fantasy vc - knodes

Continuing a series on startups I'd put a bet on if I could.

At New York Tech Meetup last year I saw a presentation by the founders of Knodes. It got me then and, eight months later, I still think about it.

Facebook, Pinterest, Instagram, etc., are utilities [eventually] optimized for advertising revenue. This means they must generate noise to make money from our captured attention. I’ve asked: what if we were paid directly for our attention rather than those middlemen?

Knodes asks: what if we could use those noise generating systems to generate signal?

Put these things together:

• It’s become a truism that there’s too much information, too much of which is noise and most of which is filtered out automatically by people on social media, in searches, etc
• Word of mouth, recommendations from friends and trusted advice have the greatest leverage when it comes to commanding high-value attention, the kind that leads to actual action and stickiness
• "High-value" attention because all attention is not made equal, which is (hopefully) intuitively self-evident
• The social capital of trusted networks (or whatever)—a friend you know knows a thing or two about something—can turn something from a bit of noise into a bit of signal
• The demographic, interest and activity profile matching used for ad targeting can (and should) be used by trusted networks to reach each other with greater leverage
• For example: I don’t know who in my network is really interested in supporting autism research, but some of them must be so instead of hitting all of them with noise—support this because I want to—I can target the ones that care with a signal—support this because they want to—without having to know who they are ahead of time

In generating signal I wrote:

 

Instead of us filtering out all the noise to find the signal, the signal filters out everyone to whom it is noise. The signal finds you.

Jeff Jonas has been saying this for more than a decade: the data must find the data and the relevance must find the user. Go read him. If you get the chance, talk to him.

That is the promise of Knodes.

Generate signal.

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None of this is to say that they're guaranteed success. Or won't get crushed by an incumbent or other party. Or even scooped up before they become too successful. Just that I would've placed that bet.

fantasy founder - what if your eyeballs make you (not google) money?

Kicking off an occasional series (like fantasy vc) about products or companies that I’d like to build or see built someday.

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Two thoughts:

• Thought One (from fantasy vc - cumulus)— Either you disrupt by doing something new. Or you disrupt by changing the supply chain, removing middlemen, disintermediation (or consolidation of intermediaries unto yourself?).
• Thought Two (from facebook, instagram, snapchat and you the product)— The cost of everything Facebook does to create and run Facebook is the cost of acquiring the product—your attention. Facebook sells your attention to advertisers.

Here’s the idea:

• If your attention is the product being sold by some third party to the highest bidding advertiser, why aren’t you getting the proceeds from that sale? 
• What if you had a way to sell your units of attention directly to the advertiser and get paid? 
• And what if nothing about how you use the web changed? 
• Except that now you get a check in the mail or money deposited in your bank account every month.

So, how might this work? An easy (in the sense that we’re not inventing anything new) approach: use ad block technology to strip out everyone else’s ads and insert ours. Have a plugin for each major browser. Create (or jack into an existing) an ad network to source the ads. And give users (for example) 65-75% of the transaction, claiming the rest as a transaction fee to run the business.

The point would be to give you most of the profit being made off your attention.

It should be profitable. But mainly, I’d like to see if  something sustainable can survive that puts a noticeable dent in advetising-driven business models. 

Why? Because I don’t care to have my attention sold. Because it’s grossly inefficient to pay for, say Google searches, by maybe being made more likely to buy some product part of the profit for which turns into the operating cost of some company that in turn spends that money on advertising on the web. There are tons of middlemen in that chain taking their cut of the money I could just pay Google for the damn search capability without fueling the consumerism, growthism, more-ism that prevails.

P.S. Prior art: AttentionTrust

facebook, instagram, snapchat and you the product

Some simple ideas from broadcast television/radio/etc:

• The station buys your attention with entertainment, news, etc.
• The station sells your attention to advertisers (who created the station in the first place)
• You are the product
• Advertisers are the customers
• The cost of everything the station does to create the entertainment, news, etc., is the cost of acquiring the product—your attention 

Transpose station with Facebook:

• Facebook buys your attention with entertainment, keeping in touch with friends, etc.
• Facebook sells your attention to advertisers
• You are the product
• Advertisers are the customers
• The cost of everything Facebook does to create and run Facebook is the cost of acquiring the product—your attention
• The more of your attention Facebook has, the more it can sell
• When Facebook bought Instagram for $1B (ignore the actual number), it bought the attention of 30M users at something like $33 a pop
• That’s 30M more units of your attention to sell to advertisers
• In order to keep making more money, Facebook has to sell more (and better) of you to its customer the advertiser
• At some point, Facebook’s organic user growth has/will drop off and thus its supply of you—the product—will become constrained
• So Facebook must go out and buy your attention wherever it is, be that Instagram, SnapChat, WhatsApp, whatever in order to maintain its supply of product (you)

The real question...Is $33 a pop a good price to pay per unit of your attention, given

• The cost to run a service like Instagram AND
• What advertisers are willing to pay to plaster themselves in front of your eyeballs everywhere your eyeballs might roam AND
• Whatever measure of “quality” you can apply to the particular unit of attention you give to Instagram?

Replace Instagram in the story with SnapChat and that’s how I’d look at whether $3B is a good price to pay.

Replace Facebook in the story with any other advertising-selling business that does not charge for what you as user get from it.

Then consider what most of the talent in the technology world is out there doing. 

And finally, what would you do if the money these companies are getting from selling your attention went to YOU instead?  

Hat tip: this post 100% inspired by Benedict Evans’ post on Instagram and Youtube.

And finally, this:

Attention is the currency of rich people.

— Paul Ford (@ftrain) February 13, 2014

generating signal

Courtesy @epc, I went to the July New York Tech Meetup. For the most part, consumer/social/mobile/web/fashion startups aren't my bag. But here's something interesting..

@NYTM: Deliver the right message to the right person. @Knodes http://t.co/AWLrqdjOiO #NYTM 

The same technology used to sell our eyeballs to advertisers is flipped into a tool for us to reach deep into our own networks with the backing of our personal social credit. This flips the noise generating system into a signal generating system.

Instead of us filtering out all the noise to find the signal, the signal filters out everyone to whom it is noise. The signal finds you.