What 2 runaway llamas taught us about net neutrality

"Katy was so worried when you two just took off like that"

For about two hours today, all the Internet wanted to talk about was the FCC’s historic net neutrality decision. (They’re in favor of it.)

Then, suddenly, all work stopped as the digerati focused their collective attention on two runaway llamas scampering around Phoenix.

Short attention span much? Sure. Never accuse the Twitterverse of being able to focus on any one thing for very long. And if it involves cute animals, a skycam, or — wonder of wonders — both of those things, well, it’s hard for those of us brought up in the school of quick clicks to resist.

But the two events are more connected than you might think. Without belaboring the point too much, it’s clear that the Llama Drama could never have happened without a fairly substantial stack of technologies, all working together smoothly.

Helicopters? Check. High-bandwidth, real-time digital video connections from the helicopter to the TV station? Check. A social network primed to share links (and jokes) about an entertaining, developing “news” situation as it happens? Check.

The ability for a local TV station in Phoenix to broadcast live video anywhere in the world, in real time, with a minimum of lag and pretty decent video quality? Check.

Now imagine a world where that TV station wasn’t able to broadcast real-time HD video without paying extra fees. Where Netflix, because it had paid extra fees to your ISP, could guarantee that you’d be able to watch the upcoming release of House of Cards season 3 without hiccups, but at the expense of the live video feed from ABC 15 in Phoenix. Where ABC 15 couldn’t even be sure its video feed would get across at all, because it hadn’t made extra payments to every ISP and content delivery network along the path from its servers to your browser.

Now, this argument works for both sides of the net neutrality debates. The FCC just made its decision today, but as of today’s Llamapalooza, those rules were not yet in effect.

ISPs and wireless carriers — starting with Verizon — have mocked the FCC for trying to apply ancient, 1930s-era communications policy to the modern world’s technologies. And we were all able to watch the llamas without an explicit net neutrality mandate just fine, thank you very much.

But net neutrality proponents point out that there are plenty of examples already where carriers have prioritized the content of paying customers over others. It’s only a matter of time, the argument goes, until you can’t get through to customers in any kind of reasonable way without paying extra. Just because you could watch Llamarama today doesn’t mean it’ll be streaming smoothly the next time it happens — and that’s why we need regulatory enforcement.

As for me, I can see both sides of the argument, but I feel there’s a strong argument to be made for the FCC to ensure that everyone — individual consumers as well as small-time video broadcasters — have access to a basic level of service. That shouldn’t eliminate the option for companies like Netflix to hire CDNs to ensure fast, timely delivery — as long as that priority channel doesn’t adversely affect the transmission of basic email, web content, and video.

In other words, as FCC chairman Tom Wheeler said today, this isn’t a restrictive regulatory move (unless you’re a rapacious carrier). This is a guarantee of non-restriction.

This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech!” Wheeler said today, nearing yelling.

As for the llamas: Well, they’ve now been regulated. Both were eventually lassoed, bringing an end to the epic that future generations might call the Llamayana.

We mourn. But, like the Left Shark, the images of the llamas will live on. And so will the Internet.

from VentureBeat » Dylan Tweney http://ift.tt/18rYsYm

What 2 runaway llamas taught us about net neutrality

Dylan’s Desk: Why the coming messaging economy will be very big business

WhatsApp, Line, Skype, WeChat -- how do you want to chat?

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There’s a deep shift in the way we communicate happening, and it’s about to turn media and marketing businesses upside-down.

In short, the Web-based world is about to become secondary to the message-based world.

Messaging apps like WhatsApp (now part of Facebook), WeChat, Line, Snapchat, and Kik are sitting pretty in this new world. That’s because they’re the apps that young people increasingly use to communicate. Some striking stats:

  • WhatsApp: 700 million monthly active users
  • WeChat: 468 million monthly active users
  • Line: 181 million monthly active users
  • SnapChat: 100 million monthly active users
  • Tango: 70 million monthly active users

Kik, whose cofounder and chief technical officer Chris Best was on a panel discussion with me earlier this week, doesn’t report monthly active users for some reason. Instead, it reports that it has 200 million registered users — of which some unknown, smaller proportion are active users. Tango also reports 200 million registered users, so we can estimate that Kik, like Tango, probably has about 1/3 as many active users, or about 70 million.

But Kik claims that 40 percent of people in the U.S. between the ages of 13 and 25 have Kik accounts. Forty percent! That’s an astonishing number that gives some hint of how ubiquitous messaging apps are becoming.

At first glance, you might wonder what the big deal is. Why does anyone need one of these apps to communicate when we’ve already got email, instant messengers from Facebook, Google or AOL, and SMS-based text messages?

The answer is complex, but boils down — I think — to the fact that these message apps let people create unique identities that aren’t tied to their email accounts or phone numbers, and they support a wider range of content. You can send funny GIFs to your friends. You can send them custom stickers. You can send them goofy selfies that (usually) disappear in a few seconds. You can play games with them.

And, increasingly, you can read the news or make purchases via message apps.

In this, the U.S. is a bit behind Asia, where you can even buy insurance and apply for a mortgage via WeChat. But transactional features are coming to our shores.

And content: Snapchat’s move into content, with its Snapchat Discover channel, is just the start.

And search: As NYC Techstars’ Alex Iskold recently wrote, I’ve seen the future of search, and it ain’t Google.

And even more: One new startup out of Y Combinator called Magic is promising to fulfill whatever it is you need — whether that’s a pizza and a Pepsi, an order of sushi and some flowers, or a tiger. Magic works via SMS right now, but it’s easy to imagine it working in any of the major messaging apps.

Web- and content-based businesses, like Google and Facebook, will have to recalibrate their entire business models. (Facebook seems to understand this, and was willing to spend an enormous amount, $22 billion, in acquiring WhatsApp as a hedge against this message-centric future.) That goes double for publishers like Yahoo, Buzzfeed, Vox Media, the New York Times, and, yes, VentureBeat.

Apps that aren’t message-centric will need to transform themselves, or else find a way to insert themselves into the message economy somehow. Instagram’s recent direct message feature is a perfect example of a content-centric app trying to turn itself into a messaging app.

For marketers, messaging apps are incredibly tempting — and potentially revolutionary. Kik, for instance, says that 70 percent of the branded messages it has sent to its users are opened in the first hour, an enormous open rate. That’s not based on a small sample size, either: It has sent 100 million of these messages to date. What’s more, it says that the click-through rates on those messages are 10 to 50 times higher than on Twitter or Facebook. The reason it’s seeing such high rates of engagement are because people have already opted-in to receive those message. If you’re following Funny or Die (a content partner on Kik), you’ve already self-selected as someone who is interested in that brand’s content. Also, Kik limits marketers to just four branded messages per month, to help keep the frequency low and the novelty high.

Other message-centric apps are taking different approaches. WhatsApp claims that it will not carry advertising — though that’s the fundamental raison d’etre for its parent company, Facebook, so we’ll see how long that lasts. Snapchat has just started to experiment with making money. WeChat hasn’t made nearly the traction here that it has seen in Asia, and offers fewer features to its English-speaking users (and marketers). Tango has been aggressively courting game developers.

Whatever approaches win out, one thing seems clear: Message apps are flush with cash, and know that they’re sitting on top of an incredibly valuable resource — the time and attention of a young and tech-savvy demographic. Look for a lot of experimentation to happen in the next year or two.

And who knows, maybe the next big media brand will emerge on a messaging app instead of on the Web.


from VentureBeat » Dylan Tweney http://ift.tt/1FZNOGa

Dylan’s Desk: Why the coming messaging economy will be very big business

Think mobile is big? You ain’t seen nothing yet

Mobile technology has been one of the biggest drivers of growth in the tech sector since the iPhone’s launch in 2007. But if Digi-Capital‘s predictions hold water, you ain’t seen nothing yet.

According to the research and advisory firm’s latest Mobile Internet Investment Review, investors plowed more than $32 billion into mobile tech companies in 2014.

These 68 companies have $1B+ valuations.

The most valuable of those companies — the 68 mobile “unicorns” with a valuation of $1 billion or more — added $28 billion to their combined value in just the fourth quarter to reach a total of $261 billion.

“To put the $28B value added last quarter in perspective, that’s $300M [per day] — or more than 30 Tim Cooks (who got paid over $9M last year) a day,” said Tim Merel, the managing director of Digi-Capital.

“But it wasn’t all plain sailing, as fourteen of the billion-dollar companies lost value (in some cases multiple billions of dollars). Admission also doesn’t guarantee lifetime membership, with two former unicorns falling below $1B in Q4 for a total of five dropouts last year.”

You might think that these unicorns are the cream of the crop, and you’d be right. But even within this exclusive club, there’s a tier of truly successful elite companies.

Just 20 of those 68 billion-dollar mobile companies account for almost 70 percent of the entire group’s value, or $178 billion of the $261 billion total. Those top 5? Uber, WhatsApp, Twitter, Flipkart, and Snapchat.

The Pareto principle at work: The top 5 mobile unicorns account for 70% of the value.

Digi-Capital predicts that revenue from the mobile Internet will top $700 billion annually by 2017, more than tripling its 2014 figure. The vast majority of that, $500 billion, will come from m-commerce, or purchases made by people using their phones to order things online.

The U.S. and Europe will account for a fair amount of m-commerce growth. But where the market will really boom is in Asia, which will account for almost half of the m-commerce total by 2017, Digi-Capital predicts.

There are some other intriguing data points in this report. Not surprisingly, Android app downloads greatly outnumber iOS app downloads, while iOS apps are far better at making money. That’s a story we’ve been hearing for a couple of years now.

But what surprised me is that the Google Play store only accounts for a minority of Android app downloads worldwide. Google Play has 20 percent of overall downloads, while iOS has 17 percent — but competing Asian Android stores are close behind, with Baidu at 17 percent, Tencent at 16 percent, and Qihoo at 11 percent.

Android and iOS app store market shares and monetization, 2014.

Not surprisingly, mobile games dominated mobile app revenues, with 74 percent of the total.

And if there’s a power law operating in the valuations of the biggest mobile companies, it’s an even more powerful effect when you examine the performance of the top mobile apps. For instance, the top 1 percent grossing apps have 35 times more sessions per day than the top 5 percent, and 20 times the customer lifetime value. That’s an enormous differential that shows where the money is mostly going in this market.

The question, then, is how to capture some of this epic growth. That’s where VentureBeat’s Mobile Summit comes in. I’ll keep my pitch short: This small, invitation-only event that we’re hosting next week will bring 180 of the top mobile executives, founders, and investors into one place to talk about ad tech, user acquisition strategies, how to make the best use of mobile data, and how to optimize and personalize apps for your customers.

And Digi-Capital will be giving a detailed, 47 page summary of its extensive 578 page report to all attendees.

If you’re in the mobile industry and want to find out how to get on the leading edge of the growth curve described in these charts, the Mobile Summit is well worth the price of admission. I hope to see you there.


Think mobile is big? You ain’t seen nothing yet

Why Twitter will always be #2

Twitter buttons

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Twitter’s got an interesting problem: Its revenue is booming, but — as with all the major social networks — its user growth has slowed to a crawl.

That’s not a good place to be for Twitter: It means that the odds are very, very good that the company will forever remain #2 or #3 in its market.

Here are the numbers.

In its earnings call today, the social network reported Q4 revenue of $479 million, up 97 percent over the same quarter in 2013, when it posted $243 million in revenue.

Meanwhile, the number of people using Twitter at least once a month increased 20 percent year-over-year to 288 million — but that was actually a decrease of about 4 million from the previous quarter. Last year, it reported 30 percent year-over-year user growth. So growth is slowing.

Compare that to LinkedIn, often regarded as an also-ran social network that’s focused on the lucrative but boring business niche. But LinkedIn is doing pretty well. LinkedIn reported just 93 million monthly active users (a year-over-year increase of 23 percent) and revenue of $643 million for Q4 (44 percent growth year-over-year). Same slow growth, but much larger revenues.

Or the giant in this market, Facebook, which grew its count of monthly active users 13 percent year-over-year to 1.39 billion, while its revenue grew 49 percent to $3.85 billion for the same quarter.

Let’s look at the annual figures:

2013 vs 2014 figures for Facebook, Twitter, and LinkedIn.

What these three companies tell is a similar story: Growth is slowing down to the 10-30 percent range, while each of the companies gets far better at actually making money from those users. Of course Facebook has the lion’s share of both users and revenue, but there’s probably a healthy amount of the market left over for the other two.

Networks like Facebook-owned Instagram and Twitter-owned Vine attempt to capture the younger crowd, but let’s stipulate for now that these sub-networks aren’t a major force — yet. (Though Snapchat’s reported 100 million user figure, and its forays into original content, suggest that there might be another chapter to this story.)

For now, Twitter’s main challenge is hanging on to its existing user base, so it doesn’t fall even further behind Facebook. But it’s also got to figure out what makes it special.

What does Twitter do uniquely well?

There are a few possibilities. Twitter plays a key role in the news ecosystem: For me, as for many journalists, Twitter is both a valuable dashboard of what’s going on in the world and in the tech industry. It’s also a useful tool for publicizing the news that VentureBeat publishes.

But I think I am in a minority, and our traffic figures — like those of most publishers — show that far more people use Facebook to learn about the news.

Twitter is a useful mobile tool that offers great control to end-users than Facebook does. Rather than try to anticipate what you want to see, Twitter lets you curate your own lists — or just follow the whole tweetstream generated by everyone you’re following — without mediating that too much, other than with the occasional promoted tweet. So it probably appeals to control freaks who get weirded out by Facebook’s algorithms. Again, a minority.

It’s a uniquely public place to hold conversations, so famous people — or even slightly famous people, like tech journalists and VCs — can have intelligent conversations with one another that other people can follow along with. But along with that public quality comes a significant downside, which is that anyone can troll anyone else. Just ask Anita Sarkeesian about the downsides of public conversations.

It’s one of the last major bastions of pseudonymity, so you don’t have to use your real name on the service. Again, the downside is trolling. To his credit, Twitter chief executive Dick Costolo seems to recognize that this is a serious problem, and says he will make dealing with it a high priority. How he does that remains to be seen.

And finally, Twitter helps people form more emotional connections with each other — and with the content they’re consuming. A very intriguing and somewhat creepy study done by Twitter’s marketing science team shows that actively using Twitter while browsing the web increases the sense of that web content’s relevance by 51 percent.

That’s powerful evidence that Twitter can play a key role in making content more persuasive, powerful, and effective. That’s news that should be incredibly interesting to digital marketers as well as publishers of content.

For the most part, Twitter has avoided being tarred with the same kind of brush that’s often used to paint Facebook as a privacy-hating, opportunistic marketing machine. It even won an award last night at the Crunchies (an annual tech industry event cosponsored by VentureBeat and TechCrunch) for positive social impact.

So Twitter’s future lies somewhere along that line: The smaller, more likeable social network that news publishers and marketers use to forge stronger ties with their readers and viewers.

Maybe it will always be #2 or #3 in users and traffic — but as LinkedIn has shown, if it can identify a lucrative segment, even a smaller social network may be able to turn its users into an ever-larger slice of revenue.

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from VentureBeat » Dylan Tweney http://ift.tt/1LWglh3

Why Twitter will always be #2

Dylan’s Desk: Why Silicon Valley is still a man’s world

ipad classroom students

Girls are just better at school, it appears. So why aren’t there more women in key roles at tech companies?

Girls outperform boys in academic achievement in 70 percent of the countries around the world, according to a recent study. The study, done by researchers at the University of Missouri and the University of Glasgow, looked at the educational achievement levels of 1.5 million 15-year-old students around the world, from 2000 to 2010.

“Even in countries where women’s liberties are severely restricted, we found that girls are outperforming boys in reading, mathematics, and science literacy by age 15,” said one of the study’s two authors, David Geary, a psychology professor at MU.

The only places where that was not the case were Colombia, Costa Rica, and the Indian state of Himachal Pradesh. In the United States and United Kingdom, boys and girls had comparable levels of educational achievement.

But everywhere else, on average, 15-year-old girls do better in all subjects, including science and math.

So why aren’t there more women in tech?

As the researchers write in their paper, this finding “raises the question of why – despite educational opportunities and success – women are under-represented in leadership positions in politics, business, and academia.”

Or, as many have been asking in Silicon Valley lately, why aren’t there more female programmers, engineers, product managers, and tech executives at our companies?

The researchers put forward two theories. One is that, while the average performance of girls is higher, it’s the top-performing individuals who go on to these kinds of leadership positions, and “boys at the highest levels [do] equally well [as] or better than girls at the highest levels.”

The other is that relative performance matters to each individual. If you’re better at language arts you’re more likely to become a humanities major in college; if you’re better at science and math, you’re more likely to become a science, math, or engineering major.

In other words, even if you’re better than most of the boys at math, you still might go into the humanities if those are your strong suit.

The authors acknowledge that there are other issues involved, such as the way cultural norms might feed boys into a “pipeline” of clubs, interests, and majors that culminate in the kinds of skills needed to land a tech job — while girls get directed into other kinds of educational and extracurricular tracks.

Put another way: Between the ages of 15 and 21, most girls face an enormous amount of social and academic pressure to leave science and math. They have to put up with schools, peers, and a society that expect less of them, and people who actively discourage them from pursuing these fields. Despite starting academically ahead, they have to work extra hard just to keep up with the boys, who don’t have to spend half their energy simply justifying their right to be there. Faced with stereotypes, discrimination, exclusion, peer pressure, and more, most girls give up.

But the study didn’t tackle that issue.

The aptitude gap persists

There’s a third possibility, which is that academic performance doesn’t correlate with aptitude, and that from ages 15 to 21, the math-science abilities of boys start to outstrip those of girls.

A blogger who goes by the pen name Scott Alexander has done some interesting, detailed analysis of GRE scores and SAT scores by university department, and has found very strong correlations. Physics and engineering departments have a much higher average score on the math part of the test, and a much smaller number of women, while art history and English literature show the opposite pattern.

Now, GRE scores are taken by college seniors, so that could reflect the benefits of four years of schooling. But SAT tests are usually taken by 17-year-olds, and they show a similar, if slightly weaker, correlation. In other words, Alexander writes, by 11th grade, there is already an aptitude gap between girls and boys in terms of their math abilities.

There are all kinds of ways to argue with that point (going back to the pipeline and stereotype arguments, of course), but it can’t be easily rejected out of hand. Whatever the cause, the gap seems to be there.

If we try to square this two papers, it looks like something happens after the age of 15. Girls, who start out very strong in science and math, gradually drift away from it — for whatever reason — and that causes them to lose ground.

If I were looking to solve the gender gap in tech, I’d start by trying to keep 15-year-old girls engaged with science and math — and prevent people from pushing them out.

The Moneyball opportunity

The Missouri study raises another issue for me. It suggests that Silicon Valley companies, which pride themselves on being meritocracies, are missing a big opportunity.

It’s a competitive job market, which means that many companies would be eager to find a pool of talent that is easier to recruit — and perhaps less expensive — than the usual suspects.

This study shows that there’s an enormous pool of talent like that: women, who for whatever reason, had high levels of academic achievement in science and math early on but wound up going into different fields in college.

Now, granted, many of these talented people will lack the kind of training that most companies need. But with the wealth of coding academies around — many of which are aimed at women — it should be pretty easy to rectify that problem.

You just need to find talented candidates who did well in science and math during high school, regardless of whether they followed up on that interest in college, and then train them up. It’s the Moneyball strategy.

Or, you know, you could just look for culture fit.

from VentureBeat » Dylan Tweney http://ift.tt/1BqZaMn

Dylan’s Desk: Why Silicon Valley is still a man’s world