People will always tend to resist change, whether it is in their interest or not - it is just human nature. This resistance can be conscious or subconscious in that the resistance will not always be explicitly manifested in a negative manner but may be simply in the process required to adapt. Clean technology is in the interest of mankind's future but the resistance embedded in the process of adaptation means that innovative and radical new technologies may take much longer to become useful as a clean technology whereas smaller and incremental technologies will be the success stories in the short, medium and even long term.
What are the implications?
1) Cleantech companies whose products require radical changes in process, require large investments or require highly special skill-sets, regardless of how unique and valuable they are, will not yield the results or returns that might be expected.
2) There will not be a unique, innovative technological solution to the problems caused by global warming that is financially feasible in the short to medium-term, and maybe even the long term.
3) This may also mean that environmental problems will get worse before they get better as the process of adaptation may not be quick enough to reduce the impact of global warming and the factors that cause it.
What does this mean for investors?
I believe that, for example, technologies that change one component of systems such as cleaner batteries or highly efficient electrical components will quickly gain momentum while technologies that change many elements of systems or require system overhauls such as smart grid technology, while very feasible with clear benefits, will take much longer and may never provide a viable return on investment. Investors who want to make a good return on investment in clean technology should therefore focus on companies pursuing incremental technologies while governments and large corporations should focus on supporting technologies which change fundamentals.
Comments invited.
Showing posts with label social networking investment. Show all posts
Showing posts with label social networking investment. Show all posts
Sunday, February 28, 2010
Sunday, February 14, 2010
Where is the value in online social networks?
Online social networks have become very popular worldwide but are the numbers misleading? Investors have valued social networks at billions of dollars largely due to the potential for revenues generated from advertising and the potential for analysing the data being generated in these networks. Is the behaviour of the users of these online social networks really supporting these presumptions?
Can advertising really generate the required revenues to match investors' valuations of these networks? I think that hopes and expectations are hugely inflated. I believe that the premise that advertising revenue can yield large future profits is based on the models from search engines where the purpose is different - users of search engines are "looking". My belief is that users of these networks do not easily get distracted by advertisements but rather focus on their task at hand when they visit the network, whether it be looking at friends' updates, making a new business contact or updating their profile information.
Secondly, is the data being generated really so valuable as to warrant the valuations? Indeed, the data can generated a lot of useful information about behaviour and other consumer patterns as well as valuable news and insight from various stakeholders. But this happens across many similar networks around the world and therefore any one instance should not be so unique as to put such a high price on it. Even if the data may be unique, what is the cost of extracting the garbage and useless data from these enormous warehouses and databases?
I also suspect that over 80% of the users of any given network are not active enough to be of any real value to the network. As with any real life club, the membership may be very large but active participation comes from a few. Many of these sites have yet to generate a profit. Moreover, it is unlikely that any social network will begin to charge the masses for using the site since it is not difficult to switch to the next most popular free network available. Is there really value in online social networks?
Can advertising really generate the required revenues to match investors' valuations of these networks? I think that hopes and expectations are hugely inflated. I believe that the premise that advertising revenue can yield large future profits is based on the models from search engines where the purpose is different - users of search engines are "looking". My belief is that users of these networks do not easily get distracted by advertisements but rather focus on their task at hand when they visit the network, whether it be looking at friends' updates, making a new business contact or updating their profile information.
Secondly, is the data being generated really so valuable as to warrant the valuations? Indeed, the data can generated a lot of useful information about behaviour and other consumer patterns as well as valuable news and insight from various stakeholders. But this happens across many similar networks around the world and therefore any one instance should not be so unique as to put such a high price on it. Even if the data may be unique, what is the cost of extracting the garbage and useless data from these enormous warehouses and databases?
I also suspect that over 80% of the users of any given network are not active enough to be of any real value to the network. As with any real life club, the membership may be very large but active participation comes from a few. Many of these sites have yet to generate a profit. Moreover, it is unlikely that any social network will begin to charge the masses for using the site since it is not difficult to switch to the next most popular free network available. Is there really value in online social networks?
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