Nat Torkington

Yesterday I gave a talk to the Privacy Forum in Auckland, New Zealand, titled Web Meets World: Privacy and the Future of the Cloud. The talk was intended as a scene setter for a discussion with the audience, about 70 lawyers, technologists, consultants, and public policy wonks. They responded well to the challenge, and we talked about the nature of privacy, how expectations change over time, trust.salesforce.com, and more. The presentation is embedded below, and can be downloaded (CC-Attribution-ShareAlike) from Slideshare (I recommend expanding the preso to full-screen so you can read the notes, which contain the text of the talk).

Larry Lessig was busy last week: he was in New Zealand for the LIANZA (Library and Information Association of New Zealand Aoteatora) conference, flew back to California to man the phone banks for the Presidential election, and then spoke at Web 2.0 Summit. Fortunately, several of his talks were recorded.

Monday night he gave a public talk at Auckland University, sponsored by University of Auckland Law Faculty, the Legal Research Foundation, and the University of Auckland's Department of Commercial Law. I was in the audience for this, and it was vintage Lessig: culture, remix, legal reform but not abolition. His framing was brilliant, and everyone cheered at the end. The Law Faculty blog wrote about it, there was a great write up on Public Address blog, and there's a clip on Vimeo. I saw official looking video cameras, but I haven't been able to find the online video yet.

On Thursday, back in the US (maybe it was Wednesday back in the US, curse that dateline) Lessig gave a High Order Bit at Web 2.0 Summit. He spoke about corruption, focusing on quickly making the connection between money, trust, and independence explicit. It's short, hard-hitting, and fit perfectly with the "Web meets World" theme of Web 2.0. All the Web 2.0 Summit talks are online at blip.tv, including Lessig's talk. The talks are also available on YouTube including Lessig's talk.

But earlier, on Tuesday, Lessig keynoted the LIANZA conference. He spoke about corruption in the context of libraries, libraries as anchors of trust and independence and the ways in which copyright, like money, erodes trust and independence. It was brilliant, and the video is online (albeit with a Windows codec). It's 1h12m in length, so pour yourself a warm tea.

You even get the question and answer session at the end, in which he addresses New Zealand's latest Copyright Amendment Act which adds takedown provisions for alleged copyright infringement. In no uncertain terms he condemns it. "I don't know if you recognize this but you guys are at the edge of the world [...]. The idea that you would start cutting off internet access to people sitting at the edge of the world is crazy. [...] Allowing these random cutoffs of your connection to the rest of the world to define the future of New Zealand Internet is just crazy, so I hope that Government rethinks this before they march forward with this demand by copyright holders to push you back into the Dark Ages." Amen, brother!

Check out this perception altering post on the Ponoko blog. It really puts the current state of 3D printers in context: they're now cheaper than laser printers were in 1985. It almost dares you to think of when you first saw a laser printer, and when your company first got one, and when you first owned one, and .... The implicit trajectory is irresistible. Open questions: how will the natures of design, commerce, distribution, manufacturing, and recycling cope with widespread mass distributed manufacturing? (PS, surfing the Ponoko site I found this awesome Nerd Brain Necklace)

November 7th is World Plone Day, when the Plone community will run outreach events around the world to "promote and educate the worldwide public about of the benefits of using Plone in education, government, ngos, and in business". Look for your local community in their list of planned events. I see there's even going to be activities in Auckland, Wellington, and Christchurch in New Zealand, so your home town has no excuse!

Here are two presentations that I've found particularly instructive in the market meltdown:

• Making Sense of the Mortgage Meltdown: many numbers, tables, and charts to help you see the full number of sigmas the last few years represent.
• Sequoia Capital on Startups and the Economic Downturn: this is a presentation from VCs about how startups should deal with the new market conditions. In short: batten down the hatches.

Sequoia is right on the money in my opinion: lock down, there's tough times a-coming. They say that if you don't have a year's cash in the bank, you're in trouble. I can believe it. Their best advice is to become cashflow positive as soon as possible. Hmm, weren't smart people saying this before? No, not just 37 Signals and our very own Marc Hedlund ... oh right! Sequoia were saying it in 2001.

I hereby reveal Torkington's Law: when VCs no longer emphasize becoming cashflow positive as soon as possible, you're officially in a bubble. You don't thank me now, but just wait four years until there's a new instrument that lets bankers manufacture money from thin air. When VCs smell silly money exits again, they'll remove those "unnecessarily limiting" bits of advice from their presentations because "this is a new world" and "this new market makes greater growth possible, justifying any temporary debt", and when they do you'll recognize it for the convenient self-serving venal lie that it is and cry "Torkington's Law! We're in a bubble!". The guy beside you in the soup kitchen line will look at you strangely, but ignore old Badger Pants Pete and rush out to start one of these new Web 3.0 companies all the kids are talking about so you can get some of that silly money for yourself. After all, the only reason to hate a boom is if you didn't get in before it ended, right? Right?

I think I need a bailout for my faith in human nature ....

As the financial markets battle the fallout of years of poorly regulated unwise greed, the language of analysis is revealing. Commentators talk of "contagion spreading", financial "gears jammed", and "turbulent" markets. This is the language of non-obvious connection, where it's theoretically possible but impossible in practice to predict the future state.

Listening to This American Life's new episode on the spreading financial market failures brought this home. It talked about Credit Default Swaps (CDS) and how hedge funds would both buy and sell these so that they were making money from the interest even as their clients were covering each other's principals. This worked fine for a while, but because hedge funds were each others' clients there arose these long lines of dependencies—if A failed to pay B, then B couldn't pay C, who couldn't pay D, and so on. When the markets started to choke on rotting mortgages, the CDS chains began to unravel.

The CDS game was a bugger because it was easy to check one fund's books and say "yes, we are covered". But there was no way to identify these chains of dependency: the connections between funds were invisible. And, as it turned out, the connections between funds were so much more impotant. Just as one person dying isn't as important as the fact that they can infect others, so too one hedge fund going belly up wouldn't have been anything like the disaster of the dependencies. With globalisation, these connections can span markets, borders, currencies, and languages.

This newly-realized importance of the network reminds me of biology, where we thought we could understand an organism by mapping its genes. Now we realize an organism is a complex mixture of manufactured and transformed chemicals and even other organisms, and the genetic blueprint is necessary but not sufficient for understanding. You can no more understand how an organism works by reading its DNA than you can understand how San Francisco works by reading its phonebook. This "whole organism" multi-level integrative approach is called systems biology.

Nodes often aren't as important as the connections between them. Reductionist science and analysis from the 19th and 20th centuries focused on nodes. I believe 21st century science, economics, political science, and computer science will use more complex systems theory to understand the interactions between chemicals, speculators, nations, and users.

Social network mining, exemplified by Duncan Watts' six degrees work, is just the tip of the iceberg. I think this kind of modern network analysis can make the world a safer place, our futures more secure, and even our bodies more comprehensible. In 100 years time, historians will say that this century's Einstein, Watson, Crick, and Feynman were students of network analysis, and that this was the Connected Century.

Don't miss this great post by Chris Heathcote deconstructing Google's first steps into map advertising on the web and mobile map apps. There's still some usability and use-case work to be done, but it's interesting to see their initial take. As many people have predicted, text ads are difficult to make work on the mobile screen; in Chris's words, "On the web, a banner is 1-5% of the page; on a mobile it’s close to 30%". Chris doesn't feel Google has the problem solved yet (and, in fairness, I doubt Google does either).

You're Doing It Wrong

Here's the state of play as I see it: it is expensive and difficult to borrow and this shows no sign of change; the US debt is rising instead of falling, propelled by the Iraq War and the reliance on China for material goods unreciprocated by a reliance from China on American goods; and this adds up to difficult times for business in America for at least three years and possibly longer. From these premises, it's possible to cautiously guess at what the future will hold. (Bearing in mind that every day brings new revelations about the grim state of world finance, so the crystal ball is murky at best)

First, this recession will be good for innovation because recessions generally are. During boom times, companies direct development and occupy great talent with at best evolutionary improvements over the state of the art. Companies are great chasers of new things, but aren't great at making new things. A recession means technologists cease to be paid vast amounts to duplicate the work of others. The Great Tech Bust of Ought Two gave us 37Signals, Flickr, and del.icio.us and there's a strong argument to be made that many companies spent the next six years chasing what they created.

Second, this recession will be great for free and open source because of the shortage of cash. Last recession saw the mainstream legitimisation of open source operating systems (youngsters, take note: there was a time when it wasn't automatically okay for an IT department to use Linux) because it was clear and away the most cost-effective choice. The saying I use is, "come for the price, stay for the quality". Perhaps this recession will legitimise many of the applications (CRM, finance, etc.) higher up the stack. (However, I'm not about to stick my neck out and predict 2009 as The Year of the Linux Desktop)

Third, open source services and cloud computing will benefit from the tight financial situation where conditions will favour opex and not capex. It wil be nigh impossible to borrow to buy hardware or a major software license. An open source software product is free to get through the door, and services around it are delivered from opex not capex. Similarly, cloud computing lets a company pay a little to use someone else's enormous capital investment. It looks like, if the rumours are true, Microsoft will launch Windows Cloud just in time. Don't expect to see anyone else putting in new data centres any time soon—in fact, the days of deep-pocketed investors covering high burn rates are over for a while.

Most consumer apps will be a harder sell with the US dollar in the gutter while the country haemorrhages cash overseas. This is bad but won't make profit impossible, you just have to really be making something consumers need. Apps like Wesabe might find a whole new audience in a recession (disclaimer: O'Reilly is an investor in Wesabe). The conditions don't suit speculative acquisitions, so expect a return to the focus on the bottom line that (very briefly) characterised the fallout from the '01 tech bust. Sorry, dreams of getting people to pay for your toothpick collector social network may have to wait until the return of the stupid money in 2013.

As Phil Torrone said, people will have more time than money. This is good for open source software, but also for hardware and Make-style reconnection with the objects around us. The low-cost high-impact physical events we've created (Ignite, hacker meetups, coworking spaces, foo/bar camps) will thrive even as big-ticket conferences feel the effects of pinched pennies. The killer app in the "web meets world" space may just come from a Maker with spare time who sees a great need.

That's how I see the world and what I think it might favour and disadvantage. How do you see it? What am I missing? Share your views in the comments, and a Head First SQL fridge magnet set for the commenter whom I find the most insightful.

I talk a lot to people who don't quite understand the scale of the media shift from atoms to bits (update: corrected), so I always have my eyes open for numbers and anecdotes that illustrate the point. The latest I found are from an article on Apple's threat to shut the iTunes store if it has to pay more to songwriters:

Digital downloads grew 38 per cent from 2006 to 2007 to become a $1.26 billion business, making up 23 per cent of the market for recorded music, according to the Recording Industry Association of America. Sales of physical music media such as CDs, cassettes and DVDs declined 19.1 per cent to $7.5 billion in the same one-year period.

I'm still looking for convincing numbers on film and TV movement to digital. For example, does anyone have numbers on how well Dr Horrible's Singalong Blog (the web-only offering from Buffy creator Joss Wedon) did?

Wednesday night in Wellington is a lot more exciting when the New Zealand Open Source Award ceremony is on! The Minister for Communications and Information Technology, David Cunliffe, made a brief speech lauding open source and was around to hand awards to the winners. We gave out prizes for best project, contributor, use in government, use in business, use in education, use in community organization, and use for infrastructure, as well as two special awards.

I was a judge (along with Don Christie, Rochelle Hume, Colin Jackson, Janet Mazenier, Chris Daish, and Paul Matthews) and presented the Project award to Silverstripe and one of the special awards. It was quite the honour to be on stage with the wonderful winners. A list of the finalists and winners is on the NZOSA web site.

As all awards should be, they were very hard to judge. Everyone finalist was doing great work, and it was almost impossible to pick one over another. Nonetheless, Robert O'Callahan from Mozilla edged out Debian, Perl, and OpenSolaris contenders for Best Contributor. Richard Hulse from Radio New Zealand took home the award for use of Open Source in Government (their online presence is built on open source and they even offer Ogg Vorbis show downloads, e.g. for science show This Way Up). Dave Lane from Egressive in Christchurch won Best Use in Business for almost singlehandedly building the open source business scene in Christchurch. FLOSS Manuals won for Best Use for Community Organisation, beating out Wellington's rising star Brenda Wallace. CityLink won for Best Use in Infrastructure.

There were two Special Achievement awards handed out. Colin presented one to New Zealand's CIO, Laurence Millar, to acknowledge the great work the State Services Commission has done in levelling the playing field for open source and open data within Government. I was honoured to present one to Matthew Holloway, whose work on the ISO OOXML proposal was a key part of the great work that Standards New Zealand did to establish their position (they voted against it becoming a standard). Well, I would have been if Matthew had been there, but it was accepted in his absence by Peter Lambrechtsen who was also part of the Standards NZ process.

There was even drama on the stage. Colin Jackson gave the Minister some stick over the ISP-hostile DMCA-esque provisions of the latest Copyright Act being snuck in after the bill had passed the Select Committee without it. Then I, as part of my speech above Matthew, got to observe that the transparency of the Standards NZ process was something that New Zealand could be proud of--unlike the ACTA and US Free Trade agreements which are being negotiated in secret and have considerable potential to interfere with the computer industry. The Minister stood up afterward and extended an offer to us and the relevant industry representatives to meet the appropriate people after a Cabinet meeting and go over our objections with the people who need to hear them.

Many thanks to MC Mark Cubey (by day the producer of the Kim Hill show), and to Catalyst Networks, the NZ open source consulting company that has funded the NZOSA for the last two years and built it into the great event that it deserves to be. Go Kiwis!