We posted this fairly non-stock-related content on the R2 blog and wanted to share it here for those thinking more broadly about technology over the longer term.
The concept of "one way doors" fascinating to me in terms of consumer behavior and technology adoption. We've seen it a few times with Apple when they released iPod/iTunes, touch screens devices like the iPhone and new form factors like the iPad. The point is that once a consumer experiences this they never consider going backwards.
This might also be true for digital books thanks to the Kindle. Or online sharing sites now that we have Facebook.
There are a few other thought provoking notes in the post which I wrote after spending a day immersed in a "think tank" with lots of smart people.
The concept of “one-way doors” for consumers in the technology space is very powerful. It’s a perfect turn of a phrase to describe what we’ve been doing for hundreds of years. But today the doors seem to be coming faster and realizing just how “one way” they are is instructive. Recent examples are the iPhone and the Kindle. Consumers expect simplicity, power, touch screens and the ability to get immediate access to digital content.
Many of us have already had the experience of touching and pinching a device with a non-touch display and wondering what’s wrong. Now it seems odd to interact with a hand-held device that *doesn’t* have a touch screen. The advent of mainstream touch screens is only four years old. iTunes is another good example because it took a very convoluted process and turned it into a plug and a click. Another instant one-way door. I think the Kindle (and Kindle software) will do this for a large segment of the book market. I’ve been crazy for books my whole life (no doubt in part because my dad and my step-mom were both librarians) and I thought the Kindle was a terrible idea when it came out because I love my physical books so much. But, after using it for a year, I can see that it will be very big for everyone, myself included. Art books, out of print books, large format books, etc. will continue to need a physical aspect for a while but not forever. A quick look at the interactive Sistine Chapel makes it clear that conventional books will get outmoded quickly. It will take some time to see a digital edition of “Classic Japanese Joinery Illustrated,” but when it does come out it is likely to offer an enhanced viewing and learning experience that I can’t even get today from the beautiful printed book. It’s true that for services like Kindle to work we need a way to borrow and lend content more easily. Remixing need to be easier too. In the meantime, however, a digital version will offer better value than the physical book for many purchases.
Many of these recent innovations have hit the consumer first but are increasingly putting pressure on enterprises. Most enterprise technologies are very difficult in almost every way possible: hard to buy, hard to install, hard to learn, hard to run. Many enterprise technology bigots suggest that this is all necessary because these products are secure, they scale, they meet the myriad requirements for compliance, etc.
But enterprise users are still people. Which means they are also consumers who are going through these “one way doors” all the time. They are coming to expect power and simplicity. They are beginning to vote with their feet – or finger now that most things are just a click or two away – and enterprise technology providers need to take notice. One study found that a vast majority (>70%) of people in Fortune 100 companies were using services like Dropbox even though they are prohibited. It’s hard to prevent the use of simple, free (or cheap) products that work great.
From an investment standpoint I think this means that markets will shift faster and the ability to adapt and scale will continue to be extremely important. It also tends to add to visibility once the door is opened. For example, the attractiveness of an investment in Apple has not really ebbed much since 2007. So many people have yet to flow through their one way door (with high margin toll booths) that years of profitable growth are locked in.Lean Back versus Lean Forward
A little over ten years ago, John Seely Brown gave a presentation at a Warburg IT conference in NYC using a brilliant set of illustrated charts that showed many modes of computing, including leaning forward and leaning back. Today the idea is very apt given the battle that is going on in the entertainment industry. Entertainment evokes a “leaned back” view of content. You are, after all, supposed to be entertained. Which means someone else is doing the work.
Video games blurred the distinction long ago and today we are faced with a very fuzzy set of lines in digital entertainment. The real challenge is that consumers vacillate wildly about leaning forward and leaning back *even in specific genres*. For example, games are lean forward activities but now many gamers are eager to watch others play games on a gaming TV channel to learn more and pick up tips while eating pizza and relaxing with friend in the living room. Some even watch for the entertainment value alone. Millions learned about poker by being captivated watching the Poker Channel on their TV (often while unable to sleep at 2am in their hotel room.) That turned into a desire to play online and “lean forward” into the game. The same is true for Internet radio (last.fm) and eventually Internet video (YouTube/GoogleTV, AppleTV.)
The other sort of crazy new trend is to go from lean back to lean forward based on direct interaction with the artist and the content. Increasingly, consumers are being invited into the creative process and many true fans take advantage and turn passive music consumption back into active engagement and a new level of entertainment.
This is also happening with sports with “helmet cams” seeping into NFL football that allow viewers to select and view their own perspectives of a play. NASCAR implemented “in-car cameras” some time ago. These are interesting technologies but it’s too soon to know how much consumers will be willing to pay for and engage with these new models.
Multiple consumption modes don’t just apply to the *types* of content but also to the use cases which seem to be mutating and being demanded *simultaneously*. This is a big problem for non-IP architected content solutions like cable companies. It would seem that what is going on here is utterly incomprehensible to cable companies and media networks. Consumers will need to pay for big data pipes, but in return will demand new content models that shift endlessly between “lean forward” and “lean back,” which will make it impossible to succeed without radical retooling.Is Facebook the Devil?
It hasn’t taken long for Facebook to become a lightning rod for many storms (privacy, valuation, data ownership, games) and it seems, for many, also morals and society. Clay Shirky has said that Facebook is a new metaphor which defies analogies and prior examples. As such, everyone is still figuring out how to deal with it and opinions range from “the greatest thing ever” to “it’s the Devil” to “it’s good but like AOL for social networking and a big short.”
Now that technology is so entwined with society, debates about a new “technology” like Facebook are unlikely to go anywhere from an investment standpoint. Mankind has consistently given up things like privacy in exchange for convenience. One way to really understand this is to read a book called “How to be Invisible” which lays it all out for you. The extent to which you would have to change your life not to be fairly easily discovered and known is staggering.
For me the real question is “are we using Facebook or is it using us?” Many of the people in the room no doubt felt they were controlling it, but worried about the less technically savvy and teens/tweens in the world. Based on a small sample I think young people are learning fairly rapidly how to use these systems and are pretty smart about what information to put where (at least based on their own sensibilities) and which things to avoid.
It’s become pretty clear that most people have multiple and distinct networks (social and professional) so that the idea of having just one, be it Facebook or another, doesn’t really make sense. This means that despite the dominance of Facebook we can probably expect to see many successful networks built and become great investments. We’d point to examples like StockTwits (stock investing), LinkedIn (professionals), and Mendeley (scientists) as three easy examples.
Digitizing our lives opens my myriad opportunities for use and abuse. Which path Facebook will take isn’t yet totally clear.
[Credits: Door image from Fluxxlab.] [Disclosures: None for this post.]
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