe paying a billion dollars for something) is a measure of how scared Mark Zuckerberg has become of what might happen to facebook.
  • What’s he scared of? Well, says Gapper, scared of repeating the fate of many earlier Internet poster-children (like Bebo, for which AOL paid $850m in 2008 and flogged off in 2011 for $10m).

    • And Frederic Filloux, one of my favourite commentators, is also sceptical about the deal — and about facebook generally. “When I read the news of the Instagram acquisition”, he writes, “I wondered: Imagine Facebook already trading on the Nasdaq; how would the market react? Would analysts and pundits send the stock upward, praising Zuckerberg’s swiftness at securing FB’s position? Or, to the contrary, would someone loudly complain: What? Did Facebook just burn the entire 2011 free cash-flow to buy an app with no revenue in sight, and manned by a dozen of geeks? Is this a red-flag symptom of Zuckerberg’s mental state?”

    Other points Filloux makes:

  • Zuckerberg controls 57% of facebook shares, and therefore can do what he likes. This can be a mixed blessing.
  • Zuck is beginning to look like Bill Gates in the early years of Microsoft’s dominance — the years when he decided that Netscape had to be eliminated. Every challenge is seen as a potential threst. Only the paranoid survive, etc. etc. Facebook’s photo-sharing dominance was beginning to leak, and Instagram was one factor in that. So it had to be acquired or destroyed. “With this transaction”, writes Filloux, “the ultra-dominant social network acted like an elephant scared of a mice. Instagram has 35 million users? Fine. But how many are using the service more than occasionally? Half of it? How many are likely to switch overnight to a better app? Most likely many will. Especially since Instagram is not a community per se, but a gateway to larger ones such as Twitter and Facebook.”

    • LATER: Andy Baio has made an interesting attempt to work out an empirical rationale for the price Zuckerberg paid for his new toy.

    Snooping and state power

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    This morning’s Observer column:

    The basic scenario hasn’t changed. Because of technological changes, we are told, criminals and terrorists are using internet technologies on an increasing scale. Some of these technologies (eg Skype) make it difficult for the authorities to monitor these evil communications. So we need sweeping new powers to enable the government to defend us against these baddies. These powers are as yet unspecified but will probably include “deep packet inspection” as a minimum. And, yes, these new measures will be costly and intrusive, but there will be “safeguards”.

    The fierce public reaction to these proposals seems to have taken the government by surprise, which suggests ministers have been asleep at the wheel. My hunch is that the proposals were an attempt by the security services to slip one over politicians by selling them to senior officials in the Home Office, who, like their counterparts across the civil service, know sweet FA about technology and are liable to believe 10 implausible assertions before breakfast. In that sense, the Home Office has been “captured” by GCHQ and MI5 much as the health department has been captured by consultancy companies flogging ludicrous ICT projects….

    On reading (and not understanding?) Heidegger

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    This morning’s Observer column.

    If you write about technology, then sooner or later you’re going to meet a smartarse who asks whether you’ve read Heidegger’s The Question Concerning Technology. Having encountered a number of such smartarses in recent years, I finally decided to do something about it, and obtained a copy of the English translation, published in 1977 by Harper & Row. Having done so, I settled down with a glass of sustaining liquor and embarked upon the pursuit of enlightenment.

    Big mistake. “To read Heidegger,” writes his translator, William Lovitt, “is to set out on an adventure.” It is. Actually, it’s like embarking on one of those nightmares in which you’re wading through quicksand and every time you grasp a rope or a rock it comes apart in your hand. And it turns out that Heidegger’s fiendish technique is actually to lure you into said quicksand.

    What we learned from the BBC Micro

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    This morning’s Observer column.

    The BBC Micro is 30 this year. It got its name from a BBC project to enhance the nation’s computer literacy. The broadcasters wanted a machine around which they could base a major factual series, The Computer Programme, showing how computers could be used, not just for programming but also for graphics, sound and vision, artificial intelligence and controlling peripheral devices. So a technical specification was drawn up by the BBC’s engineers and put to a number of smallish companies then operating in the embryonic market for “micro” computers.

    Two of these companies were based in Cambridge. One was Sinclair Research, the eponymous vehicle of Clive Sinclair, a self-made man who worshipped his creator. The other was Acorn, a company co-founded by an ex-Sinclair employee, Chris Curry, and Hermann Hauser, an aristocratic-looking Austrian physicist. The story of the rivalry between these picturesque outfits has been memorably told in Micro Men, a TV film that combined a riveting technological tale with brilliantly comical dialogue (and which is still available on YouTube).

    Acorn got the BBC contract, for reasons that baffled Sinclair but nobody else.