New Release 2.0 on Money 2.0

One year ago, we published an issue of Release 2.0 entitled "When Markets Collide" (download a PDF), in which we considered what Wall Street and Web 2.0 might have to teach one another. Quite a bit, it turned out: the key parallels we uncovered include latency (both have to do their jobs more or less instantly), connectivity (it's the liquidity of Web 2.0), sensors and actuators (and how to use them), and reputation (stockbrokers are no longer curators -- they're rated).

So it's a ripe time to consider the status of the relationship. What's new? What's changed? The amount of financial data available publicly is astonishing. That doesn't mean it's all useful. There's plenty of data out there, but it's plenty confusing. You can't extract alpha until you understand what you're looking at. As Michael Simonsen, president and CEO of Altos Research, puts it, "free data on the internet is a mess."

If anyone doubts that financial markets and technology markets are deeply intertwined, consider this: the same day that JPMorgan Chase revealed its "purchase" of Bear Stearns, a Gartner Group analyst released a report showing that "the financial services industry continued to lead all vertical markets in server revenue, as it accounted for 25.3 percent of worldwide server revenue in 2007." As goes one set of markets, so goes the other.

In this issue of Release 2.0, we consider the Wall Street/Web 2.0 mashup from a number of angles. We talk to Paul Kedrosky, chair of our Money:Tech conference and an influential blogger on the topic (as well as others), about why some on Wall Street hate Web 2.0 -- and what Web 2.0 can do to infiltrate Wall Street nonetheless. Entrepreneur Marc Hedlund, now chief product officer for OATV-funded personal finance startup Wesabe, examines what happens when hidden data gets surfaced. Cathleen Rittereiser talks to hedge fund managers to discover what they want from Web 2.0 -- and what they're actually getting. Longtime Radar contributor Nathan Torkington digs deep into prediction markets and spells out both how to manage them and what companies can gain from implementing them.

It's a truism that alpha lasts longest when it's hidden. That may have been true in the past, but the growing use of Web 2.0 tools means that less data will stay hidden, and what's hidden will stay hidden for a shorter period of time. As James Altucher of Stockpickr said at Money:Tech, "When it comes to data nowadays, closed source is a myth."

You can purchase the current issue of Release 2.0 or, even better, subscribe to the newsletter.

SpongeBob SquarePants Supports O'Reilly Research Finding

In O'Reilly Radar's recent reseach report, Virtual Worlds: A Business Guide, we contend that virtual worlds will go mainstream. The most powerful data point supporting our argument is that the most active and popular virtual worlds nowadays tend to be those populated by children. The next generation is growing up playing virtual worlds.

And now one of the biggest purveyors of virtual worlds for children, Nickelodeon (which owns Neopets), is going in deeper. It's adding more virtual world features to Neopets and developing a virtual world around its SpongeBob SquarePants franchise. Companies not paying attention to virtual worlds are not paying attention to where the market is going.

Goodbye, New York Times

I love The New York Times. I've read it almost every day of my life since I was in high school. For all its recent flaws -- the weirdo profiles of the major presidential candidates are the most high-profile -- it is still full of the most outstanding reporting. And, on the days that Gail Collins files, it offers up the most penetrating and entertaining opinion.

What's that? It's the last print copy of the Times I'll ever have delivered to my front door. Over the years, I've slowly weaned myself off subscriptions to physical newspapers, but it was hard to say no to the Times. The quality was high, the thump of the paper on the sidewalk was a pleasant sound to hear first thing in the morning, I liked the serendipity of walking through a print section, and I felt obligated to pay for the paper at a time when print subscribers were becoming an endangered species. But, after years of wavering, I'm done. The environmental argument alone should have been enough for me, but the simple fact is that I do more and more of my reading on a screen (the only holdouts: fiction and poetry). And plenty of that reading has been from the Times. What finally made me give in to the inevitable was realizing, one barely-dawn morning last week when I was reading the paper at our kitchen table, that I had already read much (most?) of it online. For all the pleasure of holding and print, the Times on paper is just too late. In 2008, today's paper is yesterday's news.

So now I'm a freeloader, although you could argue that my personal information, sent to the Times in return for a username and password, may have some value. I rarely, if ever, click on an ad on the Times's website. I would gladly pay for the pleasure and convenience of reading the paper online, just as I do for The Wall Street Journal, but I don't have that option. In this era of advertising-is-the-only-business-model, management at the Times Company has decided that I've decided that the value of what it sends to me is zero. I disagree -- and I'm not going to pay a premium for the proprietary and little-used Times Reader to make my point.

I'll miss the paper on paper, and I bet I'll buy it when I'm on vacation, as a treat, an indulgence. But if even people like me -- who adore The New York Times -- can no longer justify a print subscription, how can its print version survive, except as a high-priced, scarce product for an increasingly elite audience?

Dan Roam's "The Back of the Napkin"

I can't draw. Really. I'm a competent interaction designer, but my graphic design skills are those of a plankton. I can't draw on the right side or the left side of my brain.

Yet, like everyone else in business and technology, I need to communicate. As so many studies -- and common sense -- show, we make decisions better (or, at least, faster) when there are pictures involved. I've written awkward stick figures and embarrassingly asymmetric circles on whiteboards and the backs of napkins and envelopes to make points. And now there's a book to support those of us who have to communicate visually but shouldn't be allowed to. Dan Roam's The Back of the Napkin (Portfolio) is breezy in presentation but rigorous in approach. Essentially, it's a framework for understanding why presenting problems in visual form makes it easier to solve them and presenting ideas in visual form makes it easier to develop them and convince others that they're good ideas. Most important, it shows you how to show things, walking through some vivid examples and well-worn metaphors. Chances are you won't pick the same visual metaphors -- but you will think in terms of visual metaphors and that's what will stick.

I hope I've made the case for this book, although I realize I would have done it more effectively if I had drawn something.

Penguin's Missed Ebook Opportunity

I've seen several softball pieces (such as this one) praising Penguin's decision to release, on Amazon's Kindle and Sony's Reader, some classics of English literature, starting with Jane Austen, with certain extras, in multiple ebook formats. Austen's Pride and Prejudice, for example, "will come with recipes from the era, copies of the book's first reviews, and a primer on social etiquette circa 1813." Another source adds "rules of period dancing, and illustrations of fashion, home decor, and architecture."

I'm guessing that the etiquette primer will not be what makes ebooks mainstream. Although ebooks should have extras, those extras should take advantage of the interactive medium, not merely deliver more -- and inferior -- text. This reminds me of the early days of CDs, when all sorts of trivial extras (outtakes, alternate takes) were added to discs as selling points. More recently, it's like the "deleted scenes" stuffed into DVDs. People, do you think those scenes were deleted because they were good?

What's most galling, of course, is that Penguin isn't attempting to increase interest in ebooks as a medium by making these classics, long past copyright, available in free, un-DRM-encumbered formats. In an old-meets-new mashup, publishers could use free distribution of still-in-demand classics to generate interest in a form, ebooks, that is still only in the earliest days of its potential public acceptance. Wouldn't you be more likely to try something new if it was free?

Jill Bolte Taylor's amazing TED talk

At least three of this year's TED talks were flat-out amazing: Tod Machover's, Benjamin Zander's, and Jill Bolte Taylor's. The first of them has just been posted:

Jill Bolte Taylor, a Harvard neuroanatomist, eavesdropped on her own stroke. As I wrote the day of her talk, she walked us through what she felt and thought while her brain was going wild, from the borderline-metaphysical ("I can't define where I begin and where I end") to the borderline-hilarious ("I'm a busy woman. I don't have time for a stoke"). Her description of her time in that strange state, caught between two worlds, the rare researcher who has been able to chronicle a brain-changing event from the inside, was astonishing.

And now you can see and hear it, too:

The brain she's holding there is a real one, by the way.

We'll alert you to the other two classics when they're published.

New O'Reilly Radar Report: a Business Guide to Virtual Worlds

Virtual worlds, particularly Second Life, have generated much excitement -- and much skepticism. In Virtual Worlds: A Business Guide, the newest O'Reilly Radar report, Ben Lorica, Roger Magoulas, and the O'Reilly Radar team get past the hype (and the anti-hype), detail what is happening in Second Life and other virtual worlds, and lay out what businesses need to do to succeed in these worlds, now and in the future. It examines business opportunities, evaluates what has been successful and what hasn't, and what trends are starting to emerge. Those interested in the present will finds an in-depth study of Second Life; those interested in the future will be most interested in what we've learned about children's engagement in virtual worlds. Indeed, the most active users of virtual worlds aren't adults yet. Regardless of how Second Life ends up as a business, there are plenty of reasons to be bullish about virtual worlds as a business category. This report shows why and what to do about it.

Order the report.

See all the O'Reilly Radar reports.

@ETech: Wednesday Morning Keynotes

Another day, another set of expansive keynotes.

John McCarthy, father of LISP, a giant in artificial intelligence, gave a sit-down high-level talk about Elephant 2000, a proposed programming language intended for transaction processing and electronic data interchange. He described Elephant in terms of its ability to capture "speech acts," which I'll define roughly as words that lead to actions. (One of McCarthy's examples: "I now pronounce you man and wife.") McCarthy said these words "create obligations." They're promises, questions, requests, etc. As anyone who has read the code to programs I've written (many of which include the words "hello" and "world" in the title) will know that I'm no expert. If anyone in the ETech audience can do an ace job of explaining the most provocative line in McCarthy's talk, "ascribing beliefs to thermostats is like adding 0 and 1 to the number system," I'll send you a free O'Reilly book of my choice.

Steve Cousins of Willow Garage proposed an open source platform for personal robots. Those personal robots would perform useful activities, and he showed some very enjoyable film clips of humanoid robots performing basic tasks such as picking up a living room. And Willow Garage is balancing its philosophical and business imperatives:The company is privately funded and "focused on impact before the return of capital...The goal is to produce 10 robots and make them available to researchers so we can all be on a common platform."

Kathy Sierra, who ran an inspiring storyboarding tutorial on Monday, told us how to kick ass. Her talk was not merely a paean to mastery, but also a brisk walk through recent neuroscience to "show that the difference between world-class and average is not about natural talent." The research, she said, reveals "that most common thread separating world-class and average is the ability to put in the time, to focus, concentrate, and practice." Expertise, she noted, is not so much about what you know, but what you do. She showed how mirror neurons let us run similations of another persons bran inside our brain -- but she emphasized that the quality of simulation depends on experience. There's still only one way to get to Carnegie Hall.

(Then Tom Coates spoke about fire eagle. My post about that is here.)

Finally, Peter Semmelhack, CEO and founder of Bug Labs, talked about community electronics, a term intended to turn the tradition term "consumer electronics" on its head. He posited a long tail of gadgets. Today, there are relatively few devices, marketed to millions. In the future, he's hoping for millions of devices targeted for the few. To develop these niche devices and custom gadgets, Bug is building a hardware innovation platform that goes from idea through functional spec, all the way to manufacturing. It's not the only way, Semmelhack noted, but it's the way Bug is trying to make it happen.

And now to the breakout sessions: Why are there always two I want to go to scheduled at the same time?

@ETech: fire eagle Launches

Most of the Yahoo news these days is about its possible absorption by Microsoft, but there are still new projects coming out of the company. Right now Tom Coates is onstage at ETech, launching fire eagle, an open location information-brokering service. You can share your location online with sundry sites and services. It's liberal with what it takes in, but precise in what it puts out. There are plenty of controls put in, both for developers and real people using the services. Right now there are many services trying to capture location, but really nothing that ties together the applications that capture location information with applications that use location information. This does that. You can find fire eagle here. If you're not at ETech, Tom will be talking at Where 2.0 in May.

You can read Brady Forrest's previous coverage of rire eagle on Radar and our resident geo wiz will post further thoughts on this shortly. He can't now -- as the program chair of ETech, Brady is onstage right now, too.

@ETech: Tuesday Morning Keynotes

Saul Griffith started the day with a sober, but ultimately hopeful, talk about energy literacy. The subtitle of the talk was "know what you can do, do what you can," and the core of his talk (we'll point to the slides when we get 'em) was the steps we need to take, individually and collectively, to be able to have a rational conversation about energy.

1. We need to understand the link between CO₂ and climate
2. Based on that understanding, make a temperature choice. The planet is warming. The question is how much. Where do you want to stabilize the earth temperature? He set the dial at different levels and sketched out the different consequences we have to accept at each level.
3. Based on the temperature we choose, we have to decide just how much carbon that allows us to release. He pointed out that temperature stabilization can take 100-300 years.
4. Based on the amount of carbon we choose to release, we have to decide how much fossil energy we can use.
5. Based on the usable fossle energy we can use, we have to decide what clean energy sources we need to supplement the fossil fuel.
6. Based on what clean energy sources we have access to, we have to determine a new energy mix -- and how we'll engineer.
7. Then -- and Griffith acknowledged that this "might be the hardest part" -- we have to turn off our use of existing carbon fuels."

He then showed how he is trying to change his lifestyle based on his decisions during those seven steps. He pointed out what we know already -- that even reasonable, moderate people in the developed world have a big carbon footprint -- and something I, for one, didn't know -- that public carbon-footprint calculators give low estimates.

As he listed the changes he's trying to make, Griffith noted that the things he wants to do to lower his carbon footprint are things he wants to do already (eat less, travel less, etc.). If you're optimistic about your ability to change, you can be optimistic about how we gets to his new life -- and how we can.

Then Megaphone founders Jury Hahn and Dan Albritton delivered a fascinating phone-game demo. Their combinations of tiny mobile devices with simple games those devices play on a big, communal screen were both technically interesting and fun to play. Albritton promised us something "really, really weird," and he delivered. You really haven't lived until you've sat next to someone next to you in a dimmed conference room standing up, yelling "ribbit" like a frog, and looking to see if his perfect match responds.

Eric Rodenbeck, CEO of Stamen Design walked through some of his firm's more high-profile visualization projects. Trulia Hindsight maps homes over time, but also reveals more (like where pollution is); Oakland Crimespotting reveals both patterns of crime -- and patterns of crime enforcement; a project for mySociety shows how multiple variables -- home prices, commute time -- can be elegantly combined in a single interactive visual.

Rodenbeck spent some time showing how information visualization, while it may be hot right now, nothing new. He displayed some century-old pre-computer infovis examples that were"both beautifully arranged and scientifically valuable." Then, as now, the best information visualizations are those where cool and useful overlap, where story and headline overlap. This dovetailed nicely with an obvservation Griffith made in his earlier talk, when he cited an 1896 article by one Svante Arrhenius that linked carbon with warming. We keep discovering the same things!

Sun Microsystems chief gaming officer Chris Melissinos, was there to talk about the company's J2SE-based, open source (via GPL v2) game-development platform Project Darkstar, but he had plenty of provocative one-liners and observations:

* "If we calculated the carbon footprint for World of Warcraft, we'd all vomit."
* "This is the first generation of gamers raising gamers."
* "Women over 35 comprise the largest segment of online game players."

Finally, Elizabeth Churchill, of Yahoo Research, reported on studies she made of public multi-touch displays, emphasizing how the real and the virtual interact. In particular, I was taken by her descriptions of how people learn to be part of communities of practice by watching -- or as the online world calls it, "lurking," an activity that is often dismissed. But Churchill maintained, "Lurking is an important practice. What we reveal in the virtual serve as the icebreaker for real life."

I'm only giving a quick taste of a strong, diverse session, but I want to get back into the breakout sessions, which have started already...

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