B2B, B2C, B2B2C, and B2S

In the startup world, “B2B” and “B2C” are familiar terms that were coined in the 90s:

B2B = startups whose customers/users are businesses
B2C = startups whose customers/users are consumers

Lately I’ve been hearing “B2B2C” which although a bit clumsy sounding is useful:

B2B2C = businesses who partner with other businesses to reach customers/users who are consumers

Finally, I propose the term “B2S” to refer to an especially risky type of startup that usually emerges in markets where VC money is plentiful:

B2S = businesses who sell only or primarily to other startups


Disruption of the video game market, illustrated

A core idea in Clay Christen’s disruptive technology theory is that incumbents eventually “overshoot” the needs of customers by adding excess performance, complexity etc. This creates room for disruptors to go after less demanding customers by creating simpler, less expensive and less technologically advanced products.

John Madden Football has sold over 70 million copies and is perhaps the most iconic video game of the last decade.  

Here are the controls you need to learn to play Madden’s most recent version:

A Button snap ball
B Button (Hold) coach cam
1 Button call your shots
D-Pad Left or Right switch controlled player
– Button call timeout
Control Stck or D-Pad move player
Flick Wii Remote Down Lightly = throw ball lob (gesture based passing)
Flick Wii Remote Down Quickly = throw ball bullt (gesture based passing)
Point Wii Remote At Plyaer + A Button (Tap) = throw ball lob (point and bass)
C Button (Hold) + Flick Wii Remote throw away (gesture bases passing)
Point Wii Remote Off Screen + A Button throw away (point and pass)
Control Stick or D-Pad move player
A or B Button stiff arm, juke, spin
Shake Wii Remote power move
Drum Wii Remote break tackle
Flick Wii Remote Up catch the ball
A Button (Hold) no huddle
B Button (Hold) spike ball
– Button call timeout
Control Stick or D-Pad move player
Flick Wii Remote big hit
Flick Wii Remote + D-Pad Down (Hold) low hit
Flick Wii Remote Down swat ball
Flick Wii Remote Up jump, intercept
Swing Wii Remote Left or Right rip, swim, spin
Point Wii Remote At a Player + A Button or D-Pad Left or Right switch controlled player
B Button (Hold) coach cam
Point Wii Remote At QB + A Button (Hold) sack the qb
Point Wii Remote At Runner + A Button (Hold) stop the run
Point Wii Remote At Receiver + A Button (Hold) defend the pass
A Button snap ball
Z Button (Hold) coach cam
Point Wii Remote At Player + B Button qb pre-play menu
2 Button quick audibles
B Button quick qb audibles
D-Pad Left or Right switch controlled player
Z Button (Hold) + D-Pad or A Button lock-on (gesture based only)
1 Button call your shots
– Button call timeout
Control Stick move player
B Button (Hold) sprint
Flick Wii Remote Down throw ball (gesture based only)
Point Wii Remote At Player + A Button throw ball (point and pass)
D-Pad + A Button lock-on (gesture based passing)
Point Wii Remote At Player + Z Button (Hold) lock-on (point and pass)
Control Stick Left or Right precision passing (while throwing the ball)
Z Button (Hold) + Throw the Ball pump fake (gesture based passing)
C Button (Hold) + A Button pump fake (point and pass)
C Button (Hold) + Throw Ball throw away (gesture based passing)
Point Wii Remote Off Screen + A Button throw away (point and pass)
Shake Nunchuk qb avoidance
C Button (Hold) dive (when past the line of scrimmage)
C Button (Tap) slide (when past the line of scrimmage)
Control Stick move player
B Button (Hold) sprint
D-Pad Left or Right stiff arm
Z Button juke
Z Button + Control Stick Left, Right or Down directional juke
A Button spin
C Button (Hold) dive
Shake Wii Remote power move
Drum Wii Remote break tackles
Flick Wii Remote Up catch the ball
Push Wii Remote Forward impact block
D-Pad Down (Hold) + Push Wii Remote Forward cut block
A Button no huddle, hurry up
B Button spike ball
– Button call timeout
C Button + Z Button instant replay
1 Button bring up playcall (only with gameflow activated)
Z Button (Hold) coach cam
Point Wii Remote At Player + B Button pre-play menu
B Button lb pre-play menu
Point Wii Remote At Player + A Button or D-Pad Left or Right switch controlled player
1 Button call your shots
– Button call timeout
Control Stick move player
B Button (Hold) sprint
A Button control defender nearest to the ball
D-Pad Up or Down pass, run commit
C Button dive
Z Button (Hold) strafe
Shake Wii Remote big hit
Shake Wii Remote D-Pad Down (Hold) low hit
Flick Wii Remote Down swat
Flick Wii Remote Up jump, intercept
Shake Wii Remote Left or Right rip, swim, spin
D-Pad Up strip ball
Drum Wii Remote + Drum Nunchuk tackle boost
Point Wii Remote Down + A Button (Hold) + Swing Wii Remote Up kick the ball
A Button (Tap) switch players
Hold Wii Remote Up and Wave Left and Right fair catch

In contrast, Farmville’s controls consist simply of the clickable buttons you see on the screen here:


And Angry Bird’s controls consist of simply clicking, dragging and releasing birds:


Console games kept adding feature after feature to please their most demanding customers. Meanwhile, social and mobile games came along that were playable by the other 95%+ of the population.

The role of credit agencies in the financial crisis

To understand just how destructive credit rating agencies like S&P, Moody’s, and Fitch are, an excellent starting point is an op-ed in the NYTimes by Michael Lewis and David Einhorn:

Everyone now knows that Moody’s and Standard & Poor’s botched their analyses of bonds backed by home mortgages. But their most costly mistake — one that deserves a lot more attention than it has received — lies in their area of putative expertise: measuring corporate risk.

Over the last 20 years American financial institutions have taken on more and more risk, with the blessing of regulators, with hardly a word from the rating agencies, which, incidentally, are paid by the issuers of the bonds they rate. Seldom if ever did Moody’s or Standard & Poor’s say, “If you put one more risky asset on your balance sheet, you will face a serious downgrade.”

The American International Group, Fannie Mae, Freddie Mac, General Electric and the municipal bond guarantors Ambac Financial and MBIA all had triple-A ratings. (G.E. still does!) Large investment banks like Lehman and Merrill Lynch all had solid investment grade ratings. It’s almost as if the higher the rating of a financial institution, the more likely it was to contribute to financial catastrophe. But of course all these big financial companies fueled the creation of the credit products that in turn fueled the revenues of Moody’s and Standard & Poor’s.

These oligopolies, which are actually sanctioned by the S.E.C., didn’t merely do their jobs badly. They didn’t simply miss a few calls here and there. In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it.

This is a subject that might be profitably explored in Washington. There are many questions an enterprising United States senator might want to ask the credit-rating agencies. Here is one: Why did you allow MBIA to keep its triple-A rating for so long? In 1990 MBIA was in the relatively simple business of insuring municipal bonds. It had $931 million in equity and only $200 million of debt — and a plausible triple-A rating.

By 2006 MBIA had plunged into the much riskier business of guaranteeing collateralized debt obligations, or C.D.O.’s. But by then it had $7.2 billion in equity against an astounding $26.2 billion in debt. That is, even as it insured ever-greater risks in its business, it also took greater risks on its balance sheet.

Yet the rating agencies didn’t so much as blink. On Wall Street the problem was hardly a secret: many people understood that MBIA didn’t deserve to be rated triple-A. As far back as 2002, a hedge fund called Gotham Partners published a persuasive report, widely circulated, entitled: “Is MBIA Triple A?” (The answer was obviously no.)

At the same time, almost everyone believed that the rating agencies would never downgrade MBIA, because doing so was not in their short-term financial interest. A downgrade of MBIA would force the rating agencies to go through the costly and cumbersome process of re-rating tens of thousands of credits that bore triple-A ratings simply by virtue of MBIA’s guarantee. It would stick a wrench in the machine that enriched them. (In June, finally, the rating agencies downgraded MBIA, after MBIA’s failure became such an open secret that nobody any longer cared about its formal credit rating.)

The S.E.C. now promises modest new measures to contain the damage that the rating agencies can do — measures that fail to address the central problem: that the raters are paid by the issuers.

Remember that the ratings agencies receive special status from the SEC. Many funds (e.g. pension funds) can only buy bonds that the “official” agencies give high ratings. So the agencies aren’t neutral messengers. They are unelected regulators who are paid by the corporations they regulate, with no appeals process, and an abysmal historical track record of corruption and incompetence.

The whole article is well worth a read: The End of the Financial World as we Know It.


Wired on iPhone factories in China


Wired magazine had a sensationalist cover earlier this year:

1 Million Workers. 90 Million iPhones. 17 Suicides. Who’s to Blame?

In the article it says these 17 suicide occurred over the "past half decade" – implying a suicide rate of 3.4 per million people.

According to Wikipedia, throughout China the suicide rate is 66 a tragic people per year per 1M people:
If anything, the numbers would suggest, gadget factories are saving lives.  

(I don't actually think that's the case, but I do think the Wired cover headline is wildly misleading).

IRL checksum

Why Van Halen demanded that brown M&M’s be removed in all their venue contracts for their concerts:

That way, the band could simply enter the arena and look for a bowl of M&Ms in the backstage area. No brown M&Ms? Someone read the contract fully, so there were probably no major mistakes with the equipment. A bowl of M&Ms with the brown candies? No bowl of M&Ms at all? Stop everyone and check every single thing, because someone didn’t bother to read the contract. Roth himself said:

“So, when I would walk backstage, if I saw a brown M&M in that bowl . . . well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.”

Not sure what to call this.  Kind of like a checksum.  Different goal but reminiscent of watermarking.  Probably a better technical term for it.

Full article (was) here.

recent media consumption

Caanoo is definitely the best hand-held device ever made for playing retro arcade games. NES, Mame, and Amiga emulators all run great. Problem is that every time I play retro games they aren’t as fun as I remembered. Perhaps a failure to manufacture nostalgia?  Although I will say NES version of Punch Out is still fun, as is Mame Sinistar.

As a user, I continue to love Twitter and just simply fail to understand the value of Facebook. Facebook is sometimes fun for going back to look back at old friends but otherwise just feels like a bunch of spammy disconnected tweets. Obviously i’m missing something since the rest of the world loves the damn thing.

Best iPad games:  Words with Friends (you knew that), 7 Little Words (you might not have known that), Helsing’s Fire (you didn’t know that… really, if you are going to play one iPad puzzle game this is it).  Toss in Juice Belts and Sopilskier if you have time.  Incredible Machine == Incredible Disappointment (bring back the old version!!).  Ticket to Ride – I want to love you but why can’t you support asynchronous games with my friends a la Carcassonne and Words with Friends??

I really like the New Yorker iPad app. The only problem is you have to manually download issues, but it sounds like this will be fixed in iOS 5. NYTimes iPad app has gotten better but still miss the feel of the physical paper. I was subscribing to The Economist on my iPad but after that stupid tech bubble article have just found it intolerably stupid and need a few weeks cooling off to go back to it.

Nintendo 3DS: Want to love it.  Blown away by screen technology.  In the end, the 3DS – like life – just gives me a headache.  Wow, Nintendo has gone from brilliant back when they launched the Wii to kind of irrelevant now.

Books:  Reading The Lean Startup (great, even though I’ve already read almost all of Eric’s blog posts), Tempo (@ribbonfarm is a super smart guy), Cosmopolis by Don DeLillo – a bit precious but still interesting.  My favorite DeLillo books are White Noise and End Zone.

At the risk of being accused of talking my book, I’ve been basing all these choices on Hunch.  It is working better every day.  Right now you have to rate a bunch of stuff to get it working really well.  The onboarding will be fixed soon to make this smoother.

Finally: Python, I love you but ” “.join(“a b c”) syntax is bringing me down. And: Node.js – we all love event-driven web servers (e.g. Tornado) but the idea that using Javascript on the backend will somehow unite front-end and back-end programmers overestimates the similarity between the two jobs and the importance of language syntax.

good way to understand cryptocash

From Future Imperfect:

Low-Tech ECash

I randomly create a very long number. I put the number and a dollar bill in an envelope and mail it to the First Bank of Cybercash. The FBC agrees –in a public statement –to do two things with money it receives in this way:
1 If anyone walks into the FBC and presents the number, he gets the dollar bill associated with that number.
2 If the FBC receives a message that includes the number associated with a dollar bill it has on deposit, instructing the FBC to change it to a new number, it will make the change and post the fact of the transaction on a publicly observable bulletin board. The dollar bill will now be associated with the new number.

Lets see how this works:

Alice has sent the FBC a dollar, accompanied by the number 59372. She now wants to buy a dollar’s worth of digital images from Bill, so she emails the number to him in payment. Bill emails the FBC, sending them three numbers: 59372, 21754, and 46629.

The FBC checks to see if it has a dollar on deposit with number 59372; it does. It changes the number associated with that dollar bill to 21754, Bill’s second number. Simultaneously, it posts on a publicly observable bulletin board the statement “the transaction identified by 46629 has gone through.” Bill reads that message, which tells him that Alice really had a dollar bill on deposit and it is now his, so he emails her a dollar’s worth of digital images.

Alice no longer has a dollar, since if she tries to spend it again the bank will report that it is not there to be spent – the FBC no longer has a dollar associated with the number she knows. Bill now has a dollar, since the dollar that Alice originally sent in is now associated with a new number and only he and the bank know what it is. He is in precisely the same situation that Alice was in before the transaction, so he can now spend the dollar to buy something from someone else. Like an ordinary paper dollar, the dollar of ecash in my system passes from hand to hand. Eventually someone who has it decides he wants a dollar of ordinary cash instead; he takes his number, the number that Alice’s original dollar is now associated with, to the FBC and exchanges it for a dollar bill.

My ecash may be low tech, but it meets all of the requirements. Payment is made by sending a message. Payer and payee need know nothing about the other’s identity beyond the address to send the message to. The bank need know nothing about either party. When the dollar bill originally came in, the letter had no name on it, only an identifying number. Each time it changed hands, the bank received an email but had no information about who sent it. When the chain of transactions ends and someone comes into the bank to collect the dollar bill he need not identify himself; even if the bank can somehow identify him he has no way of tracing the dollar bill back up the chain. The virtual dollar in my system is just as anonymous as the paper dollars in my wallet.

With lots of dollar bills in the bank there is a risk that two might by chance have the same number, or that someone might make up numbers and pay with them in the hope that the numbers he invents will, by chance, match numbers associated with dollar bills in the bank. But both problems become insignificant if instead of using 5-digit numbers we use 100-digit numbers. The chance that two random 100-digit numbers will turn out to be the same is a good deal less than the chance that payer, payee, and bank will all be struck by lightning at the same time.

Now get rid of the central bank (make them peering nodes) and encrypt the envelops it receives so the bank can do its jobs without actually knowing the secret numbers involved.