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Logistics: Utility and Customer Satisfaction

A journalist friend of mine asked for my Won cent on Amazon Fire. Since I’m too lazy to make it a blog post, here’s the email, copied and pasted.

I think it all boils down to utility and customer satisfaction.
Amazon's pain points:
In terms of the market, Amazon is doing well in e-commerce, but no where near dominating the retail space yet: Amazon's revenue is a complete dwarf compared to total U.S. retail. Amazon's revenue was roughly 70B last year compared to something like 450B by Walmart. However, they're killing Walmart online, and they therefore must absolutely continue to do so. Not to mention Alibaba entering the U.S. e-commerce space this year.
http://thenextweb.com/us/2014/02/11/chinas-alibaba-is-preparing-to-dip-its-toes-in-the-us-e-commerce-market-for-the-first-time/
It’s great to be a giant in the e-commerce market, that doesn’t mean the other retailers are unaware about going after the same space.
Some of Amazon's reasons, beyond the data that they're after:
Here’s an article that may highlight the importance of the smartphone and commerce:
http://searchenginewatch.com/article/2049723/S.-Korean-Companies-Claim-Googles-Android-Blocking-Competing-Search-Apps
Google’s mobile search numbers have progressed greatly since then. Whoever teams with Google on search for products are going to profit, with Google Product Listing ads gaining impressive traction. You can imagine what that means for Amazon, and Fire is one of their reactions.
http://www.businessinsider.com/google-product-listing-ads-revenue-2013-7
Why logistics is important:
Consumer satisfaction is inherently logistics dependent. Therefore, consumer delivery data is being collected in some way or another by the big four. One obvious example is Google shopping express (or Google Trucks). Logistics is also important as one of the areas left with a lot of unbundling left to do. Some obvious frontrunners in this space are
Uber: uber.com
Trak: trak.addy.co 
Shippo: goshippo.com
Bonus:

Messaging Apps are unsurprisingly beating Twitter on Monthly Active Users

So who will monetize print content first, and successfully?

Despite being somewhat smaller than its rival messaging services WhatsApp — which boasts 250 million monthly active users –and China’s WeChat — with over 300 million downloads and 195 million monthly active users — LINE seems to have arrived at a content-driven recipe for monetary success.

Twitter IPO details here. According to the filing, Twitter currently has 215M MAU’s. 

The Global Local: English Content in Asia

tl; dr

1. There is a serious market for high quality English content in Asia, due to rapidly expanding middle class in key countries, pushing education and spending power. 

2. Smartphone penetration at all time high, followed very closely by social messaging. Social commerce is however still lagging: but social commerce specific to digital goods within social messaging is rocketing. 

3. It’s not about going to another store out of many stores to download another magazine, but about finding where social and content sharing is already happening and adding premium content to it, right alongside the premium stickers. 

Engrish your Engrish

As I write there are highly incentivised human beings absorbing more English content than ever before. After all, the ubiquitous “second language” has an acronym of ESL (English as a Second Language), not, say CSL or SSL or ASL. Sure, we can argue about what it means to “speak” a language; but there is no evidence of, say, Americans attending what appears to be a moonie wedding for learning Chinese. China on the other hand has more English speakers than the U.S., even if purely by population, but also by choice: China actively blanket-mandates English education starting at the 3rd grade. 

Here are some rather convenient numbers:

  • China: growing middle class at 300 million; larger than the entire U.S.
  • India: second largest English speaking country
  • Vietnam: let’s just say you’re better off saying that you’re American than Chinese if you’re walking around the place; certainly no one’s learning French anymore
  • Philippines: 5th largest English speaking population in the world, just above the UK

Thing is, the Engrish in Asia phenomenon is not even remotely new. To cite just one example while hopefully not dating myself too much (and I rarely get a chance to talk about two of my major foci— music and technology—in one post), there was a band from Denmark that was immensely popular in Asia in the 90’s called Michael Learns to Rock. To give you some idea, from Wikipedia:

"Although not making any headway at all in America despite getting airplay for "My Blue Angel", a latter single (second in Denmark, the first being "I Still Carry On") from the album, "The Actor”, topped the Danish chart and also did well in Norway, Sweden, Indonesia, Malaysia, Singapore and the Philippines. In January 1992, the album would top the Danish charts, followed soon after by success in Asia selling 25,000 copies and earning gold status in Indonesia alone.

On the 6th of July, 1997, they were the headlining act for the show Celebrate Hong Kong, marking the transfer of Hong Kong from the the UK to China.

All of their songs are in English. 

The traffic doesn’t lie either, and here’s just one example: a little birdie told me that the second largest traffic for fast.co this year after the U.S. is… Indonesia. Fast Company does not appear to be publishing in Bahasa. 

Across Device and Device

The other commonality in the countries mentioned above is a rapidly expanding, better educated middle class, which comes with spending power. The smartphone/smart device generation that speaks fluent Engrish as well as English is about to mature, along with the push for cheaper devices and better networks.

  • Indonesia: smartphone penetration rate of almost 62%
  • Singapore/Malaysia: smartphone penetration rates of 88% +

Some other fun facts here would be Indonesia with the highest Twitter rates, along with the Philippines leading in Tumblr. These are crowded countries with incredibly high social capital built-in: no one needs to know how to do anything fancier on their new smartphones than messaging. The way instagram can be re-appropriated for commerce in terms of advertising for, say, livestock— these messaging apps are successfully driving social commerce, at least, for now, in digital goods. And as we already know, those digital goods are seriously profitable.

More markets, less software

Messaging is essentially a rapid personalisation of content. The curation that Facebook does best is through its News Feed: consume the content your friends are consuming, read what your friends are reading. It is baffling to have yet another store out of many marketplaces to download yet another magazine, when it is far more logical to position oneself to where the social commerce and content sharing is already happening. Companies like Magzter, a YouTube-like content aggregator from India, doesn’t fundamentally solve the economics of content creation and distribution. IMHO, high end English content should be there right alongside those golden goose stickers on messaging platforms. If you’re competing in a $30 billion global e-reading business, localisation by language and rather arbitrary market segments is essentially feature creep. Here’s another fun little fact: Magzter’s first big client was India Today. Guess what: India Today is printed in English. 

Messaging platforms are proven storefronts. English is the Minimum Viable Product.

wonheechang:

A long time ago, a Harvard scholar lived with our family— back when North Korea wasn’t North Korea. That’s grandma there, with my two uncles, and if I may say so myself, a rather forlorn pooch. His name is Marshall R. Pihl:

"However, the Ivy League veteran I would most like to honor on this Veterans Day is Marshall R. Pihl (1933–1995), Harvard class of 1960, who learned Korean courtesy of the Army Language School and used his G.I. Bill funding to become a renowned scholar of Korean literature, especially the “performed literature” he described in his dissertation, later published as The Korean Singer of Tales (Harvard U. Press). Here’s the obituary posted to a Korean studies listserv in July 1995.”
…
Marshall used to say that at the end of each duty day in Korea, regular soldiers might stack arms, but his fellow translator/interpreters would stack pencils. His ashes are interred in Punchbowl National Memorial Cemetery of the Pacific in Honolulu.

The article and obituary here.

wonheechang:

A long time ago, a Harvard scholar lived with our family— back when North Korea wasn’t North Korea. That’s grandma there, with my two uncles, and if I may say so myself, a rather forlorn pooch. His name is Marshall R. Pihl:

"However, the Ivy League veteran I would most like to honor on this Veterans Day is Marshall R. Pihl (1933–1995), Harvard class of 1960, who learned Korean courtesy of the Army Language School and used his G.I. Bill funding to become a renowned scholar of Korean literature, especially the “performed literature” he described in his dissertation, later published as The Korean Singer of Tales (Harvard U. Press). Here’s the obituary posted to a Korean studies listserv in July 1995.”

Marshall used to say that at the end of each duty day in Korea, regular soldiers might stack arms, but his fellow translator/interpreters would stack pencils. His ashes are interred in Punchbowl National Memorial Cemetery of the Pacific in Honolulu.

The article and obituary here.

The frontier is content monetization; OTT messaging is poised to own paid content distribution

Video Killed The Radio Star

It’s a winter coat cold April. KakaoTalk’s lair lies in Seoul’s Techno Valley on the relatively new pink subway line, less Kraftwerk than something out of Ayn Rand. The same area hosts NHN Naver with their “Green Factory”, a 28-story building complete with special UV areas to disinfect your toothbrush after lunch; Ahn Labs, a well-regarded anti-virus security firm for the mobile web that is the namesake of Ahn Cheol Soo, the independent ticket for the last presidential campaign (who also came by earlier this year to pay respects at the public City Hall vigil for gramps— thanks!); and since it’s Korea, one of Samsung’s many tentacles lies close by. 

Sirgoo Lee (CEO of KakaoTalk) and I talk casually; he wears a soft, pale blue sweater over a t-shirt, with a relaxed haircut— uncommon for Korea’s corporate culture. His eyes are steady and smiling, his body language actively promotes an atmosphere of calm; his diction is both to point and self-effacing. We quickly switch to English mostly because I have no idea how to say phrases such as “Internet Service Provider” in the language, my language, whose culture boasts the fastest broadband speeds in the world. The interview revolves around conception and competition, along with a little segue into creative content and ownership. I mention Facebook and its impending Home as the largest threat to the OTT messaging space and Kakao’s own launcher; he chuckles. At the heart of this conversation he specifies, “We co-habitate in a similar space, but we don’t see them as direct competitors. We’re a mobile communications platform company, not a web service. The nature of what we provide is private, between users, and not a public service.” 

30th April 2013: I am still plugging away at my now-abandoned sharewall prototype, with a partnership with KakaoTalk in mind via KakaoPage, their newly launching marketplace for content creators. Then into my inbox this little chestnut arrives: 

"Daily OTT messaging traffic has already overtaken daily P2P SMS traffic in terms of volume, according to newly collected data from Informa, with an average of 19.1 billion OTT messages sent per day in 2012, compared with an average of 17.6 billion P2P SMS messages…

By the end of 2013, Informa estimates that 41 billion OTT messages will be sent every day, compared with an average of 19.5 billion P2P SMS messages. However, there are far more P2P SMS users than there are OTT messaging users: There were about 3.5 billion P2P SMS users in 2012, according to Informa, compared with about 586.3 million users of OTT messaging. Each OTT user sent an average of 32.6 OTT messages a day, compared with just five SMS messages per day per P2P SMS user, meaning that OTT-messaging users are sending more than six times as many messages as P2P SMS users do.” 

Translation: there are ever more smartphones, the smartphones are getting smarter than the humans who sell and consume them. And oh god, how many messages will we send via how many different messengers when smartphones really take over. Here isn’t merely the one-for-one replacement of SMS, but the rise of an entire marketplace of messaging apps riding on Internet Protocol, ready to take over all the voice traffic and digital goods commerce. They aren’t just for tap tap tapping that glass anymore.

Here was not just a failing business model, here is a marketplace. 

Content necessarily negotiates delivery and ownership: show me the money

So the marketplace calls for content, and content has ownership. In the abstract it sounds reasonable, but what does it mean to, say, own weather data? Real-time transit data? A song that is being played on the radio for free? Or, for sasang.ge’s simple purposes, a written article? As I write this post, I certainly hope I own it, though it is certainly for free and is being distributed for free on Tumblr; Tumblr calls itself a publishing tool for content creators, after all. If this post gets re-blogged or shared, it is akin to having a song that I wrote being played on the radio— to no monetary benefit, but to be distributed. This is exactly what KakaoTalk, via KakaoPage, was pushing away from, in that cold, miserable April. KakaoPage allows content creators to monetise their work immediately.

Picture Stickers/Emoticons called Stick-ons, alongside the games of OTT: an ecosystem of the content creator working with the distributor, on an available platform, with a simple cash register. KakaoTalk actively engaged cartoonists in Korea to create these stick-ons with a 50-50 revenue share. Needless to say, it was highly successful— no current messenger fails to have stickers. Revenue for Line in Q1 2013 was $58M, an increase of $28M from the previous quarter. Half that revenue was from in-app purchases from social games. Another $17M of those profits came directly from paid stickers. 

Content independent of messaging is going to have some serious engagement problems. In the US, the ideal paid content distribution in my mind is a magazine beautifully done on something like Tumblr and through Babblr (a messaging platform on top of tumblr); combined with ownth.is (a payment system). Those who still hang on to content-only destinations can go visit the stunning work of Atavist or 29th Street Publishing, but those audiences aren’t the future. Sorry Flipboard

Capitalism is about marketplace, not business models

At the moment — sorry Facebook too. The new games publishing program is a great step in the marketplace direction, but other content needs a cash register. And Facebook needs credit card numbers or other billing relationships. 

While most consumers may see Facebook Home as yet another nifty product, it is very much a reaction to market movement. One way to explain the OTT turf wars is to understand that OTT and Facebook are battling squarely for the same space. Here is one definition by Tencent’s WeChat, the second most popular messaging app in the world after WhatsApp: 

"WeChat is the complete mobile communication and private social networking app. Free, cross-platform, and full-featured, WeChat is the best way to keep in touch with everyone you care about." WeChat tells me that as a software it is trying to solve how to put these functions together: communication, sharing, gaming. It’s essentially a navigation system for content for how you want to watch it or when you want to read it— managing real estate, on anything with a surface, whether it be through XBox or Apple TV, on a table top, or a Samsung Galaxy IV. 

Software eats industry, again. 

tl;dr

1. OTT Messaging is already killing SMS on volume, even with a small fraction of SMS’s audience reach. If anything saves mobile carrier margins, it will be their billing. 

2. Paid content players, i.e. publishers, among others, have it in their interests to partner up OTT messengers as distribution platform, a communication platform with a built-in cash register.

3. Facebook Messenger/Home needs to be able to monetize, encourage/buy into content: double attack from potential monetised Tumblr (Yahoo!) and already monetised OTT communication platforms.

De-Feature, Re-Focus

To de-nail the newspaper/magazine coffin was this simple premise: 

Gotta get Distribution, Gotta get Cash. 

Let’s start with distribution. The Bloomberg article had focused on the sharing of content, the promise of virality. It should have punched me in the face before that sharing is a actually a complex hybrid between distribution and personalisation. Consider: with any retweet or reblog, I am certainly distributing the content— but more importantly, I plucked it out as pertinent out of trillions of tweets and billions of blogs and shitfuckloads of sites as worth some kind of value. Therefore, beyond distribution, I personalised the content for myself, and my immediate community, anyone who will be on my feed, or to the person I share it to— which is in itself not surprising. Think of a magazine of your choice: the storefront was upstaged by personal delivery, personal delivery got derailed by newsfeed/twitter stream— which was still a destination point— what will knockout the destination point is the real estate to not have to destinate at all. I can see it now from the grumblings of my ex-VC career, a greyscale image of mobile phones with the words in 36 point Garamond: “homebase of crowdsourced personalisation”. So why the fuck was a I building a website (though, shout out to Cloudspace for being fucking awesome, especially Rosenblatt)? Jesus, I personally interviewed Sirgoo Lee covering the Kakao Launcher vs. Facebook Home. I had the intel and the insider tapes that I had recorded myself on Photobooth no less; I had just watched and kept my guard (and hands) down.

If the above were a friendly jab— let’s talk cash. The kick to the face should have been the fact that my 17 year old self had worked on an SMS ad platform in Thailand, many many many macallans ago. Aside from the fact that I far preferred gin then, the intel was right: in a crowded environment, the text message was the most intimate way to reach someone, at all times. A few companies managed to leverage the platform to reach teenagers in South East Asia, using their handphones as a source for discounts. The next level of said leverage was to send jokes, a few cents to send a joke to a friend. It is my understanding that this was highly successful in countries like Indonesia; I do not consider it coincidence that Indonesia currently happens to be the highest tweeting country on the globe. Try managing a software outsourcing shop in Jakarta: hell hath no Friday night fury like the sodden company-wide “reply-all”.

But the dream then in the late 90’s was to directly monetize SMS. Imagine paying for your coffee by, say, texting an agreed code, or sharing that code to three people to unlock a free coffee. Back to the future now: that’s exactly what OTT messengers do— the motherfucking holy grail of the cash register. Specifically, KakaoTalk, WeChat, and Line (among others, I’m sure) are already ahead, having built knowledge on top of gaming, while slowly developing a programmable cash register. With Internet Protocol available universally on invisible airwaves (an unfortunately relevant “stupid network” post to come later), there is absolutely no reason to pay for SMS— again, the most intimate way of reaching you. And so countries like, say, Korea, has no need for SMS any longer, with Kakao soaring to 99% penetration— it is unsurprising that leveraging an earthquake had a similar effect for NHN Line. Chaos commands the simplest functioning denominator: to some it’s an underwater AK-47, to others it’s WeChat for a McDonald’s double sausage egg McMuffin deal in China.

And so the lesson: the blow that took the air out of my lungs was precisely the two above premises combined. New companies rarely generate their own volume. Most piggyback some other juggernaut to get big. OTT is taking over from SMS at an alarming rate, with a monetisation bonus. I didn’t need to build my own platform, nor the hard problem of needing a programmable cash register at the end of it all. 

If I Gotta get Distribution, Gotta get Cash, I gotta ride the right platform wave.

And that wave, as you guessed it, is called OTT. 

Ali's Tumblr: New Adventures »

rosensalsa:

I joined Facebook early in 2006, when they were a community of 4 million, and led teams through hyper growth and intense competition when MySpace was the behemoth and the industry felt saturated.

As a part of Facebook’s Business Development and Mobile organizations, my colleagues and I in…

If only more news of OTT as a serious industry for the upcoming VC wars; tremendouly exciting— WHC

Madness Of Startups

Allow me to fast forward to the origin story, as that seems to be quite in vogue these days. It was April, my ninth month on the road working for a private equity firm— perhaps the only kind of gig that an ex-academic in Philosophy could procure. The focus was on mobile and emerging markets: skipping legacy infrastructure, proliferation of LTE and spectrum speculation, mobile commerce, software outsourcing, what to build on top of telcos as dumb pipes… essentially, it was a HUMINT gig: gather intelligence on the ground, figure out the competition, kill and/or acquire, onboard them to the keiretsu— I got there, stayed there, until whatever I did was undoubtedly done. Somewhere between drooling on the floors of transit gates, stranger hell, and just another keynote pdf and management tiff later, I knew I, or at least what I really wanted to do, was once muchier. Also, I dare you to consider airplane beef or chicken as an option while the unwashed gentleman next to you is click-picking at his facial hair with a pair of coins, followed by the then informed silence of eating said hair. I chose chicken, finished it, and made small chat about Muay Thai with the man, if just to stop the clicking until the whiskey would kick in, work its blessed sedative function, and erase any misguided sense of dignity that comes with said sedation.

Back to the point, the rational thing was to quit, which coincided with the results of an official coroner’s inquest into the rather suspicious demise of my grandfather in August 1975. Celebrated as an independence fighter, but uncomfortably assassinated by a military dictator whose daughter had just won the 2012 election, he was finally re-buried in April at a reunification park dedicated to his memory, near the 38th parallel. To point, there’s also a musical about it all, but with just the friendly anti-occupation part, of course. He left behind a historic magazine, and a famous book on his defection from the Japanese army. I happen to be his youngest granddaughter, and no one before yours truly had thought of using these assets to problem solve, build something, anything. What it really comes down to is that everyone else is rational, with respectable, stable careers.

Dear friends (and dear enemies: for some reason they are very interchangeable though my love is constant for both) refer to my boredom trigger as unleashing a tactical destructive cylon puppy with the occasional kernel panic— happily granddad’s vindication coincided with a deadline for 500 startups and Y-combinator’s next batch— along with a very handy RFS— and some solid knowledge about mobile platforms. The economics of creating, publishing, and distributing content was broken, which meant there was a problem to solve. When so much potential material caught my rolling eye, I was ready to hitchhike, Cadillac or motorbike, back to startup land. Alice was at it again. 

I set about gathering HUMINT now in journalism, publishing, distribution; anyone who would part with 15 minutes of their time to this scrappy lass. Because of the nature of the magazine and the man behind it (good work, gramps!), doors opened very quickly. Within a week, I was sitting with the content and new business division of NHN (Naver); within 10 days I was interviewing Sirgoo Lee, CEO of KakaoTalk. In 14 days was a rather nice writeup by Caro Winter at Bloomberg Businessweek on coercing virality. The product was to “gamify journalism”: we give you points that increase with engagement and sharing of content; points are depleted with consumption of content. You could buy points, but we would always match those points with a friend. A cookie-based mobile-first javascript wordpress site would do as initial test: to see if users would hit the “buy” or “share” button, essentially. The future was to be glorious: we would figure out where users are, geo-fence, collect data on sharing and interaction and make it an open API with a commercial license, a pan-Asian ad network… this is how we kill the paywall, long live the paywall…

The 500 startups angelList requirement was quickly filled out, along with the Y-combinator application. I most certainly did not make the Y-combinator cut, and met Dave McClure and got an interview if only because of very good friends in common. I would also subsequently iMessage spam him on start-up incubators in North Korea, but that’s for another time.

Point being, with all the signs, How Fucking Wrong I Was.

WHC

Issue Preview! Image by the fabulous WK

Issue Preview! Image by the fabulous WK

Press release: OTT messaging traffic will be twice the volume of P2P SMS traffic by end-2013 » Analyst Blog - Informa Telecoms & Media »

The volume of OTT messaging traffic is set to be twice that of P2P SMS messaging by the end of the year, according to data collected by Informa Telecoms &  Media.

Daily OTT messaging traffic has already overtaken daily P2P SMS traffic in terms of volume, according to newly collected data from Informa, with an average of 19.1 billion OTT messages sent per day in 2012, compared with an average of 17.6 billion P2P SMS messages.

By the end of 2013, Informa estimates that 41 billion OTT messages will be sent every day, compared with an average of 19.5 billion P2P SMS messages. There are far more P2P SMS users than there are OTT messaging users: There were about 3.5 billion P2P SMS users in 2012, according to Informa, compared with about 586.3 million users of OTT messaging. Each OTT user sent an average of 32.6 OTT messages a day, compared with just five SMS messages per day per P2P SMS user, meaning that OTT-messaging users are sending more than six times as many messages as P2P SMS users do.

(Yonhap Feature) Granddaughter of famed dissident revives symbolic magazine »

kakaotalk

"I decided to work on reviving the magazine because of a larger problem: the death of the newspaper and magazine industry. As someone who has worked in start-ups and private equity, I think it’s fairly uncontroversial that distribution and experimentation is important upfront," Won said, defending her decision to launch into digital publication rather than print.