Facebook Hashtags: When Monetization Clashes With Branding

Considering that my startup CyBranding owns a thriving website named hashtagify.me and sells a product called Hashtag Intelligence, you could easily see why hashtags (probably) coming to Facebook is very good news for me. But, as a person very interested in branding, I can’t help questioning this move from the Facebook brand point of view.

For its users, Facebook’s core expectation can be described as “easily sharing with friends and family through the Internet”. It is a very compelling expectation, Facebook owns it in the mind of billions of people, and thus their website has become the most engaging in the World as all the stats about time spent online tell us.

Facebook’s problem is that its core expectation isn’t as easy to monetize with advertising as, for example, Google’s “quickly finding what I need on the Internet”. Or even Twitter’s “publicly sharing on the Internet”, which is much less compelling than Facebook’s to most people, but which has that “publicly” attribute that makes it much more compatible with infotainment and advertising.

Facebook already took many steps towards making itself a better platform for the public sharing and consuming of content – think pages, “follow”, privacy changes, etc. – so adding hashtags, that were integral to Twitter’s success in that space, would only be a logical move in that same direction. The big risk for Facebook here is that this move could actually work – and, if it will work, it will also significantly dilute Facebook’s brand expectation of “sharing with friends”.

Why is that a big risk? Because public and personal don’t mix well; by diluting its core expectation, Facebook would leave the door open to some competitor completely focused on “personal”. This move could very well bring a short and medium-term benefit to Facebook’s bottom line and market capitalization, but, by putting in jeopardy its nearly complete domination of its current, incredibly compelling focus on “friends and family”, it could also sow the seed of its own undoing.

The good news? After all, if the history of branding has something to teach us, Facebook is most likely not going to “become the Internet”, closing us all inside a walled garden. In the world of brands, you just can’t be everything to everybody.

[UPDATE] I just read an article on Time about the “tragic beauty of google“, where the author says that he likes Facebook more because it feels more “warm, personal”. Will it still feel that way if the move toward more public conversations will work?

Is the EU too big as a startup ecosystem?

The other day I attended an event in Rome where Greg Horowitt discussed how the Rainforest model for fostering a healthy startup ecosystem could apply to Italy. It was a fairly interesting presentation and discussion, but I was a little disappointed by the lack of any reference to the bigger European context (and market).

Curious to know if this was just because the organizers were only interested in the Italian specific case – the conference title was “The Italian Rainforest” – or for other, more profound reasons, I asked Horowitt what he thought about a possible “EU-wide rainforest”.

His answer was that, above a certain size, the transaction costs become too big for an ecosystem to work, and that the EU was, in his opinion, above that size. I then asked about Italy’s size: the Italian population is 1.5 times that of California, and around 20 times that of Silicon Valley+San Francisco. During the conference Horowitt had said that the very different Italian regions should work to create their own ecosystems to leverage their different strengths, but his answer was that in Italy’s case it would make sense to work for an Italian rainforest.

This made me think. The 27-states European Union is home to 500 million people. Obviously, the EU could never be the “Next Silicon Valley” – just like the whole USA couldn’t be a “Silicon Valley”. But would the transaction costs really be too high? Are the problems that startups in the different EU states have to face so much different? Wouldn’t it help if we started thinking in terms of a EU startup ecosystem, thus creating a cross-pollination of experiences, solutions, talents – and, why not, some EU level lobbying?

I don’t have a definitive answer yet. But, from the many discussions I follow about EU startups, I see a lot of common problems, and the transaction costs are getting lower every day: At least among innovative startups throughout Europe, English is already the lingua franca; we have very cheap and frequent flights connecting most of the EU; Internet communication options are getting better and better every day; regulations are converging more and more.

And, most important of all, only at the EU level our startups could have a home market able to rival in size the one US startups have privileged access to, with all the advantages in terms of economies of scale and publicity this brings. No matter how well we develop our national ecosystems, no single EU nation could create one that could compare in size not just to the US, but also to China, Japan, and soon India, Russia and Brasil.

So, no matter how difficult it could be, and even if there are no guarantees that a EU rainforest could work, EU startups should start thinking at a EU level, and at least try to find ways to turn the EU single market, and the EU common institutions, to their advantage. The only alternatives are to settle for also-ran ecosystems, or move to the US.

I thank Horowitt very much for the insights he shared with us and for taking the time to answer me, but I hope EU startups will prove him wrong.

Is the open source/internet singularity coming?

Many have heard about the idea, popularized by Ray Kurzweil, that a technological singularity is coming. In a nutshell, the idea is that as the power of computers is growing exponentially, at some point it will bring about an artificial intelligence that will overtake human intelligence, reinforce itself and change everything beyond any (human) imagination.

I personally don’t believe that the creation of an AI able to compete (let alone surpass) with human intelligence is near at all. But while working on my latest web project, I noticed just how easier it has become to create incredibly powerful and attractive new software than just a few years ago. And all this thanks to Open Source and the internet.

Increasingly, we see amazing new software libraries, frameworks, programming environments being released as (Free) Open Source on the internet. This makes it progressively easier for other people, even solo developers working from home in their free time, to create great software, and often give something back to the Open Source community.

Not just that; the internet is making it easier and easier to find the best new pieces of software, to get answers to the most difficult programming questions, to circulate ideas and to publish the end results of it all. And to bring this all to even the most isolated programmers, in the remotest parts of the world.

Isn’t this all it’s needed to create an exponential growth of software innovation? I guess it is. And I don’t know what this will bring about, but it is a fact that information technology is disrupting lots of industries, with consequences that are harder and harder to predict – as unfortunately the current economic crisis is showing.

I don’t know if this could be the real technological singularity, even without artificial intelligence in the mix, but it could come damn close.

US patents and European startups: More threat or more opportunity?

Martin Bryant on The Next Web gives his take about the mess with US patents and European startup and tech sector in general, about which I wrote in a recent post.

From his article it looks almost as if the patent threat was worse for European businesses than it is for US ones, because it is easier (or less risky) for US business to come to Europe than the opposite. But US startups have to face that threat in their home market, and the situation there isn’t any better for them than it is for their foreign competitors. So they could never get the chance to come to Europe, if they don’t even get the opportunity to start.

I still think that the threat is bigger for US startups than for EU ones. Maybe that’s not true for big businesses, but I’m not convinced of even that. We’ll see 🙂

European startups and US software patents: Threat or Opportunity?

For a long time the intellectual property of computer software could only be protected by the means of copyright laws. This meant that a developer who had an idea and wanted to make it a reality could do so without any fear: As long as he didn’t actually copy from someone else’s code, there was nothing to worry about.

Business sharkThis changed when patents started to be granted for software. With a software patent you are barred from reinventing something that someone else already invented and patented, even if you do it starting from scratch and without knowing anything about that patent. This means that you may be forced to pay to use your own idea, if someone else had it before you and already patented it – that is, if the patent holder even wants to license it to you.

To make a long story short, since 1996, when the patentability of software was officially regulated by the US Patent Office, the trickle of software patents issued in the US has become a deluge – over 16,000 just last year, for an accumulated number well over 100,000. And most of the “inventions” that those patents cover are far from revolutionary or from being something requiring years of research; on the contrary, most of them are very simple if not absolutely obvious. Something that most average programmers could reproduce by chance when solving a problem on their own.

So, if you have an idea and implement it in software today, it is quite possible that you will break at least one of those patents, without knowing it. This has been true for some time, but now there are more and more companies that are trying to profit from their patents by threatening to sue other companies, and even individual programmers, who might be infringing their portfolio – even if there is no competition whatsoever with the infringer.

This is bad news for developers, bad news for entrepreneurs, and bad news for consumers. The only good news is that the situation isn’t as bad everywhere – for example, here in Europe, at least for now, software patents are much more difficult to obtain. They are usually only granted when related to some industrial process, and the patentability of software “as such” is explicitly prohibited.

This means that European startups don’t have to worry so much about software patents in Europe itself, but if they want to get to the US market they fall under the same threat as their American counterparts; and to become a global player in software, success in Europe is not enough: You need to be validated in the US.

As a matter of fact, Europe has been the birthplace of many successful software startups, some of which have become global hits: Rovio and Spotify (which incidentally got sued the moment it landed in the US) just to cite a couple of the most recent ones, Skype and Mysql to talk about the most famous. But that’s nowhere near the number and the level seen in the US.

There are many theories about this difference, and as far as I know they never include a lack of talent as an explanation. The problem lies somewhere else. In my opinion, one of the biggest disadvantages European software startups have to face if compared to US – and especially Silicon Valley – new ventures is one related to visibility and credibility.

Success begets success. The attention of the tech world is focused on the US and even more on Silicon Valley. The simple fact that a startup is based there brings a higher visibility and bigger credibility, easier publicity, more funding. It’s not for nothing if so many foreign startups and entrepreneurs move to the Valley to seek their success.

As the pernicious effects of software patents start weighing in more and more, though, this could change. I’ve got nothing against the Silicon Valley or the US – I even have relatives living there – but this self-inflicted problem could create a big opportunity for European developers and entrepreneurs.

Europe is already the richest market for software in general, but its linguistic fragmentation, more conservative consumers and a tradition of US innovation make it less prominent than the US one. If the European Parliament resists the pressures to relax the European rules on software patents, though, and if the USA doesn’t change the track it put itself on, Europe could become the reference market for innovative software, especially for new web and mobile apps that would be riskier and riskier be bring to the market in the USA because of the threat of patent litigation.

An American market practically closed to innovators that don’t have very deep pockets and/or thousands of protective software patents to answer the threat from lawsuits would mean a poorer global market for everybody. But in that poorer global market European startups would be comparatively much better positioned than today.

And if lots of cool new things will start to happen in Europe,  startups based in Europe could gain the upper hand when it comes to visibility and credibility. There would still be problems of fragmentation and consumer attitude, but if the tipping point is reached that could be superseded by other effects. Even some American entrepreneurs, scared by patent litigation at home, may decide to move here, inverting the traditional trend of European startuppers who move to the US, and this influx of talent would create an even better environment and contribute to the change.

If not Europe, who could bear the baton of software startup innovation if the US were forced to pass it up? China or India could be two candidates, but for now Europe looks much better positioned to me, if anything else because the best software talent in those two giant countries is already soaked up by other booming industries.

In the end, I wish that the US will be able to sort out its growing mess with software patents soon, not just out of disinterested generosity but also because that would be better for the global economy. But if they stay on their current course – and it looks VERY difficult to me that that course will be changed substantially, considering the staggering amount of money that has already been invested in software patents – then we in Europe should try to be as ready as possible to receive the baton.

This should include lobbying to get even stricter rules for software patents, creating stronger ties between innovators and other such systemic measures. But, in my opinion, it could and should start first of all creating an awareness of the chance that European developers and entrepreneurs have in front of themselves.

The baton may be there for grab in a short time – a couple of years. What are we waiting for then? We should already be warming up.

Are hashtags too geeky for Google+? A meditated answer to Loic Le Meur

I was able to join Google+ last week, and found it very interesting for three reasons:

  1. Circles
  2. There are mostly early adopters, and this generates some very interesting conversations
  3. It isn’t blocked at my office yet, so I don’t have to resort to dirty tricks to use it like I have to do with facebook – yet

Is it all good then? Of course not, there are many useful features that could be added. But the one I really miss is tags. I fell in love with tags since I first started using del.icio.us (before the yahoo-less-licious days) and were delighted to see them spreading to more and more uses. It’s no coincidence that I created a website completely devoted to (hash)tags!

Today I found out I’m not alone when I stumbled upon a post on G+ about the use of hashtags on G+ itself. After all, the use of hashtags on Twitter started exactly because there wasn’t a tag feature there, like on G+ now. And, as I discovered later, the same Chris Messina who first proposed their adoption on Twitter did the same for G+ just four days ago.

Not everybody agrees, though. Loic Le Meur commented on that same post where I first read about the debate that “hashtags are geeky and they shouldn’t be added to G+”.

I answered that hashtags are geeky, but simple tags aren’t. But, on second thought, the real answer should have been: Hashtags can’t be “added” to G+; they weren’t even “added” to Twitter, only half-heartedly supported after their use became widespread.

So the real question should be: Should tags be added to G+? I definitely think they should; is there any better way to allow the discovery of interesting conversations? And: Are tags too geeky for G+? Considering that they’re also used on Facebook, I guess they really aren’t.

So please, Google, add our beloved tags to G+; and, while you’re at it, also add a sampling streaming API for public messages so that all sorts of interesting research could be done and, why not, so that I could also add the data from G+ to hashtagify.me 🙂