This is kind of funny.

You can now bet real money on who will acquire Twitter in 2009.  I tend to agree that this will happen, and in fact one of my predictions for 2009 was that Twitter would be acquired:

BetOnline, the site taking the bets, has these odds:

• Google – even money
• Facebook 5 to 1
• Microsoft 10 to 1
• Yahoo 20 to 1
• Field 5 to 1
• No 2009 acquisition 2.5 to 1

I can't say I agree with the odds at all.

Interesting post from Robert Scoble today.  Apparently the new Facebook layout is intended to facilitate more and better contextual advertising:

Yes, we’re having another baby. But look at what did NOT happen on Twitter: not a single diaper company contacted us yet. Not a single maternity clothing company. Not a single car company (yes, we’re going to buy a new one soon). Not a single camera company (already bought a new one for this occassion). Not a single insurance company (I need more). Not a single bank (I need to start saving for another college student). Not a single stroller company (need a new one that can hold two). Not a single vitamin company (Maryam is going through her prenatal vitamins at a good clip). Not a single shoe company (Maryam needs new shoes for pregnancy, and Milan is growing fast too).

That will NOT last.

So ultimately this change will allow Facebook to spam Robert Scoble for baby stuff when he announces he's having a baby.  I thought the best comment was this:

Robert's entire post boiled down into a single sentence.  Now that's what I call editing.  But Scoble thinks advertising is the bee's knees.  Check out his reply:

First of all, his reply makes it sound like Scoble has an ego that would make Freud blush, but secondly it reveals that Scoble is slightly weird.  Also, you can't extrapolate the Super Bowl--a truly unique TV social phenomenon--into Web advertising.

Let me put this into context.  We canceled cable, and we've moved about 90% of our TV viewing to Hulu.  Hulu shows the same shows cable does but only makes you watch one brief commercial during shows, where you would have been stuck watching 3-5 commercials on cable.

In the months that we've been watching TV this way I don't think I've ever once, no not once wished that we could sit through more commercials in the middle of our shows.  Amazing, I know.

I don't WANT advertising everywhere.

If I want a product, I will go LOOK for it.

And I suspect that the majority of people are really not interested in being forced to digest yet more 30-second snips of video designed to make them part with their money.  I don't think "best of" commercials collections are flying off the shelves.

Contextual advertising is no longer a viable business model for taking over the world.  Advertising is fed by consumerism, which is fed by rampant inflation, which is fed by debt.  That era is dead.  Kaput.  Over.  Finito.  Mathematically, it cannot even be considered again for several years.

Consumerism is dying because its blood--debt--has been cut off.  No longer do people have money to buy things on impulse.

Ultimately I think this is a good thing.  For one thing our society will be much healthier without so much of its self-worth tied up in things and conspicuous consumption ("look at me, I know how to spend money!  Wheeeee!")

But beyond that, it will force companies like FaceBook to come up with actual solid business models that ADD VALUE to society.  It forces them to create something of worth that people will actually PAY for.  Add information.  Make people more productive.  Let them do things they couldn't before.  Anything but try to find a way to stick yet more ads in front of their eyeballs.

Advertising as a business model exposes a lack of real value or a lack of imagination on the part of the executive team.  And while Robert is ready to pass out from excitement over more ads, I suspect that he is flat out wrong about the eventual success of this path for Facebook, if it's truly what they intend to do.

Over the past six or seven years, when credit was plentiful and the money supply was exploding, people were spending money like crazy, even to the point financing much of their consumption.  Giant flat screen TV's with low low monthly payments and so on.

This resulted in a flood of customers to most businesses, which steadily increased as our consumption society really started roaring.  A big problem for many businesses was that their infrastructure was not built to handle such a large volume of customers.

This created a bubble in the technology industry--products that were built to help businesses accommodate perpetual growth.  That growth has now slammed into reverse.

Today's news that Steve Jobs would be handing over the reins of Apple was a sad moment for me.  Supposedly it's only until June, but I think pretty much everyone knows that it's for good.

I know a lot of people don't like the man, but I do.  He had a vision, which is rare these days.  Sure he had his rough edges, but most people with a single-minded focus on something do--they have no patience for anything that's going to deter them from their goal.  He was one of the rare people who could force massive change by the sheer force of his will and vision.

Most CEO's drive in a reactionary manner, Jobs led the industry around by the ear.  He had an idea in his head about how things should work, forced Apple into that mold, and shook up multiple industries.

You just don't see that kind of character any more.  The industry will certainly be much less interesting without him.

Sadly, I don't think we'll get to see the culmination of his vision, which I think included things like a much more fleshed-out and ubiquitous Mobile.Me service.  It's too bad, because it will probably be a long time before such a charismatic leader with a dynamic vision emerges again.

Cheers Steve, well done

Every year I enjoy writing a post with my predictions for the next year.  It's a nice way to empty the old thoughts from my brains so there's room for new ones.  Plus I leave a trail of blog posts so I can see how my thoughts change from year to year.

In retrospect I've realized that each year tends to have a theme or two, and that the hardest part about making accurate predictions for a given year is identifying the themes that will drive it.

In 2007 the driving themes were social networking and online entertainment.  In 2008 the themes were distributed and mobile communication, with a dash of cloud computing sprinkled on top.

The theme for 2009 is almost absurdly easy to identify:  the economy.  If you thought 2008 was about the economy, just wait for 2009.  You truly ain't seen nothin' yet.  A deflationary black hole is sucking all of the money out of the economy and we haven't even seen the impact yet.

Every time I hear somebody talk about how the market has bottomed and the economy is starting to improve I mentally picture them in this position:

So if we're talking about the economy and you see me chuckle, you know why.

Hope is a great mindset to have and a fantastic slogan for winning Presidential campaigns apparently, but it is not such a great lens to view reality thru when you're trying to make money.

I have a problem:  I love Web 2.0 startups and software as a service, and I have been using them.

On the face of it, that doesn't really sound like a problem, does it?

I'm on my way back to Boston after a great Thanksgiving with the family, and doing some reading catch-up on the plane.

One of the articles that I was really looking forward to reading was a new essay by Paul Graham (founder of the VC firm Y! Combinator), which is about (in a nutshell) the hidden cost of checks and balances--presumably the ones found in big companies--and I don’t agree with him at all.  This is the first essay of his that I haven’t been able to point at and say “yeah, he’s dead on with that.”  I thought he was going to discuss the finer points of skilled labor losing efficiency to time-consuming process (writing to startups like he usually does) but this post is directed to the companies who buy the startups' products. 

Instead of his normal sage advice to startups, this piece makes him sound like an apologist for poorly run startups.  I think his vision may be clouded by the current state of the economy.  I hope not by the economic state of the Y! Combinator startups, but I don’t think that can be ruled out given a glance at TechMeme on any given day.

Now LinkedIn and Microsoft are getting into the cloud computing game (by cloud computing I mean providing a platform for you to run your own application without a data center of some type).  LinkedIn, Microsoft (Azure), SalesForce.com, Amazon, Google, you name it.  Cloud computing is the new black.

It's been interesting watching the blogosphere come to terms with the recession/depression over the past week.  With typical dot com speed, I've watched people go from denial to anger to bargaining to depression to acceptance, all within the span of a week.

Now that people are coming to grips with the reality of the situation, we can start to analyze it, sift thru the wreckage, and identify opportunities.  Denial is counter-productive.  Accept that the economic climate is not going to be good for several years regardless of what Tweedle Dee and Tweedle Dum (aka Bernanke and Paulson) do, take note of the new reality we're living in, and move on with our lives.

On that note, I came across this memo from VC John Borthwick of Betaworks to his portfolio companies, and there are some real gems in here that I'd like to comment on.

I had been using Disqus as my comment provider since I redesigned my site.  I really like having threaded comments, but I decided to ditch them, for two reasons.

• They store all the comments in their database, and generate the display in my pages on the fly.  That means that comments ultimately live on their servers, which means if they ever go down, or something happens to the Javascript in a visitor's browser, my comments go down.  It also means Google can't index comments.
• I can't see a good business model for them.  This is made more troubling because of #1.  If they ever croak I anticipate nothing more than an email saying "We're sorry but Disqus is no longer able to serve your comments it's been a pleasure serving you have a nice life"  As nice as they might be, making sure my comments are preserved will be the least of their worries at that point.

Like I said I really enjoy the output of the service, but with the current economic environment I just can't put myself in the position of relying on a company with no real revenue model that I can comprehend.  I don't think this is just Disqus, either.  I would like to use Seesmic video comments too--but again, if they ever go out of business (and they just laid off a handful of people) then I would assume that all the content they host goes to Web 2.0 heaven with them.

Nothing against the service or the company, as I said I've been happy with the results.  But I suspect you will be seeing a lot more people hesitant to rely on 3rd parties to host their content as the Depression unfolds.  This really all goes back to what I've been calling the SaaS trust issue--how much can you really trust your critical service providers, and how much will it cost if you get that bit wrong?