tag:daltoncaldwell.com,2014:/feedDalton Caldwell2014-12-21T13:40:25-08:00Dalton Caldwellhttp://daltoncaldwell.comSvbtle.comtag:daltoncaldwell.com,2014:Post/bitcoin-adoption-in-20152014-12-21T13:40:25-08:002014-12-21T13:40:25-08:00Bitcoin adoption in 2015<p>The chart related to bitcoin that I find most interesting is not price, but instead <a href="https://blockchain.info/charts/estimated-transaction-volume-usd?showDataPoints=false&timespan=2year&show_header=true&daysAverageString=7&scale=0&address=">Estimated USD Transaction Volume</a> from Blockchain.info:</p>
<p><a href="https://svbtleusercontent.com/ug324hyogf4bg.png"><img src="https://svbtleusercontent.com/ug324hyogf4bg_small.png" alt="Screenshot 2014-12-20 17.35.06.png"></a></p>
<p>The reason I find this chart useful is that it seems a decent proxy for the amount of value being transacted through the network irrespective of bitcoin price fluctuations. </p>
<p>By way of comparison, here is a chart of the <a href="https://blockchain.info/charts/market-price?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=">USD market price of bitcoin</a> over the same period:</p>
<p><a href="https://svbtleusercontent.com/s003tymwpu82ma.png"><img src="https://svbtleusercontent.com/s003tymwpu82ma_small.png" alt="Screenshot 2014-12-20 17.38.49.png"></a></p>
<p>And here is a chart of the <a href="https://blockchain.info/charts/n-transactions?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=">number of daily transactions</a> over the same time period:</p>
<p><a href="https://svbtleusercontent.com/zqdb5spnobgqa.png"><img src="https://svbtleusercontent.com/zqdb5spnobgqa_small.png" alt="Screenshot 2014-12-20 17.42.10.png"></a></p>
<p>Taking these three charts together, the relatively static USD transaction value per day metric in 2014 appears to be the result of the falling market price of bitcoin being offset by increased transaction volume. </p>
<p>Perhaps this is all just a coincidence, but it appears that 2014 was a year of relatively <em>static demand</em> for transacting value through bitcoin. Static demand implies that either 1) the number of people using bitcoin to transact value has been relatively stable, or 2) the number of people in the ecosystem using bitcoin to transact value is growing but offset by churn/decreased usage by other participants.</p>
<p>What sorts of things could be underpinning this relatively stable daily transfer value? For one, bitcoin mining firms likely liquidate some amount of their daily earnings to pay for electricity and other operational costs. Their electricity and rent cost the same irrespective of bitcoin market price. Also, some people use bitcoin to purchase goods/services on a regular basis, and buy/spend bitcoin in amounts denominated in their local currency. </p>
<p>Regarding the prospect of growth in value exchange occurring via off-blockchain services: I still think we would expect to see off-blockchain value transfer manifest itself on-blockchain, in much the same way that buy and sell pressure at a single off-blockchain service flows throughout the entire ecosystem. If an off-blockchain service did somehow manage to become an “island” and transact increasing amounts of value without <em>any</em> of the growth showing up on-blockchain… it would be bad for bitcoin on a number of levels.</p>
<p>I think it is important to see significant growth in the daily USD transaction volume graph in 2015. I have no idea what will happen to the <em>price</em> of a bitcoin in 2015, and could imagine the price going far lower/higher while the value transacted graph increases at a steady and somewhat predictable rate. For example, if people started to use bitcoin for remittance at any sort of scale, we will see growth in this graph (with an undefined effect on bitcoin price). On the other hand, another year of static demand is unlikely to be beneficial to participants in the ecosystem. It will be interesting to see what happens.</p>
tag:daltoncaldwell.com,2014:Post/pinterest-vs-snapchat-purchase-intent-valuation2013-10-26T12:41:19-07:002013-10-26T12:41:19-07:00Pinterest vs Snapchat: Purchase intent and valuation<p>Online advertising is all about purchase intent, right? To quantify just how valuable the purchase intent of search is, it’s worth thinking about revenue per search. In 2006 <a href="http://www.forbes.com/sites/greatspeculations/2010/04/21/three-things-to-boost-googles-search-revenue-and-share-price/">Google’s revenue per 1000 searches was $45, in 2009 it was $35</a>. (I’d like to put in a more recent datapoint, but my cursory Googling is coming up short.) </p>
<p>Keep in mind that Google search ads are non-interruptive units. By way of contrast, let’s talk about advertising on YouTube. These units either make you wait to watch the video, or takeover part of the video player while it is playing. Despite the fact these ads are designed to be more “engaging”, eCPMs for video are far lower vs search. <a href="http://allthingsd.com/20130304/youtubes-show-me-the-money-problem/">Here are some approximations of revenue from top publishers on YouTube according to Peter Kafka</a>:</p>
<blockquote>
<p>[M]any big publishers say that after YouTube takes its 45 percent cut of the ads it sells, they frequently end up keeping about $2.50 for every 1,000 views their clips generate — that is, if their video generates a million views, they get $2,500. Other publishers say their split can be as high as $10 per 1,000.</p>
</blockquote>
<p>I don’t want to spend more time comparing and contrasting eCPMs across different medium types, but the underlying point is this: <strong>some user experiences are inherently more monetizable via advertising than others</strong>. No matter how many fancy pieces of technology you throw in the mix to allow sophisticated segmentation, targeting, creative, etc, the context by which users are exposed to advertising sets the stage for the business.</p>
<h2 id="why-compare-pinterest-and-snapchat_2">Why compare Pinterest and Snapchat? <a class="head_anchor" href="#why-compare-pinterest-and-snapchat_2">#</a>
</h2>
<p><a href="http://allthingsd.com/20131026/next-on-deck-for-snapchat-pinterest-some-sales-help/">They are currently valued equally by the private market.</a></p>
<h2 id="advertising-intent-on-pinterest_2">Advertising intent on Pinterest <a class="head_anchor" href="#advertising-intent-on-pinterest_2">#</a>
</h2>
<p>I have always been optimistic about Pinterest as an advertising-supported company because of how users were using it from the very beginning. Pinterest is about organizing and planning things in your life. A big part of that organizing and planning has to do with products that you have bought or would like to buy. That seems like an ample amount of purchase intent which has always been a part of the core user experience. I imagine Pinterest could roll out Promoted Pins and most of the userbase wouldn’t notice. </p>
<p><a href="http://news.cnet.com/8301-1023_3-57436140-93/why-did-rakuten-invest-so-much-in-pinterest-integration/">Previous statements from strategic Pinterest investor Rakuten</a> seem to agree with this analysis.</p>
<h2 id="advertising-intent-on-snapchat_2">Advertising intent on Snapchat <a class="head_anchor" href="#advertising-intent-on-snapchat_2">#</a>
</h2>
<p>This is a tough one. Brands pushing coupons with short timeouts to users? Geo-fenced push offers? How would a call-to-action work from a disappearing message? Would the ad unit stick around inside of the Snapchat UI? The smartest ad unit would probably take advantage of the fact users are trained that stuff disappears so they would need to act fast before it goes away. </p>
<p>Even if we assume some sort of amazing killer ad unit is released, are users in a state of mind to want to consume advertising? It appears that Snapchat is a new communications medium, which seems very fundamental and valuable. However, in other communication mediums such as phone calls, email, or SMS, interruptive messages from advertisers are historically not appreciated by consumers. </p>
<h2 id="so-why-would-the-private-market-value-them-eq_2">So why would the private market value them equally? <a class="head_anchor" href="#so-why-would-the-private-market-value-them-eq_2">#</a>
</h2>
<p>Here’s what the top of the US iOS app charts look like right now. Keep in mind that <a href="http://techcrunch.com/2012/05/16/how-many-daily-downloads-does-it-take-to-reach-the-top-of-the-app-store/">downloads are superlinear as a factor of rank</a>. </p>
<p><a href="https://svbtleusercontent.com/puoeftjtlfx2a.png"><img src="https://svbtleusercontent.com/puoeftjtlfx2a_small.png" alt="comparison.png"></a></p>
<p><em>(Growth rate) x (Hypothetical revenue potential) x (Strategic value to potential acquirers) = Late stage private valuation</em></p>
tag:daltoncaldwell.com,2014:Post/the-economics-of-the-magazine2013-10-24T17:42:21-07:002013-10-24T17:42:21-07:00The Economics of The Magazine<p><a href="http://glog.glennf.com/blog/2013/10/24/why-isnt-the-magazine-free-with-ads">Why Isn’t The Magazine Free With Ads? Volume.</a></p>
<blockquote>
<p>To achieve [current subscription revenue] consistently, The Magazine would have to sell ads at $2.66 CPM on 13 million page views a month, which means we would probably need 20 million page views to make those numbers.</p>
<p>Is our modest fortnightly periodical going to attract 20 million page views against 150 or so articles every month? Unlikely. Can we attract enough subscribers on an ongoing basis to bring in revenue that lets us pay writers well and sustain our operations? Yes. </p>
</blockquote>
<p>Also worth mentioning <a href="https://sethjs.wordpress.com/2013/10/23/entrepreneur-psa-advertising-businesses-are-hard/">this excellent post from Seth Sternberg, former CEO of Meebo</a>.</p>
<blockquote>
<p>I was at an event the other day in San Francisco and ran into a friend. He’s running a business many of you have heard of. We got to talking, and early on he said “I’m never doing an advertising business again!” My gut reaction: “no kidding”. </p>
</blockquote>tag:daltoncaldwell.com,2014:Post/the-tech-industry2013-09-14T15:49:48-07:002013-09-14T15:49:48-07:00The tech industry: one or many?<p>After reading <a href="http://arstechnica.com/business/2013/09/how-zynga-went-from-social-gaming-powerhouse-to-has-been/">How Zynga went from social gaming powerhouse to has-been</a>, most would be convinced that the “social gaming bubble” <a href="http://i.imgur.com/GZhqIXS.png">has popped</a>. </p>
<p>It’s interesting that “the tech industry” can be large enough such that a significant sub-industry can go through a full boom and bust cycle without materially affecting other sub-industries. </p>
<p>In the past few years we have witnessed the rise and fall of several sub-industries including social gaming, subscription commerce, and group buying. But that hasn’t slowed down what people think of as “tech” as a whole. Perhaps the ups and downs from each sub-industry are like waves at different phases, and if there are enough of them they start to <a href="http://www.mediacollege.com/audio/01/wave-interaction.html">cancel each other out</a>.</p>
<p>I once had a conversation with someone who ran a publicly traded technology company during the 2000 crash. He told me that one day, customers who had already signed purchase orders for their products started to cancel them en masse. Additionally, the pipeline of new orders for their product dropped by 80%. Then, in a matter of weeks, some of their largest customers started to declare bankruptcy. Next, they noticed a huge glut of their products on the secondary market because their former customers were liquidating. The bottom fell out. </p>
<p>Is “the tech industry” so complex and robust that it is no longer a single industry, and thus a concept in need of rethinking, or are all of the boats still tied together? I am genuinely unsure. One property of <a href="http://en.wikipedia.org/wiki/Black_swan_theory">Black Swans</a> is that they only seem obvious in retrospect.</p>
tag:daltoncaldwell.com,2014:Post/response-to-brennan-novak-part-ii2013-08-07T11:20:00-07:002013-08-07T11:20:00-07:00Response to Brennan Novak, part II<blockquote>
<p>On August 10, 2012, I published a blogpost entitled “A response to Brennan Novak”. In that post, I stated that App.net would support a number of interoperable web technologies.</p>
<p>As the one-year anniversary of my blogpost approaches, I’d like to highlight how App.net supports those technologies.</p>
</blockquote>
<p>Following through is important.</p>
tag:daltoncaldwell.com,2014:Post/where-will-google-reader-traffic-go2013-06-29T12:57:56-07:002013-06-29T12:57:56-07:00Where will Google Reader traffic go?<p>Unless something dramatic happens, Google Reader is shutting down July 1. </p>
<p>A few days ago, <a href="https://alpha.app.net/dalton/post/7119283">I posed the question</a>:</p>
<blockquote class="short">
<p>Has anyone written up their expectations/projections re:how the Google Reader shutdown will affect traffic to blogs?</p>
</blockquote>
<p>For comparison, when Google makes an <a href="http://moz.com/google-algorithm-change">algorithm change</a> to Google Search results, it can make or break a business. For a publisher on the web, having an significant source of daily referrals go dark one day is likely to have at least as dramatic an effect as a Google Search algorithm change.</p>
<p>Frankly, I have no idea what will happen, but I will present three possible scenarios regarding what will happen from a traffic perspective.</p>
<h1 id="scenario-one-quotthe-new-age-of-innovationquo_1">Scenario One: “The New Age of Innovation” <a class="head_anchor" href="#scenario-one-quotthe-new-age-of-innovationquo_1">#</a>
</h1>
<p>As a consequence of the creative destruction brought upon by the demise of Google Reader, a new class of excellent feed reading software is being created. This is a Good Thing from the perspective of a user.</p>
<p>In this scenario the aggregate market size of RSS readers increases, and the net traffic being driven by people directly consuming content via RSS increases. A publisher would hopefully see a changeover in daily referrers <em>immediately</em>, and then a slow but steady increase as interesting new software is built.</p>
<h1 id="scenario-two-quotbusiness-as-usualquot_1">Scenario Two: “Business as Usual” <a class="head_anchor" href="#scenario-two-quotbusiness-as-usualquot_1">#</a>
</h1>
<p>The people that really care about RSS will migrate to new Reader alternatives. The Reader alternatives will be competing for this passionate market.</p>
<p>In this scenario, the net amount of traffic being driven by RSS feeds will stay essentially the same because the folks who don’t bother to migrate their feeds out of Google Reader <em>weren’t actually using it</em>. Sure, the number of subscribers you conceptually have will decrease, but that matters a lot less than the daily traffic being generated.</p>
<h1 id="scenario-three-quotdeadweight-lossquot_1">Scenario Three: “Deadweight Loss” <a class="head_anchor" href="#scenario-three-quotdeadweight-lossquot_1">#</a>
</h1>
<p>Some percentage of people that are currently using Google Reader will either not bother to migrate to another service, or, if they do migrate, they won’t get in the habit of actually using it. </p>
<p>In this scenario, there will still be a vibrant market for RSS readers, but the total amount of referral traffic currently being generated by Google Reader will drop overnight, and some percentage of that traffic isn’t coming back. A publisher would see a significant, immediate drop in their daily referrals, and perhaps a small increase over time as the stragglers migrate.</p>
<h1 id="other-scenarios_1">Other scenarios? <a class="head_anchor" href="#other-scenarios_1">#</a>
</h1>
<p>Those are the three likely scenarios that I could think of, are there other scenarios that would happen? </p>
<p>If you are a publisher of a blog that was featured/promoted inside of Google Reader, are you more likely to see a traffic drop? Will the traffic change affect blogs with large or small numbers of subscribers more?</p>
<p>I suppose we are about to find out.</p>
tag:daltoncaldwell.com,2014:Post/y-combinator2013-05-16T17:24:38-07:002013-05-16T17:24:38-07:00Y Combinator<p>From the <a href="http://blog.ycombinator.com/welcome-kevin-michael-steve-dalton-and-andrew">official Y Combinator blog</a>:</p>
<blockquote>
<p>We also have five new part-time partners: Michael Seibel, Steve Huffman, Dalton Caldwell, and Andrew Mason. As the name suggests, part-time partners advise startups like regular partners, but part-time. Michael was cofounder of Socialcam (YC W12) and now works at Autodesk, which acquired it last year. Steve is cofounder of Hipmunk (YC S10) and before that was cofounder of Reddit (YC S05). Dalton is cofounder of App.net and before that was cofounder of Imeem. Andrew was cofounder of Groupon and till recently its CEO. We’ve known all these guys for years and we can already tell it will be great to work with them.</p>
</blockquote>
<p>I’m proud to say that I have accepted a “part-time partner” role at Y Combinator. I have known PG & Jessica for years, and have tremendous respect for them. The upshot of taking this role is that I’m going to be spending a few hours a week helping out YC companies. </p>
<p>Given that running App.net is a full-time job, I had to carefully weigh the pros and cons of taking on an additional time commitment. After consulting with my co-founder and some of my advisors, I came to the conclusion that spending this time with early-stage startups will make me better at my job at App.net. </p>
<p>Specifically, the #1 thing we can do at App.net right now is ensure that we’re building the best social platform for developers creating the next big thing. As PG has put it, <a href="http://www.paulgraham.com/13sentences.html">understand your users</a>. I like to think that being exposed to this many startups will help keep me honest.</p>
<p>I look forward to getting to know more of the YC community, learning as much as possible, and (hopefully) offering some useful advice and perspective.</p>
tag:daltoncaldwell.com,2014:Post/apps-vs-platforms2013-05-14T21:17:47-07:002013-05-14T21:17:47-07:00Apps vs. Platforms<p>Some interesting analysis on “apps” vs. “platforms” <a href="http://stratechery.com/2013/facebook-phones-and-the-future-of-mobile-communication/">from Ben Thompson</a>:</p>
<blockquote>
<p>An app can afford to be prescriptive about the user experience and means of interaction; in fact, the best apps have a point of view on how the user ought to use their service.</p>
<p>Platforms, on the other hand, are just that: a stage for actors (i.e. apps) of the user’s choosing to create a wholly unique experience that is particular for every individual user.</p>
<p>It follows, of course, that no successful platform can be built on advertising. Advertising demands eyeballs; platform success demands the ability to fade into the background as said unique experiences take center stage.</p>
</blockquote>
<p>(<a href="http://daringfireball.net/2013/05/facebook_home_dogfooding">via Daring Fireball</a>)</p>
tag:daltoncaldwell.com,2014:Post/sine-waves2013-03-16T15:25:52-07:002013-03-16T15:25:52-07:00Sine waves<p>One thing I have noticed studying web traffic logs is that daily human behavior at scale resembles a <a href="http://en.wikipedia.org/wiki/Sine_wave">sine wave</a>:</p>
<p><a href="https://svbtleusercontent.com/dalton_24542448166944_raw.png"><img src="https://svbtleusercontent.com/inline_dalton_24542448166944_raw.png" alt="Wave.png"></a></p>
<p>Over the years, my mind’s eye has constructed an image of the daily ebb and flow of web traffic resembling the ebb and flow of ocean tides. I’ve learned that code tends to break at the “high tide”, and the best time to do site maintenance is at “low tide”.</p>
<p>So why does human behavior at scale look like a sine wave? It’s because of our daily cycles of waking and sleeping. In other words, we have a 24 hour cycle because of <a href="http://en.wikipedia.org/wiki/Circadian_rhythm">circadian rhythms</a>, which occur because of the cycles of darkness and light caused by planetary movement.</p>
<p>And why do we have a tidal system? It’s largely caused by the <a href="http://en.wikipedia.org/wiki/Tide">gravitational pull of the moon</a>. </p>
<p>It only recently occurred to me that the unconscious link I felt between tides and web traffic wasn’t a lazy <a href="http://en.wikipedia.org/wiki/Folk_science">cognitive crutch</a>, rather, they are both causally related to planetary movement. </p>
<p>To me, this minor insight was a helpful reminder: everything is connected.</p>
tag:daltoncaldwell.com,2014:Post/touring-by-yourself2013-02-19T16:01:12-08:002013-02-19T16:01:12-08:00Touring by yourself<p>In 2002 I went to see a live show at the coffee house on my college campus. The show featured the band <a href="http://en.wikipedia.org/wiki/The_Microphones">The Microphones</a>. </p>
<p>“The Microphones” was a somewhat confusing name for the band because there was only one member: <a href="http://en.wikipedia.org/wiki/Phil_Elvrum">Phil Elvrum</a>.</p>
<p>I went to the show early, and watched Phil personally haul in his own gear. He then proceeded to take out a marker and white butcher paper and make some larger-than-life drawings. Once completed, he hung his drawings behind the stage as scenery. Next, he set up his microphone and amp and played a show. When it was over he gave away the drawings to audience members and stood next to the stage to sell LPs and T-shirts. Each LP had original hand-drawn art on it. I bought one and talked to him for a minute.</p>
<p>Phil Elvrum was 23 when that show happened, and in retrospect, it is difficult for me to imagine what it must have been like to be in his shoes. He seemed very brave to me… as far as I can tell, no one was traveling with him to help out or offer moral support. </p>
<p>I’ve been talking to a number of independent writers and software developers recently, and it has made me think a lot about what their day-to-day lives must be like. I’ve never been a freelancer, or worked in a solo capacity myself, but I have to imagine it must sometimes feel like doing a solo music tour. You show up alone, you do your thing, then you haul out your own gear… whether or not the show went wonderfully or terribly. </p>
<p>Going “indie” is clearly not for everyone, but I have the utmost respect for the people that are able and willing to do it.</p>