The real Matrix?

Second Life is hitting all the headlines.

It's a virtual world where anybody can participate in building an online life through a graphical world like that seen in computer games such as Quake and Doom. In fact it is interactive like those but in the mold of SimCity.

But it is more than just a SimCity with other players interacting with you. Yes you can build your own virtual house, etc, but you can also set up a virtual frontend to your real business!

Stores in Second Life do millions of US Dollars of transactions each month.

Perhaps this is the next step in ecommerce. Books may sell through the traditional browser, but goods demanding a more tactile experience such as clothes have battled to achieve the same level of success.

There are over 1 million residents of Second Life. Quite a market!

Here it is in their words:

Second Life is a 3-D virtual world entirely built and owned by its residents. Since opening to the public in 2003, it has grown explosively and today is inhabited by a total of 1,049,836 people from around the globe.

• From the moment you enter the World you'll discover a vast digital continent, teeming with people, entertainment, experiences and opportunity. Once you've explored a bit, perhaps you'll find a perfect parcel of land to build your house or business.


• You'll also be surrounded by the Creations of your fellow residents. Because residents retain the rights to their digital creations, they can buy, sell and trade with other residents.


• The Marketplace currently supports millions of US dollars in monthly transactions. This commerce is handled with the in-world currency, the Linden dollar, which can be converted to US dollars at several thriving online currency exchanges.

Welcome to Second Life. We look forward to seeing you in-world.

Picture: Second Life

Now imagine where this could go. I firmly believe that we are not far away from having sensors create visual overlays to what we see in the real world. These will replace monitors. Already, you can buy glasses with a display built in. Certain games overlay graphics over your real surroundings for a kind of hybrid real / virtual version of your favourite shoot-em-up.

Think of what a limitation the 2D 15-inch (or even 19-inch) monitor is in front of you. Imagine rather seeing computer documents on your physical desktop.

The idea of a person's mind taking over the graphic display is old. It has of course featured in the Lawnmower Man, Johnny Mneumonic and most famously the Matrix. I am sure there are many more.

The best I ever saw, however was the virtual information system in the movie Disclosure. It took the most tried computer concept - the computer as a filing system - and built a virtual world that made the concept a richer experience.

Now combine that with a world like Second Life and the computing paradigm is changed forever!

UPDATE: Baboing?

The Cape Town baboon war has been reported in National Geographic and then linked to in that directory of wonderful things, Boing Boing.

The Boing Boing entry mentions the problem but not the latest sad news regarding the poisoning of the baboons and through transmission, head of Baboon Matters, Jenni Trethowan.

Previously:

What do you call these guys?

Who are these friggin heartless creeps?

So which celebrity chef are you?

I'm a bit of a food nut. Not that I'm all poncy about food and restaurants, I just love good food and get cross about wasting money on bad food.

I'm getting better at cooking too and really enjoy myself in the kitchen. I'm from a line of chefs, so perhaps it is in the blood - except that my cheffing is purely for fun and remains mostly aspirational.

So I watch quite a bit of BBC Food - the food channel on DSTV in South Africa. Tonight was Gordon Ramsay night and featured the first episodes of "The F Word" and "Ramsay's Boiling Point." The latter was filmed when Ramsay struck out on his own as a 32 year-old two-Michelinned star chef looking for his third in 1998. The former is more recent.

Ramsay is infamous for his foul mouth and fiery temper. Boiling Point exhibits this well!

Watch the beginning of Ramsay's Boiling Point Episode 1 here From the Biography Channel

Regardless of how nice a chef is, kitchens are typically where tempers are raised. Those who have watched Jamie's Kitchen will have seen exactly this with all-round nice guy, Jamie Oliver. A friend is a chef and has told me about how she had pots thrown at her while training in one of South Africa's top kitchens!

Watching made me think about my natural leadership style. I have to admit, my natural (although repressed) leadership style is more like Ramsay's. This is not good and therefore the repression.

I wondered about this and why I have that streak. Perhaps it is because my first job was as a waiter with a boss like Ramsay! It is also because I have been bred in a high-stress environment - management consulting - over 10 years (7 longer than the average consultant lifespan). Because of all of this and my natural makeup, I cannot abide poor standards and excuses. I also demand total commitment which sometimes pushes people to breaking point. I have been responsible for my share of tears and frayed tempers although these have been evoked through my quietly stated disapproval rather than Ramsay's brand. People either sought to work on my teams or desperately tried to avoid them.

Ramsay grills a contestant in Hell's Kitchen, a game show he hosted

All of that said, I seldom lost it and don't think I ever swore at anyone. That probably wouldn't have worked with the over-achievers / prima-donnas I managed. But sometimes I wanted to! Watching Ramsay made me remember that.

Gary Rhodes Picture: BBC

It is funny how self-awareness also makes one more aware of a more appropriate aspiration. My aspirational celebrity chef? Gary Rhodes, the once-spiky-haired nice-guy chef. I'll bet he gets more out of his staff too.

Which celebrity chef are you?

Links:

Ramsay's biography
Gordon Ramsay's website
The BBC Food website
The Gary Rhodes website

Has Google done the math?

Picture: Peter Forret

$1,6bn. Wow. It made the mainstream headlines of South African news. It is a lot of money for a business that's not making a cent. That's what Google paid for YouTube.

Google has made other big purchases - including a stake in AOL from Time Warner at $1bn for 5% [source]. But I guess this one has all the romance of another dot com fairytale.

Speaking of fairytales, is Google too good to be true?

Google’s market capitalization at $110 billion is larger than Coca-Cola’s $98 billion and over twice Yahoo’s $46 billion [source].

If Google were an established business, one branch of theory would expect it to return earnings equal to its weighted averaged cost of capital (WACC) - basically the average of what shareholders and creditors expect back on their funds invested/lent to Google. Using the Capital Asset Pricing Model, Google's WACC could be estimated at 14,7% [source]. That would imply (based on Google's market value of $110bn) that Google would have to return $16,17bn per annum in earnings.

Google earned $6,139bn in revenues and $1,465bn in earnings for the financial year ending in December 2005 [source].

For 2006, Bear Stearns raised its revenue estimate to $6,8 billion from $6,55 billion. For 2007, Bear raised its revenue estimate to $10,1 billion from $8,3 billion (in April 2006 - prior to the YouTube acquisition) [source].

This after the 2005 earnings disappointed the market and resulted in a 20% knock to Google's market value.

But the numbers above show that market value to be inexplicably overstated. Even if you could guarantee Google's future earnings at $16,17bn (which is many a mile from today's $1,465bn), you'd have to reduce the company's value based on the time it woud take to achieve those heady heights. Would anybody guarantee earnings larger than those of Microsoft? And when would they be achieved? For every element of doubt, investors reduce the value of a company. There hasn't been any of that wisdom in the valuation of Google's shares.

Google's most recent acquisition was funded through shares issued to YouTube investors. Effectively this has increased Google's valuation by the same amount - as opposed to a cash acquisition which would have resulted in a commensurate outflow.

Based on the same Cost of Capital theory as above, the additional capital invested in YouTube requires an additional $243m in earnings or an additional revenue of $7,1bn (based on the same net margin as 2005) per year.

So let's recap:

• Google currently makes $6,139bn in revenues and $1,465bn in earnings.


• On Google's current market value, Google should earn $16,17bn per annum in earnings implying revenues of $472bn -based on Google's current net margin (ridiculous of course - investors expect Google's net margin to improve over time, reducing the implied revenue figure - still compare those revenues and earnings to those of Coca-Cola for 2005: $23,1bn and $4,9bn respectively or for Microsoft for 2005: $39,8bn and $12,3bn respectively - ridiculous?)


• The YouTube acquisition increases that required revenue and earnings figures by $7,1bn and and $243m respectively.

Let's try and put those earnings figures in perspective:

• Advertising makes up 99% of Google's revenues. Advertising has accounted for an increasing share of Google's revenues for each year since 2001 [source].


• Google pays cost of acquisition costs (payments to Google network members of roughly 40% of those ad revenues, dropping from 48% in the first quarter of 2004) [source]. This is a strong motivation for bringing companies like YouTube inhouse or developing their own traffic (which they tried to do unsuccesfully through building Google Video as a competitor to YouTube).


• The entire US online advertising market was projected to be worth $15,6bn in 2006, up from $12,5bn in 2005 [source].


• Online advertising spending accounts for 5% of total media spending and is forecast to grow to $55bn by 2010 [source].


• Search is by far the most lucrative area, accounting for 40 percent of the total online ad spending in the U.S., according to JupiterResearch [source].


• The amount being spent on Internet advertising is growing, but the rate of that growth in the United States is slowing slightly, from 32,5 percent in 2004 to 30 percent in 2005 [source].

So could Google get its $16bn of earnings from the search market? Unlikely without it owning the whole market, that market growing substantially and Google massively increasing its net margin.

Clearly Google are focused on improving their margins and this must be the primary reason for bringing a network site like YouTube inhouse - it avoids that 40% they pay to acquire those eyeballs.

So let's look at the revenue potential of YouTube.

Around the world, people watch videos on YouTube more than 100m times daily. About 65 000 clips are uploaded on to the site every 24 hours and the monitoring agency Hitwise says YouTube accounts for 60% of all videos viewed on the net [source].

While Google operates a variety of advertising placement methodologies, let's simplify things and assume only a cost per thousand impressions (CPM) model (a cost per clickthrough - CPC - model is favoured by advertisers).

Let's assume (generously) that YouTube users view 2 YouTube pages for each video they watch, implying that the site generates 200m page impressions per day. On Google's CPM model of $5 per CPM, that's $365m in revenues per year - saving the 40% cost of acquisition is a $146m saving per annum. You'd have to subtract any costs of running YouTube's business from that. However, ignoring that and discounting the full $146m figure into perpetuity by Google's cost of capital arrives at a valuation on that saving of $993m. And of course, that $146m in savings is a long way short of a cost-of-capital derived figure of the additional $243m in yearly earnings that YouTube needs to bring in.

So unless YouTube's business model offers some other exciting business opportunities, their founders made out like bandits - much like Google's founders it would seem.

Read more about YouTube's founders here.

Note: turns out I know someone involved in the deal (who made a bundle). It marks another dot com bonanza to someone I know. My dot com planning reignites this weekend...

Are you a bigot too?

I must say that the pending civil unions bill has brought every bigot out of their closet.

From the members of parliament who feel they cannot approve it (despite a constitutional court interdict), to the verious members of the various churches, to Jacob Zuma, to Jon Qwelane, to The Marriage Alliance.

This is not a South African issue. The gay marriage debate has raged all over the world and surprisingly few countries recognise gay marriage. In many countries is it still illegal to be gay.

What is a bigot?

Merriam-Webster defines it as:

Main Entry: big·ot
Pronunciation: 'bi-g&t
Function: noun
Etymology: French, hypocrite, bigot
: a person obstinately or intolerantly devoted to his or her own opinions and prejudices; especially : one who regards or treats the members of a group (as a racial or ethnic group) with hatred and intolerance
- big·ot·ed /-g&-t&d/ adjective
- big·ot·ed·ly adverb

All the people and groups mentioned above qualify.

It is surprising that the issue has drawn such heat in a country as open as South Africa (we have come a long way since 1994!) The attitude seems to be one of, "If you keep it in your bedroom and never confront me with it, I'll ignore it."

Which again is amazing. I mean, when Pieter Dirk-Uys had a massively public fight with his boyfriend in the town of Darling (don't you just love the aptness of the location, daaahling? For those who don't know, Darling is a small, very Afrikaans farming town in the Western Cape), the whole town had an interest. After all, not only was he their most famous gay resident, he was their most famous resident! I wonder how they feel about gay marriage?

Now this is no argument for Gay Pride. Give me a break. I find the thought as redundant as Black Conciousness (although, more on this soon in another post - I understand the need for prejudiced groups to understand the prejudice, who they are and to fight prejudice, but pride?) Kissing your gay boyfriend or girlfriend in front of someone because it makes them uncomfortable is provocative and unlikely to win them over.

But back to gay marriage. Just read this Jon Qwelane claptrap: "It's unnatural," "I like homosexuals," " I would condemn and disown [my offspring] if they turned out to be homosexuals."

"I like homosexuals?" - that sounds like, "I have many black friends." How do you usually respond to that Mr Qwelane?

And then there was the out and out hate speech by Jacob Zuma: "When I was growing up an ungqingili (a gay) would not have stood in front of me. I would knock him out."

The Sowetan quoted Zuma as saying that same-sex marriages were "a disgrace to the nation and to God."

Which brings us to perhaps the crux of the matter. Religion. Many if not most of the groups protesting gay marriages do so at least partly on religious grounds. People seem to forget both the idea of seculism and the Christian requirement to treat the Bible as a book of rules for them as an individual - "For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you. Why do you look at the speck of sawdust in your brother's eye and pay no attention to the plank in your own eye? How can you say to your brother, Let me take the speck out of your eye when all the time there is a plank in your own eye? You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother's eye." (Matthew 7:2-5)

Jesus demonstrated love for all mankind, Christian or not. He loved those of other religions, Jews who did not recognise him as the son of God and spent time with undesirables such as lepers.

Yes the Bible is clear on homosexuality (Leviticus 18:22 - even though there remains much debate). That remains a homosexual person's issue to deal with should he/she consider Christianity, and not for his fellow Christian to stand in judgement of him.

The same would apply to any part of Christianity or any other religion as it applies to those who do not follow their religion. Must Islam be outlawed because it is not Christian, or vice versa?

Which comes to law. Should law be the popular view? I wonder. I wonder if the measure of good law is that it prevents someone from doing you harm and protects your rights. On that measure, it is difficult to argue against the civil unions bill. It proposes nothing to harm Christian, Moslems or anybody and their beliefs.

What Christians and other religions might argue is the right of a Church or priest to refuse to marry them. Hey, I hear them on this one. In any case, why would you want a religious ceremony for a religion that condemns your actions?

There may be one good thing coming out of this. It seems that Jacob Zuma's supporters could accept possible corrupt dealings on his part. They could accept his regard for a woman's dress as a sexual invitation. But, if the papers are to be believed, they might not be able to accept his homophobia.

Maybe we're making progress after all.

Why the Web 2.0?

I've been involved with the Internet since 1994. Those were the early days when the ANC was one of the pioneer Internet users in South Africa and I used DOS prompt FTP to get their latest economic thinking on the RDP.

In 1995 I started ecommerce development and in 1996 built an eCommerce server. I went on to be an eBusiness consultant and head up an eBusiness consulting unit.

I lived through the Dot Com crash and due to my aversity to hype, missed joining many Dot Com startups but then also missed the millions some of my friends made.

In my job I often had to speak to Blue Chip CEOs and their executives about the Internet. A few bought into the hype (that I didn't sell them) and wanted to explode their legacy and go from blicks to clicks. Some were desperate not to be taken apart by an agile competitor operating from a garage - even some of the Big 4 SA banks.

We know what happened. Those of us who truly live the Internet also know what was true, what wasn't hype. We are the future consumer. We see our kids growing up as reflections of us and living differently - be it through teaching us things on the Net or being addicted to MXit.

We get Web 2.0. While others fight over definitions, we see a site and know, "That's Web 2.0."

But some of us - OK maybe it's just me, wish someone hadn't coined the term.

I'll tell you now, if I walk into an executive's office and try and sell him on Web 2.0, he's going to be thinking, "Yeah like it was with the Dot Com boom, huh?"

Just the fact that new web tendencies have been named is the problem.

The preferable route? Just build it into what the Web should be. Talk about what Amazon are doing, what the BBC are doing, what the New York Times is doing. What Google, Wikipedia and Flickr are doing.

I'll tell you what. In the late nineties, when we were looking for a way of conveying the goal, we'd often talk about the "Amazon.com" experience. If the executive had ever used the Internet, they knew what we meant. If their eyes didn't flicker with recognition, I'd schedule an hour to take them through Amazon.com's website.

I wouldn't do much different today. Maybe I'd say that there are some new tools and best practices that are worth noting, but I'd avoid saying, "You need to be Web 2.0"

Will a tide of media attention help turn the tide against crime?

Something somewhere has changed. South Africans have had enough of crime.

And for a change they're not whinging and emigrating. They seem to want to be part of a positive change.

This was marked by an unprecedented front page editorial in this week's Sunday Times:

This is a crisis, not just a problem

THIS coming weekend the high minds of the ANC’s leadership will gather for their regular National Executive Committee meeting. On their agenda will be important policy matters, organisational issues and lots of discussion about the presidential ambitions of the country’s favourite karaoke performer.

Very low on the agenda, if at all, will be South Africa’s out-of-control crime situation.

The reason for this is that the ruling party and the government it controls merely see crime as a problem, not the crisis that it is.

Like the proverbial ostrich, they refuse to accept that this country is under siege from criminals. They seem to believe that it is a problem affecting pampered whingers in Sandton, Durban North and Claremont, forgetting that the residents of places like Tembisa, Manenberg and Clermont are as much at the receiving end.

The past year has seen the undoing of the work of the past few years when we seemed to be winning the war against criminality.

Crime statistics revealed this week showed that nearly 19000 people were murdered in the past year, nearly 55000 were raped and there were almost 120000 robberies.

It is these horrendous statistics, and the horrific violence that accompanies South African crime, that drove Judge Gerhardus Hattingh to deliver what some considered an injudicious political statement in court this week.

Sentencing the killers of four-year-old Makgabo Matlala, Hattingh told how he wished he could condemn the killers to death.

“In my experience, all right-thinking members of the community, regardless of race, are in favour of the death penalty. Government must take responsibility for ending the rampant crime wave engulfing our country ... and it’s now time something drastic is done about crime. Just like South Africa was freed from the yoke of apartheid, South Africa must be freed from the yoke of crime,” he said.

Hattingh had earlier heard the confession of the killers, who had tied the four-year-old’s hands with shoelaces, suffocated her with her own panties, blindfolded her with trousers and strangled her before taking turns in raping her 58-year-old nanny.

While we strongly disagree with the learned judge’s views on the death penalty, we concur that, as with Aids, the government’s response to crime amounts to a gross dereliction of duty.

Can we as South Africans really proclaim that we are a free people when we live in fear of the thousands of monsters who roam our streets?

As renowned author André Brink points out on the pages of this newspaper, South Africa is a normal society that should not be tolerating such an abnormal situation.

Fortunately the citizens of this republic are not tolerating this state of affairs. South Africans have not thrown their hands in the air and said, as is the case in some societies, that this is the way it is. South Africans are fighting back and want their government to fight alongside them.

But the authorities seem to believe that it is they who are under siege from a mutinous citizenry and have come to regard the public — not the criminals — as the enemy.

Police Commissioner Jackie Selebi has become increasingly arrogant and unaccountable, believing that it is fine to yell statistics at us once a year.

This newspaper would like to suggest that, in-between the mandatory back-stabbing sessions at this weekend’s gathering, the ANC’s high-ups reserve some time for an
in-depth discussion on this crisis.

If they do not do so, it will confirm our worst fears: that they do not care.

---

Today's Business Day carried a balanced and thoughtful piece from the always good Hilary Joffe:

Crime statistics show we need a range of solutions, and urgently

Hilary Joffe

IF CRIME were coming down, would anyone believe it? The response to last week’s crime statistics suggests not.

The statistics compiled by the South African Police Service (SAPS) show decreases in crime rates across a broad front in the year to April. Almost all of the 22 serious crimes the police report on declined, both in absolute terms and relative to the population. Car theft did increase, after coming down in previous years, and within the key “aggravated robbery” category there were worrying jumps in crimes such as cash-in-transit heists and car hijacking. For the rest, those crimes that increased were supposed to, in the sense they reflect better policing or better reportage rates — driving under the influence and drug-related crimes, as well as commercial crime.

But from reading much of the media and opposition party comment on the crime stats, you could be forgiven for believing that crime rates in fact went up. People don’t seem to feel that much safer.

It’s not too hard to explain why, despite the statistics. Even if overall rates are declining, each year a whole lot more people have become new victims of crime. There’s likely to be a long lag before perceptions catch up with any improvement. Low conviction rates add to the sense of insecurity. But the scepticism is fuelled too by the police’s own communications. Their response last week to the calls to release crime stats more often was legitimate — few countries do release national crime statistics more than once a year, and one quarter’s figures may reflect short-term blips. Even so, one wonders why they don’t just publish quarterly stats and have done with it. The police might gain more credibility for their stats if they rushed them into print, whether good or bad. We need numbers on prosecution and conviction rates, too.

Not that the police could be faulted for the detail and comprehensiveness of last week’s information. Nor could they be accused of playing down the failures. They drew attention to the increases in cash-in-transit robberies and car hijacking, which reversed the declining trend of previous years. SAPS’ statisticians highlighted too that the 2% decline in the murder rate was much slower than in the previous two years and fell well short of the targeted 7%-10% annual decrease in contact crimes.

Oddly, though, they didn’t do a convincing job of highlighting some of their successes — an 11% decrease in aggravated robbery in Gauteng, for example. Perhaps good news is always hard to sell. The problem with knee-jerk negative responses is they tend to prevent us listening to what the crime stats are really telling us. For the stats raise crucial questions, not only about policing and law enforcement but also about South African society.

Take murder, usually seen as the most reliable indicator of crime because it’s the most accurately reported. The murder rate has declined sharply over the past 11 years, falling from 66 per 100000 people in 1994-95 to 39,5 in 2005-06.

In absolute terms that’s still 18528 murders, the mark of an extremely violent society. But while the level of random violence perpetrated against strangers is exceptionally high, the number of murders committed by victims’ friends and relatives is much higher. A recent SAPS analysis of crime dockets shows 81% of murder victims knew their murderers. The figure rises to 90% in assault cases and is about three-quarters in rape cases.

The police argued last week that these “social contact crimes” could not be curbed by conventional policing methods, because they reflect social and economic conditions, as well as high levels of alcohol and drug abuse. Cynics note the police are more likely to blame murder on social ills in years when the rate isn’t decreasing fast enough, while taking credit when it falls. One could speculate, too, that the decline in the murder rate in the past decade might have had more to do with improved socio-economic conditions and a more peaceful society than with better law enforcement. But the social nature of violent, contact crime is a crucial issue, and is one that was raised this year in the Presidency’s macro-social report. The police can’t be let off the hook and they clearly can do a lot more to improve their conventional policing. But there is an important debate here about where that fits in relative to other, broader strategies to combat social breakdown. It’s important to establish why success has been achieved in the latest year with bringing down rates of social contact crime.

At the other end of the spectrum are those areas of crime, such as cash- in-transit, car hijacking and bank robbery, that are dominated by organised crime syndicates. Many of those crimes had been coming down nicely, reflecting the success of a focused, integrated approach between the police, the National Prosecuting Authority and business. Clearly, though, something has gone awry, more so since April. If the crime stats show anything, it is that there are many different problems on the crime landscape, and they require a range of different — and urgent — solutions.

‖Joffe is chief leader writer.

Today's crime headlines - just those from IoL:

Ministers' Cape homes robbed
Shop owner traps robbers inside store
Man fatally wounded in clothing store robbery
Man accused of raping four-year-old niece
Burglar cleans house but leaves clear trail
Argument leads to taxi owner's death
Officer killed during assault investigation
Cop seriously wounded in early-morning attack
Armed robbers target Joburg bank
Sirens stop heist robbers in their tracks
Man held for perlemoen poaching
Woman 'duped' by witch doctor's money plan
Cops nab heist suspects after shoot-out
Teen chases down mom's torturer
Attack victim blogs his painful recovery
Makgabo murderers' second trial postponed
Ramokgopa 'authorised irregular' payouts
North West police nab bank robbery suspects
Police probe officer's shooting spree
Man strangled, wife assaulted in raid on home
Unionists' case postponed to November
Huge cash haul as robbers hurt guard in heist
Gang of 20 makes off with education computers
Man on porn charges cuts R300 000 deal
Roadworks firm latest victim of N2 hell run
Day the hijackers should have stayed in bed
KZN police launch crime blitz in the suburbs
'I had no idea my son was a bouncer'
Ex-Comrades boss on trial after muso's death
Killer priest takes his secret to jail
Scorpions prosecutor gets nasty sting
Alleged paedophile 'filmed attacks on girls'
Murder suspect is unstable, says psychiatrist