Does the bank own you, or do you own the bank? The continued codependency of Facebook & Zynga

There's a saying "Owe the bank $1000 and they own you. Owe the bank $1 million and you own them." Basically that at high levels of indebtedness the bank becomes dependent on you - your default would be their demise. Sort of a "too big to fail" idea.

Facebook and Zynga find themselves in a similar situation. Despite having signed a mutually agreeable deal, they are both working furiously to try and reduce codependency. Zynga with a move towards mobile and Z-Cloud. Facebook by diversifying revenues. It's working somewhat - in early 2011 Zynga accounted for 19% of Facebook revenue, but by 2012 it was down to 15% (of course Facebook's growing total revenue also contributes to this percentage drop).

Still though, for a soon to be public company, one likely to trade at a very high P/E multiple, that's a big risk in a marketplace where missing earnings by a few cents can impact valuations. Both companies are well-managed, growth stories so my wondering here isn't about whether the bottom will fall out of either property in the near-term, but rather how Zynga thinks about the fact that Facebook is still so dependent on them in the nearterm.

I assume the partnership agreement they signed doesn't last in perpetuity - at some point it's up for renegotiation. At that stage Zynga actually still wants some leverage over Facebook, so they want to maintain some degree of revenue concentration. My guess is the current deal provides some MFN status with regards to not being treated differently in the social feed than other gaming companies. And I believe it has been reported that Facebook agreed to drive a certain amount of traffic to Zynga properties.

For Facebook, they need to minimize Zynga as a percentage of revenue while still relying upon the advertising and credits revenue stream to make quarterly numbers. So they care less about suppressing Zynga and more growing the non-games business in general, since growing games likely means growing Zynga. Is that bad for other game developers? Will Facebook not invest as much in gaming relationships during this next phase?

Of course the Machiavellian side of me imagines some large company like Tencent acquiring Zynga and doubling down on Facebook, not to maximize Zynga's value but to control Facebook. Pretty sure that if a public Facebook is getting 25%+ of its revenue from one source then you own the bank.

FIRST! Two sharing vectors for you to exploit.

While most apps seem to focus enthusiastically on broadcasting what your friends have read, watched, etc there are two aspects of social discovery which today are being underexplored:

1) Tell me what my friends HAVEN'T seen yet
Various user research I've done suggests there's a sharing stigma around being last to the party - sharing something with a bunch of friends only to hear back "yeah saw that two days ago." Given this, I believe there's potential value in prompting me to share - generally or directed to certain people - with the call to action "Hey, probably hasn't seen this yet. Share with them?"

The mechanics of doing this are actually not that difficult if you have access as a first or third party to G+, Twitter or Facebook graphs. Here's one way it could work:

I'm reading an article on a tech blog and click +1 to share it to my G+ circles. In the publish confirmation box, I get suggested friends to add specifically to the share, based on (i) Google's knowledge of their interests & (ii) Google knowing that they haven't seen this URL yet via search/email/reader/G+/etc.

2) Which of my friends was FIRST to see it
Anyone who isn't a n00b knows what FIRST! means but yet none of these social sharing systems do a very good job of rewarding the initial curator. Who was the first of my friends to watch the video that later went viral? Which person I follow was first to tweet out the link to that amazing blog post? Who listened to that cool band before they went big time?

The ability to identify curators as trendspotters is pretty valuable generally and to be known among your friends as the one who got there early, major clout (if not Klout).

Again, not that hard to do within a closed system. Twitter could certainly do this - for a given link I share or see, who was the first of the people I follow to tweet it, or I could pivot to see who were the first people to tweet it overall (you'd run into the self-promotion issue there as the author is likely the first to tweet, but perhaps still valuable).

What one decision would Yahoo want to redo?

Peter Dinklage on Luck

Peter Dinklage (Tyrion on Game of Thones) on role of luck in NYTimes:

“I feel really lucky,” he said, then added, “although I hate that word — ‘lucky.’ ” When I asked him why, he mulled it over for a moment, looking away. Then he focused back on me. “It cheapens a lot of hard work,” he said. “Living in Brooklyn in an apartment without any heat and paying for dinner at the bodega with dimes — I don’t think I felt myself lucky back then. Doing plays for 50 bucks and trying to be true to myself as an” — here he put on a faux snooty voice — “artist and turning down commercials where they wanted a leprechaun. Saying I was lucky negates the hard work I put in and spits on that guy who’s freezing his ass off back in Brooklyn. So I won’t say I’m lucky. I’m fortunate enough to find or attract very talented people. For some reason I found them, and they found me.”

The most overused words in tech?

Can Online Video Usher in a New Age of Empathy?

Here's an article I published on Fast Company's Co.Exist site today: Can Online Video Usher in a New Age of Empathy?

tldr: the worldwide availability of media on YouTube is helping to create a new type of global citizen whereas we've previously been separated by differences in religion, nationality, politics.

Beating the market using sentiment analysis of Internet product reviews

Wow, a sample portfolio investing in companies based on sentiment in web user generated product reviews outperformed the market by 8% over a period of four years.

NBA Players Who Touch Each Other Win More Frequently

The Power of the Bro Hug in the NBA from a study on physical contact between players!

1. Players who touched their teammates more had higher "Win scores," defined as "a performance measure that accounts for the positive impact a player has on his team's success (rebounds, points, assists, blocks, steals) while also accounting for the amount of the team's possessions that player uses (turnovers, shot attempts). "

2. Teams where players touched teammates more also enjoyed significantly superior team performance than those where players touch teammates less (the authors used a more complicated measure of team performance than win-loss record, it took into account multiple factors like scoring efficiency and assists, and other measures, which correlated .84 with the number of wins that season.

3. The authors present further analyses suggesting that the increased cooperation among teams where players engage in more "fist bumps, high fives, chest bumps, leaping shoulder bumps, chest punches, head slaps, head grabs, low fives, high tens, full hugs, half hugs, and team huddles" explain why touching is linked to individual and team performance.

-"Tactile Communication, Cooperation, and Performance: An Ethological Study of the NBA"