steveharmon.com

In the world of famous threesomes there’s Larry, Moe and Curly; The Three Musketeers; Paris Hilton, Britney Spears and Madonna. But the battle for media will be fought by these three: Apple, Google and Microsoft.

All three companies are engaged in multiple battlefront wars with each other: search, software, hardware, services.

Apple’s banning of the Google Voice app from the iTunes store is just the opening shot in a lengthy decade battle ahead for control of the world’s communication and media flow.

What kind of battle will it be? Understanding where each company is at will help understand what’s at stake and who is winning so far.

I ran some numbers on what each of the company has in terms of users for its various offerings, from music to phones to Web, and it showed some interesting results: the battle royale that I see coming is between Apple and Google over which controls the user across multiple digital avenues. Why Apple and Google? Apple has the lead if we look at each platform. Google has the edge in search, a huge onramp to multiple end user services that it doesn’t yet provide as it steers users to other sites.

Microsoft clearly dominates in operating systems with a global share that Apple and Google don’t seem likely to touch anytime soon. However, given the government restrictions on Windows it clearly has hampered its growth into new markets such as search, music, and other new areas. That said, Windows Mobile had impressive numbers but looks like it’s losing ground as Apple’s iPhone gains.

Apple’s hardware “ecosystem” of iPods, iPhones is the biggest threat to Google. These devices feed Apple growth and network services (iTunes, Safari, MobileMe, etc.). This is the main reason Google is trying to get a foothold with its own mobile software effort, Android. Reports say Android-powered phones have sold 1.5 million units. Not big in the iPhone sales gauge. But somewhat notable. The biggest threat to Google, however, is that Apple is probably the only company in the world perceived as “cooler” than Google. Apple’s game changing moves in music and phones are not easy to duplicate. Just ask Palm Pre or Microsoft Zune. Cool is elusive.

In a perfect world for Microsoft it would be allowed to bundle anything into Windows and both Apple and Google would have a much more difficult job of gaining market share. However, as software becomes more “service” than a installed item, this advantage would likely have faded over time anyway. It’s ironic that much of Google’s employees came from Netscape, which Microsoft soundly defeated in the software market. This time around, though, there is no software, it’s all Web services, server farms, networked information distributed. Controlled by the end user.

There are other threats to the above three, the biggest is facebook with over 200 million global users. But it remains a long shot to unseat any of the above for multiple reasons.

About 5 years ago I said Apple was the new Sony and Pixar was the new Disney (both ran by Steve Jobs). Today Pixar is owned by Disney and Apple is the undisputed king of consumer electronic media from music, TV, movies, apps and more it delivers. Why else did Amazon launch its own ebook reader, the kindle? Because Apple’s iPods in a few moves could become the leader in ereaders overnight — same as music.

Who wins the battle above? I think Apple currently has the edge with its 32 years of being in business, making mistakes (some big like helping Microsoft early on), and its ups and downs with products and CEOs. Experience and making cool new products keeps consumers buying (look at Apple’s latest balance sheet).

Microsoft will have to accelerate its growth into consumer-facing services and acquire many new services to make this happen. Not Yahoo but Twitter, Facebook.

Google will have to hire people from Apple to help it figure out better consumer experiences. Look at Orkut, still has problems and server hiccups all these years later. Google Base didn’t beat Craigslist. Google Docs isn’t dethroning Office. Even Android sounds more like a tech solution than a consumer one.

Summer Camp for billionaires happened this week in the middle of Idaho. For the ‘geographically challenged’, Idaho is somewhere due east from San Francisco. But what happens when you get over a dozen billionaires such as Bill Gates, Google’s Eric Schmidt, DELL’s Michael Dell and others in the Idaho wilds? The odd thing is not much it seems. That’s what happened this year at an exclusive retreat for the media moguls and tech titans who spent a week in Sun Valley, Idaho, trying to figure out just what everyone else in the room was doing.

Sun Valley is a town in Idaho where every year for the past 27 years the investment bank Allen & Company has invited media and technology CEOs and founders to get together to socialize and network with each other. The idea is this can lead to deals. Sometimes it does.

The event this year was like Texas Hold ‘Em poker game with a lot of poker faces sitting around the table, few hands shown and chips not put on the table. In past years this annual event spawned a slate of mergers and acquisitions, speculation and buzz. This year seemed to be more of a “wait and see” and “you go first” environment from what I can tell.

Facebook founder Mark Zuckerburg was there. As was Twitter co-founder Evan Williams who may have been looking for a buyer for the company (unofficially of course). New AOL honcho Tim Armstrong (formerly of Google) popped up. Sony CEO Howard Stringer put things in perspective when he said Twitter was a company he didn’t want to acquire. A company with little or no revenue? “not a club I want to join.”

From my perspective the larger observation is that the U.S. financial market isn’t where it needs to be in helping new companies grow and be successful. Events like Sun Valley are the epitome of the availability of capital and debt to accommodate mergers and acquisitions. The market for initial public offerings in the U.S. has been hampered by over-regulation. Ironically, some of the only companies to go public in the U.S. this year have been from China.

On the debt side, private equity overtapped the debt markets for several years to acquire assets they had no right buying, from retail to manufacturing. Combined with housing, mortgage and other debt weakness, the debt markets are not as able as they should be to finance the kind of mega-merger that a conference like Sun Valley should announce.

In lieu of that, here’s the announcements I would have liked to have seen come out of Sun Valley this year:

Google buys Facebook. There was no Google-Facebook deal. Although Facebook is much more valuable than YouTube to Google in my strategic long-term observation. With Facebook, Google gets the real-time user opinion of over 200 million users + billions of user photos uploaded monthly + profiles full of personal data + a social network winner.  My prediction: Google could make an offer for Facebook for $15 billion cash and stock within 12 months. We’ll see.

Microsoft buys Twitter. There was no Microsoft-Twitter deal (not yet anyway. My bet is Microsoft could acquire Twitter within 6 months for about $750 million. Why? Twitter has no revenue but does have a user base that Microsoft needs to differentiate its search from Google). Twitter is the new PR platform and usenet groups for today’s thumb-happy crowd (mobile users).

Time Warner spins out AOL. AOL is trying to rejigger after a disastrous 10 years under Time Warner in a failed merger. Coincidentally, in 1996 I said AOL wanted to be Yahoo when AOL  grew up. Well, AOL is finally web-based but still looking for a grown-up self. The cable companies and telcos are the new on-ramps, where does that leave AOL? Destination? AOL’s instant messenger service AIM is the jewel, along with Advertising.com. AIM is the largest “real-time Web” conversation.

Remember in the movie when Forrest Gump opened a box of chocolates and said he never knew what he was gonna get inside. Well, one of the biggest missing ingredients at Sun Valley this year was not only action but mobile industry mavens.

For all the talk about media, the real platform that most media and tech titans ought to be focused on is mobile. Mobile is bigger than PC, TV, print, broadcast. Mobile is the new Holy Grail of media. Ask any 10-year old what they’d rather do: watch TV, read a book, listen to radio or play their Nintendo DS or PSP. Increasingly, another game option is iPhone. What do they want for birthday? an iPhone or iPod Touch, or Nintendo DSi.

The real story about media this year is that Apple with its mobile-centric product line looks more like the future than anyone talked about at Sun Valley. And Steve Jobs wasn’t even there. Roasted marshmallows anyone?

Welcome to the law of digital abundance, is your business prepared? Probably not.
Most businesses are set up according to 18th and 19th century work ideas.
We’ve all heard of Moore’s Law about computing power doubling every 18
months; of Metcalfe’s Law of the power of network growing exponentially
with every new user.

Welcome to The Law of Digital Abundance. Most of what we do in life is
based on scarcity. Limited land, water, resources. Look at the cost of
oil. Finite capacity. Or controlled markets, prices set by cartels,
whether oil or diamonds.

Companies price products based on supply and demand. Homes, cars,
services.

Everything about what we do, in fact, is based on scarcity.

Except when we operate in the digital environ. Digital environs are
based on abundance. Not scarcity. The problem is most businesses, even
in the digital world of the Web and mobile, price things according to scarcity.

Very, very few companies know how to address digital abundance. And just
when they do, they either sell to a larger company, putting abundance
under check, or they stop considering how deep the abundance is. Like
looking at a solar system and not seeing a galaxy potential.

Digital goods expand, not contract. In the old TV series Star Trek Captain Kirk
comes across the Tribbles which multiply amazingly fast.

For those of you who haven’t seen it, here’s a screen shot from the TV show:

Someday You'll Be Called Furbies And Make Billions $$$

Digital goods are like that, just think of a viral video or email your friends sent you.

Susan Boyle of the UK talent show comes to mind, she became a YouTube star overnight.

Susan Boyle's Swan Song

In offline goods, pricing and value is fundamentally derived as a result of scarcity.

Ask the owner of the beachfront home on Hawaii or Bora Bora. Airline seats are priced
according to number available. Unlike airline snacks which are priced on
how how salty sweet cardboard-like and how much BHT they can squeeze in. Potato chip, anyone?

Airline snacks aren't this good

But in a digital environ with basically unlimited storage, bandwidth,
information and access value is created as a result of the abundance but
not because of it.
In a digital environ abundance by itself is value-less.

Digital value is instead based on convenience. How quick, meaningful,
easy something is. Users downloaded 1 billion iPhone apps from Apple in just 9 months.

Often free or cheap, these apps are redefining digital values.

It's The Apps That Made Apple's iPhone A Hit

Companies hoping to compete in a digital era need to understand Digital
Abundance and how it changes their business.

Each digital copy is an original (not a copy). Pricing digital goods needs to be based
on taking advantage of the opportunity of scaling and distribution.

Instead of having one central source like Amazon.com you end up with 100,000 Amazon.coms,
100,000 Apple iTunes stores, 100,000 Alibabas, 100,000 Google Ad Senses and more. Ready to multiply?

What if these digital goods expanded unfettered?

One of the biggest myths running around the web and tech industries today is the idea of ‘first mover advantage.’

Take a walk with me down memory lane:

Booklink. First book store on the web. Early 1990s.
AOL acquired in 1994 and it got lost in the mix of the online service.

=> Amazon crushed it.
GNN. First web directory. Early 1990s. GNN?
Global Network Navigator, launched by book publisher O’Reilly (hello to Dale Daugherty over there) and sold to AOL for $11 million, a then unheard of price for a ‘home
page.’

=> Yahoo came along later and beat it.

HotBot. First meta search engine. Mid 1990s. Run by Wired’s HotWired. One box front end as it is today pretty much.

=> Alta Vista, Lycos, Infoseek and finally today Google beat it. Compuserve. First online service. 1969. Owned by H&R Block. Yep, the tax people.

=> Compuserve had millions of subscribers when AOL was still called ‘Quantum Computer Services’ and had a few thousand subscribers to a DOS-based system based on a BBS (bulletin board service, these are what geeks did to network before the web).
Mosaic. First commercial browser 1994. Became Netscape Navigator.

Deluge of browsers sprouted including Spyglass Mosaic, SPRY Mosaic, Netcom NetCOMPLETE, Quarterdeck, Netmanage Chameleon.

=> Microsoft licensed Spyglass’s browser and launched Internet Explorer 1995. 1999 it had dominant marketshare.

Delphi. First online service to offer Internet mail access.

=> Acquired by News Corp.

Real Audio. First audio software player for the web. Mid 1990s. Progressive Networks (now called Realnetworks) launched this. Later came out with Real Video, then Real Player.

=> Microsoft licensed the code and created Windows Media Player, now the dominant player for audio/video, bundled with Windows.
IBM PC. 1981. First IBM-based PC.

=> by the late 1980s and in the 1990s Compaq, HP and others beat it. By late 1990s and 2000s, DELL crushed all of them with a better supply chain and relationship direct with customer.

Lessons: Time and time again first does not guarantee winning. The real strategy is to be something I call “best mover advantage”. Best mover can be first, middle or last — doesn’t matter what the placement is.

You want another example? Apple lost the PC war decades ago due to pricing its PC too high and limiting its licensing. Fast forward two decades and Napster launched the online music business, peaked and died and got resurrected.

Meanwhile, Apple finally figured out its “real” business is making cool gadgets for any platform (not just PCs) and launched iPod and iTunes. iTunes becomes the #1 online music store in weeks. And the iPhone has become the most-popular smartphone in the world, with a new 3G S coming out in the U.S. this week (already sold out).

Companies that talk about their strategy and business need to think about being the “best mover” not the “first.”

Being best mover is why Google even exists, long after a truckload of search engines had come along, gone public to the tune of hundreds of millions, and fizzled while drinking their own Kool Aid.

A lot of hype around Palm and Pre mobile phone this week. Hmmmm, what’s the reality check? I was one of the earliest Apple evangelists when the company came out with the Apple II and the Mac. Back in the day I sold personal computers to help pay my way through college and based on the graphic interface and more “human” approach to interacting with a machine I became an Apple fan.

In my first job after college, in fact, I dragged my Mac to work and plugged it in, refusing to learn MS-DOS. But eventually in the business world Microsoft won. Applications for business were based on MS-DOS. Not Apple. MS-DOS was a platform. Third-party software developers made it into a global empire valued at hundreds of billions of $.

By the time 1995 rolled around and Microsoft came out with Windows 95 the eye candy advantage that Apple had was gone. Third party apps built on it and propelled Microsoft to the fore. I stopped being an Apple fan and started liking Windows and the plethora of apps available for a fraction of the price for a Windows PC.

Apple withered and fizzled like an open can of Pepsi.

I don’t know if you read Bill Gate’s book ‘The Road Ahead’ (way back in 1990s) but he talked about “virtuous cycles” that build companies. Positive swirls around a product. I guess the hippies in Cupertino at Apple must have read it since by the early 2000s the iPod popped out like Angelie Jolie emerging from Phyllis Diller. Somehow the gene pool that gave the world the Performa now had it right, again.

Maybe it was the return of Steve Jobs after his monk-like wanderings into NEXTville, which ended with Apple buying NeXT, his new PC company.

iPod gave Apple back a platform weapon, iTunes. Distribution. Ubiquity. The step from iPod to iPhone was short as who wanted to own a clamshell cell phone when a touch screen music and web player was available?

Mobile is not a desktop metaphor. It is what’s known in Latin as “tabula rasa,” or clean slate. What’s important on mobile isn’t the same as a desktop PC. Mobile is based on new apps, social and mobile by design (not afterthought). The mobile experience is staccato, Morse code-like bursts of communication. Texting. Gaming. Sharing. Listening. Watching. (And soon, Buying).

Today, iPhone is the world’s largest mobile computing platform with over 1 billion app downloads. Some 50,000 apps are reportedly available on the iPhone platform. Rivals are way behind: Information on Blackberry apps and its downloads are not readily available. Palm’s new Pre has about a dozen apps available and news reported about 150,000 downloads its first day (phone came out June 8, 2009).

Google is also getting into the mobile hardware effort by pushing out its Android mobile software to over a dozen handset makers.

The real battle is in third-party apps and who has the biggest ecosystem for developers to build on. Other contenders will emerge: Google, Facebook, Twitter. But they are all hopelessly late to the battle. Palm Pre may make it easier by using Web programming to hasten dev for its app store, but if a tree falls in the forest and no termite sees it…

The war will be fought by developers and won by developers — they are the ones that will make or break the computing platforms (Web, mobile, desktop). Whoever makes more money off of any platform will create the virtuous circle that wins. So far it’s Apple. By a 1 billion download margin. But, as mobile becomes the main computing/web/commerce/communication platform, the next 10 years will be more telling than the last 10.

Since the early 1990s I have been building companies and know many of the others foolish enough to build companies. Some of the better known fools built Yahoo, TiVo, eBay among others. I was a lead investor in Ad Sense which Google acquired and today generates about 30% of Google’s revenue.

The name for those that build new things is “entrepreneur” which is basically French for “dreaming against the odds.”

The dreamers against the odds include Bill Gates, who dropped out of Harvard to tweak an Altair, and ended up reselling DOS to IBM under the Microsoft name.

Then there’s Steven Jobs, phone phreak (free phone call hacker) who turned his hippy Zen on the PC with uber geek Steve Wozniak.

Jerry Yang, co-fiddler of Yahoo, who was set to be an electrical engineer but got sidetracked on a web directory thingie.

Wall Street quant deserter Jeff Bezos who left a good job with a major banking firm, loaded up his Honda Accord and headed to coffeeville, Seattle, to make an online bookstore.

There are hundred more in my Rolodex (I mean my Contacts! since nobody uses Rolodex any more).

Steve Harmon’s 8 traits of successful entrepreneurs (first here’s my napkin scribble with the traits, followed by more detailed examples):

1] Vision. Seeing what others don’t see. Inventing the future rather than reacting to it.

2] Instinct. Words cannot describe it. Gut feelings mixed with heavy doses of doubt from your brain.

3] Drive. It takes 5x the energy to start something vs. doing something that’s been done. And at least 4x the caffeine.

4] Alert. A certain awareness of opportunity. Quick thinking and reacting to very dynamic environments, changing landscapes of business and technology.

5] Calm. While storms erupt and brew inside as struggles increase, it reaffirms an inner sense of peace. Pruning makes the garden.

6] Persistent. Brothers Walt and Roy Disney started three or four animation studios all of which went bankrupt before creating Mickey Mouse. Pixar nearly went broke until Steve Jobs rescued it and invested when nobody else believed in computer animation.

7] Grounding. Sense of value in people, things, agreements. Belief in what they do for purposes other than “making money.”

8] Balance. Setbacks provide launching points to move ahead. Moving ahead can mean giving up opportunities. Understand the yin and yang of the situation and don’t lose sight of the balance. Build value based on the best whole advantage.

A few weeks ago, Steve Ballmer, CEO of Microsoft, addressed students at Stanford and shared his insights into innovation, which are so good I wanted to share some of Ballmer’s quotes:

“I did meet Bill Gates at Harvard, and our sophomore year at school we lived down the hall from each other. And his friend from high school, they had started actually a company when they were in high school that did software that processed traffic tape. I don’t know if you notice when you drive down the road you sometimes see these rubber tubes across the road. Well, it turns out in the old days when you drive over one of those, it would punch holes in a paper tape in a box at the side of the road. And you would have to ship them back to Maryland. And Bill and Paul said, gee, let’s buy one of these new Intel microprocessors. At the time it was something called the Intel 4004, just to show you how olden days that was, and they started a business processing these tapes for cities in the State of Washington.”

“…when our sophomore year in college, the cover of Popular Electronics magazine, there was a picture of the first microprocessor-based computer, something called the Altair. And Bill and Paul decided to ‘write all the software the machine would ever need.’”

“It was all programmers when I joined the company in 1980. I came in to ‘be a business person,’ whatever that meant. I didn’t know much. Frankly, all I’d ever really done was interview for jobs, and market brownie mix. I wasn’t exactly well-credentialed. I’d taken the first year in Stanford Business School, so I could read a balance sheet. That was really important. We didn’t have that much money back then, so there wasn’t much to read. But, anyway, those lessons were important.”

“…we kind of just kept grinding and grinding, a few bits of inspiration, a lot of perspiration.”

“I just spent an hour with a group of venture capitalists, and they said, hey, look, if you’re going to tell entrepreneurs – I said, I’m going to go talk to some entrepreneurs – what would be your lessons from the early days? They were simple. Hire good people. We actually didn’t have very good people when I started. Bill was good. There were like four or five very good people, and I went into Bill’s office after I’d been there a month or so, and I said, we’ve got to hire 18 more people on top of the 30 that we had. He said, Steve, our people aren’t even very good. Why do you want to hire 18 more? And you’re going to bankrupt us…and so we just really worked hard at getting good people, smart people.”

“Success is…(a) great idea, a lot of hard work, and then you work at it for a year, two years, three years, four years, five years, six years, seven years, eight, nine, 10. Some things that actually wind up being really important take more than 10 years to get popular. You wouldn’t believe it reading the popular press, but it’s really true. It’s really true. It’s true with Windows. It’s true with SQL databases, for guys like Oracle. The Google guys were at it for a number of years before that thing really took off. There’s a few exceptions, but most things you’ve got to really grind up. And certainly that was kind of the history of Microsoft in the early days.”

“You know, if you say today, OK, is all the good stuff in the days gone by? This is one of the questions I get a lot from people who are just starting out who say, wow, technology has changed so much in the last five years, 10 years, 15 years, 20 years. Are all of the
great companies created? The answer is no, not even at all.”

“Today you learn to speak the computer’s language, if you want to write programs you learn to write programs in the computer’s language. If you want to control programs, file, open, copy, paste, not get me ready for my trip to Stanford. My secretary is able to process that command, my computer cannot process that command. The kinds of things that are going to be invented over the next several years is just to me outstanding, and particularly for somebody who’s got skills in software.”

“You don’t even have to be interested in the tech field, software is going to change so many fields. It will change energy, environmental science, the impact of software will be broadly felt. So I’m a bit of a zealot on that, as a particular expertise, but the chance for entrepreneurship is really, really high.”

“We live in a world where I think things are really also changing based upon the fact that we’re still quite early in the presence of the Internet. People say, well, the Internet, we’ve had that for 15 years. So much has been invented. And yet really the whole world of
technology is being redone as we speak. Technology grew up with the computer, and now it’s the computer, the PC, and maybe the smart TV. The computers, phones, and TVs, didn’t grow up assuming the Internet. And frankly the Internet didn’t grow up assuming tomorrow’s PCs, phones, and TVs. And so the whole mode of how software gets written to run intelligently in PCs, phones, and TVs, to talk to the Internet cloud, that’s all going to get redone.”

“…now we’re in sort of a Web 2, Web 3 kind of generation. Smart phones, smart PCs, smart TVs, talking to a smart
Internet, and that creates a whole generation of opportunities to disrupt the businesses that are to there. To create new businesses that people couldn’t dream of before. We talk about the cloud, the cloud is kind of that smart Internet presence talking to those smart clients.”

“Your world needs to be brought together, the consumer, you have one identity on the phone, you’ve got another on the Internet, you’ve got another at work, you’ve got another at home. You may want them separate, but you may not want to manage the cacophony of things that you deal with today.”

“In our business you’ve got to be inventing new things, because software doesn’t wear out. It doesn’t break, or at least if it breaks it was broken when you finished it, it doesn’t break over time the way physical goods do. So the opportunity and need to invent, just like
any other startup, or entrepreneurial activity remains strong.”

“I think it’s just a phenomenal time to be starting all kinds of companies.”

“Entrepreneurs who invent, who create, who really add to the level of innovation, the productivity in the economy, will change the world, will create economic value, will drive jobs, and will have a heck of a lot of fun doing it. So I think despite everything else now is the time.”

sponsored by Taleee the leader in consumer product ratings

Here’s some evidence that things are picking up from the world’s largest chip maker, Intel. Intel chief executive Paul Otellini met with analysts at the company’s headquarters May 12 and said he sees business gaining traction, with 2Q orders better than expected.

What’s driving the action? consumers. Buying compact and powerful. Such as…

A netbook is basically a PC that connects to the Web, with a small screen and external storage. Typically they sell for under $300 in the US. Here’s a photo of one:

Intel’s CEO comments come as no surprise to me that what’s driving the signs of growth? The Internet. Or what I call the Webs. PC, Mobile and Gaming. These are what I refer to as the Three Horsemen of Technology. The Three Musketeers of The Global Economy.

Driving PC sales? consumers. Not business. At my company Taleee our software and algorithms measure consumer opinion from across the Web and the data shows that netbooks and next-gen mobile phones (which are more mobile Web than phone) are the two hot items consumers are after.

One of the greatest axioms of investing is “buy when nobody is buying” but if you happen to watch CNBC or financial TV you’d never get that advice. The media always trails the reality. It reflects what was, not what is. That’s why it’s important to look at technology companies that serve consumers for economic growth, and listen when a company like Intel provides insight into its business.

In the larger picture, the world is a consumer economy. What began in the 1940s in America stirred into the automobile boom, highway boom, gas boom, suburb boom and baby boom of the 1950s and 60s. By the 1970s, 80s, 90s and 00s that wave hit the UK, Europe and now Japan and China in a big way. It’s still a breaking wave.

Consumers now are the economy from San Francisco to Shanghai. Intel knows. Worth paying attention to as a leading indicator, especially since Intel also made a radical, cool motorcycle to celebrate its 30 years making embedded chips. Now it’s the embedded economy. Check it here, it’s got wheels:

And now for something completely different, quick takes (or what I call “blips”):

Amazon:
reported record sales of $4.89 billion, up 18%, and $177 million net profit, up 24%. Jeff is kickin’ kindle and not taking names. Which venture investor would back it today, especially with all the years of losses it had. Shows that patience is a virtue and a value.

Alibaba:
reports 150 million Alipay (PayPal-like service) users in China. That’s half of all Chinese Internet users.

Changyou:
online gaming site goes public. Yes, goes public on NASDAQ. It is growing like a weed. Most Americans know diddly yang about China. A lot of Chinese Web companies are gaining as stocks this year. Coincidentally, I pulled up a report from 1999 and it showed 6.3 million Internet users in China. Today it’s 300 million.

Facebook:
Realizes that social is more about “streaming people in realtime” than posting profile pages. Still a work in progress with clunky interface and terrible ads that have no meaning at all for 99% of users. Ads look like spam (pigs with lipstick on?). Hired a lot of Google execs, raised capital from Microsoft at a high valuation before the birds hit the turbine. Needs to get smarter about what people want and ways to deliver it through, let others customize it without going down the MySpace roll your own nightmare design route. End game? Microsoft, Google or Yahoo picks it up. If it was based overseas maybe it could go public in London, Shanghai or Berlin. NASDAQ? Maybe.

Twitter:
Raises $35 million more. Free PR on Oprah. My perspective is it’s 2% there as a company and 98% to go. Hardest part will be getting mainstream people to use it. If blogging is a time taker, micro-blogging is a voracious piranha for your time. Current service is cool but not ready for prime time in my opinion. Who really wants to follow CNN? RSS is easier and more convenient. Also doubt about “active” following…my guess is 1% or less actually read the tweets they follow.

Myspace:
Hires a new executive from Facebook to run the show as CEO. MySpace isn’t the “company du jour” as it was in 2006 but still has tons of users and News Corp. cash behind it. Don’t forget, Google paid $900 million to serve ads on it. Its two founders are out.

AOL:
Hires former Google exec to run the show. AOL’s ad platform still looks valuable to me, hard to beat its scale and it’s not just on AOL, it’s webwide. AOL is going to take a lot more work to become viable again in my opinion. The entire social web has passed it by. Ironic since AOL was built on chat in the 1990s.

eBay:
restructuring big time. Made some bad bets on Skype and stumbled with StumbleUpon. Neither had anything to do with eBay’s core business. eBay needs to acquire ecommerce firms.

Yahoo:
not moving fast enough yet. Hard to do with large companies. Needs more of a MASH unit approach than patient outclinic. BTW: MASH = mobile army surgical hospital for those of you who didn’t watch the TV show.

Google:
passed its prime? vested executives (and talent) bailing out. No longer the “media darling”. Needs to find some fresh energy again, new blood. New acquisitions that will move the needle beyond 10 on the Richter scale.

–sponsor–

When I was a kid I studied Chinese martial arts and, in particular, Jeet Kune Do, the martial art approach developed by Bruce Lee. The one thing that Lee always repeated was “no way as way” and “be like water.” Which to me always meant: be open and adaptable to situations.

If you think about most business schools they teach a certain approach to creating a business. While there are the fundamentals if you look closely, no school teaches innovation. Innovation by its very nature cannot be taught. An environment that fosters innovation can be taught but isn’t in most business universities. That’s why you have students like Bill Gates who dropped out of Harvard to start Microsoft. Harvard wasn’t teaching how to create something new but rather how to perpetuate something old.

Other examples: Facebook founder dropped out of college to pursue building Facebook; Apple Computers founder Steve Jobs never finished college. Google founders dropped out of Stanford University. The list can go on. Nobody gets a degree in being a “Master Entrepreneur”… entrepreneurs must adapt and react to the environment.

Which led me to the thought that much of what Bruce Lee did in martial arts was about a philosophy that can be applied to business. So I pulled out my old copy of Tao of Jeet Kune Do and wanted to share some of Lee’s sayings. Here are a few along with some business lessons that I added that correspond:

Victory is for the one, even before combat, who has no thought of himself.
—>applied to business: put your customer first and not yourself

If nothing within you stays rigid, outward things will disclose themselves. Moving, be like water. Still, be like a mirror.
—>applied to business: listen to the market; don’t create something nobody wants

The point is the doing of them rather than the accomplishments. There is no actor but the action; there is no experience but the experience.
—>applied to business: enjoy what you do, riches are not the reason

To see a thing uncolored by one’s own personal preferences and desires is to see it in its own pristine simplicity.
—>applied to business: look for the core essence of the solution, make it simple

The problem is the answer. Understanding the problem dissolves the problem.
—>applied to business: if you’re not solving a real business problem you don’t yet understand the problem

The second-hand artist blindly following the sensei or sifu accepts his pattern. As a result, his action and, more importantly, his thinking become mechanical. His responses become automatic, according to set patterns, making him narrow and limited.
—>applied to business: copying others only leads to mediocrity and not success; innovation cannot be “taught”

The efficient structure in attack and defense.
—>applied to business: focus on a niche since they are easier to grow and defend

It is not daily increase but daily decrease–hack away the unessentials
—>applied to business: decide based on need versus want; need should drive business, don’t be distracted by things that create no revenue or earnings value to the company

To hell with circumstances; I create opportunities
—>applied to business: opportunity never knocks at your door, you must go knock on its door and, don’t forget, open it

Use only that which works, and take it from any place you find it
—>applied to business: lessons and common sense can be learned from many sources, not just “schools”. Just like these ideas are applicable to business.