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Further fueling the ongoing debate over the future of the news media and independent journalism, eBay founder and billionaire Pierre Omidyar last month committed $250 million to a news site co-founded by journalist and author Glenn Greenwald. Omidyar’s investment followed the announcement over the summer that Amazon founder and CEO Jeff Bezos had purchased The Washington Post, also a $250 million investment. The late Steve Jobs’s wife, Lauren Powell, and 29-year-old Facebook co-founder Chris Hughes are also pouring money into old and new media ventures.

Could this new band of news media owners shape a technology-led business model that will be profitable and protect the integrity of impartial, ideology-free journalism? Ultimately, according to Wharton experts, the ball will rest with the consumer.

Any new business model that those in the technology world would bring to the media realm would have to address the major pain points currently facing the industry. News organizations have “suffered a lot financially in the past couple of years,” says Wharton marketing professor Pinar Yildirim. Circulation numbers and advertising revenue have shrunk as both readers and companies turned their focus to the Internet. The industry has tried to adjust to the new normal — some newspapers and magazines have cut back on issues or the number of days they produce a print product. Other news organizations have started charging for online access. Still more have tried to add content that mimics what tends to be most popular on the web, especially entertainment-related coverage, Yildirim notes.

Omidyar has indicated that he was motivated more by a desire to protect independent journalism than the prospect of getting a return on his investment, at least for now. In a blog post published on his website last month, Omidyar wrote that his investment in Greenwald’s venture (tentatively called “NewCo.”) stems from his “interest in journalism for some time now.” In 2010, Omidyar founded Honolulu Civil Beat, a news website with a stated focus on “investigative and watchdog journalism.” Earlier this summer, he explored buying The Washington Post newspaper before Bezos became the winning bidder. Around that time, Omidyar said he began thinking about the social impact he could help create with an investment in “something entirely new, built from the ground up.”

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Bezos' "remote display" patent envisions tablets and e-readers that are just screens—power and processing is provided wirelessly by a central system.

US Patent & Trademark Office

It seems like everyone is trying to jump on the cloud computing bandwagon, but Amazon Chairman and CEO Jeff Bezos wants to take it to a whole new level. GeekWire reports that he and Gregory Hart have filed a patent for "remote displays" that would get data and power from a centrally located "primary station." The tablets or e-readers would simply be screens, and the need for a large internal battery or significant local processing power would theoretically be obviated by the primary station.

The patent sees processors and large internal batteries as the next major roadblocks in the pursuit of thinner and lighter devices. "The ability to continue to reduce the form factor of many of today's devices is somewhat limited, however, as the devices typically include components such as processors and batteries that limit the minimum size and weight of the device. While the size of a battery is continuously getting smaller, the operational or functional time of these smaller batteries is often insufficient for many users."

The full patent is an interesting read, since it presents other potential use cases for these "remote displays" that wouldn't necessarily need to wait on this theoretical fully wireless future-tablet to come to pass. For example: a camera or sensor could detect when a hand is passed over an e-reader display and respond by turning the page. A touch-sensitive casing could detect when a child is handling a display by measuring things like the length and width of their fingers and then disable purchasing of new content or the ability to access "inappropriate" content.

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David S. Rose

By 2045, human beings will become a new species, half human, half machine.

Or so futurist Ray Kurzweil believes. He argues that by looking at the how tech is being developed that one day we will sort of merge with machines and society will reach a state of "technological singularity."

That's because, in part, computer processors double in speed every year while they get increasingly smaller. One day, we'll inject tiny computers into our bodies like medicine or add them to our brains to make us smarter. 

In the meantime, tech is always getting faster, cheaper, and spreading to more markets and industries. And this creates a lot of opportunity for startups, until the day when we all turn into cyborgs.

"Because of this totally changing nature of society and the community business world, any company designed to succeed in the 20th century almost by definition has to fail in the 21st century," David S. Rose, Associate Founder of Singularity U and founder at Gust, tells Business Insider.

So what does that mean for startups today?

In order to prepare for the singularity, Rose says, entrepreneurs need to figure out what technology will change and over how long, determine what effect that technology will have on a particular market, figure out what holes there will be to fill, and then actually build a business that will intercept that market hole when it comes around.

Amazon, Rose says, is the perfect example of a company that built a business with the singularity in mind.  

Amazon CEO Jeff Bezos foresaw a world where there was no longer a need for physical bookstores, so he decided to build one online. Once Bezos nailed down the distribution side of books, he had to start thinking about ways that competitors could kill his business. Given that the cost of storage, networks, and other digital technologies were dropping, Bezos realized the potential in digital books.  

Enter the Kindle.

Instead of waiting for a company like Apple to take him out, Bezos took himself out.

"He deliberately shot himself in the foot because he knew that if he didn't do it, someone else would," Rose says.

And someone eventually did. Apple announced in 2009 that it would be coming out with an iPad, and shortly after that, the tech industry proclaimed that the Kindle would die, but it didn't

Even though Amazon doesn't release its exact number of Kindle sales, the company has continued to expand its Kindle lineup and announced in November that worldwide Kindle device sales over the holiday shopping weekend doubled

Obviously, Amazon continues to face competition from the likes of Apple and Google. But Amazon is the perfect example of what a Singularity-focused business looks like, Rose says. 

In short, here's how startups should prepare for the Singularity moving forward:

  • Figure out where the ball will be a few years down the road.
  • Determine how to hit that ball when it arrives.
  • Figure out what could potentially take you out, and then take yourself out. 

SEE ALSO: Here's What Futurist Ray Kurzweil Thinks Life Will Be Like In The Next 20 Years

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929005910_a12cbbc1ec

Editor’s Note: A guest post by Uzi Shmilovici, CEO and founder of Future Simple, the company behind Base CRM.

Strategy. Unfortunately, it suffers from a bad reputation among startups. It is associated with consultants who are paid millions of dollars only to come back with a two-by-two matrix of animals. Not that there is anything wrong with it. Some of my best friends are consultants.

However, strategy is crucial for startup success. Startups usually operate in an environment of constrained resources while competing with strong incumbents. Hence, the right strategy can be a matter of life and death. This post is the first in a series of posts that will explore concepts in strategy and how they apply to startups.

The first concept we’ll look at is the “Innovator’s dilemma”, a term coined by Clayton Christensen from the Harvard Business School. The innovator’s dilemma discusses a situation in which there are established incumbents in a specific market who are investing in sustainable innovations — these are incremental improvements to an existing product. Usually, they are doing that to support the incremental needs of their customers.

They are then faced with a new entrant to the market that introduces a disruptive innovation. The new entrant attacks only a small part of the incumbents’ business, usually the one in which the margins are very low. At this point, the incumbent decides not to compete in this business anymore because they don’t want to invest in defending their least profitable business and/or are afraid of cannibalizing their main business. As a result, the new entrant is then able to capture a significant market share in that specific segment.

What happens next is funny. After it captures the low end of the market, the entrant moves upstream to the next part of the business. Again, the incumbent is reluctant to compete in that segment which is now its newest least profitable segment. The entrant then captures a significant market share in this second segment.

What happens next is funny. OK, you got the point…

Before we continue, it is important to understand the types of disruptive innovation that exist. There are four: a new product, a new technology to produce a product, a new way to distribute a product and a new way to provide services. The entrant can introduce a disruptive innovation along one or more of these dimensions.

Why would anyone buy books on the internet?

1995. The commercial internet is in its early days. Jeff Bezos decides to start selling books online. At that time, the biggest booksellers in the United States are Barnes and Noble and Borders.

Bezos understands that he can disrupt the book industry by taking advantage of the internet as a new distribution channel. Amazon launches and grows exponentially. It takes B&N two years to open its own website. What took them so long? Well, not too many people buy on the internet and they are far better investing their resources in their major business — the retail stores.

It takes Borders three years to launch their website. At this point, Amazon is far down the road. In 2001, Borders decides let Amazon run their website for them. After all, the internet is just a small percentage of their sales anyway.

On February 16th, 2011 Borders files for bankruptcy.

If you’ll look around, you’ll find many industries that experienced or are experiencing a similar type of disruption. A small sample from internet startups — Zynga : Gaming Companies, AirBnB : Hotel Chains, Box : Sharepoint.

The Innovator’s dilemma and your startup

There’s a reason why so many internet startups were able to use the concepts from the innovator’s dilemma. The internet provides an amazing platform to build disruptive products, and more importantly, create and leverage new distribution channels.

So, how should you think about the innovator’s dilemma? Here are four key takeaways:

  1. Understand what is the source of your disruption. Is it a new product or a new way to distribute an existing product? This will help you understand whether you are really disrupting the market or just building an incremental product.
  2. Pay attention to opportunities in new distribution channels. Zynga’s biggest innovation was taking advantage of Facebook as its distribution channel before the traditional gaming companies could say “Mark Zuckerberg”.
  3. Start by marketing to the group of customers for which the incumbent in your industry has the lowest margin or the lowest interest to defend. Don’t go head to head on their most important customers. They will crush you.
  4. Remember these lessons when you are at the top.

Figuring out how to compete in your market will take a lot of time and effort. Remember that these frameworks are just tools to help you think through the problem and will not provide you with a magic answer. You’ll have to discover it yourself.

Image credit: isdky — Brian Barnett, Flickr

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TEDxBradford - Tim O'Reilly - Creating More Value Than You Capture

Tim O'Reilly is the founder and CEO of O'Reilly Media, largely considered to be the world's foremost computer book publisher. Tim has built an exceptional reputation as one of Silicon Valley's most farsighted individuals, famously defining his work as "changing the world by spreading the knowledge of innovators" and to "amplify the faint signals of the alpha-geeks." Tim's has been are the forefront of almost every noteworthy development in computing for over 30 years; publishing ebooks, the first commercial websites, popularising the open source and web 2.0 movements and galvanising technologists into activism under the umbrella of Gov 2.0 and Code for America. Though, not a household name like Steve Jobs or Jeff Bezos, Tim is widely understood to be "The Oracle of Silicon Valley". Tim has a special connection with Bradford, with fond memories of the city during visits to his maternal grandparents. So, it's a special pleasure to welcome Tim as our guest for TEDxBradford2012, joining us via Skype from Washington DC. He speaks about "Creating More Value Than You Capture". In thespirit of ideas worth spreading, TEDx is a program of local, self-organized events that bring people together to share a TED-like experience. At a TEDx event, TEDTalks video and live speakers combine to spark deep discussion and connection in a small group. These local, self-organized events are branded TEDx, where x = independently organized TED event. The TED Conference provides general guidance <b>...</b>
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Editor’s Note: This guest post is written by Doug Pepper, who is a General Partner at InterWest Partners where he invests in SaaS, mobile, consumer Internet and digital media companies. He blogs at dougpepper.blogspot.com.

Everyone expects startups, even successful ones, to undergo a cycle of hype, disappointment and ultimately growth on the way to a sustainable business. But what about new technology markets themselves? Does the growth of a new market follow a similar pattern?

Fred Wilson recently wrote about the twists and turns that startups face (expanding on Paul Graham’s astute “Startup Curve”). I’d like to take those ideas further and describe the “Market Curve” — a similar path that new markets take on the path to sustainability.

The chart below shows the basic pattern. Markets often experience a “Hype Cycle” of overheated expectations followed by a trough — call it “Facing Reality.” If the market ultimately succeeds, the next phase is “Liftoff.” But troughs don’t end until several ingredients are present. First, there must be broad adoption of core underlying technologies that support the market. Second, there needs to be compelling reference applications to drive mainstream adoption. Finally, there must be a pioneering company, typically with a charismatic leader, that leads the market out of the trough. Obviously not all markets are destined to make it out of their trough.

For entrepreneurs and investors the most exciting element of the Market Curve is that, once the trough ends, strong technology markets ultimately prove more valuable than anyone imagined even during the Hype Cycle. Here are a few examples of how different technology markets fit into this curve.

Internet: Broadband Penetration and YouTube

The late ‘90s saw extreme hype surrounding the Internet but the market was simply not yet ready to deliver. With only five million fixed broadband connections in 2000 the underlying technology wasn’t there. Plus there were very few truly compelling applications. The Internet entered its “Facing Reality” trough in the early 2000’s and failed to live up to initial expectations.

But, by 2005, there were 43 million U.S. broadband connections and addictive applications like YouTube and eventually Facebook. That year Jeff Bezos launched Amazon Prime and convinced mainstream consumers that they could conveniently and safely shop for anything online. Since then, the Internet has proven to be more transformative to our civilization and more ingrained into mainstream culture than ever imagined.

Amazon has surfed the wave of the Internet’s Market Curve almost from the very beginning. Their stock price clearly follows this pattern.

Mobile: The iPhone and App Store

Between 2000 and 2005, nearly every VC firm had Mobile as a core investment sector. And, with few exceptions, those investments were unsuccessful. During that time, mobile networks were slow and unreliable (remember the CDPD network?), devices were clunky and carriers thwarted innovation. Clearly, that all changed when Steve Jobs launched the iPhone in 2007 and replaced the carrier decks with the App Store. And, with more than one billion mobile broadband subscribers globally, the post-PC mobile computing industry is in a “Liftoff” phase that is accelerating beyond wildest expectations.

SaaS: Salesforce.com and Successfactors

When I first joined my VC firm, InterWest Partners, in September 2000, the Application Service Provider (ASP) concept was all the rage. These ASPs offered off-the-shelf software to enterprises delivered over the Internet. However, between 2001 and 2007, adoption was slow because enterprises were more concerned with security risks than the benefits of hosted software.

Over time, Internet security and reliability improved and several pioneering companies, including Marc Benioff’s Salesforce.com and Lars Daalgard’s Successfactors, emerged with proprietary software applications that proved the benefits of SaaS delivery. Today, this market has broadened into a larger paradigm called Cloud Computing with corporations shifting nearly every aspect of their IT infrastructure into the Cloud. This could not have been imagined during the Hype Cycle of this market.

Market Failures: Troughs That Never End

Of course, not every market recovers from its trough. For example, while there are certainly specific nano technologies that are fundamental to many products, a broader nanotechnology market hasn’t emerged. It’s not clear that it ever will. And, in my opinion, Cleantech currently sits at the bottom of the trough. Because of extreme capital intensity, long sales cycles and wavering enterprise and consumer interest in “Green,” this market has become challenged. The question is whether Cleantech will ever emerge from the depths of the trough where it sits today and become the powerful market that John Doerr, Vinod Khosla and many others had hoped.

In the chart below, I show where a number of current technology Markets sit along the Market Curve.

Takeway: Have Conviction During the Trough

The best investors recognize and take advantage of these troughs and the best entrepreneurs lead Markets out of the trough. When SaaS was in the trough, Marc Benioff built Salesforce.com and Dave Strohm invested in Lars Daalgard at Successfactors. When the Internet was in the trough, Jeff Bezos built Amazon.com and Roelof Botha invested in YouTube. In the case of Steve Jobs, he invented a product and pioneered a business model that altered the Mobile market and led it out of the trough. The key is to have conviction about a Market and, as an investor, look for the technologies, products and leaders that will end the trough. Or, as an entrepreneur, launch market leading products and business models to end it yourself.

Marketo is an example of an investment my firm, InterWest, made during a trough. During the late 1990′s, there was a peak of excitement around Marketing Automation with companies like Annuncio, Rubric, Marketfirst and ePiphany. But, the market was not ready. Marketers were not adopting Internet techniques for acquiring customers and they didn’t have sufficient budgets to adopt and implement enterprise software.

By 2006 when InterWest invested in Marketo, the company’s founders believed, and my colleague Bruce Cleveland and I agreed, that the market had progressed along the Market Curve. Marketers had begun consistently utilizing search engine marketing, landing pages, email marketing, and online content marketing … all the activities that are harnessed and optimized by Marketing Automation and Lead Nurturing products. And, the SaaS delivery and business model meant that marketers could quickly see ROI without big budgets or IT resources.

We had conviction that that the Marketo team would create the compelling products needed to lead the Marketing Automation market out of the trough. Today it seems clear that this market will be larger than expected even during the initial Hype Cycle.

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Christopher Brown Opscode

You never know how big something will be while you're working on it, says Christopher Brown, one of the guys that helped build Amazon's cloud. 

Brown is now the CTO of a hot startup he co-founded, Opscode. But along the way he worked at Microsoft three times and at Amazon once -- just long enough to help build EC2.

The time was 2004. Amazon already had cutting edge tech. "Amazon is a high tech company that just looks like it sells books," he laughs.

The powers that be wanted to somehow make money on their IT.

Rick Dalzell (CIO at the time) and Chris Pinkham (the vice president of IT Infrastructure) had been pondering a paper written by Amazon website engineer Ben Black that summarized the idea, says Brown.

CEO Jeff Bezos needed almost no convincing. He "was on board from the beginning," says Brown. The team "had a plan to build and sell it as a service sell from Day 1," he says.

There was a catch. Pinkham was moving back to his home country, South Africa. But Amazon convinced him to keep his job and build EC2 from there. 

So Pinkham invited Brown to come with him. Brown packed up his family and left the U.S.

They assembled a team in South Africa and for two years worked in Cape Town. Brown says. "From our corner, we had no idea EC2 was going to be this big."

Now that EC2 has become the 800-pound cloud gorilla, Brown says he still impressed with it. "It's part of Amazon's culture, the way they stay ahead of the competition."

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