Intrade is prediction market. People buy and sell contracts based on outcomes. If you own one of the 2008.Pres.Clinton(H) contracts and Hillary Clinton does become President, you get $10. Right now, that contract will cost you about $4.85. That’s more than a 100% return in just over 1 year. Not bad. Google (GOOG ) would have to be trading at $1,300 per share to give you the same return.

There is a lot of subtlety in the market information - nothing is guaranteed. But, if you take the contracts with the highest price in each area, here is what the market is predicting today (Oct 19, 2007)

• Hillary Clinton is going to be the next President of the United States
• Barack Obama will be Vice President
• The Clinton / Obama Democratic ticket will defeat Giuliani / Huckabee Republican ticket
• The Democrats will control the US Senate after the 2008 elections
• The Democrats will control the US House of Representatives after the 2008 elections

This is a very long way out. And some of the contracts are trading at values that indicate little market certainty. Huckabee as the Republican VP candidate is the contract with the highest current price, but that price is only 16 to 18, or $1.60 to $1.80 to buy a contract that pays $10 if he is, in fact, the Republican VP candidate.

What do you think about the quality of these predictions?

I’m at another Web Guild event: Next Generation of Social Networking

• Sundeep Ahuja, Founder, Appfuels
• Jonathan Abrams, Founder & CEO, Socializr - He also helped found friendster
• Jia Shen, CTO, Rock You - great speaker - saw him at the API conference on Monday. Rock You is on 50% of the Facebook profiles. Damn! The business is an advertising model that other companies can use to reach the Facebook audience.

I’ll try and capture the gist of the discussion. What follows will not be exact quotes. Blame me… not the speakers.

What are the next generation of Social Networks and what will they look like?

1. Sundeep - trend is that it is going to be implicit as opposed to explicit. You won’t have to say who is my friend. The network is already there in your behavior. Who you are emailing. And… randomly… “It will be mobile.” That last bit seems buzz word like to me.
2. Jonathan - They did it all before in friendster… sort of. He likes the idea of implicit vs explicit. People have tried to make this happen. However, people have not been able to successfully mine implicit data. Instead, it will be a combination of the two ideas. On Socializer, they are going to look at the implicit data of who you are inviting to event. He still would like to see what his real friends are reading, where they are eating… etc. Maybe Plaxo has this now?
3. Jia - Don’t look at “theories” - look at what the kids are doing. The generations seem to be 1995, 2000, 2005. All my friends used friendster…. and then they got married. Jonathan said “When they get divorced, that’s when they come back”. The interesting thing will be to create a network that can transition. For example, can the network transition from dating to businesses.

When will this open up, so I can have different views of people

1. Jia - there are no current market forces that cause the social networks to open up. Facebook and MySpace will never want to share users. Facebook is a walled garden. No email addresses. Maybe, instead, the transition out - how do you open the graph.
2. Sundeep - how do you open the graph? Maybe that is what Google is going to do.
3. Jonathan - at Friendster, they were not inundated with requests to move. He admits that he is getting slammed with requests to “be my friend”. Ironic given he invented the question when at Friendster. The truth is that users don’t care to move their friends between networks - because people use different networks in different ways.
4. Sundeep — The users will go where people have built stuff for them.
5. Jia - The critical thing is where are all the users. What works is critical mass. If all your friends are on a network, you are going to be on it too. A - what is the killer app. B - where are your friends are? Same goes with video games.
6. Jonathan - Facebook might have killed one value from the network. The Facebook wall is now some interesting stuff + tons of crap… what camera someone bought, who attacked who with a zombie.

Monetization - are they becoming the new portal

1. Sundeep - Ad spend on social networks is small. Brands are worrying about poor logo juxtaposition. But… what is working is engagement. Nike is doing this. As in Red Bull. What they have discovered is that putting up an ad for a concert doesn’t work. Clicks off the Facebook platform today … don’t work.
2. Jonathan - On google, you go to google, and you leave. And then you come back. The problem is that the audience isn’t there to leave Facebook. The audience to stay. The new business model is not going to be based on physcographic information, because you still have the problem of intent. So, people are playing with other models - sponsored profiles, groups, etc. None have really work. But, when you have a huge amount of traffic, you can get something. If you have 1M users, you can, with today’s bad rev streams, you can generate $500K per month.
3. Jia - The thing that is working for them now is advertising stuff inside Facebook. They have 100M page views per 2 days. They are getting $1 to $20 CPMs. Rock You is thus, getting you an order of magnitude jump in revenue for a developer over Google Ad Words. That is a quote from Jia, I have nothing prove it correct or incorrect - just want to say. The cool part is that it isn’t that different from an ordinary web site. Thus, the Rock You ad network is trying to deliver something that isn’t much different from what the ad industry is used to today.
4. Jonathan - so, when apps advertise other apps, that feels a bit MLM.
5. Jia - there have been other ad networks that have been successful. $10 CPMs. BUT, they have not been able to fill their inventory. Maybe the future is single sign-on check out for virtual goods. And the virtual goods can be bought with effort, time and/or money.

So… seems to me, the big $ will go to the company that figures out how to get people to go “off facebook” and still enjoy the Facebook work-flow / experience.

Is Facebook really open?

1. Jia - Facebook really is open. When Rock You built on MySpace, they took a big risk. Facebook is a much better platform for entrepreneurs. See my post from earlier this week.
2. Sundeep - “I was at MySpace and fielded the Rock You call…and I said they couldn’t make money”.
3. Jia - An infinite session - if someone has installed the app, you can continue to leverage the personal information.
4. Jonathan - They are also changing stuff every week. - But he wants to say that what Facebook has done is brilliant. — But, they can build something internally that kills a 3rd party app. Or they build something as a feature. The risks from the Web 1.0 world are still there. And you have added the risk of being depended on Facebook. From a business perspective, it is risky to depend on one distribution partner.
5. Jia - look the distribution is valuable.   Rock You has calculated that the spread of apps on Facebook is 7X what they got on MySpace.
6. Jonathan - most of the popular Facebook apps have not translated to traffic outside Facebook.
7. Jia - yeah - that may be true.

quoting Dave McClure today.

It’s not a herd of VCs…. that’s just what they do.

it’s a “frost of VCs“.

Put on by Mashery and the punk rock stars at Dealmaker Media .

The Business of API’s Conference.

Thomas McCarthy Howe

Life expands and contracts in direct proportion to the courage with which it is lived.

• Enterprises are extremely anxious
• They worry about how to monetize in this new API focused world.
• You can’t control your distribution channel - so stop trying.
• He talks about how companies can use APIs - His example
  • A Morisky Survey - ask users 4 questions and predict whether a patient is going to complete their care. HMOs want to run the surveys to take preemptive action.
  • Nurses cost $7 per minute. A VoiceXML survey costs only $0.10 per minute.
  • Combined the survey content with a VoiceXML survey API to save an HMO a bundle

A Look Inside the Giants

Amazon, AOL, Yahoo! -

• They talked about companies that can get realistically cash flow positive before they have to talk with VCs. You need only hundred’s of dollars to get up and running.
• OpenID - and Yahoo’s closed version “means that a small company can go into VCs and say “We have 250 millions users… they just don’t all know about us yet.” according to Bradley Horowitz. Jeff Barr claimed that young companies could also claim the same about running on Amazon’s infrastructure. Personally, I am not 100% sure about that argument. Amazon S3 is a low level system. You still need to know how to code against it.
• It isn’t only about the API. You also need Biz Dev. Or a massive network that attracts 3rd party developers.

Teclos - Asha Vellakial, Orange Labs

• Orange has 40 million customers all with access to an Orange OpenId, if they want it.

Compete - David Cancel

• Compete is a great traffic monitoring tool. I love it. Better than Alexa in my opinion.
• Their traffic doubled in six months from opening up their API. And this lead to many new real paying clients.

RockYou - Jia Shen

Jia gave a  phenomenal presentation.   This is a fast dump of the bullet points he covered.   What he did was describe how RockYou has gained millions of users distributing through MySpace and Facebook.   For me, what was most valuable about his talk was the blunt description of what RockYou wanted to see from a social network that had opened up their APIs.

• 43 Million users
• 430 Million Pageviews
• 150 Million widget views a day
• 450k widgets create a day
• Flash widgets is their focus
• Slide show
• The social platform API
• They look at 3 pieces - distribution, tracking and publishing / monetization
• They look for viral distribution channels
• Must have tracking - Measure growth, tune campaigns, grow a business - must have $ in it
• Needs to see clear rules to operate.
  • Judge risks
  • Grow Monetization Strategies

• Case study on MySpace
  • 130 Million users - growing at 500K users a day
  • Had a viral channels - in Profile - must see it and then go an copy it into your own profile
  • MySpace did not give any tracking. Thus, RockYou had to do a lot of in house development or use Clearsprint, Comscore and Google Analytics.
  • RockYou wanted to make sure they could correlate which user was using which widget was being used.
  • MySpace has also been very unclear on the rules. Make it hard to judge the risks for RockYou or other 3rd party developers.
  • BC MySpace does not allow monetization on their site, 3rd party developers are forced to try and figure out how to drive people to their own site.
• Facebook
  • 40M users
  • 3% per week growth
  • Full API
    • Invties
    • Profiles
    • Newsfeeds
  • Tracking
    • In House
    • Google Analytics
    • Full Statistics Page
  • Black Box
    • Profile is a black box
  • Business
    • Clear Rules
    • Monetization boundaries clear
    • Allows a clear business to be built
    • Easier to Collaborate between 3rd party developers
  • Facebook is 7 times more viral that all other social network platforms that don’t
  • $1 to $20 CPMs.
  • Adoption is very Hard

Dave McClure - Successful Developer Programs

• Your Product - make geeks rich or famous
• Your Team - find geeks… you need serious credibility - hire extroverted Geeks
  • Get code examples in multiple platforms
  • Get notable geeks
• Geek Metrics - you have to measure stuff
  • Make sure the non-geek boss signs off on those goals
  • Only one % of downloads convert to active use
  • In other words, some of the metrics have to reach down to making $$$
• API Biz Model = Biz Model
  • Ultimately, your API is just a big [hopefully] Biz Dev deal
• Education
  • To Win, you Must Educate
  • To Educate, You Must Speak
  • To Speak, You Must Do/Show (Code Examples)
  • Don’t ever require registration or login to educate - ever! Make the educate free and easy.
• Marketing - Sell the Geeks, Not You
  • Create a directory that features your geeks - not you
  • If you help them - best friends forever
  • Send them customers

Valley Wag has a hot post with a video of Jason Calacanis explaining why Facebook might not generate as much ad revenue as Google.

His argument is pretty simple: Facebook is used for direct communication between friends and family. What your friends and family are doing and saying is far more interesting than ads.

Calacanis uses this reasoning to justify why he thinks that Facebook will not become a $100B company. I liked his comments because they deflate hype.   Facebook has a lot of heavy lifting it still needs to do before it gets to that kind of valuation.

However, Calacanis’ reasoning does not prove his conclusion. There are a series of flaws in his thinking.

1. While the click through rate on Facebook based ads might be lower, the amount of time that users spend on Facebook could easily be enough to make up the difference.  If Google’s click through rate is 10 times higher, but Facebook gets user attention for an average of 100 times longer, then Facebook wins on a per user basis. Where is the data to back this up?  I don’t have it.   But I have found this: Videoegg has a quote from a Deloitte and Touche that says “Young people spend more time on UGC sites than traditional ones”. Traditional includes Google. On Inside Facebook, they say “More than half of active users return daily (users spend an average of 20 minutes on the site per day)”. I don’t how much time people spend on Google. If it is not at least 20 minutes a day, then Facebook has the advantage.
2. Calacanis assumes that all advertising is about clicking to get someone to come to your site. It isn’t. A huge chunk is about brand awareness. Red Bull’s Roshambo (rock, paper, scissors) game is a perfect example of the kind of engaging brand awareness advertising that is possible on Facebook. I am not sure how Facebook will eventually charge for this kind of access, but considering that they have figured out a way to charge Fortune 500 companies in excess of $300K per year just to have a network on Facebook, my guess is that they will figure out a way.
   
3. Calacanis assumes that what we see today is all there is to come. It is not the ads - its the apps. The amazing thing about Facebook apps isn’t that the apps today are particularly exciting. Instead, it is that the platform is getting end users in the habit of installing server side apps in the cloud into a domain that they control. As such, Facebook is the first widely successful Personal Server. This could radically change the way that people buy computing services. Think about the following questions:
   • How could a Facebook version of Gmail be more useful to you simply because it leveraged the social network information available? What Facebook mail could leverage their app platform. Remember, there are no plug-ins to Gmail. If, like me, you are a WordPress user, you know how valuable plug-ins can be.
   • How could an Activity Centric business blogging platform benefit from the “social graph”?
   • How could a generic “white label” version of Salesforce’s ideas.salesforce.com customer feedback site be built to leverage the existing social networks within Facebook? Remember here that these kinds of social feedback systems where end users vote of product improvement ideas require social recognition to succeed. Also recognize that this kind of passionate user feedback is worth millions to large companies.

Social Network as a Service

Clearly, there are ways to leverage and monetize Facebook that have not been tried yet.

And, there are lots of applications that would benefit from a social network component - but do not have a realistic chance of driving users to join yet another social network. For these kinds of applications, Facebook provides their social network as a service.

In addition, true end users could very easily be willing to pay for these kinds of applications. Companies from 37Signals to Salesforce have proven that if your app adds enough value, end users will pay for it.

Jason Calacanis might be proven correct by future events. Facebook may not get to be as big as Google. Facebook may lack the imagination to take full advantage of the platform they have built. Facebook users may not be willing to move from current “fun only” group chat behaviors towards more complex interactions

However, saying that the click through rate for ads on Facebook isn’t as high as the click through rate for ads on Google does not prove the outcome, one way or another.

I love the web.   43 pages of top flight, MBA Thesis quality research into how businesses use wikis - and its all available online.

The paper is called Managing Wikis in Business.   You can get a pdf copy of this great research into wikis in the workplace here.   The paper is by Penny Edwards.   I recommend it highly.

Here are some of the main points:

• “Wikis’ usage, management and growth, to date have been dependent largely
  on the grassroots initiatives of self-motivated ‘technical’ users.  Those users tend to be
  more venturesome and able to cope with uncertainty during early adoption stages.”
• When implementing this technology, companies need to think most about how to phase in adoption by non-technical users
• “View [any] implementation as a change process and allow for planned
  emergence during adoption and growth/maintenance, and encourage
  evaluation throughout.“
• “Don’t rely solely on the self-motivation of the initial adopter groups.”
• “Recognise that later adopters may need greater support helping them
  understand how to use the wiki and work more collaboratively.  Engage
  existing users in this process to grow the wiki organically.  Focus on and
  demonstrate the uses/benefits of wikis’ use for everyday work (with
  knowledge collection being a by-product of wiki usage rather than an end in
  itself).“
• “Allow people time to develop their skills with the wiki and gradually move
  them away from use of inefficient tools by constantly and subtly promoting its
  use (e.g. through moving tasks/information onto the wiki, sending people
  links/referring people to wiki pages and involving people in projects using
  wikis).  However, support different communication styles and recognise that
  using a wiki may not be suitable in certain circumstances”

The biggest take-away I have comes from that last point.   In a work environment, new technology is never adopted over night.   It takes time to move people over.   When introducing something as radically new as Enterprise 2.0, you have to be patient…. at least during the roll-out phase.

Interesting development. As Ross says:

Jaiku is more than a Twitter alternative. With Google’s portfolio, you could easily see it augmenting Gtalk and Orkut on the web and mobile clients.

Robert Scoble explains it this way:

[Why did Google by Jaiku?]

Orkut?

Yeah. Now do you get why they just bought Jaiku?

Now do you get why the world is going to pay attention to what Google releases on November 5?

Yeah!

Facebook has real competition coming. Competition they haven’t yet faced.

However, I saw that Scoble had made this post because he tweeted about it on Twitter.

The key question is going to be “which is more important, the technology, or the social network?”

Jaiku seems to have a powerfully interesting product. Arguably, twitter’s api has received more uptake. And twitter has more users.

UPDATE

Maybe Zoli has answered the question about the whether Google bought Jaiku for the network or for the technology .

My only question is why Google had to apply it’s standard process of freezing newly acquired applications, like they did with Writely, JotSpot..etc? (Existing users can continue Jaiku-ing, but new signups are on hold.)

If Google was interested in the network, my guess is that they would have kept the service open. If I remember correctly, they did not close access to new YouTube users when they bought them.

Checking out at the Diamond Heights Safeway, the clerk asked me “Would you like to donate $1 to Breast Cancer Research”.

I said sure. Then I said, “I bet Safeway has raised a fortune to charities this way.”

The clerk responded “People usually say yes if it is the first time they have been asked, but they get really mad if it is the second time they have been asked. They say ‘I donated last time’.”

This is a simple problem with an easy fix. Safeway needs to keep a record of when customers donate and have that information available the next time someone visits the store. The check out clerks could then have two scripts.

• “Would you like to donate $1 to Breast Cancer Research”
• “Thank you for your donation to Breast Cancer Research the last time you shopped here. Would you like to make another donation?”

I think the same insight applies no matter when you are trying to get people to contribute. It does not matter whether you are trying to get donations to a worthy cause, or trying to get your employees to contribute innovative ideas; you have to give people recognition when they add value.

As an aside, does anyone know who runs this amazing program at Safeway? Obviously, they are already doing a lot of good.   Maybe this is a way for them to do even more.  I think the little idea above could increase the money they raise for good causes by an additional 40-50%. What do you think?

My friend Dharmesh Shah, Chief Software Architect & Founder of HubSpot.com just pointed me at their new free service, WebSiteGrader.   It is a free Search Engine Optimization tool and if you run a blog, my guess is that you will find it really useful.    Here’s some of the results it gave for Innovation Creators: