Complexity and Social Networks Blog

I have come up with a new format for our blog. In the next couple of months I will post interviews with leading Internet entrepreneurs and venture capitalists who can share their insider knowledge on the current state and future of social software/Web 2.0. Hopefully this is inspiring to those with entrepreneurial ambitions in the area as well as interesting to researchers who want to work on the "next big thing".

Dear Thorsten, you have been involved in various internet ventures either as part of the management team (21Publish, kinkaa, Newtron, Creative Weblogging) or as investor. We are very happy that you are taking the time to answer our questions.

Please tell us about your latest activities.

Hehe - that is a broad question - I did run my first marathon, saw my first two kids born and I do continue to bootstrap two startups - Kinkaa (a meta travel search engine for Europe) and Creative Weblogging (a blog media network).

Will the social software industry be affected by the economic downturn? Have you recognized or experienced a change in entrepreneurial or investor activity within the last couple of months?

People are certainly more cautious as everyone is trying to figure out what the impacts could be (less marketing spend, less advertising). However its just psychology so far - I haven't seen any early stage deals fall apart (as it happened with many private equity deals). Overall it seems that early stage deals show a healthy consolidation but its hard to forecast this further for me.

Let's say someone would like to start a social networking venture today. What would be your recommendations? Do you believe that the ideas are still of interest to Angel investors or VC's?

They are - just look at a Hamburg (Germany) based social network for classic car ('oldtimer') lovers. It just raised funds in the end of last year. Social networks must have a convincing organic growth and should target a certain specific demographic. If there is a good business model or good idea to make money besides running ads that can indeed be an enticing mix for investors.

Google executives recently said that it is harder than expected to generate revenue from online social networks. What is your opinion on the potential revenue models for social networks?

CPMs (price per 1000 impressions) will continue to be below average compared to other internet services. Nevertheless social networks market themselves mostly and can claim enormous amounts of users with very little marketing needed. So most will break even eventually.

Many social networking platforms have made it easier for companies to mine their user data for marketing purposes. Do you think this is the right move or will the internet community strike back?

I feel it's not a good idea to move into that direction. It was felt like going 'under your skin' as a user. Most initiatives have backtracked already from their former stance.

A follow-up question. Aren't you tired of keeping your profile up to date in all those social networks. Wouldn't it be the best way to create a single XML type online identity?

Absolutely - but remember each social network has a (slightly) different purpose - my identity in LinkedIn and MySpace may never be the same.

Merging data from social software with the real world has been discussed in the past under the name of "location based services". Though we have yet to see applications and devices that are available and used by a majority of users. When and how could this change?

It must become ubiquitous - all (or most) phones need GPS. Data plans must be included into a normal mobile phone subscription. Mobile phone displays and UI must improve so that even your grandma can login to Facebook from her mobile phone. Seems a coupe of years off - judging from my grandma who has yet to buy a mobile phone...

As a pan-european investor you are seeing and hearing about trends before they emerge. Is there an area of social software that we should be aware of in the near future? Will we be seeing more crowd based business concepts such as the trend to allow users to share almost anything?

I like the idea of Amazon Mechnical Turk a lot - it's basically an API for the human mind. It's still a lot of theory and only so much practice, but social networks with all the user data could eventually build their business on a similar platform. Social networks as an API to knowledge and human services?
...
I kept it short - hope it still helps. Please let me know if you have any more questions.
Best, TJ

Torsten Jacobi or 'TJ' is a serial entrepreneur and investor with experience in the software and media industry in the U.S. and Europe. He lives close to Silicon Valley with his family.

Posted by Alexander Schellong at 11:15 AM | Permalink | Comments (0)

It is an interesting and important question how voters search for information about candidates. Presumably, in a democracy, one hopes that institutions push people to deliberate about the choices before them, because (1) it would normatively be a good thing that the collective choice reflects the balance of well-thought out opinions about the direction of the country, (2) that the (individual) deliberative process has a cumulative effect on people’s knowledge and preferences, and (3) thinking about the collective choice helps forge a civic identity.

Political science often offers a rather pessimistic view of the capacity of voters to make informed decisions. However, this view is often based on an overly static of the voter. (I will blog another day regarding a paper that I am working on with Kevin Esterling and Mike Neblo on this subject.) Voters (arguably) search for information on an as-needed basis. Much of that search is around nonhuman sources (e.g., news media), and much of it human sources (e.g., friends and family). One of the nice things about the Internet, as I have written before, is the digital record people leave of their behavior (as compared, for example, to casual conversations). So here’s a little fun with google trends: Below are two figures from google trends, one for google searches for the names of each of the remaining candidates for President over the last 30 days in the whole country, and one for Washington State, which is holding its caucuses today.

I would note that for the first figure, of the top 10 states that conducted these searches, 8 were Super Tuesday states, one was DC, and one was South Carolina. Put together, these figures offer a glimpse of how the campaign drives people’s search for information about the candidates; and they also offer a hint of who people are looking for information about. An emphasis needs to be put on the word “glimpse” because we are drawing on a particular sample of searching behavior. What types of people look where for what types of information? The contrast shows up quite clearly between Paul and Huckabee is illuminating, where Paul is relying on an Internet-based network, and Huckabee more of a church-based network. One suspects that this figure thus over-represents the relative number of people looking for information about Paul.

HERE IS THE KEY:

Blue: Obama
Red: Clinton
Yellow: McCain
Green: Paul
Purple: Huckabee

Posted by David Lazer at 2:24 PM | Permalink | Comments (0)

A few more observations about the primary in Massachusetts: I voted this morning, apparently in the midst of heavy turnout. There is this charming tradition of sign holding for candidates outside of the voting areas. I don't know how common this is-- certainly, it wasn't the case in other states I have lived and voted in (Michigan and New Jersey). It is all quite civil-- I walked by the Obama (two) and Clinton (one) sign holders and they were talking about local affairs. There no Romney signs, notably, since this is his home town (although I am sure he votes in the higher rent precinct). And, of course, the sign holders are members of the community, so people who pass by always are stopping to chat with the sign holders. These little exchanges, I think, are the microscopic civic foundations of a democracy.

Posted by David Lazer at 9:41 AM | Permalink | Comments (2)

A small but telling note about the "invisible" networks mobilizing around the primary-- a canvasser for Obama knocked on my door yesterday. A few observations: the canvasser was not someone i knew, but was from the neighborhood (4 or so blocks from my house); she had a checklist of doors to knock on; my town is not obviously promising Obama territory, where the median voter is probably about 50 and white; and, more generally, surveys have suggested that Clinton has the biggest lead in Massachusetts of any of the Super Tuesday states (see wonderful pollster.com graphic). There were no other canvassers that came to our door, and no others that I saw, generally, going door to door.

What does this tell us? It suggests that there is a formidable and sophisticated grassroots mobilization effort by the Obama campaign-- with primaries tomorrow covering a population of about 150 million people the Obama campaign had someone from my neighborhood knock on my door. The fact that it was someone local reflects the mobilization of local networks, the fact that she had a computerized print out of people to talk to suggests the sophisticated and centralized dimension of those efforts. Field studies suggest that these mobilization efforts can be very effective, and the effect must be amplified if it is someone from the neighborhood (as compared to outside canvassers). It also highlights the intensity of the Obama support, which is only partially reflected in voting (since the votes of high intensity people count no more than those of low intensity people, although presumably they are more likely to turn out), because intensity is related also to efforts to persuade. (My intuition therefore is that, at least in Massachusetts, polls are understating Obama's support-- although that intuition may wilt in about 28 hours.)

The other thing that this highlights is the role that elections play in spurring civic discussions. It is one of the curses of the electoral college system that the election does not come to states that are uncompetitive. It has been a long time since Republicans and Democrats fought over Massachusetts. There are votes (on the margin) to be fought over here, probably as many as in any state, but no electoral college votes to be won. As a result, the election settles with a vengeance in places like Ohio and Florida, but states like Massachusetts and Utah are utterly ignored. The Democratic and Republican primaries offer a nice contrast, where the Democratic delegates are awarded roughly proportional to the number of votes Clinton and Obama get in each Congressional district, whereas the Republican primary is winner take all. In part as a result there is vastly more competition for votes on the Democratic side than the Republican side, because McCain cannot hope to win delegates here, and Obama can.

Once tomorrow is past, the election is pretty much over for Massachusetts, except for commercials aimed at New Hampshire this Fall (since New Hampshire will be a competitive state). And I think that is unfortunate, because these kind of election-spurred discussions are healthy for our democracy.

Posted by David Lazer at 2:10 PM | Permalink | Comments (0)

As I waited for the bus a good chunk of yesterday morning, in the drizzly slush that is Boston's lot in winter, I was contemplating how travel should work in a networked world. In particular, let me propose the idea of "netcentric travel", where service providers push out information so as to allow consumers to assist in the co-production of good outcomes. Example: it should not have been necessary for me to stand outside for the better part of an hour waiting for a wildly out of sync MBTA bus. Instead, one could imagine placing GPS devices on each of the buses, which could be tracked real-time on the Internet. Given such a system I could have seen when the bus was going to arrive and gone out shortly before (or seen that it was not going to come in time and driven in).

Such a system would be fairly cheap to implement, and, I would note, could be plausibly be built through a public-private partnership. You could imagine a private company funding the installation of GPS devices, but gaining revenue through web-based advertising revenue.

The data produced through such a system could also prove a valuable operations management tool for mass transit.

Another example: I have had a series of bad experiences with air travel over the last year (I know: join the club). One particular example was a USAirways flight I was on the day after they merged their database with America West. Needless to say, this merging of databases went rather poorly, putting out of commission all of their check-in kiosks. When I arrived at the airport, there was a 2+ hour line, resulting in many missed flights. One could have imagined, as soon as this problem arose, their communicating to customers (via e-mail and phone) that they should (1) arrive at the airport especially early, and (2) print out their boarding passes at home if at all possible. This would have potentially greatly reduced the impact of this disruption on customers.

In any case, the key insight here is to recognize that in travel (as in many domains) consumers co-produce systemic outcomes, and will adapt in ways that are good for the system given the right informational tools. Such a system exists to some extent-- e.g., one can see if flights are delayed online; some highways have a radio station that transmits information about traffic; you can go to traffic.com to find out real time where there is traffic congestion. But I think that these bottom-up possibilities are underexploited by some of the more top-down parts of our travel infrastructure.

Posted by David Lazer at 11:28 AM | Permalink | Comments (4)