Marcus Cake

Email was created 40 years ago and provides specific means for people to communicate. It mimics the conventional postal service. Wave is Google’s attempt at how we should communicate given technology today. It provides a new means and a new workflow to communicate. Google Wave may be a masterful strategic move by Google that integrates a range of their online technologies and triggers a paradigm shift. The impact of Google Wave is revolutionary. It could render desktop office productivity software obsolete as workflow and content is managed online. It could also render existing open source and commercial email servers obsolete. Corporates will bypass much of the Web 2.0 point applications and implement Google Wave for an immediate productivity improvement.

Our society is in transition. It is applying new technologies to create new structures. Proprietary information is no longer necessary to encourage innovation or distribution channels. The internet provides a virtually free distribution channel in a services based economy. Online social networks have redefined how we interact with large numbers of people adopting new behaviours. Online industry network will redefine industry. Online political networks will redefine politics.

The following is intended to provide a summary of how our society operating in a Web 1.0 world and the emerging Web 3.0 world. This is one of a series of concepts that explain the evolution toward Web 3.0. I recommend you review the visual overview of these concepts in the Marcus.cake overview presentation.

I recently read A New Earth by Eckhart Tolle. “At the core of the teachings lies the transformation of consciousness, a spiritual awakening that he sees as the next step in human evolution. An essential aspect of this awakening consists in transcending our ego based state of consciousness. This is a prerequisite not only for personal happiness but also for the ending of violent conflict endemic on our planet” (Inside back cover, A New Earth ). This has prompted the following question? Could a open source style online network, like Linux, focus the global consciousness to accelerate the solutions to immediate global problems. How would the online network be structured? How many people would be needed? Can this right brain global consciousness be just another resource or function of a left brain information distribution and collaboration online network?

We need to deploy five online political, industrial and social networks to avert disaster by 2012. Existing structures that rely on proprietary ownership of information, distribution channels, institutions and regional approaches are unable to solve our most pressing problems. Even if they could solve the problems, they are simply unable to coordinate a global endeavour in a rapidly closing timeframe. I had previously written that online networks could be delayed for up to 50 years by three epic battles. In some aspects of our global community, we can wait 50 years (and there is only an opportunity cost). However, for some specific problems, online networks need to be built, acquire a significant audience, and achieve their objective by 2012.

Regional stock exchanges are deprecated. They will be superseded by new structures in a global market. These new features include online industry networks, global and specialist stock exchanges and a global private equity industry that can provide capital for any size of transaction - small and large in any market. Companies will need time to change their approach and use these new features of the global equity market. Regional stock exchanges are likely to throw up a lot of deprecation errors, or public relations messages, as they struggle with emerging global exchanges and online industry networks. The pace of industry consolidation has rapidly increased in the last 18 months as the global stock exchange is created. With economies of scale, a global stock exchange may be able to provide access to the equity market for companies which previously could not get access. It is unclear whether the global exchanges currently being created will improve access to the equity market by smaller companies.

Online networks which embody every facet of industrial, social and politcal aspects of our modern society are inevitable. They simply offer a superior way to interact and transact. The transition to a global community based around online networks will take six months, sixteen years or fifty years. The timeframe will depend upon the outcome of three epic battles. The battles are economic development vs geostrategy, community knowledge vs intellectual property, and online networks vs closed systems. Online industrial, political and social networks which are involved in these battles could be delayed for decades.

Online industry networks could develop pharmaceutical products using open source principles. The Tropical Diseases Initiative is an example of an “open source” online network developing drugs for tropical diseases. It operates in a niche that is uneconomic or unviable for the pharmaceutical industry. It has been allowed to survive as a result. It demonstrates the potential of online networks in the pharmaceutical industry. A description of the Tropical Disease Initiative is provided below.

Most financial products, and particularly insurance, are entirely information based products. They have no physical existance and very little need for physical things to occur within a specific country. The internet allows any provider of an information product to form a direct relationship with the consumer. The two parties may be in any country. An insurance provider could be located in a specialist financial center optimised for insurance companies. The policy holder could be located anywhere in the world. The insurance provider could use freelancers in local countries to perform local tasks. For existing insurance providers, the internet could be seen as Pandora’s box by the insurance industry.

An online industry network for the insurance industry would be quite simple. The products would be identified. The assessement criteria for each product would be determined and broken down into questionaires. Local freelancers could be used for pre-policy due diligence and post-claim investigations. All could be coordinated by an open source application on a elastic cloud. Maybe a hacker could build an online industry network for the insurance industry for US$25k in 90 days. I suspect the insurance industry may take US$50k an 180 days for a truly global platform. The participants in an online industry network could be limited by company, country or encompass an entire industry. Ultimately, a global platform will develop.

Information technologies which capture, store, process or transmit information double in performance or halve in cost every 18 months. Moore’s law has been working patiently for 40 years. In an information economy, this should have had a dramatic effect. However, political, industrial and social structures largely remain the same. Advances in technology have not changed the fundamentally way that our society or economy has operated. The right information in the right place at the right time will transform the world. This transformation will only start now. This article will discuss why such a process should only begin now and what role information is likely to have.

Amazon web services are pioneering essential building blocks for economic development. These blocks will provide a foundation for the next phase of online networks which will pioneer new structures. They reduce processing power and information storage to basic utilities, just like telephone, gas and electric supply. The storage service (S3) and web hosting service (EC2) cost less than 50% of traditional approaches and are more flexible and simpler to use.

Hackers can design their online network at home and simply drag and drop it onto the Amazon cloud. The conventional approach would require a large number of employees or consultants to deliver equivalent functionality. Ofcourse, a significant amount of time was required to raise capital from investors to pay for it. Today, a hacker can create an application on the (free) Linux desktop and an open source development platform. A major ebusiness could be built by a hacker with less than US25k in external development. If you are not a hacker, then you will need to raise some serious capital because you will need significant support to navigate unfamiliar ground and achieve your outcomes.

What if we did have cars that cost $25 and got 1,000 miles to the gallon? What if the Moore law rates of innovation and improvement could be applied to the world’s problems. What if Moore’s law rates of improvement applied to aircraft engines, car engines, carbon dioxide emissions, industrial pollution, cures for disease, energy and minerals usage, education and leadership. Our world is evolving. Advances in technology present new ways to organise. Online networks are likely to be a step forwards. An expansion of intellectual property laws is likely to be a step backwards. If there was a new way to deliver greater rates of innovation, we have a compelling need to solve specific global problems. We need to question that our underlying assumptions of how to organise.

Typo3 is a content management system. It was named as one of the top 100 companies and projects in the digital content management industry. It is rapidly developing new features and will improve its standing.

The objectives of open source will change over time. As open source evolves and proves its capability, it will move beyond technology, beyond specific industries, to all other aspects of our society. This has been suggested in the past. However, existing organisations are not sufficiently motivated to apply advances in technology to promote development. Business, social and political entrepreneurs that establish online networks are likely to be the primary force for change.

This article outlines the first four stages of the development of online networks and the .Net boom. The objective of the online network in each stage is identified.

The next evolution in economic development and the evolution of the internet is likely to be user generated industries. This will move beyond user content to valuable industries which distribute valuable information. Online industry networks will facilitate collaboration and distribute information. Small groups may specialise in the manufacture of information. They will rely on online networks to distribute it. Consumers of information will increasing source their products from online networks.

A user generated industry combines user generated content and user generated infrastructure to distribute products and services from individual manufacturers to individual consumers. There are significant economic and social benefits for the individual manufacturers and consumers of information. Individuals can focus on their unique speciality, work from home and be their own boss. Customers obtain the convenience of online delivery and lower costs. Organisations that have only served the community by distributing information are likely to be rendered redundant by technology advances. These will need to find other means to add value to the global community if they are to survive. Some will not.

The potential of open source software, open source principles and collective innovation is significant. They could change the world. They should, at the very least, change information intensive industries. These assertions are largely an intellectual argument. The thoughts of an individual. The compelling value of open source and collective innovation as a solution needs to be demonstrated.

Companies in developed countries will need access to the 33 million university educated professionals working in the developing world. Immigration can only solve a proportion of the problem. Online networks will be an essential tool to find and coordinate delivery of talent from the developing countries to global projects. This international talent pool will deliver services to every industry on every continent. Organisations will need to know how to participate in, or build, an online network to access this resource.

The problem with the world today is that there is not an convenient and effective means to aggregate and distribute the unique contribution of each individual. This is particularly true where problems may rest with government and large corporations which are perceived to have unlimited resources for “public relations”. Without an effective and convenient means to contribute, each individual quite rightly assesses any contribution to be futile. It is highly unlikely their activity will result in the desired outcome.

The internet offers a new means to overcome the futility of contribution. The rise of online industry, social and political networks will provide all individuals with the opportunity to make a contribution. We will be surprised at the phenomenon that will reshape the world over the next twenty years. As the real underlying problems of the world are publicised, collective communities will assemble to solve them.

The reasons underlying the rise of online political networks are similar to the rise of industry networks. Technology advances have not been applied to distribute the quality of information demanded by each individual. A significant proportion of the community is dissatisfied with the quality of information they receive, or the operation of governments. These individuals will be inspired by recent events to establish, participate or contribute to online political networks.

There are, arguably, online political networks. Many are staffed by small groups of volunteers. My reference to online political networks refers to a Linux type network which uses the available technology to capture the interest and energies of their audiences and direct them toward a singular purpose. I can not think of an online political network which meets this criteria. Online political networks rivaling the Linux community will emerge. The kernel for many of these networks are likely to be an existing web site or small group. These online political networks will only prosper if they service the unique needs of their constituents and apply principles of “open source” and “free software”.

Online political networks will increase supply by encouraging more “representative” behaviour from elected representatives and may be a means for new politicians to acquire political support without need for corporate fundraising. Online political networks are likely to deliver improvements to all political systems in use today. For representative democracies, they are likely to make the systems more “representative” of their constituents.

The patent system emerged to motivate business to organise people to develop new technology. Without providing an exclusive opportunity for profit, business would not assemble the structure and people necessary to create new technology. Technology means ways of doing things. This includes information technology, biotechnology and healthcare. If the global objective is the creation of new technology, then there is another way to organise.

Regulations have trailed the opportunities and benefits presented by technology. The SEC has only recently changed its regulation to allow the delivery of shareholder information by the internet. The internet presents the world with an opportunity for a truly global capital market. Regulation is critical to the integrity and credibility of equity markets. However, in an era of global business and the internet there are limits to the reach and effectiveness of regulation. My spam filter receives at least 10 emails a day recommending the purchase of the shares of a listed company. I suspect many receive similar emails. It is difficult to see how any method of regulation could protect an investor from Spam, or point to point communication. Can we protect the “investor” in a world where information can travel from individual to individual, companies can shift countries and advisers could use the internet to mask their identity. The challenge for global regulators is real. A careful balance must be struck between the need for efficient and effective capital markets, effective investor protection at a minimum of transaction costs. The efficient and effective operation of global capital markets is critical to capital formation, economic growth, taxes to fund government and having available resources to address the critical environmental, health and social problems of our time.

Economic development and new technologies can require significant adjustment for existing players. In financial markets, many of these business models were formed in the early 1900’s. Large organisations and signficant infrastructure was required to distribute information from point to point. In an era of the internet, the cost of distributing information point to point is almost zero. Information distribution business based upon old business models must adapt. Given the significant investments, many current players are unable to change. Only new entrants have the flexibility to offer new business models offered by the internet.

” …it’s a different world out there. A world where anyone’s ideas can quickly spread if they happen to strike a chord. Where you don’t necessarily have to have a large company or a huge public relations effort to make an impact (although that still doesn’t hurt).”

A colleague forwarded me a link at a video. It presents some key facts and music in a presentation style format. It is very effective in communicating the rapid and accelerating change that is occurring in the global community. It is more effective than the numerous articles that I have written here, and much more concise. The original author has made this available under the most permissive Creative Commons license. The powerpoint slides and music are available to change. I plan to take key messages from my web site and place them in my own short video.

Industrial use of the internet is at an early stage. Existing corporates have used the internet to reduce costs by distributing information in a lower cost means. However, there are few examples of industries that have been completely transformed. The primary purpose of some major industries is distribution of information between market participants. They have significant economic rents for taking information from one market participant, mildly transforming it and delivering it to another market participant. The internet offers free (almost) distribution and the ability to find other market participants. These significant economic rents for distribution seem redundant in an age of the internet.

The next wave of internet companies are likely to target the distribution of information with a commercial value. These are Online Industry Networks. These networks will simply break down existing labour intensive interactions and coordinate them in the internet. They will rely significantly on user generated content and each user assuming responsibility for the distribution of that information. The current intermediaries are unwilling to sacrifice the high economic rents for distribution by adopting new business models. Only new entrants will apply new business models to take advantage of the internet to deliver products and services at significantly less cost, in less time and without needing to visit a specific retail location. These businesses will facilitate the exchange of information from people to business. Freelancers from all around the world will manufacture the information and deliver it directly to the end user. An online industry network promote products and services of the community. Service providers can find customers and customers can search for service providers. The consumers of the information may have access to products and services previously denied by closed distribution channels.

If Moore’s law continues, then the cost of hardware will continue to decline and the ability to run a bank from a desert island a reality. The ability of software to take advantage of these hardware advantages may be limited. The advances in hardware and emergence of Utility computing will overcome much of the limitation. The result will be unpredented opportunity for entrepreneurs to create applications to global audiences in an increasingly service oriented world. Linux is likely to be best placed to take advantage of advances in hardware.

Skype made internet telephony popular. It added video functionality to Skype last year. It has now added remote desktop or application sharing. As the worlds most popular internet telephone software, this will have a significant impact on the number of people that work together over the internet. Could Skype make application sharing popular just like it did for internet telephony?

Google has acquired Youtube, an online video sharing service, for US$1.65B in Google stock. Youtube has approximately 45% of the online video sharing market. Youtube has 100 million videos available to view and 20 million unique visitors a month. As far a I know, YouTube does not earn revenue. Youtube was established less than two years ago and has received US$11.5m in venture capital funding to date. The sale price price provides an exceptional return on investment.

The WRT54G is a router which costs approximately USD50. It has a large installed base of users. With custom software it can have the functionality of more expensive routers. The combination of open source software, the large installed base of WRT54G users and cheap hardware has also faciltated the creation of the largest global wi-fi network encompassing 80,000 within twelve months. This article will highlight the practical applications of using the WRT54G to empower the home. It will also highlight one opportunity to change the world by leveraging user generated infrastructure that is being pursued by FON. FON has created the largest wifi community on the world encompassing 80,000 users in less than 12 months.

The key reasons that Europe and other regional economies have not developed a “Silicon valley” is not cultural and not lack of capital. There are enough entrepreneurs and the capital will mobilise. There needs to be predictable risk for involvement in early stage, greater transparency that reduce the costs of involvement and a significant reduction in the time/cost to find opportunities. Entrepreneurs and investors need to know who to call. The recipients of those calls need to be willing to get involved.

Is there a way to achieve transparency, without waiting for decades to pass and relationships to form in the conventional way? There must be a role for an online social network to assist each regional economy, company, advisers and investors with sincere early stage aspirations.

An online social network which trades in information with high instrinsic value will have a lower break-even point, less technology risk, a clearer value proposition and less investment risk. There is nothing remarkable about this statement. I am intrigued that there is not a greater proportion of online social networks which trade in high instrinsic value information. I am surprised at the amount of funding that some low intrinsic value online social networks have received.