Facebook

I want to do frandship with you…

facebook-logoThis column should have ideally been written by a woman, given that it concerns what women experience on the social media as well as on the internet. Many women receive random friend requests on Facebook from men stating: “I want to do frandship with you,” or something like “I want to be frands with you”.

Of course it is safe to say that men who send out such requests do not really understand the basic etiquette that one needs to follow on Facebook and other social media. Their English language skills are nothing to write home about. And honestly, I am being a tad euphemistic here.

Nevertheless, there is enough anecdotal evidence to suggest that men who send out such friend requests do not really give up that easily. Even though, their friend requests keep getting rejected, they keep sending out newer ones. Some of them even end up as proper stalkers.

Why is that? Nobel Prize winning economist Alvin E. Roth has a possible explanation in his new book Who Gets What and Why—The Hidden World of Match Making and Market Design. As he writes: “Think of an Internet dating site on which women with appealing photos receive far more messages than they can answer and men find that very few of their messages draw responses. This causes men to send more, and hence more superficial, messages and women to respond to fewer and fewer of them.”

While Facebook is clearly not a dating site, Roth’s logic applies perfectly to the random friend requests that are sent out on Facebook. And this explains to a large extent why some women do not have their pictures as profile pictures on Facebook. It just attracts the wrong kind of attention.

The interesting bit is that the same phenomenon plays out in a different way on matrimonial websites as well. During the course of last week, I met two friends, who, rather late in life have started using matrimonial websites in their quest to get married quickly. The female friend complained that she was getting way too many proposals, and it had become difficult for her to separate the wheat from the chaff.

The male friend on the other hand was disappointed with his search and felt that trying to get married through matrimonial websites was a waste of time. He had been getting proposals at a very slow rate. And this was happening despite him showing interest and sending out many proposals.

So, what is happening here? As Roth writes: “At many interest dating sites…attractive women get more emails than they can answer. The men, who find that many of their emails go unanswered, react by sending more emails.”

Further, unlike approaching a woman in person, it is very easy to send across a proposal over the internet. Hence, many end up sending too many proposals. But as Roth writes in the context of dating websites (and which I feel applies equally to the Indian matrimonial websites): “These emails become less informative, because the men submitting them are less likely to study the information  contained in each woman’s profile and how best to approach her. The women in turn reply to a smaller and smaller percentages of the messages they get, and the men respond by sending even more, and even more superficial, messages.”

This essentially leads to the collapse of the matrimonial market on the internet. Given that messages can be easily sent, more and more messages are sent and ultimately nothing happens. As Roth writes: “Economists call such superficial messages “cheap talk.” When talk is cheap, it doesn’t reliably signal anything.” It leads to congestion setting in, “and that can make it impossible for participants to identify the most promising alternatives the market has to offer.” And that makes the entire situation quite tricky for both men and women looking to get married.

(Vivek Kaul is the writer of the Easy Money trilogy. He tweets @kaul_vivek)

The column appeared in the Bangalore Mirror on August 19, 2015

Technology doesn’t tell us how to make best of use of technology

SmartphoneThere is a personal reason behind writing this column. Over the last few weeks I have opted out of all the large WhatsApp groups that I was a part of.
This was a conscious decision in order to concentrate on the work that I do. The phone constantly kept buzzing with forwards, pictures and videos being sent all the time on weekedays. Over the weekends, the men got into arguments primarily centred around Narendra Modi.
This was a constant distraction. Briefly I tried turning the notifications off. But there was always the tendency to keep checking WhatsApp. Given this, I finally opted out of these groups.
We live in a day and age where there is an information overload. Hence, more than the ability to gather information per se, the ability to sift through it has become more important. As Pico Iyer writes in The Art of Stillness: “The amount of data humanity will collect while you’re reading this book is five times greater than the amount that exists in the entire Library of Congress. Anyone reading this book will take in as much information today as Shakespeare took in over a lifetime.”
Also, a lot of information that we are exposed to (like constantly receiving messages on WhatsApp or emails or calls for that matter) essentially ends up disturbing us, sometimes in ways that we perhaps don’t even understand.
As Iyer writes: “Researchers in the new field of interruption science have found that it takes an average of twenty-five minutes to recover from a phone call. Yet such interruptions come every eleven minutes—which means we’re never caught up with our lives.”
In fact, researchers have been trying to figure out the impact that technology has on our working lives. And the results merely state the obvious—that we can’t multi-task.
As Bob Sullivan and Hugh Thompson write in a column in The New York Times: “There’s a lot of debate among brain researchers about the impact of gadgets on our brains. Most discussion has focused on the deleterious effect of multitasking. Early results show what most of us know implicitly: if you do two things at once, both efforts suffer.”
Hence, trying to do two things at the same time is not the best way to operate. “In most situations, the person juggling e-mail, text messaging, Facebook and a meeting is really doing something called “rapid toggling between tasks,” and is engaged in constant context switching,” write Sullivan and Thompson. And this is exactly how most of us who spend their working days in front of a computer tend to operate. But any kind of switching comes with its share of costs.
In fact, researchers Christopher Charbis and Daniel Simons carried out a very interesting piece of research to show how difficult it is to even spot something else when one is engaged in doing a certain task.
As they write in their book The Invisible Gorilla – And Other Ways Our Intuition Deceives Us:“When people are focussing attention (visual and auditory) on (a) task…they are unlikely to notice something unexpected.”
Chabris and Simons made a small film which basically had students of Harvard University playing basketball. One team was wearing white and another team was wearing black.
After they had made the film, they ran a small experiment, where they asked participants to watch the film and count the number of passes made by the team wearing white, ignoring the passes made by the team wearing black.
The participants were asked after around a minute, if they had seen something else as well. And nearly 50% of them they hadn’t. As Daniel Kahneman writes in Thinking, Fast and Slow: “The viewers of the film are instructed to count the number of passes made by the white team, ignoring the black players. This task is difficult and completely absorbing. Halfway through the video, a woman wearing a gorilla suit appears, crosses the court, thumps her chest, and moves on. The gorilla is in view for 9 seconds. Many thousands of people have seen the video, and about half of them do not notice anything unusual.”
As Margaret Heffernan writes in Wilful Blindness – Why We Ignore the Obvious At Our Peril: “The experiment has been shown repeatedly, around the world, in front of diverse audiences. I first saw it in Dublin, in an audience full of executives. Like them, I was so focussed on counting the passes I never saw the gorilla.”
Chabiris and Simons did not believe the results initially. “Simons was so stunned by the results that he says that for several years afterwards, he still kept expecting people to spot the gorilla,” writes Heffernan.
The point being that it is difficult to do two things at the same time. And that is precisely what technology makes us do. We walk on the road while messaging others. And at times we are so focussed that we aren’t aware of the traffic around us. People drive while talking on their mobile phones.
There is another interesting example that I have recently come across. When a car stops at a red light, chances are the driver will take out his smart phone and start fiddling with it. More often than not he misses noticing that the light has changed from red to green and its time to move on. And it is only when other cars behind him start honking he wakes up.
Iyer sums it best when he says: “The one thing that technology doesn’t provide us with is a sense of how to make the best use of technology.” It is time we realized that.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on www.firstpost.com on Mar 18, 2015 

Why Facebook liked WhatsApp

 facebook-logoVivek Kaul 

The messaging company WhatsApp was recently bought by Facebook for a whopping $19 billion. The owners of the start-up will receive $4 billion in cash, $12 billion in Facebook stock and the remaining $ 3 billion in the form of restricted stock units, which will vest over the next four years.
In rupee terms, Facebook paid close to Rs 1,18,000 crore (assuming one dollar is worth Rs 62.2) for Whats-App, a company with just 45 employees. This amount is greater than the individual budgets of most ministries of the Indian government for the next financial year, except the defence and the finance ministries.
So what is it that made Facebook pay so much money for WhatsApp?
Lets compare this with Instagram, a company that Facebook acquired in 2012 for a billion dollars. Interestingly, Instagram had just 13 employees, when it was acquired. Why did Facebook a billion dollars for a company with just 13 employees and 19 times more for another company with just 45 employees?
Computer scientist and philosopher has an explanation for it in his book Who Owns the Future? As he writes “When it was sold to Facebook for a billion dollars in 2012, Instagram employed only thirteen people…Instagram isn’t worth a billion dollars just because those thirteen employees are extraordinary. Instead, its value comes from the millions of users who contribute to their network without being paid for it. Networks need a great number of people to participate in them to generate significant value. But when they do, only a small number of people get paid.”
In the above paragraph replace Instagram with WhatsApp and the logic stays the same. As of the end of 2013, WhatsApp had around 400 million users worldwide. So Facebook was essentially paying to acquire the number of people who used the messaging service rather than the knowledge and the technological prowess of the people who ran it.
But wouldn’t it be cheaper for Facebook to just build a similar application? In fact, it wouldn’t take much effort on the part of Facebook to develop a similar and even a better application than WhatsApp. So why pay so much money for it?
In fact, WhatsApp like Facebook and Twitter before it is a classical example of what economists like to call a network externality. This is a situation where demand for a product creates more demand for the product.
As economist Paul Oyer writes in his new book “A product has a network externality if one added user makes the product valuable to other users…The rise of the internet has made network externalities more apparent and more important in many ways…Perhaps the best example of the idea is Facebook. Essentially, the only reason anyone uses Facebook is because other people use Facebook. Each person who signs up for Facebook makes Facebook a little more valuable for everybody else. That is the entire secret of Facebook’s success—it has a lot of subscribers.”
Again, replace Facebook with WhatsApp in the above paragraph and the logic stays the same. What made WhatsApp very valuable is the fact that it has close to 400 million users. Hence, even though Facebook can create a similar application at a much lower price, it can’t get 400 million people to use it.
Take the case of Google, which launched Google+ a few years back to take on Facebook. The experts felt that Google+ was a better product and some of them even went ahead and predicted that people would now move on from Facebook to Google+. But that did not happen.
As Niraj Dawar writes in Tilt – Shifting Your Strategy from Products to Customers “For those who want to be a part of a social network, it makes sense to congregate where everybody else is hanging out. There is only one village square on the Internet, and it is run by Facebook. Being on a different square from everyone else doesn’t get you anywhere—you just miss the party.”
This was the main reason why people did not move from Facebook to Google+, even though it may have been the better product. “Google + may offer features such as greater privacy or group video chat,” writes Dawar, but it fails to “create the positive feedback loop, because it makes sense for everybody to be where everybody else already is.”
So even though Google+ was believed to be superior to Facebook, the users continued to stay put with Facebook. As Oyer puts it “Google+ has signed up many users, but it has not put any real dent in Facebook’s dominance. Nobody is going to switch to Google+ from Facebook unless most of her friends do, too, and it seems very unlikely that whole groups of friends will act in a coordinated fashion to move from one social network to another.”
Given this, even though Facebook could have launched a better version of an application on its own, there was no guarantee that people would start using it. Chances were that they would have continued to use WhatsApp. And that explains why Facebook paid a bomb for it.
Also, in a way Facebook was just buying out prospective competition. Many youngsters have their parents and family, as friends on Facebook. This obviously limits the frankness of the conversation that they can have with their “real” friends.
This has led to teenagers preferring to use messaging services like WhatsApp rather than Facebook. In fact, in a recent earnings call Facebook admitted that teens were spending lesser time on its service and were fleeing to messaging applications like WhatsApp WeChat etc. Mark Zuckerberg, the chairman of Facebook, believes that kids are fleeing the format because parents spam their walls with inspirational quotes and tagging them in photographs which they really do not want their friends to see.
Another explanation on why teenagers are fleeing Facebook was offered to me by a friend who has worked extensively in the technology industry in the United States. When it comes to technology, Facebook is not a light app, like the chat sights. There is a newsfeed comprising of various kinds of data and there is always a chance that things get lost to your intended audience under large piles of such data. Also, it might need more memory, something that the lowest priced smartphones, which the kids are likely to use ave may not have.
Due to all these reasons Facebook paid $19 billion for WhatsApp.

The article originally appeared in the Mutual Fund Insight magazine dated April 2014

 (Vivek Kaul is the author of Easy Money. He can be reached at [email protected]. He would like to thank Somnath Daripa for providing some excellent thoughts on the topic)

Google Plus versus Facebook: How a big brand can win even without the best product

facebook-logoVivek Kaul  
Google+ was launched sometime in 2011. It got rave reviews and many technology enthusiasts claimed that it was much better than Facebook and advised users to switch. More than two years later Facebook continues to be the leader and Google+ is at best an also ran.
The moral of the story is that a better product doesn’t always win in the market place. And there are various reasons for the same. In case of Google Plus versus Facebook it was a clear case of the network effect.
As Niraj Dawar writes in Tilt – Shifting Your Strategy from Products to Customers “For those who want to be a part of a social network, it makes sense to congregate where everybody else is hanging out. There is only one village square on the Internet, and it is run by Facebook. Being on a different square from everyone else doesn’t get you anywhere—you just miss the party.”
This was the main reason why people did not move from Facebook to Google+, even though it may have been the better product. “Google + may offer features such as greater privacy or group video chat,” writes Dawar, but it fails to “create the positive feedback loop, because it makes sense for everybody to be where everybody else already is.”
Hence, people stayed on Facebook because everyone else was on it as well. So, even though most people may have the mandatory Google+ account, but ask them where they spend a good amount of their social networking time, and the answer you will get is Facebook.
An excellent example of the network effect being the main reason for the success of a product is the WhatsApp messenger. Despite the fact that there are other players in the market which are advertising very heavily, WhatsApp continues to hold its ground.
Another area where the network effect plays out these days are the movies. “With social networks’ rapid dissemination of information, these types of brand network effects have been turbocharged—they occur more rapidly and forcefully than ever before. A movie now flops or hits as a result of the first forty-eight hours of tweeting and box office sales,” writes Dawar. The holiday season and long weekends are littered with examples of several bad movies, which people watched because everyone else had.
At times what also happens is that the criteria for success that the company had backed on, turns out to be different from what consumers think it should be. Take the case of the VHS versus Betamax battle for the video standard, between Sony and Matsushita, both Japanese companies. Sony decided to concentrate on video quality whereas Matsushita decided to concentrate on longer recording time, which ultimately became the key differentiator between the two standards.
By concentrating on the quality of the video Sony was just doing what it had done in the past. But consumers, it turned out, were looking for a longer recording time and were willing to compromise on the quality of the video.
At times, the consumers don’t have a role to play and have to go with what is offered. Take the case of the battle between Blu-ray and HD-DVD, two competing DVD formats. As Karl Stark and Bill Stewart write in an article titled Why Better Products Don’t Always Winon Inc.com “Unfortunately differentiating factors aren’t always clear, and consumers don’t always get the right to choose. Consider the battle between Blu-ray and HD-DVD; while consumers could buy either product, ultimately the war was fought over which content providers would exclusively back each format. Since more content was available on Blu-ray, it ended up creating more customer value, despite the possibility that HD-DVD was a technically superior product.”
Once the consumer is on the Blu-ray format, there is a huge cost of switching to HD-DVD, even though HD-DVD may catch up in terms of content that is available on it to be viewed.
On occasions what also happens is that the brand association of a particular product being the best product in that category is very strong and competitors can’t break it. Take the case of Gillette. As Dawar writes “After more than a century of blade technology, Gillette still controls when the market moves onto the next generation of razor and blade. And even though for the past three decades, competitors have known that the next-generation blade from Gillette will carry one additional cutting edge and some added swivel or vibration, they’ve never pre-empted the third, fourth, or fifth blade.”
Why is that the case? “Because there is little to gain from preemption. Gillette owns the customers’ criterion, and the additional blade becomes credible and viable only when Gillette decides to introduce it, backed by a billion-dollar launch campaigns.”
The chip maker Intel is in a similar sort of situation. Consumers believe that the chip is the fastest chip in the market, only if it comes from Intel. “Both AMD’s K-6 chip and the PowerPC chip were faster than the fastest Intel chip on the market at the time of their launch. But the two challengers were unable to move the market,” writes Dawar.
To conclude, let me quote Stark and Stewart: “Better products win when the total value – that is, the benefits minus the cost – is clear and measurable to the customer and creates more value than comparable offerings.” The trouble is it is difficult to figure out in advance what creates more value for the customer. Even the customer may not know the answer to that question.
The article originally appeared on www.FirstBiz.com on February 25, 2014 
 (Vivek Kaul is a writer. He tweets @kaul_vivek) 

The death of Facebook

 facebook-logoVivek Kaul 
A friend of mine had a rather unique problem sometime back. His daughter’s class teacher had started putting their daily homework online on a Facebook page. She wanted the parents to follow that page, so that they knew what was happening in the class.
“So what is the problem?” I asked him.
“I don’t have a Facebook account,” my friend replied.
“So open one,” I suggested.
And this is when things got really interesting.
“I don’t like the voyeurism that comes with Facebook,” he said, trying to give me a reason for his reluctance to open a Facebook account.
“Voyeurism?”
“Yeah. Like you may get to see the honeymoon pictures of a couple holidaying in Goa. The irony of course is that you had not been invited for their wedding.”
“Come on, you are nitpicking here,” I tried to protest.
“No I am serious. Think about the digital footprint that you are leaving out there. And that is something that makes me uncomfortable. What if someone tags some old pictures of mine from my engineering days, where I am looking drunk or maybe even stoned? You may tell me you can always remove the tag. Yes, but it is not always possible to keep track. And given this, how will I tell my daughter in the years to come that smoking pot and excess drinking are not good for health. Also, what I write will stay there forever. Have you ever thought about these things?”
I guess my friend had a point. In fact, my mind went back to a conversation I had had with Ferdinando Pennarolla, an associate professor at the department of management and technology, Bocconi University in Milan, Italy, a few years back. Pennarola had made several interesting points during the course of our conversation about our digital lives.
“The consumers are not asking themselves to what extent their digital lives are there forever. When you write something on the internet it is written on the stone. It is forever. It is very difficult to erase things on the internet. Once you get Googlised it is very difficult to cancel or erase your news. There are many stories where people cannot erase their contribution to things like community groups and forums,” he had said.
Also, as we spend more and more of our lives on the internet the question of what happens to our digital lives after we die, comes into the picture well. We spend a lot of our time these days reading emails on Gmail, making friends and posting pictures on Facebook and telling the world at large what we think about it, in less than 140 characters, on Twitter.
Other than this we have subscribed to newsletters, articles from various websites, blogs and so on. We also have multiple logins and passwords that we have created on various e-commerce websites. What happens to all this when we are no longer around?
Or as Pennarola put it “Who will have access to all of this? Will these accounts just be cancelled because they will remain unutilised? Will the vendors still keep on bombarding our mailboxes with news and advertising? I think there is a need of an integrated service that in the future will take care of all our digital and networked life, and pass it to our loves, according to our will.”
For people like me, who primarily write for websites, there is also the question of who gets the copyright for all the writing that has been published and will continue to be published digitally. That is one part of the problem that most of us are not thinking about.
A few days after meeting my friend I happened to start reading a rather fascinating book called Who Owns the Future? written by a philosopher and computer scientist called Jaron Lanier. In this book Lanier raises many other fascinating questions regarding our digital lives that do not have easy answers.
Take the case of Gmail, Facebook and Twitter. A large portion of people who use email these days use Gmail. When it comes to social networking, Facebook happens to be the number one preference. When was the last time you logged onto Orkut? And do you even remember Bigadda?
As far as micro-blogging goes, have you even ever heard the name of any other website other than Twitter?
By concentrating our digital lives around a few companies, we are working with the assumption that they will stay around forever. But for anyone who understands a little bit about technology companies, knows that has never been the case.
“It’s sad to say, but all young things change over time. The prototypical great Silicon Valley company Hewlett-Packard, which inspired all the rest to come, encountered in the not-too-distant past a period of now only crummy management, but weird, tawdry scandals, board intrigues, and demoralization. Chances are that some of today’s bright young companies will go through similar periods someday. It could happen to Facebook or Twitter,” writes Lanier.
Lanier then discusses the case of Facebook in some detail. As he writes “Suppose Facebook never gets good enough at snatching the ‘advertising’ business from Google. That’s still a possibility as I write this. In that event, Facebook could go into decline, which would present a global emergency…If Facebook starts to fail commercially, suddenly people all over the world would be at the risk of losing old friends and family ties, or perhaps critical medical histories.”
The same argument stands true for Gmail as well. For most of us it is a repository of a large amount of information, communication and documentation, that we need to keep going back to time and again.
In that sense, these websites are becoming more like electric utilities as every day goes by. Something that we really cannot do without. As Lanier puts it “It’s a piece of infrastructure people need, and when people need something they eventually ask the government to make sure they have it. That’s why government ended up in the middle of water, electricity, roads, and the like.”
These are things that no one has really thought about, which is clearly worrying. As Lanier concludes “The death of Facebook must be an option if it is to be a company at all. Therefore your online identity should not be fundamentally grounded in Facebook or something similar.”
This article originally appeared in the Wealth Insight magazine dated Feb, 2014
(Vivek Kaul is the author of Easy Money. He can be reached at [email protected])