Prediction Markets

Is it a good idea to encourage ALL employees to trade in these markets? Should insiders and/or highly uninformed people be allowed to trade? Do they help or hurt the market?

First of all, prediction markets would never be allowed in my workplace, so I’m a little bit biased against them. I also think they are a more or less a waste of time in the workplace, and can be a gigantic distraction.

I recognize, however, that my opinion on whether or not they are worthwhile is not what is being asked here. If do are going to have prediction markets in your workplace, you should allow everyone to use them, especially if you’re looking for diversity in experience or viewpoints, and the trades being made are anonymous. Having more diversity should aid in the accuracy of the market, and encourage participation. If you’re giving away tangible rewards for the winners, maybe you limit who can win the awards, so that you are not giving them to senior leaders. That would probably hurt morale and end up discourage participation in the markets.

Threadless Case

In what other industries or areas would Threadless’ community-driven product development model work well? And not so well?

I think that Threadless’ business model would work pretty well with other articles of clothing, or art, posters, or anything else that requires artistic touch for design, but yet can still be produced on a semi-significant scale (not neccesarily mass produced ala something you might find at Wal-Mart, but you need some volume). It might also work with some IT products as well, specifically video games.

It would not work well with commodities, made-to-order goods, or products that don’t require a lot of design work. The benefit in the model is in having people work for you, and sharing the rewards if they have good designs. None of those above categories can give you that.

Social Networking Cases

Online social networks have become ubiquitous in the past few years. What forms of value do users get from these services and who is most likely to sign up on LinkedIn versus other sites?

Clearly users feel that they are getting some value from social networking. According to VentureBeat.com, Facebook alone had over 115 million users as of last April. What each person is getting out of these sites is likely slightly different, depending on which sites they use, who their friends are, and how often they visit the site. Facebook is a way to keep up with friends or find out about upcoming events. Sites such as Match.com are geared strictly towards dating. LinkedIn focuses on professional development and networking. Other social networking sites focus on niche subjects. Regardless of the subject, people enjoying networking with friends, like-minded people, or people with common interests. As people have become more comfortable with the internet, they have become more comfortable with posting their information publically, and have turned sites such as Facebook into major players in terms of media and mass appeal.

LinkedIn specifically targets business and professional users, as opposed to Facebook, which is more of a social site (although many companies and entertainers have Facebook sites and use the site for low-cost marketing). People who use LinkedIn are looking to increase their business network or develop contacts. LinkedIn has also been able to charge certain users such as headhunters or salespeople for better features, something that Facebook has not been able to implement.

On a side note: The most recent issue of New York Magazine has a pretty good article on Facebook. It might be worth checking this out before class:

http://nymag.com/news/features/55878/

How do Wikipedia’s processes for creating and modifying articles ever lead to high-quality results?

At first glance, Wikipedia’s open access policies would seem to lead to a lot of mistakes and inaccurate data on the site. Anyone can start or edit an article (although there are now some restrictions to this rule), they can also nominate an article for deletion if they feel that it does not meet Wikipedia’s standards. (A Wikipedia administrator has the final say on whether something is actually deleted.) All entries are editable, and all edits are reversible. Combine open access with dedicated and opinionated users, and the result is probably an endless loop and editing and reediting, particularly on sensitive or controversial topics.

In practice, I think whether or not the site has quality information comes down to whether “heavy” users are willing to police themselves and keep data relatively accurate. Having an active community of users who are dedicated to keeping the site’s neutral point of view probably helps as well. It also helps that the site promotes having verifiable sources whenever possible, and that users can search old versions of articles in case they have doubts about the accuracy of what they’re reading.

I don’t know how Wikipedia prevents persistent or determined parties from constantly damaging data on certain topics, but in an overall sense, the information on Wikipedia seems to be fairly accurate. I’ll admit to not using the site that frequently, but I don’t remember seeing a lot of obvious errors. Of course, if I’m on the site, I’m usually not looking up something that I already know a lot about. If I know a lot about something, there’s no need for me to look it up on Wikipedia.

Even if the information on Wikipedia is fairly accurate, there are times when I need to be absolutely sure. If I really need to be sure of the accuracy of something, I’m certainly not going to rely on Wikipedia. I’m going to find a better source of information.

What are the advantages and disadvantages of implementing internal versus external employee blogs in a corporate setting? Are there certain industries where one of these strategies makes more sense?

Internal blogging gives employees the ability to post information about their companies, customers, and products, and to share best practices with the rest of their company. This seems like a good thing to me. However, if there is no QA on the information, you tend may not be disseminating the best information to your company. You may get a lot of information from the people who actually put forth the effort to update the blog or are the most opinionated or consistent. It also requires management to give up control of an “official” information source, which they may not be willing to do.

External blogging allows you to get immediate and honest feedback from your customers, suppliers, and interested parties. However, if you put out a subpar product, you’re going to have a lot of negative information out there, and it may be attached to your website, making it freely available to people researching your product. (You can’t really edit out the negative information either, as that is likely to create a negative backlash).

I would think in an industry that is heavy on repairs or tech support (computers come to mind), having a blog where employees can enter problems that they are seeing would allow the company to quickly identify common problems and fixes as they emerge, rather than have to have analysts identify the problems after they’ve been ongoing for awhile. Internal blogs would make more sense than external blogs in that situation.

iPod/iPhone Case

Has the digital music market irreversibly tipped in Apple’s favor?

Hmm. This didn’t post a second ago, and I’m not sure why. I’ll try again (sorry if it’s more or less a repeat).

The short answer is no. “Irreversibly” is a pretty strong term. While it seems that everyone has an iPod or iPhone at the moment (except for Connor and his Zune), it strikes me as being a bit of a fad. At some point, someone will figure out a better design for a portable device, or a better way to distribute music, and Apple will have competition. Remember, the Walkman was pretty cool too at one point.

Brightcove Case

What are the strengths and weaknesses of Brightcove’s business model?

Busy week. It’s going to be a short post.

Strengths:

Brightcove is one of the first movers in the internet video market, and has established itself as a major player. This may help it lock in some of the larger publishers and other content providers. It also sells internet advertising, which for the time being sells at a premium to other forms of advertising.

Weaknesses:

I think Brightcove is trying to get into too many areas at once. This is demonstrated in the case when it mentions that they are having fights amongst senior management over the direction of the company. I’ve read the case, and would have some trouble coming up with a short answer of what exactly Brightcove does. (It took the case about 5 pages.)

The other big problem that I have with the company’s model is that they have to keep pouring resources to make sure that they have the best technology. They’re now competing against Google. Google has a lot of money and engineers, and if it decides that it wants whatever space Brightcove ends up carving out, it can make life pretty miserable for Brightcove.

DoCoMo and Google Cases

1. Is DoCoMo wise to offer its existing mobile phone rivals access to FeliCa?

DoCoMo is likely offering its FeliCa service to its rivals in an attempt to make it the preferred platform for automated payments. If its rivals adopt the technology as well, it will be more likely to be accepted by merchants since there will be a larger number of customers with access to the service. Merchants are not likely to install multiple readers at their places of business, so it will be critical to be the first company to gain significant acceptance from the public. Being the first mover isn’t critical, but being the first SUCCESSFUL mover definitely is.

In addition, by charging liscensing fees to its rivals, it is able to offer its products with FeliCa chips on a wider scale (possibly gaining acceptance), and be able to offer its own products at a lower price than its rivals. It also has the added benefit of making a profit for DoCoMo (through its interest in FeliCa) on both its products and its competitors’ products.

I’m not sure; however, that rivals are going to want to jump on board and subsidize one of their competitors, especially if it means handing them the market for mobile payments in Japan. This could be a pretty sweet deal for DoCoMo, and if it can sell FeliCa to its rivals, it ought to do so.

2. Is search a winner-take-all business?

I don’t believe that search is a winner-take-all business. The switching costs are too low for users. While seemingly everyone is using Google at the moment, and “Google” has become a verb, people could switch to another search engine or service relatively quickly. It’s users that drive Google’s business, even if the vast majority of the time they are merely “free-riding” the network. If the users go, the advertisers will follow. While I don’t know of anything at the moment that will supplant Google, it just seems to me that with the low barriers to entry, and the potential rewards that come with paid search, that someone will make a better product than Google in the future, or at least take away some of its market share.

EA Case

Since the writing of the Electronic Arts Case the Sony Playstation 3 and the Nintendo Wii have been released and both have online gaming capabilities. What’s your assessment of the current online gaming market?

I’m going to confess that I don’t know a whole lot about online gaming. I’ve never really used it outside of some games like blackjack or chinese checkers on Yahoo! Games, which isn’t exactly what the case was about. While I have a Playstation2 that has sat in a closet for 3 years or so, I’ve never really had an interest in playing my games over the internet.

However, for gaming enthusiasts, I can see how online gaming is a very important feature that they would be willing to pay for (via flat fee or a subscription model, not to mention all of the “optional” accessories that you must add). It’s also a feature that the console makers (and the larger game makers) are going to have to offer in order to sell their products. Playing against another person online is a lot more fun than just shooting the same vampires over and over or beating the computer for the 1,000th straight time in Madden. So while I’m sure that it’s popular to play games online, I don’t have a clue about which consoles have better titles or which have better online capabilities, who is winning or losing, or where the industry is heading.

Netflix Case

Since the publishing of this case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?

Although I’m a Netflix customer, I’ve never used the VOD feature. According to the website, I get that with my $8.99 monthly “one at a time” subscription, but really, it doesn’t add any value to me, since I don’t use the VOD for my computer. While the early adopters may have adopted VOD, it hasn’t caught on with the rest of us.

Netflix pretty much had to get into this market because they could not afford to let another company come along and establish themselves as the market leader in VOD. Before I looked at the transcript of the company’s most recent conference call, I doubted that Netflix was actually making money off of this. It stuck me as another “wave of the future” idea that everyone seems to think is coming, but never seems to materialize (along with flying cars and food that comes in pill form).

However, Netflix seems to have 2 means of streaming video, and both seem to be adding value to the company. First, users who have at least the $8.99 monthly plan can stream unlimited video to their computer, as well as use the traditional DVD delivery service. Second, users can purchase a device that allows them to stream a smaller, yet substantial library of Netflix movies to their televisions. Looking at the company’s financials, Netflix is doing well in both of these areas, customers are up, revenue is up, and most importantly, earnings are up 36% year-over-year for the 4th quarter. The company’s management credits VOD for the outstanding results, and sees VOD as the wave of the future. Clearly, the company has found a way to successfully integrate VOD into its existing business model.