The web economy blog

Archive for April, 2010

I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets the titles of their posts along with a link.  Better yet, the people I follow retweet their favorite links, providing a very efficient way for me to discover new articles to read and publishers to follow.

Contrary to all the uninformed handwringing about how Twitter is making people dumb, I find I’m reading more long form blog and newspaper content than ever.   And the stuff I’m reading is more interesting and relevant.  That’s a good thing.

Meanwhile, Google Reader has been desperately adding social features such as sharing starred posts and automatically recommending blogs.  These features are clumsy and won’t save Reader, or RSS, from its inevitable decline.

Although I’m generally happier as a user, I think all of this is bad for the internet.  Twitter isn’t an open protocol.   It’s a private company with a profit motive that has a history of unreliable service. Moreover, URL shorteners – a byproduct of Twitter – are effectively creating a second layer DNS service that is far less secure and reliable.

I know that many people have been calling for an open alternative to Twitter for a long time.  I support them, but I’m afraid it’s too late. The network effects of Twitter’s social graph are just too strong.  Not to mention its brand momentum.  But the biggest reason Twitter has won is that mainstream users don’t care enough about these “principled” objections to switch.  Do you think Ashton or Oprah cares about open protocols?  I doubt it.

Cloud computing and virtualization reflect a general movement driven by the Web: a shift towards a more service-driven economy.

There are two major trends that are now coming together to reshape our economies and societies. One is the continuing replacement of humans by computers in the workplace. Computers are essential in manufacturing and in the office. They continuously replace human effort and boost productivity.

Consider this: most of the products we design today could not be designed without computers. A new computer from Dell, for example, can only be designed by using computers from a previous generation. In other words, an older model of a computer is helping in the creation of a newer one.

So in which areas are computers not likely to replace humans (at least in the short term)? Service. The caring industries. People like being cared for by other people. A genuine smile and a friendly voice have a powerful affect on us. The computers will look after the hard space, humans will look after the soft space.

The Web thrives on interconnections; cloud computing and virtualization live on the Web. If you are not connected-if you live on a remote island with no outside connections-then to live you must physically have everything you need beside you. But if you live on the Web, it doesn’t matter where what you need resides, once you can make use of it. It’s not the owning or the physical proximity that matters-it’s the use. And what are the implications of all this? Service.

Steve Ballmer, CEO of Microsoft, said in March 2010 that Microsoft was “betting our company” on the cloud. I hear the same sort of statements in other big companies I deal with. There’s a shift to the cloud; a shift to service.

Part of this shift is of course technical. But there’s an equally large cultural part . A service-driven economy will be different from a product-driven economy. Why? Because the most important thing will be the service. You pay 10 dollars a month, not 400 dollars as a once-off payment. That changes how you think about what you’re getting.

Most organizations are structured around a launch and leave project-based culture of products, marketing and communication campaigns. The reward is for producing things (products, websites, brochures, videos, advertising campaigns). In a service-driven economy, the reward-structure will be based on how happy the customer is with your service.

How does a service-based brand thrive? By showing customers that you care about meeting their needs, month-in, month-out. These customers have not bought your product; they’ve bought your service. And that means they judge you on your service and can leave you more easily if your service declines. In service-driven economies people are locked in by trust and satisfaction, not by the fact that they have made a major investment in a product and must stick with it.

Long awaited by some and a nasty surprise to others, the conflict between the industrial age and the virtual age is now being fought in earnest, thanks to that modestly conceived but paradigm-shattering thing called Napster.

What’s happening with global, peer-to-peer networking is not altogether different from what happened when the American colonists realized they were poorly served by the British Crown: The colonists were obliged to cast off that power and develop an economy better suited to their new environment. For settlers of cyberspace, the fuse was lit last July, when Judge Marilyn Hall Patel tried to shut down Napster and silence the cacophonous free market of expression, which was already teeming with more than 20 million directly wired music lovers.

Despite an appeals-court stay immediately granted the Napsterians, her decree transformed an evolving economy into a cause, and turned millions of politically apathetic youngsters into electronic Hezbollah. Neither the best efforts of Judge Patel – nor those of the Porsche-driving executives of the Recording Industry Association of America, nor the sleek legal defenders of existing copyright law – will alter this simple fact: No law can be successfully imposed on a huge population that does not morally support it and possesses easy means for its invisible evasion.

An invasion of armies can be resisted, but not an idea whose time has come. – Victor Hugo

To put it mildly, the geriatrics of the entertainment industry didn’t see this coming. They figured the Internet was about as much of a threat to their infotainment empire as ham radio was to NBC. Even after that assumption was creamed, they remained as serene as sunning crocodiles. After all, they still “owned” all that stuff they call “content.” That it might soon become possible for anyone with a PC to effortlessly reproduce their “property” and distribute it to all of humanity didn’t trouble them at all.

But then along came Napster. Or, more to the point, along came the real Internet, an instantaneous network that endows any acne-faced kid with a distributive power equal to Time Warner’s. Moreover, these were kids who don’t give a flying byte about the existing legal battlements, and a lot of them possess decryption skills sufficient to easily crack whatever lame code the entertainment industry might wrap around “its” goods.

Practically every traditional pundit who’s commented on the Napster case has, at some point, furrowed a telegenic brow and asked, “Is the genie out of the bottle?” A better question would be, “Is there a bottle?” No, there isn’t.

Which is not to say the industry won’t keep trying to create one. In addition to ludicrously misguided (and probably unconstitutional) edicts like the Digital Millennium Copyright Act, entertainment execs are placing great faith in new cryptographic solutions. But before they waste a lot of time on their latest algorithmic vessels, they might consider the ones they’ve designed so far. These include such systems as the pay-per-view videodisc format Divx, the Secure Digital Music Initiative, and CSS – the DVD encryption system, which has sparked its own legal hostilities on the Eastern front, starting with the New York courtroom of Judge Lewis Kaplan.

Here’s the present score: Divx was stillborn. SDMI will probably never be born owing to the wrangling of its corporate parents. And DeCSS (the DVD decryptor) is off and running, even though the Motion Picture Association of America has prevailed in its lawsuit aimed at stopping Web sites from posting – or even linking to – the disc-cracking code. While that decision is appealed, DeCSS will keep spreading: As the Electronic Frontier Foundation was defending three e-distributors inside Kaplan’s court last summer, nose-ringed kids outside were selling T-shirts with the program silk-screened on the back.

The last time technical copy protection was widely attempted – remember when most software was copy-protected? – it failed in the marketplace, and failed miserably. Earlier attempts to ban media-reproduction technologies have also failed. Even though entertainment execs are exceptionally slow learners, they will eventually realize what they should have understood long ago: The free proliferation of expression does not decrease its commercial value. Free access increases it, and should be encouraged rather than stymied.

The war is on, all right, but to my mind it’s over. The future will win; there will be no property in cyberspace. Behold DotCommunism. (And dig it, ye talented, since it will enrich you.) It’s a pity that entertainment moguls are too wedged in to the past to recognize this, because now they are requiring us to fight a war anyway. So we’ll fatten lawyers with a fortune that could be spent fostering and distributing creativity. And we may be forced to watch a few pointless public executions – Shawn Fanning’s cross awaits – when we could be employing such condemned genius in the service of a greater good.

Of course, it’s one thing to win a revolution, and quite another to govern its consequences. How, in the absence of laws that turn thoughts into things, will we be assured payment for the work we do with our minds? Must the creatively talented start looking for day jobs?

Nope. Most white-collar jobs already consist of mind work. The vast majority of us live by our wits now, producing “verbs” – that is, ideas – rather than “nouns” like automobiles or toasters. Doctors, architects, executives, consultants, receptionists, televangelists, and lawyers all manage to survive economically without “owning” their cognition.

Web 1.0 was the only official internet bubble that we’ve lived through. That period was marked by hype and speculation resulting in the overvaluing of tons of publicly traded companies.  Following the bust, a new series of companies began to emerge that were eventually classified as “Web 2.0″ start-ups.  Web 2.0 is a complex thing to describe.  If you’d like what’s now considered the “official” description of Web 2.0,

What was most important in this phase (which started somewhere between 2000 and 2002) is that you didn’t have as many ridiculous early-stage investments.  If there were early stage investments, none of the companies were going public and even today we see the continuation of that trend.  While there were bubbling centers of entrepreneurship (cities with a high density of members of the “creative class”), there was a lot of unrealized potential as people searched for ways that frequently would make them a lot of money quickly or at least rapidly generate a sustainable business via the web.

Many of these people were trying out new things on the general web but getting the attention of users was pretty challenging.  Then in May of 2008 a fair amount of this unrealized potential became realized via the Facebook platform.  A new channel opened that provided developers and entrepreneurs with a new channel to gain rapid exposure to users that would either immediately accept or reject their product or service.  All of these applications were initially launched by one or two people that had an idea and stayed up overnight. Eventually  millions of users were bitten in the neck, smacked in the face or sent a free gift.

While there were a few large, well-funded companies participating in the beginning of the platform, it was mostly built by individuals.  These individuals were rapidly snapped up and wrapped into newly built and newly funded companies.  As this mini-industry has sprouted up I continue seeking out companies and people that are adding value to the ecosystem. That’s because where there is value, there is money and money is required for an economy to grow.

The final table is where every poker player wants to end up in a big tournament. Once there, you should be facing all experienced tournament players. This will require you to take a certain attitude toward the table as well as a certain unique strategy.

When I make it to the final table, I almost always place within the top three. The way I like to play the final table differs greatly from all the other blind levels. Let’s talk about crushing the final table.

Study Your Opponents

I usually don’t study my opponents in the early rounds since so many players are moved to and from my table. At the final table, though, all of the players around you are most likely great tournament players. Very rarely will you run into a fish who caught a mad streak of cards and ended up at the final table, although I’ve seen it happen before.

For the first ten or so hands, play extremely tight. Get a feel for the table and how people are playing. Poker brings out different emotions in different people, and you must learn the current state of every player. Have you spotted a player who’s loosened up? Is there a large stack leaning on people? Is someone to your left folding almost every hand?

More than likely you’ll notice mostly tight players at the final table. You’ll also run across a few people utilizing the maniac tournament approach. Identify these players and adjust your play accordingly.

In essence, final-table play involves playing the player and not the cards. A lot of times I’ll raise really tight players with next to nothing in the blinds. I’ll also be very careful of my pre-flop starting selection against maniacs.

Wait It Out

The final table will bring about some of the best poker you’ll witness. This is simply because most of these players feel grateful to be there. They’ll be on their best behavior and play the best hands possible.

If you spot a maniac at the table, let him take a few people out. Sit back and feel your way around the table until a few people are gone. There will come a time when you make your move, but don’t go out unless you have a good hand. Conversely, if the table is really tight, you may want to take a few risks and rain on the blinds. A good tournament player’s motto for the final table should be “playing the player, not the cards.”

Luck and the Final Table

I would be lying if I said you could finish first at the final table without luck. It’s impossible. Most players at the final table are great tournament players, meaning that more than likely it will be a dogfight for each ascending place. I could sit here all day and preach to you about starting hands, but by now we all know which hands to play.

I’m here to tell you the secret to final-table play: make use of every edge available to you. Spot the tight players and maniacs. Adjust your play to each individual player. Although you want to play tight, you’ll need to take some calculated risks. The best way to beat the final table is to look for any edge possible by analyzing each precious detail available to you. Watch how each individual bets and how much he bets each hand. Study each showdown at the table as if your life depended on it. The final table is all about feel, not about cards.

I hope you’ve benefited from this series of articles. Good luck and see you at the tables.

Playing a tournament is a lot like walking on a minefield. You need to avoid as many tight situations as possible by playing the best hands. Unfortunately, you can’t wait all day long for premium hands unless you’re a big stack. This article will discuss how to proceed with playing hands according to your stack size.

Large Stack

We all love playing with a large stack. Although it might seem easy, there are a few things you need to know before you start loosening up. First, evaluate the current status of your table. If it’s really tight, you’ll need to put that big stack to use and double shorter stacks’ blinds as frequently as possible (with decent hands, of course). If the table is really loose, you’ll need to keep playing premium starting hands. Another pointer is to raise blinds only when you’re in good position. I’ll talk about this more towards the end of this article.

Average Stack

This is where most of us will be in the tournament. You want to loosen up a little here, adding hands such as A-Q and JJ to your starting hand list. When you decide to raise, you probably want to bet the flop regardless. If you spot a tight player next to you, raise his blinds double with any two cards and bet the flop. You’ll need to pick it up a little here, but for the most part remain tight.

Small Stack

The small stack must become aggressive in the middle rounds. When you spot weakness bet all-in. Go out of the tournament with a bang. Never get blinded out. Raise blinds by going all-in with decent hands. You want to add any pair to your list of starting hands as long as you’re in late position to raise the blinds. If you have a pair such as 9-9 or 10-10, don’t be afraid to go all-in from any position. You need to double-up to become a threat in this tournament.

Advice on Raising Blinds

I’m frequently asked questions about raising blinds. I believe the good players are separated from the bad players when the blinds get higher. I always choose my opportunities to raise blinds wisely. You should only raise a player who you know is really tight. In the late stages of a tournament you may need to raise any player, regardless of his image, with decent cards. But in the middle rounds you want to spot a tight player and lean on him hard. Toward the end of the middle rounds, you might want to lean on the blinds harder than normal. You should be getting closer to the money, and people will start playing really tight.

For example, say a tournament has 500 people in it, and it only places the top 80. When there are about 100 people left you’ll see everyone tighten up. This will probably be around the end of the middle rounds or the beginning of the late rounds. This is when I make all of my money, and I’ll share this strategy with you in the next article, Multi-Table Tournament Strategy: Late Blind Levels.

his is the easiest blind level to play. You really want to fold most hands in this blind level until the fishy players are weeded out. The key is to stay calm, collected and in the zone until the middle rounds.

I’ve read some strategy guides claiming that you should only play AA and KK in the early rounds. I think this is a little too tight. If you’re in late position with a pair or A-x suited, I see no reason why you would want to fold, especially if you can get in cheap. While you want to double up in the early rounds, it’s not absolutely necessary to do so.

Strategy Overview

I generally stick with the basic strong, premium hands for the first blind level. I’ll tell you exactly how I would play each of these hands regarding the blinds, but before I get started, you should take a couple of things into account:

1. This is basic tournament strategy. This strategy alone will win tournaments for as long as you use it. You also may want to incorporate other elements that you find beneficial to your overall play. Although most people stick straight to the formula, there’ll be times when you need to change it up. I will talk about this later.
2. You may want to play more hands. My strategy is stone cold tight. I’ve found that if you possess this kind of patience, you’ll win your fair share of MTTs. A lot of people say this strategy is too tight. You can choose to play suited connectors if you please, but let me warn you, your bankroll will take big swings when you’re in a lot of hands.

Starting Hands

1. The Big Three – AA, KK, and QQ
2. Ace-King
3. Pairs – 22 through JJ
4. A-x suited

Let’s talk about how to play each hand. Try your best to wait on one of the big three hands. When you’re in late position, you want to limp in with pairs and A-x suited.

When playing one of the big three hands, take into account the average raise at the table. If you are seeing huge raises on your table you may want to throw out a huge raise pre-flop. On an average table, I will usually raise four or five times the big blind. On the flop, I bet no matter what, as long as there are two people or fewer in the pot. With more than two people in the pot, the flop must be optimal, and I must have what I think is the best hand. Bet huge with these hands and take it to the river. In most cases you’ll win because you were a favorite pre-flop.

Ace-King is a hand that can make or break your tournament. I usually like to raise this hand from any position, but if I’m re-raised pre-flop, I immediately become defensive. I must hit my ace or king on the flop, or I won’t bet. The players in the early rounds are usually fishy and will call bets on the flop with drawing hands or even low pair. If you have to, give up ace-king. It can be beaten consistently by a pair of 2s heads-up. The reason to play it hard is because it has the possibility of becoming the best hand when you hit the flop. I would raise ace-king three times the big blind because I like to play it cautiously.

Pairs and A-x suited are played in a straightforward manner. These hands are good for busting big pots with a lot of players in them. We want to limp in with them from late position. If there are a ton of people in the pot pre-flop on a small raise, I might call in hopes of trips or a flush/flush draw. These hands become worthless when the blinds become high because you will usually miss them on the flop. Also, as the tournament progresses and the blinds go up, short stacks push all-in way too much for you to be limping in with these hands.

That essentially covers the early rounds. Stay tight and if someone puts you all-in with ace-king, just fold it. There will be plenty of opportunities to go all-in as the tournament progresses. You are looking to put your money in when you know it’ll come back to you. If you want to learn how to play the middle rounds successfully, read my next article titled Multi-Table Tournament Strategy: Middle Blind Levels.

The key to these tournaments is patience. If you fold enough hands, you’ll get yourself closer and closer to the final table. Let’s talk about what type of bankroll and outlook you should have before embarking on a discussion about multi-table tournaments.

Bankroll for MTTs

You’ll learn that my articles preach the importance of bankroll because it’s the deciding factor in whether you’re a winning or losing player. There’s only so much skill one possesses in the game of poker. The key is to limit your losses by playing within your limits. Remember that.

I advise having a pretty big bankroll for multi-table tournaments since you’ll lose most of them. Remember, all it takes is one big payday to replenish your bankroll. I play a lot of tournaments with 500 to 1,000 people, and I would say I make it to the final table once in every 10-20 tries. I will share with you my main secrets to winning MTTs shortly, but first I want you to realize how important your bankroll is.

Unless you’re rich, you always need to play within your limits. This is because there’s quite a bit of luck involved in poker. If I had to guess, I would say that poker is 60% skill, 40% luck. That means on any given day, you could lose your bankroll when playing over your limit. The most important aspect of poker will always be bankroll management. Boring as it may seem, way too many good players lose their bankrolls every day because they step outside of their limits. Bankroll management is serious business.

MTT Outlook

You’re going to have to be patient because tournament play can be almost as boring as watching paint dry. I’m serious. You must be a patient player to win MTTs consistently. You may get lucky from time to time, but to win time and again a player must be patient.

Before even joining the tournament, understand that it’s not uncommon to wait an hour to play a hand. Some tournaments, I wait even longer to strike.

MTT strategy requires three key components to be successful:

1. Skill (30%) – A player must be skilled in order to win multi-table tournaments. You have to know when to hold’em and when to fold’em. When a tricky situation arises, you’ll almost always want to fold more than call. I will get you closer to the final table by teaching you the basics of successful MTT play.
2. Discipline (30%) – To win consistently you must have strong mental discipline. Most of the time, you’ll be folding because in MTTs folding makes the money. The only tip I can give you regarding patience is to keep yourself occupied. Always try to predict what people have and take each blind level step by step.
3. Luck (40%) – Luck is a big factor in MTTs. We can’t control this factor at all.

Now that I’ve introduced the fundamentals of multi-table tournament play, please continue reading the rest of the series in order to obtain a more detailed understanding and a greater knowledge of what it takes to kick butt at MTTs.