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Tag: Apple

The Facebook Basket of Goods

Facebook does not produce anything.  Facebook sells personal information to advertisers. This is not to say that Facebook is not worth a lot of money, but it certainly deserves a little perspective.  In order for Facebook to be worth anything, people must be doing things, making things, and organizing things – otherwise, there would be no need for the utility that Facebook provides.

Consumer Value Index

In order for people to do things and make things, there needs to be basic infrastructure like energy, clean water, telecommunications, food,  roads, bridges, and airports.  There needs to be housing, education, and health care.  There needs to be an effective and fair legal system, equitable political representation, and civil decency.

Debt or Human Potential

Facebook adds value to the human productivity potential that already exists.  It is precisely that invisible human potential that seems to be worth most of the money that Facebook commands.  When we estimate a value of 100 Billion dollars for Facebook –  an astonishing 99 times their advertising revenue – we estimate that the market believes that intangible value exceeds tangible value by a factor of 100:1; versus, say, Apple at 16:1 or Google at 20:1

Nothing economic happens until people get together to make something

Charles Munger, CFO of Berkshire Hathaway uttered these deeply foreboding words at a conference at Seattle University in reference to the Enron debacle;

“it’s bad enough when we lose the accounting profession, but dear God help us if we lose the Engineers”.

Suppose a team of 10 engineers designs a bridge that spans a body of water cutting 1 hour off the alternate route for 14,000 people per day (connecting 2 small towns).  Over the 75-year life of that bridge, those 10 engineers are responsible for 380 Million hours of increased productivity. At 25 dollars per hour per person whose time is saved, 10 engineers create nearly 10 billion dollars of NEW VALUE.  As such, only 100 engineers could create the same amount of New Value as Facebook is worth in an IPO.

You are worth what is measured

We need to ask ourselves what is more efficient; making things that act as a proxy for the things that we are trying to sell, or measuring the real value of things that we make.  Perhaps Facebook would be worth 10 Trillion dollars on such a balance sheet.  Maybe Facebook would be worth nothing if true value were in fact measurable. Who knows?

Well, that’s exactly the problem – nobody knows.

Facebook acts as a proxy for human productivity, just like money is a proxy for productivity, but with no intrinsic value itself.  Perhaps this explains their Wall Street convertibility.  However, if we backed Facebook with New Value of human potential, rather than a basket of debt-able goods, perhaps we would not have a financial crisis to deal with, just a value crisis.

I wonder what Charlie Munger would say

The Reality Platform

Today, we do not have a financial problem as much as we have a value problem.  The challenges that face our civilization are far too great to be solved on an “Advertising” platform.  Whatever happens next, it must start with a Reality Platform.

2012: A Space Odyssey

Back in the railroad days, a platform referred to the surface upon which passengers stepped in order to enter or exit the train.  Later, the platform became a computer operating system.

In 2012,  the “platform” refers to one of the big four space stations on the Internet; Google, Amazon, Facebook, and Apple.  On the backend, they each sort products and people into their appropriated categories.  On the front end, they deliver the consumer to the product and vice versa.  Everything is done electronically; wherever possible, even the product is electronic.

A Platform for Reality

Compared to the Big Four – which collect data behind secure walls, analyze with proprietary algorithms, then serve up  content that is most beneficial to the platform (not necessarily the user) –  The Value Game is revolutionary. In one application of the Value Game, a company called Social Flights collects four separate streams of data, converts the data to a single usable form, then shares the data back to the separate streams.

For example; an airplane operator submits data regarding the inventory of their aircraft.  The hospitality industry submits data relative to their inventory of support services,  Travelers submit data relative to their likely destinations, and event organizers submit data regarding their events.

Music is a combination of rhythm, sound frequency, and timbre

Social Flights captures all of these streams, organizes the data and feeds it back to the market in a more usable form.  Aircraft operators learn the optimum use of their aircraft resources.  Hospitality and tourism learn how to best allocate their inventory.  Event planners  learn to access their markets for attendees. Finally, Travelers learn the exact door-to-door cost AND TIME to achieve their objectives.  All the connections are made WITHOUT advertising.

Social Value is literally “manufactured” because it is in the best interest of each player that the other Players are successful.  Communities become vested in each other – not unlike an ensemble.

Advertising extorts passion

Today, nearly all social organization is now funded – and influenced – by advertising. People do not wake up in the morning aspiring to follow the Kardashians. If left alone, people aspire to follow their friends, to pursue their natural interests, and develop their natural talents.  The sole objective of the advertiser is to convince people to do something other than what they aspire to do naturally.

Manufacturing Social Value

The Value Game is a real and valid social value manufacturing engine. The same system deployed to aviation can also be used for any shared asset or experience; cars, roads, infrastructure, corporations, education, and even government, all with the New Value data platforms that are under development.

The problem can never be the solution – we need a new platform.

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*2001: A Space Odyssey is a story that deals with a series of encounters between humans and mysterious black monoliths that are apparently affecting human evolution,

A Clear and Present Value!

Image credit

dev-oClear and Present Value

The value of conversations is real, clear and present – especially in the actions of those who profit wildly from them. I saw this in the negotiations of NAFTA when it was clearly in the best interest of the some negotiators to keep engineers poor weak and disorganized.

I saw it again in corporate America.  Imagine if Boeing was to publish a complete accounting of the incredible intellect, ingenuity, talent, and creativity that roams their hallowed halls – the world would dismantle them piece by piece.  The “knowledge inventory” is a company’s most closely held secret.

Keeping secrets from the secret:

Sometimes it seems that the biggest secrets are held from those who represent the greatest real value. Corporations pay their engineers the minimum amount of money required to get them to their desk in the morning.  Then they resist organization of engineering professionals, and they give them little or no power over marketing, human resources, accounting, and sales promises related to the engineering outcome.

The problems get worse when this big “secret” becomes public. For example: Steve Jobs has now been identified as trying to collude with Ed Colligan, the CEO of Palm, to not poach each other’s employees.

A Currency Collusion Collision Conversation

“Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan said to Jobs last August, according to an article Bloomberg reported.  Jobs succeeded in making such an arrangement with Google, according to published reports. The feds are investigating and the Palm allegations only make Apple look worse.

It is quite amazing that companies would expose them selves to such risk if conversations among engineers were NOT in fact extremely valuable.  Why else would Apple engage in such disrespect to engineers and others who actually create the products Mr. Jobs gets credit for?

The liberation of Knowledge Assets

The IPhone that rolls off the assembly line is not an innovation.  Rather, the millions upon millions of tiny incremental ideas, conversations, and shared thought are assembled into what does eventually roll off the assembly line.  The role of the CEO is significant, but still a minority task in the larger picture.

More than ever, social media is empowering people to hold equally productive and focused conversations outside the construct of corporation.  With the ability to measure and track impressions comes the ability to pay royalties to those that produce, direct, and sustain conversations.

With the Obama justice department and other federal regulators already looking closely at Apple over the iPhone and handset exclusivity and the sharing of board members, Jobs’ alleged anti-poaching efforts only add to the fire that is growing around him. If social media continues to integrate at a rapid pace, the biggest fire that Mr. Jobs and other CEOs may have growing around them is the autonomy of creative, social, and intellectual staff.

Special thanks to a post written by: Veteran industry-watcher David Coursey who tweets as @techinciter and can be contacted via his Web site.

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