The Internet of me and my things

Let’s say this key ring is yours and you’ve lost it.

If somebody scans the QR code with their smartphone, they will see a message from you. The message can say whatever you want (such as, “Help! I’ve misplaced these, please call or text me at this number”), and you can update it any time, because the information is in your personal cloud.

You can host your personal cloud yourself, or you can have it hosted elsewhere, such as at SquareTag, the brand name on the tag you see here. SquareTag is a service of Kynetx, the company behind the personal cloud concept. (Disclosure: I’m an advisor to Kynetx.) But you can use anybody’s. SquareTag is not a silo, and Kynetx is not out to trap anybody. Quite the opposite, in fact. Kynetx is out to give you tools to connect to your world of people and things.

Phil Windley is the co-founder of Kynetx and father of the personal cloud concept. In Personal clouds as general purpose computers, Phil says personal clouds are “the successor to the personal computer,” adding, “In the personal-cloud-as-personal-computer model, owners of a cloud control it in the same way they control their computer. They decide what apps to install, what services to engage, and how and where the data is stored.”

Most of the clouds we hear about today are the big centralized kind managed by companies such as Apple, Google and Amazon. Some of these industrial clouds are pure utilities, doing storage and compute work. That’s the case with, say,  Amazon and Rackspace. Nothing wrong with these, just as there is nothing wrong with electrical systems or storage facilities. Other clouds, however, are out to control you and your life — for both your good and theirs. Apple’s iCloud is one example. You can get it only from Apple, and it is not substitutable (as would be, say, a storage facility). In spite of the fact that Apple makes PCs and other personal devices, the company and its iCloud come from an old-school mainframe assumption: that one central server (or service) should contain and control what is done by many different clients. The technical term for this architecture is client-server. The vernacular term is calf-cow. You’re the calf. Apple is the cow. In the calf-cow system, you are always dependent, never fully independent.

With personal clouds you are independent. Your personal cloud is yours alone, to keep track of any thing, person or event in your life — and to manage your interactions with them. Such as, IF my keys are scanned, THEN display this message.

In an interview five years ago with Phil WindleyCraig Burton called every person an “enterprise of one.” In the past several years Phil and other developers (especially his colleagues at Kynetx) have been working on ways not only to make every person into that “enterprise of one” with connections to keep track of and control every thing of theirs as well. They are doing this through a general purpose platform called a personal cloud. You should have one, and so should the things you care about.

The design of the Internet in the first place is one of a boundless variety of end-points, with no central control of what those ends can do. Each is simply an address. Any end can connect with any other end. We have a similar system in the world called conversation. Anybody can talk with anybody else, or shake hands. They can also engage in business, and form relationships that last for moments or years. With personal clouds, things as well as people are brought into the Internet’s conversational and relational end-to-end system.

Take for example your car. Let’s say you put a SquareTag on the dashboard, next to the vehicle ID number. You can set up your car’s personal cloud so that all somebody scanning it sees is that it’s your car (or whatever you choose for it to say). But you can also scan the tag every time you have the car serviced, be taken to the car’s personal cloud, and enter whatever you like about the service event, or click on a private link that takes you (alone) back through your notes on the car’s service history. You can also set it up so the service station or dealer can connect their service records to yours, so when you look in your car’s personal cloud, you can also see those other service records. All you need for doing that are logical connections between the car’s tag cloud and the clouds of the other places where data is kept. With a squaretag, it isn’t necessary for any of your things to be “smart.” Instead the smarts are located in those things’ personal clouds.

There is no limit to what we can do with personal clouds because all of them are by nature independent, just as atoms are independent. And, just as certain kinds of atoms bond well with other kinds of atoms to form molecules, certain kinds of personal clouds (such as those of things we possess) will bond well with other kinds of personal clouds (such as human beings with possessions).

Likewise each of our personal clouds can, by mutual agreement, be social in the true and literal sense of the word — just as we are in the physical world. We won’t need to be social only inside corporate systems like Twitter’s and Facebook’s. There will still be administrative identities in the world (such as the ones on our drivers licenses and in employers’ HR systems), but among our sovereign selves we can choose to identify ourselves any way we wish. (Which others can, of course, accept or not.)

While personal clouds today are programmed with an open source language (KRL, for Kinetic Rules Language), and executed on an open source rules engine, what makes them interoperable are a new open standard: the evented API. Open standards are what allow closed (or open) things to connect and do things with each other. For example, it doesn’t matter whether you are reading this on a Linux, Mac, Windows, iOS or Android device. Open standards make it possible for all those things to communicate with each other.

We are at the earliest stage of where personal clouds will eventually go. What we can say with confidence, however, is that they will some day be the way each of us controls our lives, our personal data, our possessions, and our relationships with each other and our things.

We are born as sovereign beings, yet live in a networked world. The Internet as it was designed in the first place respected that. For most of the last two decades, however, we forgot that and built industrial-age systems that subordinated individual sovereignty and autonomy to the conveniences of large companies and governments. We built systems for capturing and controlling people and their things. There was lots of good stuff that could be done with these systems, but they were done at the expense of liberty and freedom for individuals and their possessions. Personal clouds not only promise that liberty and freedom, but provide the means for accomplishing it.

What we do with personal clouds is up to each of us — and to the countless new businesses that will show up to help out. When they do, you can bet a whole new boom of possibilities will show up too. The difference with this boom, however, is that each of us will be in charge of ourselves and what’s ours. That’s new. And it will never get old.

 

Wallets are personal

wallet-smallA lot of big companies are eager to get their hands in your pockets — literally. They want your mobile phone to work as a digital wallet, and they want the digital wallet app you use to be theirs.

Naturally, this looks like it should be a big business — and to some degree it is already. But it also hasn’t met promotional expectations. This became clear a few days ago, when comScore released Digital Wallet Road Map 2013, a $4995 report on the digital wallet business. In a press release highlighting the report’s findings, Andrea Jacobs, comScore Payments Practice Leader, said “Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits.” Here’s how the release unpacks that:

The current digital wallet landscape remains fragmented among providers because of low consumer adoption outside of PayPal, with only 12 percent of consumers claiming to have used a digital wallet other than PayPal. However, study results indicated that the digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits.

Consumer Awareness and Usage of Digital Wallet Offerings
November 2012
Source: comScore Digital Wallet Road Map 2013
Digital Wallet Percentage of Total Respondents Aware of Digital Wallet Percentage of Total Respondents Who Used the Digital Wallet
PayPal 72% 48%
Google Wallet 41% 8%
MasterCard PayPass Wallet 13% 3%
Square Wallet 8% 2%
V.me by Visa 8% 2%
ISIS 6% 1%
Lemon Wallet 5% 1%
LevelUp 5% 2%

One clear barrier to use of digital wallets is that the concept is often difficult to convey and prone to misinterpretation. Even after being asked to review the websites of particular digital wallets, respondents across all wallet brands still scored an average of just 45 percent in terms of demonstrated level of understanding.

Here’s the problem: wallets are personal. Even if you have a wallet with a brand name on it (say, Gucci or Fossil), it isn’t their wallet. It’s yours. What you keep in it, and how you use it, are none of their business. In fact, those companies would never think of making it their business, because all they’re providing you is a place to put your credit cards, your cash, or whatever other flat things you feel like carrying around in your pocket or purse.

So far, all the digital wallets out there are not yours. They belong to some company. You merely use the app. The wallet is their business, not yours. In this respect they aren’t much different than credit cards or various loyalty cards, which are things you put in your wallet; not the wallet itself. The wallet itself should be agnostic, if not oblivious, to what you put in there. It should be like a toolbox, where you can store lots of different tools, made by lots of different companies, made for serving different purposes.

All the digital wallet companies in comScore’s chart have isolated, proprietary and silo’d ways of providing payment benefits to users. Imagine buying a tool box from Sears that could only hold its own brand of tools, which would only work with devices from companies that were partners of Sears. That’s what we have with digital wallets so far. It’s the same problem we had with online systems (AOL, Compuserve, Prodigy, etc.) before the Internet came along. They were closed silos.

The Net works because it is a general purpose system. It isn’t run by any one company. Likewise, PCs are also general purpose systems. The company making them doesn’t insist that it only works with certain other partner companies. In that respect it’s open, just like the wallet in your pocket or purse. Smartphones, on the other hand, are general purpose to a more limited degree. Apple tells you what apps can and can’t run on your phone. Google makes sure some of  its own apps (such as its wallet) run only on Android phones — or run better on Android than on Apple’s or other companies’ phones (as it did for years with Google maps for Apple).

I suggest that the digital wallet might be best thought of as something that’s part a general-purpose thing called the personal cloud.

Your personal cloud is your personal space, which you run for yourself in the networked world. In it you define the ways that your personal data interacts with the world of things, and of services from companies and other entities. That may sound complicated, but it’s actually no different than the personal space you call your house, your car, and your body. In fact, you can think of a personal cloud as something akin to all three, but in the networked world rather than in the physical one. For more on this read Phil Windley, starting here; and follow what Kuppinger-Cole says about Life Management Platforms (which I recently visited here).

So, to sum up, the main thing wrong with digital wallets today isn’t what they do. It’s that they are called “wallets.” Instead they should be called what they really are, which is payment services. (Yes, they do more, but the main thing they do is facilitate transactions.)

The notion that something so personal as a wallet should be provided for you, as a service, by a company, is typical of the calf-cow thinking that has dominated computing for the duration. There is nothing wrong with this, if it’s still 1995. But it’s now 2013, and it’s time we moved on. And, to do that, I’d like to see real digital wallets — personal ones — come up as a feature of personal clouds. So, let the conversation begin. Then the development.

Bonus link: Google’s Wallet and VRM.

 

 

 

 

 

Bringing manners to marketing

The Cluetrain Manifesto was a success, and remains so, because it gives lessons in manners to marketing. Thus Cluetrain is also highly sourced by manners-minded marketing folk, who have eagerly leveraged Cluetrain‘s first thesis: “markets are conversations.”

It is now almost fourteen years since the Cluetrain website went up, thirteen since the original book came out, and three since the 10th anniversary edition hit the streets.Here are some stats, as of today:

Most of those results are generated by polite marketers. Unfortunately, there are still too many marketers of the rude sort. To these marketers, customers are “targets” to be “captured,” “controlled,” “managed,” “locked in” and otherwise treated without the full respect we grant human beings we interact with personally, in actual conversation. These marketers are the types about which the great Bill Hicks said this:


 

That was in 1992. Imagine what Bill would say about marketing at the dawn of 2013. Here’s how that picture looks to Luma Partners:


 

Rotate that thing 90° to the right, so the movement is top to bottom, rather than left to right. Then think about the combined weight of all that marketing, pressing down on the consumer.

No doubt some small pieces of that great mess of marketing are respectful of the consumer. And some of these categories (such as, for example, “publisher tools”) are comprised of companies providing tools for actually interacting with customers, rather than just for targeting at consumers. (The distinction is critical. Doug Rauch, retired President of Trader Joe’s, calls consumer “a statistical category.” He says, “We say customer, person, or individual.”)

Cluetrain was written in 1999, when — compared to the above — digital marketing was still in its Precambrian stage, and was essentially a declaration of independence from marketing. As Jakob Nielsen told me later, Cluetrain‘s four authors essentially defected from marketing and sided with markets against marketing. This was made clear by the Manifesto’s alpha clue, which was written by Chris Locke. Though less quoted than the 95 numbered theses below, it remains the most important:

if you only have time for one clue this year, this is the one to get… 
Unfortunately, that clue was not yet true. Our reach did not exceed marketers’ grasp. That much became clear after Cluetrain became a favorite of clueful marketers, but remained largely unheard-of by the rest of us — who were the ones Cluetrain spoke for, and who actually needed help against marketing’s persistent bad manners.

So, in 2006, I launched ProjectVRM to foster development of tools and services that would provide the reach to exceed marketing’s grasp. As of today there are dozens of VRM developers working on the customers’ side.

We have a model for that reach in the brick & mortar world, in the form of well-mannered one-to-one interactions between vendors and customers, in what the CRM business calls the buy cycle and the own cycle. As I wrote here, “Nobody from a store on Main Street would follow you around with a hand in your pocket and tell you ‘I’m only doing this so I can give you a better shopping experience.'” But online, and through our mobile devices, we are being tracked like animals by a business that often rationalizes the (almost literal) hell out of it.

It would seem a lot worse if surveillance-fed “big data” advertising algorithms didn’t also suck at it, most of the time. One case in point: Facebook. Here is my Facebook profile picture and top-level data, plus some screen shots of ads Facebook has presented to me in the last few minutes:


facebook profile and ad guesswork
Here Facebook fails to respect a fact recorded in my Facebook profile — that I’m married — and assumes I’m cool with being reminded of my age (which has edged into the final demographic). There is zero evidence that I have (or am interested in) foot fungus. (Is that something old people get? If so, is this ad how one would want to find out about it?) There is no evidence, on Facebook or anywhere in the world, that I might be interested in referral marketing, home security, or a career in hospital medicine (much less in Ohio, to which I have been just once since 1963), or that I’m up for a place in South Beach (where I’ve been just twice, long ago). I’ve also told Facebook, back when its ads came with a feedback mechanism, that I consider Classmates.com a rude pain in the ass. (I am sure they are the source of “classof1996.net” — a year off from my actual high school graduation, by the way.)

So, almost across the board, the ads I see on Facebook are rude, wrong, or both. And I’m sure, in this respect, that I’m no exception.

A couple years ago, the top guy at one of the advertising companies told me something interesting about Facebook and Google. He said they were extremely jealous of what the other could do with advertising, but that they could not do themselves — or, at least, not yet. Facebook was jealous of Google, he said, because Google could advertise all over the Web. And Google was jealous of Facebook, because Facebook could get far more personal with its advertising than Google could. Yet, because we are consumers of those companies’ services, rather than customers, we have no direct, money-backed, truly conversational mechanisms for giving them useful feedback. Such as, “Excuse me, but your manners really suck here.”

Although I am not a heavy Facebook user, I have been on the thing since 2006, and have hundreds of friends there. I am also a highly public person and not hard to figure out if you want to get personal with me. Yet I have never seen a personalized ad that appealed to me with anything I’d call accuracy. Once in awhile I’ll see an ad for something photographic, but I don’t know whether that’s because I do a lot of photography, or because the advertiser is carpet-bombing some large population, or… whatever. As Don Marti eloquently points out, the targeted individual in the system diagramed above doesn’t know what’s actually going on. Should he or she bother to care about an ad, the thought balloon over his or her head would say “I don’t know if your company is really spending a lot on advertising, or if you’re just targeting me.”

In Facebook and Google may be forced to ask permission to use personal data, The Guardian visits the prospect of regulatory relief. My problem with that approach is that it assumes that we, as poor “consumers,” are naturally weak. But I don’t think we are. I think we are strong, and only bound to get stronger. That’s why I invite everybody reading this to join Customer Commons, and to start using VRM tools and services. Let’s demonstrate genuine market power, for our good, for the health of the Internet we share, and to give real help to every business that wants to treat real customers with real respect.

The Personal Revolution

individualWhile the history of computing and communications often appears to be one led by big entities in business and government, the biggest revolution has actually been a personal one.  Each of us, as individuals, have acquired abilities that were once those of organizations alone — and have done far more with those abilities than the big players ever could — for those big players as well as for ourselves.

It started in the early ’80s, when the IBM PC became host to thousands of new applications for individuals. Personal computers suddenly proved to be a far more fertile ground for application development and new ueses than were the old corporate mainframes and minicomputers. Computing was no longer only about calculating and data processing. It was about everything one could imagine. The result was a profusion of new capabilities for individuals that also brought great benefits to organizations of all kinds and sizes.

A little more than a decade later, in the mid-’90s, the Internet did for communications what the PC did for computing. It gave individuals abilities that went far beyond those enjoyed by big organizations anywhere. Thanks to the Net, anybody could connect with anybody (or anything), anywhere in the world, using protocols that nobody owned, everybody could use, and anybody could improve. Even though there were many owned networks within the Internet, none governed the whole, and the result was a system that put every connected thing at zero functional distance from every other thing, at costs that could often be treated as zero. The positive economic and social externalities of the Internet today are beyond calculation. Again, as with PCs, this owes to new power in the hands of individuals that proved good for organizations as well.

Then in the late ’00s, smartphones and tablets put personal computing and communications advances — won by the PC and the Internet — into devices that fit in pockets and purses, running on platforms that invited millions of new applications. Once again, the increase in personal power and freedom proved essential to organizations as well. Initial resistance to BYOD (bring your own device) has ended, and companies now develop their own apps for employees and customers to use on their smartphones and tablets.

The upward trend in personal empowerment will move next to the “Internet of things,” as more of those objects and devices become equipped with computing and communication abilities — and as individuals gain the power to combine and program interactions between those things and the many services available through APIs ( application programming interfaces) and apps. Each of us will be able, either by ourselves or with the help of “fourth parties” (ones that work for us, as do brokers and banks) to control our identities, secure our privacy, and manage our many interactions in the world, without having to rely on any one platform, vendor or other enabling party. Far better economic signaling will move in both directions between demand and supply. Genuine, trusting and productive relationships will develop, and earned loyalty will prove far more useful than the coerced kind. In sum, the market will discover that free customers and citizens will prove more capable and productive than captive ones, and that this will be good for both business and society.

Progress in this direction will not be easy or even. All through the history just outlined, there have also been constant efforts to contain and limit what individuals can do with their computing and communications abilities. Large incumbent players have worked to create dependencies from which we cannot escape, and to resist competition in open markets. In spite of the many advances they have brought to the market’s table, phone and cable companies today still operate actual or virtual monopolies, and have been working from the start — aided by captive legislators and regulators — to subordinate the Internet’s boundless positive economic externalities to their own legacy business interests. Copyright and patent absolutists have also pushed successfully for laws and regulations that thwart or stop innovation and growth outside their own virtual castles.

And now, in many countries that value neither free markets nor free citizens, efforts are afoot to move Internet “governance” (an oxymoron from the angle of the Internet’s founding protocols) from organizations such as ICANN to the ITU (International Telecommunications Union, now part of the U.N.), where they can partition the Net along national lines, censor it (as in China today), and impose tariffs on data traffic across borders — enriching governments at great expense to economic growth and prosperity, and the welfare of citizens.

Yet the computing, communications and programming genies continue to do their magic for individuals and the organizations they comprise and support. Those genies will not go back in their old bottles. Thus the way to bet in the long run is on personal and economic freedom, and the general prosperity that arises from both. The only way to make that bet pay off, however, is to work on the side of individuals and the developers that empower them. That’s our job here at Customer Commons, and we invite you to join us in that work.

Discounts are free if your time has no value

“Love it or hate it, Black Friday is all about the deals,” AdAge says, in Target, Amazon, Poised to Win Black Friday. That love/hate conflict speaks to the mixed blessings (and curses) of tying a store’s — or a whole market’s — success to “deals” alone. The bargains, for both retailers and customers, can be Faustian.

Exhibit A: Kmart.

Back around the turn of the millennium, I attended a retail conference where two of the speakers were myself and Lee Scott, then the CEO of Walmart. We represented the bookends of demand and supply: as a co-author of The Cluetrain Manifesto, I represented the customer. As CEO of the world’s largest retailer, Lee represented his whole industry.

The location was Lucerne, and the lunch was boxed. It was a nice day, so my wife and I took our boxes outside and sat at a small table near the lake. Lee came over and asked if he could join us. I said sure, and then used this rare opportunity to pump the dude with questions. My first was “What happened to Kmart?” — which was then closing stores and heading toward bankruptcy.

His answer: “Coupons.” Some large percentage of Kmart’s overhead, he said, was devoted to publishing what amounted to its own currency, and then dealing with numerous effects, which only began with the time wasted by handling that currency at check-out. In addition to inconveniencing everybody involved, couponing also had the effect of “downscaling” the demographics of the customer base to a caste then known to the trade as “coupon-clippers.” (This population has now become so large — and expert — that the reality TV show Extreme Couponing persists into its third season.)

Walmart, Lee explained, minimized its dealings with coupons — and even advertising, which was limited (by decree of the late Sam Walton) to some small percentage of the company’s overhead. Instead they let the company’s tagline, “Everyday low prices,” do most of the work. (That tagline was also Sam’s.)

When I asked Lee if there were any large retailers he thought did an especially good job, he singled out Costco, which also succeeded through simplification. (Yes, they do publish and take coupons, but it’s a side thing, rather than the main thing. As a Costco customer you don’t need coupons to obtain the sense that you’re paying a low price for the goods they sell.)

Retailing has long had its time-sucking frictions. When I was growing up, in the 1950s and ’60s, the big one was stamps. The main driver of the trend was S&H Green Stamps, which had many competing imitators. The original idea was for retailers to differentiate from other retailers by offering sheets of stamps with every purchase, which customers could paste into a booklet, which they would later trade in for an outdoor grill, a door mat, or some other item from a catalog. It’s been said that S&H at its peak issued more stamps than the U.S. Post Office, and that the largest press run in human history was the 1966 Green Stamps catalog. Eventually, however, nearly every store offered the stamps, differentiation ended, and whole fad collapsed.

Today we have a similar fad with loyalty cards. Never mind that most retailers (or so it seems) now have them, but that they have costs to both retailers and customers. Here are just a few:

  • Maintaining two or more prices for items throughout the store
  • Forcing both personnel and customers to attend constantly to the differences in prices on “discounted” items
  • Partially or completely obscuring what the “real” price might be. Is the non-discounted price a surcharge for non-card-carrying customers? Probably, if the “regular” price for a dozen eggs is $3.99, and the “discount” price is $1.99 — when, say, Trader Joe’s (which has a single non-discount price for everything) wants $1.99 for the same eggs.
  • Maintaining “big data” systems for tracking customers and “personalizing” offers for them.
  • Obscuring the real value of goods gets even more than it already might be.
  • Coercing loyalty rather than earning it, causing emotional dissonance that can damage a company’s brand value.

All those practices, and many more, are both normative and highly rationalized within retailing today. Yet the notable exceptions, such as Trader Joe’s, reveal how much time, money and effort by both sellers and buyers in systems that are essentially coercive.

What would happen if we began to respect time as our most essential value? Would we have discounting at all? Not sure, which is why we need to talk about it. There are real costs to discounting. If our time has any value at all, then discounting is not free. And the hidden costs may be far higher than the obvious ones.

Cataracts for Customers

Let’s say you have an iPhone, and your carrier is AT&T.* That puts you deep inside what Scott Adams (of Dilbert fame) calls a confusopoly (and illustrates here). His text explanation:

A confusopoly is a situation in which companies pretend to compete on price, service, and features but in fact they are just trying to confuse customers so no one can do comparison shopping.

Cell [mobile] phone companies are the best example of confusopolies. The average consumer finds it impossible to decipher which carrier has the best deal, so carriers don’t have normal market pressure to lower prices. It’s a virtual cartel without the illegal part.

Now let’s just take data (and leave text and voice charges aside). Whether you choose the mobile share or the individual plan, you’re certain to pay for more than you use, unless you work carefully to use exactly 300Mb, 3Gb, 5Gb or whatever you guessed you’d use when you set the plan up in the first place.

But how can you know exactly what you’ve used? Well, by doing this:

You go into settings, hit General, then Cellular, then Cellular Usage (be sure to scroll down, because it’s off the screen), then Reset Statistics. But first you’ll want to freeze the prior total by taking a screen shot. You do this by pressing the round button in the front and the rectangular one on the top, at exactly the same time. Since resetting causes the phone to forget all prior data usage, you’ll need to save the screen shots so you can track that usage, by eyeball (since you don’t have the data, just a snapshot), and do all this repeatedly, over time. Not easy. (For example, I missed screen-shooting the middle bottom one in the example above, so I created a new one just to illustrate how disadvantaged your ability to track usage actually is.

Usually you don’t need to pay much attention, especially if you’ve got a data plan in the GB rather than the MB range.  But you need to do this often if you leave the country and need to get on the Internet. Because, according to AT&T’s Affordable World Packages page, every KB will cost you $0.0150 in Canada and $0.0195 in the rest of the world. Since there are 1000KB in a MB, and 1000MB in a GB, we’re talking $15/MB and $15,000/GB in Canada and $19.50/MB and $19,500.00/GB elsewhere. This kind of non-plan tends to cause “bill shock.” In many cases, shock is an understatement. (Here’s a report on my own run-in with Sprint several years back.)

So instead you go for one of the “affordable” plans, which look like this:

att international

The overage in each case is $30/120MB, which is 25¢/MB, or $250/GB, which is 25x the overage AT&T charges on its 3GB and 5GB domestic plans for individuals.

Confused? Of course. The whole system is partially opaque, like a cataract, or frosted glass. On purpose. This whole thing is designed so the phone company’s billing system knows constantly what’s going on while you don’t.  Knowledge, by intent, is highly asymmetrical. That way they win and you lose — while thinking you’re winning because you’ve picked the “best” plan, and have avoided getting a $10,000 bill after making the mistake of watching a movie over a cell connection in London when you thought you were on the hotel wi-fi. (Easy to do. The only thing that looks different while you’re watching is a tiny wi-fi symbol at the top of the screen, which you won’t see if you’re watching the movie in landscape mode.)

Yes, AT&T does send little text warnings when you land in another country, and notifies you as well when you hit an overage threshold, at least stateside. (I dunno about overseas.) But they still hold nearly all the cards, while all you’ve got is guesswork up front and a labyrinth of screens to spelunk through just to see where you stand, cringing every time you go there, in fear that maybe you didn’t set things right in the first place, or that you forgot to turn off cellular data (steps 1-3, above) when you left your hotel room’s wi-fi zone.

This actually sucks for the phone companies as well as for their customers. That’s because customers are a company’s nerve endings in the marketplace. If a company has a genuine and respectful relationship with customers, those customers send clear and strong signals reporting on what’s actually happening in the marketplace. Company and customer see clearly together, rather than with one clear and one half-blind eye.

Mobile phone companies don’t have to suck. A good case in point is Ting, an independent mobile phone company operating here in the U.S. With Ting, you pay only for what you use. They do publish plans, but they do that only because plans are what people are used to. Beyond that it couldn’t be more simple. Each month you are either credited for what you didn’t use, or charged for what you did, if you went over your planed amount. They also publish their phone number right on the home page, and have clear help pages and forums linked there too. They do sell phones, as cheaply as they can; but they don’t subsidize any. You either bring your own phone or buy one from them. They don’t care. There is also no charge for stopping your account. Or (and this is cool) for tethering, for example by using your phone as a wi-fi hotspot.

Ting was started by customers who were tired of having to deal with mobile phone companies that game customers with gimmicks and gotchas. They’re a great model for what innovative companies in other industries can do to break up confusopolies there as well.

And I do have some* hope for AT&T. At the Retailing Summit in Dallas this week, Kelly King of AT&T did a good job reporting how hard the company is working to change its ways, and to become more customer-friendly and helpful. It was an impressive talk, and made clear how much catching up to demand all mobile data carriers have to do.

Do you know of other companies breaking out of the confusopoly mold? Let us know in the comments below.

* I don’t mean to pick on AT&T. They just happen to be my mobile phone carrier, and the one I know best. One could say the same of Sprint, TMobile and Verizon, I’m sure. (And yes, there is this, about a different division of AT&T. It matters, but it is also beside the points being made here.)

Personal vs. Personalized

In Worth The Deal? Groceries Get A Personalized Price, Ashley Gross on NPR says,

Heather Kulper is one of those people who really wants to get a good deal. She’s a mom in a suburb north of Seattle who writes a blog about coupon clipping and saving money.

On a recent shopping trip to Safeway, Kulper pulls up a special Safeway app on her phone called Just For U. It shows her deeper discounts on products that she’s likely to buy based on her shopping history. The deals are lower than the club card discount listed in the aisle. When she checks out, she gets that personalized sale price.

“This is the artisan caramelized onion bread, which is normally $4.29. Priced with the Safeway club card, it’s $2.99,” Kulper says. “But with the Just For U personalized deal, it’s 99 cents.”

Kulper says it feels a little bit like she’s getting a secret deal.

It’s kind of like the old days, when you walked into a relative’s small grocery store, and they gave you the family discount. Except now, this is a big corporation using computers to calculate exactly your propensity to buy and at what price.

She concludes,

On this most recent trip, Kulper saved 41 percent with the Just for U app and coupons — $21 altogether — on her purchases. She says she’s happy with her discount, and she doesn’t mind that Safeway knows every tiny little detail of what groceries she buys. To Kulper, it’s worth it, as long as she can save money.

I can’t find Heather Kulper’s blog (the story doesn’t provide a link, and searches go mostly to the story), but it’s clear that she’s one kind of shopper: the aggressive bargain hunter. Is Safeway trying to turn all customers into full-time bargain hunters? Hard to say at this point, because it’s not clear whether a card-carrying Safeway customer is hunting for bargains, or simply forced to use the card to avoid paying the inflated “normal” price. It’s also not clear whether a personalized discount is any different than a coupon. The image above is one I shot of a Stop & Shop scanner, telling me about one in a series of discounts it offered me, based (presumably) on past purchases at the store.

Let’s think about about turning this around, to a system you control as a customer. You share your shopping list with the stores where you like to shop, and they come back with information about what they’ve got. Maybe they tell you they’ll give you a discounted price, or maybe they’ll tell you something is out of stock, or maybe they try to switch you to buying something else. In any of those cases you should also be able to tell them what you like or don’t like about what they’re telling you, and why. What matters in this alternative system is that the system is yours, not theirs. You take the lead, you control the information you share, and you aren’t trapped into many separate relationships, each with its own system for relating with you. In other words, it’s personal — by you —rather than personalized for you.

This is VRM, for Vendor Relationship Management. It’s how you run your relationships with many different companies, rather than how they run their relationships with many different customers. (Those are called CRM, for Customer Relationship Management, a many-$billion business.)

It’s still early, so there’s lots of room for customers to take the lead in helping develop VRM tools and services. You’ll find a list here, in the ProjectVRM wiki.

Free vs. Followed

grasped hand The fight between the free market and the followed market is about to begin. And the way to bet is on the free market, because it’s what we know works best. Also because the followed market is nuts.  It only persists because it’s normative at the moment, and an enormous sum of investment is going into improving what’s most nuts about it: following people around and constantly guessing at what they might want (or trying to make them want something some algorithm thinks it might be able to make them want).

Let’s look at those norms a bit more closely. In the followed market, we —

  • Maintain separate logins and passwords for every site and service with which we do business, which might number in the hundreds
  • “Agree” to terms of service and privacy policies that we don’t bother to read because we have no choice but to accept them if we want to use the offered services
  • Acquiesce to stalking by sites and their third parties, even as we travel out of those sites and around the Web

In the physical world where the free market remains defaulted, you are free to be who you say you are (or to remain anonymous — that is, nameless in the literal sense), and to arrive at whatever terms are agreeable to you and the sellers you engage, with minimal coercion. This is what we enjoy when we walk through a bazaar, down Main Steet, or through a shopping mall. We don’t have to become a member of Nordstrom, or Trader Joe’s, The Container Store, or the corner grocer, to shop there, or to buy anything from them. And, when we do, we usually assume that we are not being tracked by the store after we leave.

In the followed market, we are free to choose between captors who make all the rules. Our personal identity is the separate one we have with each of them, and which they administrate. Our relationship with each of them is fully contained within their separate silo’d systems. Worst of all, we are stalked after we leave, as a matter of course. “Social” sites such as Facebook aid in surveillance by making it easy for us to spill all kinds of personal data — about ourselves and our contacts — when we “login with Facebook” elsewhere.

And its getting worse.

On July 30, 2010, The Wall Street Jounal inaugurated its What They Know series (http://wsj.com/wtk) with The Web’s New Gold Mine: Your Secrets, by Julia Angwin. Here were the key findings she reported:

• The study found that the nation’s 50 top websites on average installed 64 pieces of tracking technology onto the computers of visitors, usually with no warning. A dozen sites each installed more than a hundred. The nonprofit Wikipedia installed none.

• Tracking technology is getting smarter and more intrusive. Monitoring used to be limited mainly to “cookie” files that record websites people visit. But the Journal found new tools that scan in real time what people are doing on a Web page, then instantly assess location, income, shopping interests and even medical conditions. Some tools surreptitiously re-spawn themselves even after users try to delete them.

• These profiles of individuals, constantly refreshed, are bought and sold on stock-market-like exchanges that have sprung up in the past 18 months.

The new technologies are transforming the Internet economy. Advertisers once primarily bought ads on specific Web pages—a car ad on a car site. Now, advertisers are paying a premium to follow people around the Internet, wherever they go, with highly specific marketing messages.

On the 17th of this month, in Online Tracking Ramps Up, Julia begins,

Online tracking on 50 of the most-visited websites has risen sharply since 2010, driven in part by the rise of online-advertising auctions, according to a new study by data-management company Krux Digital Inc.

The average visit to a Web page triggered 56 instances of data collection, up from just 10 instances when Krux conducted its initial study, in November 2010. The latest study was conducted last December.”The main reason for the difference is live online auctions of data about you:

Krux estimated that such auctions, known as real-time bidding exchanges, contribute to 40% of online data collection.In real-time bidding, as soon as a user visits a Web page, the visit is auctioned to the highest bidder, based on attributes such as the type of page visited or previous Web browsing by the user. The bidding is done automatically using computer algorithms.

On June 26, the Journal published On Orbitz, Mac Users Steered to Pricier Hotels, by Dana Mattioli, who writes,

The Orbitz effort, which is in its early stages, demonstrates how tracking people’s online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits.

Imagine walking with a friend down 5th Avenue in New York and attempting to have a conversation about the totally different scenes both of you see when you look into the stores you pass or enter together. One of you sees hats in a store window while the other sees shoes. One sees a door where the other sees a wall. One sees a counter of candies while the other sees an aisle of garden tools. When one of you pauses to look at the cosmetics counter, the colors of lipstick suddenly change, because the store — or its third parties — know it’s you and start making guesses about what you might want, or that the companies paying for shelf space in the store hope to make you want. When the other looks at the store directory, she finds that the departments have been re-arranged. Now the shoe department is to her right when it used to be to the left. The dress shoes are now in the back, and all of them are red and black. Athletic shoes are now in front, because she paused to look in the window of a sporting goods store back up the street.

Whether or not this kind of personalization works is beside a more essential point: that in today’s online marketplace we are being followed constantly, with at most only our tacit approval. Without the conscious involvement of fully human customers, operating as free and independent actors possessing full agency, the online environment has gone insane. That is, without coherence, or grounding in reality. It makes sense only to the vendor’s side of the marketplace, and even there it’s not fully together. Writes Julia Angwin in her most recent story,

More than half the time, Krux found that data collectors were piggybacking on each other. For example, when a user visited a website that had code for one tracking technology, the data collection would call out to and trigger other tracking technologies that weren’t embedded on the site. As a result of such piggybacking, websites often don’t know how much data are being collected about their users.

‘It may be the first medium where the buyers have more information about the price, the value and the amount of inventory than the seller,’ said Krux President Gordon McLeod.

In the free market, as it has been understood since our ancestors first traded shells for seeds, certain things are stable and well understood. These include not only the physical nature of locations, but social norms and protocols for interacting with each other, which begin with the assumption that the other party is a free, independent and sovereign being who controls what is public and what is private about themselves. (Which is why, for example, we tend to wear clothes in public and live in enclosed spaces.)

In the free market it would be absurd for a guy from a store to put a hand in your pocket and hold onto your leg while you walked around, saying “Don’t mind me. I’m just here to see what you’re up to. Actually I don’t want to know your name, but just to track what your body is doing so you can get the best advertising and product offerings, based on what some machines think at the moment would be best for you and for us. It’s for your own good.” Or, more literally, to do the same with an invisible robot tick that attaches to your body and sucks out your data. But in the followed market, that stuff is normative in the extreme. And it works well enough, so far, at least for the advertisers and their intermediaries, that it persists in spite of its absurdities.

The followed market will fail not only because it is absurd and offensive to human sensibilities, but because it is not as effective as the kind of simple human interactions we were all built for in the first place. We don’t have those online yet — not in the commercial space comprised of billions of competing silos. But we will. Count on it. The Web we know is just seventeen years old (dating back to the first graphical browsers in 1995).

In a general way, what the free market still lacks online is a build-out of capabilities on the customers’ side to match the build-out of capabilities on the vendors’ side. That’s what ProjectVRM has been working toward for the past six years. The result so far is a growing list of developers, projects and prospects for major breakthroughs in customer capacity to assert independence, establish privacy boundaries, and deal with vendors as self-empowered equals and not as vendor-defined and -controlled dependents.

Customer Commons’ mission is to preserve and improve the free market, both online and off, by helping customers become free and independent participants in that market. So, while ProjectVRM remains focused on development and developers, Customer Commons is focused on putting those developments to work for customers — and for giving customers a way to participate in that development, and to lead it forward.

And we welcome your help with that.

The Promise of the Personal Cloud

The term “personal cloud” is only about a year old and has a wildly disparate set of meanings.  For some, services such as Facebook, Dropbox, and SugarSynch are personal clouds.  For others the gold standard is iCloud, which stores data and media and manages your apps from all your devices – as long as they are all from Apple.  I find myself agreeing with Jon Udell who writes in Wired, “I see signs of the personal cloud in services like Dropbox, Evernote, and Flickr. You can use them for free, or you can pay for higher capacity and enhanced customer service. But the personal cloud also arises from a way of thinking about, and using, any of the services the web provides.”

Yes.  The personal cloud is a way of thinking and it is not necessarily a new way.  Phil Windley and co-authors Craig Burton, Scott David, Drummond Reed and Doc Searls make this case well in a recent white paper, From Personal Computers to the Personal Cloud.  As the title indicates, the authors contend that the best model for thinking about the personal cloud is in fact the personal computer.  Gartner analyst Steve Kleyhans seconds this when he writes, “Many call this era the post-PC era, but it isn’t really about being ‘after’ the PC, but rather about a new style of personal computing that frees individuals to use computing in fundamentally new ways to improve multiple aspects of their work and personal lives.”

Most of the folks working on this nascent space agree that personal clouds will emerge because customers will demand secure and trusted access to their apps, data, and media anytime, anywhere from any device.  Gartner, among others, believes that the market for personal clouds and everything they imply – connected services, devices and data — will be huge.  By 2015 Gartner predicts we will spend some US$2.8 trillion worldwide on connected devices, the services that run them and content transferred through them.  While we all agree that this is what the future looks like, how markets and technology will get there remains an open question.

Are Personal Clouds Inevitable? 

Nothing is inevitable, but the promise offered by personal clouds of putting us back in charge of our personal data, of seamlessly and securely managing our online lives in a way that meets our own idiosyncratic needs, offers a powerful pull.   Windley et at summarize the benefits succinctly.  Personal clouds will 1) change how we relate to everything in our lives; 2) rearrange how we buy and sell products; and 3) revolutionize how we communicate with each other.  Why?  With personal clouds, we set the rules.  Our identities can be fluid and flexible.  Our data can be broadcast widely, hoarded or selectively shared.  We will be able to have infinite channels, that work seamlessly, with people, companies, organizations, accounts, and more.  When we have seamless access to all of our information, and control over the tools and services to use and understand it, everything changes.

While the potential is vast, the challenges are equally hard.  Personal clouds that live up to the vision of trusted, secure, seamless services will require solving a host of hard problems.  Windley et al have begun envisioning the next steps.  Core to their vision is the development of a Cloud Operating System.  Analogous to the OS that makes your PC run, the CloudOS will track your identity, attributes and preferences; run as many apps as you like; store and manage data distributed across the web; and host services for you to use.  Here is a picture that Joaquin Miller put together after a session at the most recent IIW conference. The OS lives inside your cloud.

A Gathering of Clouds

While it is tempting to think of the personal cloud as one thing, living in one place like a personal computer, it is much more likely to be a window into a collection of stuff spread across the net.  This makes sense because this is how the Net is structured.  Virtual stuff doesn’t have to live anywhere – as long as there is a way for me to find it, I can get value from it.  This feature is central to the radical potential of the Net, whose soul is vastly distributed and peer to peer.

We are now living in an era where increasing amounts of our data and services are living in virtual silos maintained and controlled by centralized companies.  The personal cloud slices these silos open, letting the data flow around in new ways.  This is highly disruptive and why Andrew Johnson of Gartner says, “Providers of consumer devices, services and content must anticipate the risk of sweeping changes to their business models.  The personal cloud will force technology providers not only to rethink how they approach markets, but also, more importantly, how they define markets. ‘Emerging’ and ‘mature’ markets are no longer useful market segmentation.”

One of the reasons that the personal cloud will be so disruptive is that it’s not one cloud.  There will be many clouds, capable of talking to each other, with many channels between them.  As long as everything is interoperable, there could be many operating systems, many identity and trust networks, many services, and more.  These “federated personal clouds” as Windley et al call them, mean that there will likely be many vendors in the mix offering different apps and services that work together.  Federated clouds are much more likely to escape centralized control.  This could engender huge new levels of innovation while empowering each of us at the same time.

This dynamic reminds me of one of my most beloved philosophical maxims, drawn from process theology.  An omnipotent god who exerts absolute control over the universe creates a system that limits each individual’s creativity, resulting in a less creative whole.  The god that grants creative control to the creatures and then lets each of them do their thing, ends up with a much richer and more powerful universe.  The moral:  centralized control constrains creativity and innovation.  Something similar is afoot with the personal cloud.  When each of us gains creative control over our virtual lives, the whole virtual universe becomes more innovative, creative and powerful.

Aligning Incentives

Much of the current conversation is necessarily still in the programming weeds.  My hope is that in parallel with much-needed technical development, we will continue to think through real world use cases that test emerging solutions.  These use cases will not only offer leverage to those trying to build business models for the personal cloud, but they will help us ferret out the ethical issues that will inevitably arise.

I personally worry as much about the cloud doing too much for me as too little.  If it does too little, then it will not have real value.  If it does too much filtering, sorting and aggregating then I will potentially be replicating a new version of the filter bubble inside my own cloud.  That’s just migrating creepy practices from our current silos into the personal cloud.  We have to get the filters right.  The trick will be to always, always err on the side of giving users control over their settings, channels, permissions and preferences.  This is the beauty of putting the user in the center.  The vendors that give me choice and control are the ones I will pick.  The incentives between customer and vendor will align.

(This post was originally published at www.spruceadvisers.com.)

Which companies love customers?

Not love to have them, but love interacting with them, knowing them, talking with them, learning from them, involving them in the business, and letting them take the lead sometimes. (And not just by using a “loyalty card” or some other gimmick.)

In The Intention Economy, I give two examples, one offline and one on.

The first is Trader Joe’s, whose retired President, Doug Rauch, told me that his main job at the store was talking with customers. That is, literally, shopping along with them. Seeing what they liked, didn’t like, and why. Asking questions. Getting input. Trader Joe’s, he said, doesn’t just look for transactions, but for relationships. When I asked him if there was anything in the store that customers did not influence, he said no. When I told him we lived in Santa Barbara, he asked if we shopped at the store on Milpas Street or the newer one near Upper State. I was impressed. The dude was based in Massachusetts and still knew every store, and had shopped along with customers at every one he went to as well.

The online example is Zappo’s, which encourages its service people to maximize interaction with customers on phones. The company also welcomes exceptions. For example, I have wide feet: 9 1/2 EE. Shopping just for what fits me is easy. A few minutes ago I bought replacements for my several-year-old ASICS Gel-Cumulus 13 athletic shoes. The old ones look more worn than they really are, so I got some fresh ones. There was no reason to work with a human in this case, but I sensed a human sensibility to the ease with which I could find and get what I wanted. (The Kid and I like to sing, “Shop like a man, fast as you can,” to the tune of the Four Seasons‘ old “Walk Like a Man.”)

So who else is there? You tell us, in the comments below. No restrictions. The only qualifications are the ones I laid out in the first sentence. And tell us why, too.