[00:05.670 --> 00:06.310]  What?
[00:08.530 --> 00:12.190]  Oh, come on. That's okay.
[00:12.670 --> 00:17.470]  Okay, what I'd like to do is I'd like to get the slackers up here, up into this portion of the
[00:19.990 --> 00:20.630]  chairs.
[00:20.930 --> 00:25.070]  I have got some t-shirts that I'm going to give away. We're going to do a Q&A session and hopefully we're going to have a little bit
[00:25.070 --> 00:28.570]  of fun with this. Everybody looks bored. It's not going to be as bad as you think.
[00:36.320 --> 00:38.500]  Here is the mandatory
[00:39.720 --> 00:42.800]  personal anecdote. Okay, I'm in New Jersey right now.
[00:43.360 --> 00:43.960]  Yeah.
[00:46.700 --> 00:50.580]  So I'm on the plane, right? And we're getting ready to take off.
[00:50.640 --> 00:54.200]  And I've got two guys behind me.
[00:54.200 --> 00:57.860]  And I've got the cute girl next to him. And there's a guy over here that looks kind of goofy.
[00:58.000 --> 01:02.320]  And there's another girl next to him, right? So we're waiting to take off and I'm thinking
[01:02.800 --> 01:06.800]  these two don't know each other. These two don't know each other. We're headed to Vegas.
[01:06.800 --> 01:09.000]  There's all kinds of possibilities here, right?
[01:09.880 --> 01:13.800]  Then the dumb guy gets up, taps the girl on the shoulder and he says,
[01:13.800 --> 01:17.980]  Hey, would you mind moving over so that I can sit with my friend?
[01:18.920 --> 01:22.560]  That's when I knew that I had computer geeks behind me.
[01:25.400 --> 01:26.360]  True story.
[01:26.360 --> 01:30.120]  And somewhere I was hoping that there would be a guy here whose face would turn really red.
[01:31.960 --> 01:34.560]  Anyway, so they're behind me and they start talking geek speak.
[01:34.560 --> 01:37.180]  They start talking about XML and security and all this stuff,
[01:37.180 --> 01:41.180]  which past a certain point you get kind of tired of it.
[01:42.520 --> 01:45.780]  Then I got a surprise. These guys are all in their 20s. They're clean cut.
[01:45.780 --> 01:49.720]  They seem really driven by what they're doing, which is typical for DEF CON, I think.
[01:51.500 --> 01:55.320]  And then they're going through resumes and the one guy looks at a resume and he says,
[01:55.320 --> 01:58.680]  This guy's got a lot of technical knowledge. And the other guy looks and he says,
[01:58.680 --> 02:02.420]  Yeah, I interviewed him, but he doesn't have any business knowledge and he doesn't know
[02:02.420 --> 02:05.580]  what is of value and what is not. And that surprised me.
[02:06.280 --> 02:10.260]  That's what I look for now. I look for what things have value. I think we're in the midst of a change
[02:10.260 --> 02:15.080]  in the industry where we focus on what is of value
[02:15.080 --> 02:18.280]  rather than the mechanics of building things.
[02:18.640 --> 02:22.600]  So that's what our focus is going to be. It's going to be on keeping people employed through the industry
[02:22.600 --> 02:26.300]  because I personally don't believe that the shakeout is over yet.
[02:28.620 --> 02:30.480]  This is my other personal anecdote,
[02:30.480 --> 02:34.620]  which I decided was too egotistical. Why should you listen to me?
[02:34.660 --> 02:37.180]  I don't have a black t-shirt on, so maybe you shouldn't.
[02:39.360 --> 02:43.300]  What we're going to do, we're going to go through and we're going to hit three basic areas.
[02:43.300 --> 02:46.500]  We're going to lay out a couple simple business concepts, which are very
[02:46.500 --> 02:50.140]  common in MBA programs. They're common in
[02:50.140 --> 02:54.740]  large companies. We're going to lay those theories out.
[02:54.740 --> 02:57.780]  We're going to drive them down into a technical implementation
[02:58.340 --> 03:01.640]  that gives us concrete results that we can make decisions from.
[03:01.920 --> 03:05.840]  And then towards the end of the presentation, what I'm going to do is I'm going to throw out some strategic concepts
[03:05.840 --> 03:08.420]  to you, which are going to be
[03:10.040 --> 03:14.000]  a little bit radical, I think. We'll test it. We'll see. This is DEF CON. Maybe it won't be radical.
[03:14.000 --> 03:17.800]  Maybe nobody will care. But there's some ideas that I think that people can play around with and they
[03:17.800 --> 03:21.680]  might be able to turn them into additional concrete implementations
[03:22.320 --> 03:24.020]  in companies, things like that.
[03:25.480 --> 03:27.720]  Okay. Everybody watches the news, right?
[03:27.720 --> 03:32.040]  I took this a month ago and this is already out of date because there's already like a dozen more I could add on here.
[03:32.200 --> 03:35.340]  Layouts are still going on. People are still being laid off left and right.
[03:35.880 --> 03:39.820]  The crash is not over yet. Historically, industrial
[03:39.820 --> 03:43.340]  revolutions like this have seen a shakeout of approximately
[03:43.340 --> 03:47.960]  30% of the peak population of the leading technologies.
[03:47.960 --> 03:51.800]  What we've seen in IT right now is about a 15% shakeout. So personally, I think
[03:51.800 --> 03:55.820]  that you're looking at another wave that will be equivalent to
[03:55.820 --> 03:59.780]  the last four years. How many people here have been laid off or out of work in the last
[03:59.780 --> 04:03.900]  five years? Yeah. And you know what? For every hand
[04:03.900 --> 04:08.360]  that's here, there's a guy that isn't here because he's not in the industry anymore. He got washed out.
[04:08.360 --> 04:11.800]  My goal here is to give people a little bit of knowledge
[04:12.360 --> 04:15.960]  so that they can make decisions that will keep them employed or
[04:16.360 --> 04:19.840]  it will let them make a decision to leave the industry now before they waste a lot
[04:19.840 --> 04:23.820]  of time on it. So either way, if that's the outcome
[04:23.820 --> 04:25.480]  here, I'm happy with either outcome.
[04:27.900 --> 04:31.860]  The time and effort that you put out to learn things is finite. If you learn something that has
[04:31.860 --> 04:35.880]  no value, you're fucked. Right? Your time is gone. You can't
[04:35.880 --> 04:38.380]  get it back. People are not going to pay you for it.
[04:39.940 --> 04:43.760]  Now, the skew here in DEF CON is a little bit different because you guys are in the security
[04:43.760 --> 04:47.840]  industry and I think you've got a substantially better chance
[04:47.840 --> 04:50.600]  of staying employed over the next four or five years than business.
[04:50.600 --> 04:53.860]  If you're in business software, I think you're going to be in trouble.
[04:55.720 --> 04:59.800]  IT market changes constantly, everybody knows that. What we're going to look at is we're going to try and focus
[04:59.800 --> 05:02.680]  on what kind of skills that we should be learning to stay employed.
[05:05.380 --> 05:07.260]  How many people know what a meme is?
[05:09.080 --> 05:11.720]  That's good. The first question I got asked when I walked in was, what is a meme?
[05:11.720 --> 05:15.560]  And I thought, oh my god, I should have put that up. A meme is an idea
[05:16.300 --> 05:19.580]  it's a mind virus that passes through a population.
[05:19.960 --> 05:23.540]  And typically, if you want to be completely theoretical about it,
[05:23.540 --> 05:27.640]  it starts with a single person, that person talks to two more, those two people talk to
[05:27.640 --> 05:31.520]  four people, four people talk to eight, so it's typically an exponential function.
[05:32.880 --> 05:35.560]  And it looks like an exponential function, a
[05:36.260 --> 05:40.440]  hyperbolic curve, until it reaches about the 50% mark of reaching
[05:40.440 --> 05:43.100]  the entire population and then, because you're getting people that already know it,
[05:43.100 --> 05:46.740]  you're talking to people, oh yeah, I already know that, I already know that, it starts tapering down and you get
[05:47.340 --> 05:49.720]  a drop-off as you reach market saturation.
[05:50.580 --> 05:54.760]  And that's typically known as an S-curve. How many people know the concept of an S-curve?
[05:56.120 --> 05:59.460]  Okay, that's good. Here's a picture of it.
[05:59.580 --> 06:03.360]  I start with a single point, it goes through a rapid run-up,
[06:03.360 --> 06:06.400]  it reaches the 50% point, and then I reach market saturation.
[06:08.600 --> 06:11.200]  This is a fundamental concept that you can apply in a lot
[06:11.200 --> 06:16.040]  of different situations, a surprising number. And it's simple, it's a simple concept.
[06:17.940 --> 06:19.620]  Ultimately, this is our goal.
[06:20.120 --> 06:23.220]  We want to eliminate getting into new
[06:23.220 --> 06:27.280]  technologies when they're first introduced because there's a very high failure rate. I don't want to be
[06:27.280 --> 06:31.540]  here. I don't want to be in the high-risk area. I don't want to be in the low-reward
[06:31.540 --> 06:35.260]  area because that's a technology on its way out and I can't make any money in it.
[06:35.680 --> 06:37.820]  What I want to do is I want to identify
[06:37.820 --> 06:41.900]  an area as it's ramping up, but I want to get it before
[06:41.900 --> 06:45.900]  it's at the 50% mark so I can make the most money off of it. Right here,
[06:46.480 --> 06:49.900]  I can make a decision that, yeah, this is probably going to stick around, this is probably going to
[06:49.900 --> 06:53.980]  be a viable technology, and I can ride the highest part
[06:53.980 --> 06:57.720]  of the wave off, which is the optimum profit point because other people are not paying
[06:57.720 --> 07:02.040]  attention and you're already in the market to learn these things. You're already in the market to sell your services
[07:02.040 --> 07:05.660]  in this. This is a simple concept. Does everybody grasp this?
[07:05.660 --> 07:09.140]  Can I get a show of hands where everybody thinks that this is... do you think it's important?
[07:16.400 --> 07:18.540]  The reason I care about an S-curve is it
[07:18.540 --> 07:21.220]  has predictive power into the future.
[07:22.300 --> 07:26.360]  How many people here know calculus? Oh, there you go.
[07:26.360 --> 07:30.540]  So you know this already. As this is ramping up, my rate of
[07:30.540 --> 07:34.700]  change is constantly increasing and I can measure that by doing empirical analysis
[07:34.700 --> 07:38.460]  on certain things. And I can see that the saturation is...
[07:38.460 --> 07:42.140]  or the propagation of the mean is rising.
[07:42.180 --> 07:46.000]  Once it reaches the 50% mark, where roughly I have 50% of the people know
[07:46.460 --> 07:50.260]  the mean's already propagated, it changes, I reach the inflection point
[07:50.260 --> 07:54.420]  and the rate of change begins decreasing. So if I can measure the rate of change and see that it's
[07:54.420 --> 07:58.060]  increasing, I know that I'm still on the pre-50% mark.
[07:58.120 --> 08:02.520]  Afterwards, I know that I'm after the 50% mark. So this is really what we look for.
[08:02.520 --> 08:04.160]  We look for a rate of change.
[08:06.240 --> 08:08.900]  Okay, peak oil. How many know about peak oil?
[08:10.040 --> 08:12.120]  Oh my god, now I'm
[08:12.120 --> 08:12.940]  stunned.
[08:15.460 --> 08:19.940]  Just as a quick overview, peak oil is the idea that
[08:19.940 --> 08:23.940]  oil resources are finite in the world. And there was a guy named Hubert
[08:23.940 --> 08:27.540]  which, in the 50s, he did basically an S-curve analysis
[08:28.140 --> 08:31.900]  at the rate at which they were finding oil drilling holes, you know, that they were making
[08:31.900 --> 08:36.600]  discoveries. And he graphed it down on a chart and he was able to see that in the United States
[08:36.600 --> 08:39.760]  that peak oil production would occur around 1970. And he
[08:39.760 --> 08:43.520]  was right within about a year. And he predicted it 15 to 20 years before it happened.
[08:43.520 --> 08:47.260]  This is all numbers off the top of my head, so I didn't actually expect to talk about this.
[08:49.920 --> 08:51.880]  What is probably very likely
[08:51.880 --> 08:55.440]  going to happen over the next few years is you're going to see peak oil occur worldwide.
[08:55.740 --> 08:59.740]  There's a lot of talk about it. If you do a search on the internet, Google peak oil, you'll get all kinds of
[08:59.740 --> 09:04.760]  information. Environmentalists have been talking about it for a long time.
[09:05.160 --> 09:07.740]  I'm not an environmentalist, but I understand the concept
[09:07.740 --> 09:12.280]  of how Hubert did the analysis, and I personally believe that this is very likely to happen.
[09:12.280 --> 09:15.780]  I think you're going to see peak oil happen within the next five years. And that's why
[09:15.780 --> 09:19.600]  you see oil prices being driven up. It's because there's a lot of guys like me sitting at companies like
[09:19.600 --> 09:23.660]  J.P. Morgan, and they're doing the same analysis, and they're saying, peak oil
[09:23.660 --> 09:28.040]  is probably going to happen. We need to get our money into oil now and make money on that.
[09:28.880 --> 09:32.360]  Oil prices at $60, right? Everybody thinks it's speculation?
[09:32.360 --> 09:36.420]  I don't think so. This is why you care.
[09:36.420 --> 09:39.300]  You can make money. Or you can avoid losing money, which
[09:39.940 --> 09:42.180]  depends on if you're risk averse or not.
[09:44.360 --> 09:47.800]  This is another example of an S-curve. How many people know Harry Dent?
[09:48.520 --> 09:51.840]  Yeah, that's not surprising. Harry Dent wrote a book in 1989
[09:51.840 --> 09:55.860]  which was called The Great Boom Ahead, where he predicted that there would be a rapid
[09:55.860 --> 09:59.940]  IT boom, which would essentially look like an S-curve, and that's exactly what we saw
[09:59.940 --> 10:03.900]  from 1990 to 2000. We saw the entire information
[10:03.900 --> 10:08.020]  technology sector boom hugely beyond what anybody imagined, except Harry Dent
[10:08.020 --> 10:12.140]  did predict it. I don't buy a lot of his other theories. I do believe he was right.
[10:12.140 --> 10:15.780]  I mean, you can't deny that he was right about what he claimed. He made a second prediction
[10:15.780 --> 10:19.860]  in his book, which is that there will be
[10:20.040 --> 10:23.840]  a subsequent wave of S-curve technologies, which will build upon the
[10:23.840 --> 10:28.120]  infrastructure that was created in the first S-curve. That's where we're at right now.
[10:29.100 --> 10:31.940]  There's an infrastructure in place. There's networks everywhere. There's wireless
[10:31.940 --> 10:36.080]  networks, there's standards, there's TCP, IP, all the acronyms,
[10:36.080 --> 10:39.940]  all those things. It's too hard for me to remember. But ultimately, if you
[10:39.940 --> 10:43.380]  want to be looking where you should be, you don't want to be
[10:44.840 --> 10:47.760]  here anymore. This is foundational
[10:48.280 --> 10:51.880]  stuff that's in place, that's standard. It's not interesting to work on. It's
[10:51.880 --> 10:56.080]  maintenance work, and it doesn't pay a lot of money, and that's why you see a lot of things being outsourced now.
[10:56.080 --> 10:59.700]  It's stuff that's duplicatable, that we can send somewhere where there's a different kind of culture
[10:59.700 --> 11:03.600]  that adapts to those kind of things. What you want to be looking for is
[11:03.600 --> 11:07.860]  technologies that build on the existing infrastructure that was
[11:07.860 --> 11:09.660]  created in the last ten years.
[11:11.560 --> 11:15.860]  And I goofed up because I was going to give away a t-shirt if somebody told me what peak oil
[11:15.860 --> 11:17.060]  was and I blew it.
[11:20.120 --> 11:21.860]  Okay, MemMiner.
[11:21.960 --> 11:25.200]  This is a little tool that I made, which I've been doing this for about
[11:25.200 --> 11:29.300]  thirteen years, and basically it assumes that a frequency count, a word count
[11:29.300 --> 11:33.400]  on the internet is roughly equivalent to an S-curve growth of that technology.
[11:33.460 --> 11:37.100]  That's a big assumption, I know. And how many math people do we have in here?
[11:37.700 --> 11:41.440]  Oh, thank God. I don't have to worry about all the criticism.
[11:42.160 --> 11:45.060]  You get a ton of criticism. From my standpoint, I'm very pragmatic.
[11:45.060 --> 11:49.100]  I don't want to sit down and do a lot of analysis about probability and this and that. I just want a tool,
[11:49.200 --> 11:52.900]  a rough cut tool that will give me a way to make a decision quickly and easily without having
[11:52.900 --> 11:56.860]  to do a lot of analysis and a lot of guessing and things like that. And that's what this does.
[11:57.800 --> 12:00.240]  In my mind, I think of it as a data miner
[12:02.420 --> 12:05.200]  that anyone can implement and use in a small business
[12:05.800 --> 12:09.080]  and compete pretty well against large
[12:09.080 --> 12:13.260]  companies that have substantially more resources and better ideology,
[12:13.260 --> 12:17.760]  better methodology of how they do predictions.
[12:21.520 --> 12:22.980]  It's a simple little program.
[12:26.420 --> 12:30.280]  I'll go through and do it. I don't consider... does anybody want to see a demo of it?
[12:30.280 --> 12:32.000]  Do you need to see a Java code of it?
[12:34.500 --> 12:37.920]  How about if I do it at the end? I don't want to break out of this thing right now.
[12:38.260 --> 12:42.140]  But to me, it's really simple. It really is. It took me about 4 or 5 days to write it.
[12:42.140 --> 12:44.620]  Anybody could write it with basic programming knowledge.
[12:44.940 --> 12:50.140]  The key to it is the business concepts behind it and the application of those things.
[12:52.320 --> 12:54.280]  Okay, here's an example of one of the first
[12:54.280 --> 12:58.540]  graphs that I ran after I built the tool. This is the first T-Cert question.
[12:58.900 --> 13:02.620]  Can anybody tell me what this pattern is? What's driving this pattern?
[13:06.820 --> 13:10.060]  That's true. Okay, this is a graph made off of the keyword
[13:10.060 --> 13:12.940]  of work, but can you tell me why it's so rhythmic?
[13:14.560 --> 13:18.420]  Exactly. People don't talk about work on Saturday and Sunday.
[13:18.760 --> 13:22.520]  That's exactly right. So, T-Cert. I don't want to take those home.
[13:24.900 --> 13:25.840]  Saturday, Sunday.
[13:25.840 --> 13:29.820]  Monday, Tuesday, Wednesday, Thursday, Friday. And look, Wednesday really is the hump day.
[13:33.760 --> 13:34.360]  This is
[13:34.620 --> 13:38.140]  a small example that there really is data that you can extract out of the
[13:38.140 --> 13:42.200]  Internet. I use Deja News right now because Deja News, I've used it for several years
[13:42.200 --> 13:46.240]  because it gives me a time history and I don't have to previously know about
[13:46.380 --> 13:50.160]  a concept. You know, Deja News is being recorded all the
[13:50.160 --> 13:54.100]  time. So, let's say RSS comes along. And I'm not paying attention. And a year later I
[13:54.100 --> 13:58.040]  decide, oh, I should have been paying attention. I want to see what RSS is doing. Deja News
[13:58.040 --> 14:01.920]  has a history that I can go back and I can backfill it. You can see this graph. The date here is
[14:01.920 --> 14:04.740]  April 2002. I ran this graph two years ago.
[14:05.960 --> 14:08.840]  Okay, I was able to backfill it and figure out what was
[14:08.840 --> 14:12.840]  going on. The search engines, I have done pieces to
[14:12.840 --> 14:16.890]  do the same kind of analysis against the search engines, against Google, against Yahoo,
[14:18.680 --> 14:20.680]  a couple of the others, but they're very
[14:20.680 --> 14:24.740]  highly skewed to the present. You can recreate, you can
[14:24.740 --> 14:28.760]  make a crude approximation of the same data that you can get out of Deja News, but
[14:28.760 --> 14:33.160]  it's much less granular and it's just, you've got to do manipulations, it's really goofy.
[14:33.160 --> 14:37.240]  The search engines are very highly skewed to the present. You can't
[14:37.240 --> 14:41.400]  backfill data without doing a lot of analysis for more than 90 days or maybe a
[14:41.400 --> 14:45.500]  year. That's another key, using Deja News. Using some
[14:45.500 --> 14:49.320]  kind of pre-recorded data that had no knowledge of the fact
[14:49.460 --> 14:53.240]  that a trend was going on. Here's Easter Bunny,
[14:53.240 --> 14:57.420]  same thing. You can see every year, along comes Easter, people talk about
[14:57.420 --> 15:01.180]  Easter Bunny. The data is there waiting to be pulled out, you just have to know how
[15:01.180 --> 15:05.060]  to do it. Here's Comdex. Now, Comdex
[15:05.060 --> 15:09.120]  got cancelled in 2004, right? Actually, this isn't my new graph.
[15:10.180 --> 15:12.920]  Comdex got cancelled right here. If I had had this graph
[15:12.920 --> 15:17.680]  last year, like I did, is there any doubt in my mind that Comdex is going to get cancelled?
[15:18.260 --> 15:21.060]  There's not a lot of doubt. It was a predictable event.
[15:21.080 --> 15:25.020]  The fact that it got cancelled in 2005, same thing, a predictable event. You could have made
[15:25.020 --> 15:28.440]  money on it if you'd gone to the bookies and said, I think Comdex is going to be cancelled.
[15:29.640 --> 15:32.600]  Very clear trend, starting right here.
[15:33.180 --> 15:36.400]  Each successive high is lower. Does anybody do technical analysis
[15:36.400 --> 15:40.660]  of stocks? This is a very similar analogy.
[15:40.700 --> 15:45.220]  Each successive high never reaches the previous high, so we're clearly in a downtrend.
[15:48.540 --> 15:52.040]  Now, here's a graph. I went back later. You know, I'm not...
[15:52.040 --> 15:56.640]  I don't care about money a lot, but I wish I had.
[15:57.060 --> 16:00.760]  I went back and I retrofitted stuff on here, and I did keyword searches
[16:00.760 --> 16:04.720]  against stock prices of the bubble. The green is the stock
[16:04.720 --> 16:08.420]  price of Siebel. The blue is the frequency word count out of
[16:08.420 --> 16:12.080]  Deje News at the same time period, and what I did was I matched the amplitudes.
[16:12.820 --> 16:16.620]  You can see there's a... for Siebel, there's a very tight correlation. I mean, this is like a 90...
[16:16.620 --> 16:19.740]  you know, for the statistical people, this is close to a 90% correlation.
[16:20.240 --> 16:23.980]  Now, in this particular example, the word count does lag
[16:25.000 --> 16:28.020]  the actuality, so maybe it doesn't help you so much, but that's
[16:28.020 --> 16:32.160]  not always the case. Let's take a look at Palladium. Now, this is the one I really
[16:32.160 --> 16:36.080]  wish I had done in 2000. You can see
[16:36.080 --> 16:39.460]  clearly that there are rumors about Palladium's price spiking
[16:41.040 --> 16:44.040]  almost two years before it actually happens.
[16:45.280 --> 16:48.000]  Okay, right here. Although, if you really want to get technical and
[16:48.000 --> 16:51.920]  drive it back, you can say that maybe this was the peak, but that's still a year. A year
[16:51.920 --> 16:55.420]  before Platinum peaked, it was... you could have figured out
[16:55.420 --> 16:59.940]  that there was a good chance that Platinum was going to spike. And also, if you take a look,
[16:59.940 --> 17:03.720]  that when Platinum collapses, the keyword told you that it was going to collapse
[17:03.720 --> 17:07.860]  before it happened almost a year ahead of time. That's money.
[17:07.860 --> 17:12.120]  There's money right there. There are large companies that are doing all this analysis right now.
[17:12.120 --> 17:15.820]  The fact that they're doing this analysis... okay, you know, there's guys
[17:15.820 --> 17:19.640]  like me floating all around. I'm not really a
[17:19.640 --> 17:23.660]  large corporation guy, but there are guys in those corporations right now that are doing this and they understand
[17:23.660 --> 17:27.420]  all these concepts. And they've been piling onto the internet over the last five years
[17:27.420 --> 17:31.440]  and what they've done is they've cut the margin of where you can make the money.
[17:31.560 --> 17:35.660]  The latency is shrinking over the last four or five years. This is a very high latency
[17:35.880 --> 17:39.560]  a year. That's amazing to me. If you look at some of the later graphs that
[17:39.560 --> 17:43.700]  happened two or three years later, the latency has shrunk to like three months,
[17:43.700 --> 17:46.400]  four months, things like that. Sometimes it's down to like a month.
[17:49.600 --> 17:50.680]  Here's another example.
[17:50.680 --> 17:54.340]  Applied materials. There was a latency. Applied materials was clearly
[17:54.340 --> 17:58.840]  in an uptrend years before the price spike.
[17:58.840 --> 18:02.200]  And the keyword count told you that it was collapsing
[18:02.200 --> 18:05.460]  before the stock collapsed by about a quarter.
[18:06.020 --> 18:10.280]  And if you look right here, you can see that now the latency has disappeared out of it. There's a latency here
[18:10.280 --> 18:13.980]  in 2000 and as we go along, right about here, now there's no latency anymore.
[18:31.150 --> 18:32.650]  That's an excellent question.
[18:32.650 --> 18:36.790]  I've got a couple of other graphs that will show that it's very hard to determine and that's where there really is.
[18:37.010 --> 18:39.330]  There is no money to be made in mechanical
[18:43.070 --> 18:44.510]  skills. You can't make money
[18:44.510 --> 18:48.190]  in those things, especially in a global market. You have to move into something
[18:48.190 --> 18:52.090]  that requires some kind of artistic ability. And this particular
[18:52.930 --> 18:56.030]  mechanism right here does require a fair amount of interpretation
[18:56.030 --> 19:00.290]  and analysis that sometimes you're wrong. I mean, it's just the way it goes.
[19:00.710 --> 19:04.270]  In the case of Palladium, there were rumors flowing out of Russia
[19:04.270 --> 19:08.110]  that they were having problems and that they weren't going to make deliveries.
[19:08.170 --> 19:12.070]  So in that case, it was the lack of metal that drove the price spike.
[19:12.530 --> 19:16.070]  But you're absolutely right. There are cases where the rumor precedes
[19:16.070 --> 19:19.750]  and sometimes, you know, I'm not so sure that there isn't guys at some of the companies that are actually spiking
[19:19.750 --> 19:24.230]  the internet now in order to create an artificial demand in order to
[19:24.770 --> 19:28.030]  offload their stock or whatever it is. So that's something you've got to be careful of.
[19:31.780 --> 19:33.820]  I didn't run Enron. I didn't have any
[19:33.820 --> 19:37.680]  interest in Enron. I just looked at the dot com boom. But you're more than happy
[19:37.680 --> 19:40.380]  if you want the source code, you're more than happy to run Enron.
[19:44.400 --> 19:47.220]  Okay, JBuilder. How many programmers do we have in here?
[19:48.420 --> 19:50.860]  How many JBuilder programmers?
[19:51.360 --> 19:55.020]  Ah, interesting. You guys are all assembly, low level, right?
[19:55.580 --> 19:58.000]  What kind of languages do we have in here?
[19:59.880 --> 20:01.820]  Well, JBuilder, that's okay.
[20:07.960 --> 20:09.920]  This is a graph of JBuilder
[20:09.920 --> 20:14.180]  and it basically, you can see an S curve right here. The inflection point is roughly
[20:14.180 --> 20:18.060]  right here. And typically what you see, at the inflection point, your rate of change is
[20:18.060 --> 20:22.200]  infinite. As you're switching over from a rising to a falling rate of change,
[20:22.200 --> 20:26.220]  there's a spike there of infinite demand, theoretically. And you can see it reflected
[20:26.220 --> 20:30.280]  in this graph very clearly. There's a huge spike right at the time that
[20:30.280 --> 20:34.380]  JBuilder is undergoing its inflection point. And by about this time
[20:34.380 --> 20:37.880]  right here, you should have been out of JBuilder and you should have been doing something else. Although
[20:37.880 --> 20:42.220]  it's only been in the past year that it finally came to fruition. So there was a
[20:42.220 --> 20:46.420]  lag time of about two years before JBuilder finally died off and
[20:46.420 --> 20:53.860]  Borland had to admit it.
[20:53.860 --> 20:57.760]  No, you have to have a keyword
[20:57.760 --> 20:59.020]  that has uniqueness.
[21:04.700 --> 21:08.960]  Well, you have to do qualifiers. And I've got a couple other graphs in there further on
[21:08.960 --> 21:12.920]  where you'll see that, like ColdFusion. ColdFusion is a perfect one. I ran a graph on ColdFusion
[21:12.920 --> 21:17.260]  because I saw an article on it and there is some evidence to support that ColdFusion is real.
[21:17.260 --> 21:20.740]  So I ran a graph and I got this really strange graph that didn't make any sense to me.
[21:20.880 --> 21:25.060]  And about three days later, after I published it, I found out, oh right, it's
[21:25.060 --> 21:29.240]  ColdFusion the programming language. So it kind of made me look like a fool.
[21:30.080 --> 21:33.240]  So what I did for that graph was I added a new qualifier, ColdFusion
[21:33.240 --> 21:36.980]  Physics. And that gave me a much better picture of what was really going on.
[21:36.980 --> 21:41.040]  So yeah, you've got to be careful about keyword picks, which I have a little bit later on.
[21:41.760 --> 21:45.460]  Delphi. Now this is a real life example of something that I did in my own life.
[21:45.520 --> 21:49.280]  I got into Delphi around 95. I did programming
[21:49.280 --> 21:53.360]  on it. I wrote the wave up. And about 98 it was clear to me that this
[21:53.360 --> 21:57.360]  peak was over and I needed to do something different. So right in here I started
[21:57.360 --> 22:01.340]  learning Java. I went to Sun's conference. I started learning a whole
[22:01.340 --> 22:05.140]  different ideology and methodology of the way I did programs. And I switched over here and I missed
[22:05.140 --> 22:09.360]  the crash. There's a lot of Delphi programmers. Delphi is an extremely good language. I like
[22:09.360 --> 22:12.920]  it a lot. It's the best thing I ever used. I can't make money in it anymore.
[22:13.180 --> 22:16.520]  And there's a lot of ex-Delphi programmers that found that out the hard way.
[22:19.480 --> 22:21.020]  This, for some reason,
[22:21.600 --> 22:25.760]  I put this up and this is like the single most red graph on my site.
[22:27.080 --> 22:29.860]  The guys are just fanatical about scripting languages.
[22:29.860 --> 22:33.560]  It's very strange. Here you see
[22:34.580 --> 22:38.160]  Perl. Very clear rise. Very clear fall.
[22:38.400 --> 22:42.360]  Should have got out of it right around here. Maybe. Maybe should have.
[22:43.060 --> 22:45.820]  PHP. Same thing. Rises. Inflection
[22:45.820 --> 22:49.800]  points are roughly out here. It's not a true S-curve. It's not identical. But in real life that never
[22:49.800 --> 22:53.760]  happens because you get all kinds of variations. You just have to kind of guesstimate between peak and fall.
[22:53.760 --> 22:56.800]  And then Python and Ruby.
[22:56.860 --> 23:01.740]  Python, this doesn't show enough detail, but Python to me
[23:01.740 --> 23:05.760]  is the choice out of these four. If you were going to have to do a project right now
[23:05.760 --> 23:09.220]  I would choose Python. Assuming I could fit it into
[23:09.760 --> 23:14.520]  the requirements of the project. I mean you always get languages that fit a certain set of things.
[23:14.580 --> 23:17.120]  And you can't just choose a language in order to boost
[23:17.740 --> 23:20.900]  your employability. You have to look at what you're doing for the customer.
[23:20.900 --> 23:24.680]  There's also a very interesting thing that happens in the past year
[23:24.680 --> 23:29.140]  in that all scripting languages have suddenly got a high level of interest
[23:29.140 --> 23:32.180]  out of nowhere. And I don't know what drives that.
[23:35.420 --> 23:37.740]  YMAX. How many people know YMAX?
[23:38.300 --> 23:41.000]  YMAX is going to be big. I believe YMAX is going to
[23:41.000 --> 23:44.380]  be a big technology. YMAX basically replaces 802.11b
[23:44.900 --> 23:46.880]  with the same
[23:49.840 --> 23:52.920]  imagine 802.11b with a 30 mile range.
[23:53.560 --> 23:55.580]  And also I think, you guys can correct me
[23:55.580 --> 23:58.840]  I'm far from perfect. You can correct me if I'm wrong.
[23:58.840 --> 24:03.260]  But I believe that YMAX already has permission to be able to tap into cell phone
[24:03.260 --> 24:06.920]  networks. So you're going to see a huge amount of grassroots competition
[24:06.920 --> 24:11.300]  against the major wireless carriers from people setting up their own shops
[24:11.300 --> 24:15.440]  in YMAX. I can easily imagine someone getting a few million dollars
[24:15.440 --> 24:19.540]  of capital, dumping a few YMAX things in the center of maybe 30 cities
[24:19.540 --> 24:22.920]  and just cutting the hell out of Verizon's market or
[24:23.260 --> 24:24.240]  Singular's market.
[24:27.900 --> 24:29.760]  Blogs. This is an interesting one.
[24:31.100 --> 24:32.420]  This is a little bit more
[24:35.720 --> 24:38.260]  This is a question. This is a t-shirt question.
[24:39.420 --> 24:43.160]  You can see pretty clearly here. This is the moving average. You got to do a moving average.
[24:43.160 --> 24:46.160]  There's too many spikes that happen on the internet. Too many weird nuances.
[24:46.420 --> 24:50.920]  But basically by looking at a moving average you can get an idea. And we can see that blogs are clearly rising since 2002.
[24:50.920 --> 24:55.020]  And it was probably a good technology to get on around January 2004, which a lot of people did.
[24:56.720 --> 24:59.040]  Did anybody read the article that was in
[24:59.040 --> 25:02.920]  USA Today or one of the major papers about two months ago where they said that
[25:02.920 --> 25:06.860]  27% of the public does not know what a blog is. Did anybody read that?
[25:08.480 --> 25:11.280]  Now tie those two numbers together. I have an inflection graph
[25:11.280 --> 25:15.180]  here, right? It hasn't reached a peak point yet. I know it's an
[25:15.180 --> 25:19.260]  exponential function and I know that 27% of the people have not
[25:19.260 --> 25:23.600]  been exposed to the meme yet. What kind of
[25:24.360 --> 25:27.840]  thing can I derive from that? I can make a prediction from that.
[25:28.460 --> 25:31.420]  T-shirt. Anybody that can tell me gets a t-shirt. Anybody that makes a good
[25:31.420 --> 25:32.900]  guess gets a t-shirt.
[25:41.060 --> 25:47.760]  Can you give me more detail? I don't want to go down the calculus path.
[25:47.760 --> 25:51.780]  It's too much stuff for me. I took what I needed from it and I threw the rest away.
[25:52.420 --> 25:55.320]  Anybody else? Down there. Black. Black shirt.
[26:00.280 --> 26:02.420]  It's going to peak within the next year.
[26:02.540 --> 26:03.260]  T-shirt.
[26:20.770 --> 26:22.450]  It's not going to be a big money maker.
[26:22.530 --> 26:26.750]  What you'll see is you'll see a lot of hysteria in the media over the next year
[26:26.750 --> 26:30.650]  and then that'll be it. It'll have peaked and it'll be ramping down. That doesn't mean you can't make
[26:30.650 --> 26:34.770]  money in it. All it is is an indicator. There are technologies that have peaked that you can
[26:34.770 --> 26:38.810]  still make money in. That's one thing I don't want to tell you
[26:38.810 --> 26:42.350]  is that if it goes through an inflection point and it peaks that you can't make money in anymore
[26:42.350 --> 26:46.610]  it's a warning indicator that tells you you need to look at the surroundings
[26:46.610 --> 26:49.950]  you need to look at your competition, you need to look at your skill set and make
[26:51.470 --> 26:54.210]  a knowledgeable decision about what you're going to do. You can make money in post
[26:54.850 --> 26:58.430]  like J2EE. I don't know, probably nobody here has read my site. I put a
[26:58.430 --> 27:02.650]  controversial article out about 3 months ago
[27:02.650 --> 27:06.490]  that got a lot of Java people riled up which basically says that J2EE is about to go
[27:06.490 --> 27:10.550]  through its inflection point. That it's peaked out as a technology. I have no
[27:11.210 --> 27:14.350]  interest in moving on to another technology right now because I still make money in it
[27:14.350 --> 27:18.190]  and I'll probably ride it for 3 or 4 more years but if I were an entry level
[27:18.190 --> 27:22.350]  person getting into the market I don't think I would choose J2EE because
[27:22.350 --> 27:26.410]  there's already going to be a bunch of guys like me that have experience and knowledge that are going to compete against you
[27:26.410 --> 27:29.030]  and the market isn't expanding anymore.
[27:31.630 --> 27:34.050]  Now, it's time for the half time here.
[27:40.040 --> 27:42.640]  How many people think so far that this
[27:42.640 --> 27:46.520]  has been more interesting than you thought it would be? Oh, that's so
[27:46.520 --> 27:50.660]  gratifying. I mean, I kind of took this
[27:50.660 --> 27:54.600]  as a lark. I sent in like a basic program, you know, basic speech
[27:55.020 --> 27:57.800]  People that have looked on the disk realize now that it's like about
[27:57.800 --> 28:01.860]  one third of what I'm doing right now. It was like a perfunctory effort and then I decided
[28:02.360 --> 28:05.140]  a couple days ago, well, I really need to do something serious on this.
[28:05.540 --> 28:09.820]  So that's nice. That's what was my aim was to get, to have people interested and have some kind of
[28:09.820 --> 28:11.340]  value out of this presentation.
[28:13.300 --> 28:17.820]  Wi-Fi phone. How many people know Wi-Fi phone? That's another big one.
[28:17.820 --> 28:19.720]  It's going to be tied into WiMAX, I think.
[28:22.080 --> 28:25.840]  Okay, so we already talked about this. Inflection point tends to be at about the 50% saturation
[28:25.840 --> 28:29.640]  point. That's not always true. That's just a rule of thumb. It's very easy to get
[28:30.180 --> 28:33.500]  and we'll look at another graph here later on where you get a quick ramp up
[28:33.500 --> 28:37.660]  but the infrastructure is not in place to support a technology. There's two technologies
[28:38.940 --> 28:42.120]  that tried to go through inflection points. They tried to go through a
[28:42.120 --> 28:46.480]  growth phase and the support just wasn't there. One of them is Bluetooth. I was here two years ago
[28:46.480 --> 28:49.820]  and there was a lot of Bluetooth fervor. There was a lot of Bluetooth hacking, things like that.
[28:49.820 --> 28:53.920]  So I went back and I did a graph on Bluetooth and I was surprised to see that Bluetooth
[28:53.920 --> 28:57.960]  tried to take off three or four years ago and it died out because there wasn't
[28:58.880 --> 29:01.980]  a critical mass to make it go. And then within the last two years
[29:01.980 --> 29:05.980]  it's picked up a lot. So a lot of times you'll see new technologies sputter and try and
[29:05.980 --> 29:09.740]  start and then they'll die out because there's some missing factor there. Service-oriented
[29:09.740 --> 29:14.020]  architecture is another one. It came out around 2000, 2001, the buzzword,
[29:14.020 --> 29:17.360]  all that, and it tried to take off and it died. But for the past
[29:18.200 --> 29:21.580]  17 or 18 months it's been rising steadily. It's now something that
[29:22.360 --> 29:25.400]  organizations either understand and feel that they need or
[29:25.400 --> 29:28.280]  there's some critical component there that makes it viable.
[29:30.240 --> 29:33.400]  We already did the blogging. RSS feeds.
[29:33.700 --> 29:37.440]  This is very highly correlated to blogs. Same difference. By doing a search on
[29:37.440 --> 29:41.540]  and you can see here I used a qualifier. RSS RDF. I don't know if
[29:41.540 --> 29:45.960]  everybody can see that or not. People in back probably can't. So I used a
[29:45.960 --> 29:48.420]  qualified word here because RSS wasn't a good search.
[29:51.300 --> 29:52.420]  And now we're going to talk about the
[29:52.420 --> 29:56.360]  problems with this. The biggest single problem that I run into is that I'm part
[29:56.360 --> 30:00.140]  of the meme. How do I know to search for something? How do I know about RSS?
[30:00.140 --> 30:04.360]  I read it in an article. I'm part of the meme propagation and statistically
[30:04.360 --> 30:08.860]  I will learn about the meme at about the 50% mark which means I can't make any money in it.
[30:10.660 --> 30:12.380]  So I've got to figure out a way to
[30:12.380 --> 30:16.320]  track the meme before it gets to the 50% mark. I don't want to be like everybody
[30:16.320 --> 30:20.420]  else and be the average. So that's one problem
[30:20.420 --> 30:24.620]  with the methodology I'm using right now. What it requires is me to be reading articles all the time
[30:25.460 --> 30:28.360]  I have to spend a lot of time trying to be at the forefront of technology
[30:28.360 --> 30:32.280]  when there are easier ways to do it. It is subject to manipulation although
[30:32.280 --> 30:36.400]  not anywhere near as much as you would think. When you do a search off Deja News you are doing a search
[30:36.400 --> 30:40.260]  against hundreds of thousands and millions of people. It's very
[30:40.260 --> 30:44.900]  hard to inject a meme and create an artificial result. I know because I've tried.
[30:45.420 --> 30:48.900]  It's not statistically rigorous. There's a lot of criticism from
[30:48.900 --> 30:52.980]  people that are mathematicians. I've heard a lot of criticism about it and it is kind of flaky
[30:53.520 --> 30:56.840]  but it's worked well for me for 13 years. It's helped me make
[30:56.960 --> 31:00.400]  a lot of decisions where I could have easily gone off onto a bad path and ended up
[31:00.960 --> 31:04.600]  in another industry. Maybe that would be good, maybe that would be bad but
[31:04.600 --> 31:08.780]  that's not the path I chose. It works very well for
[31:08.780 --> 31:12.980]  technical trends. It does not work as well for social trends. It doesn't work
[31:12.980 --> 31:16.980]  for things that have lifetimes of
[31:16.980 --> 31:21.020]  20 years or 30 years. It works very well for a range of 4 to 5 years and we'll
[31:21.020 --> 31:24.900]  look at why in a few minutes. If I were
[31:25.740 --> 31:29.040]  serious about using this as a technology to drive my company
[31:29.040 --> 31:33.660]  and make decisions with, I would throw away the current methodology of using Deja News.
[31:34.120 --> 31:37.180]  I would start capturing RSS feeds and I would build my own
[31:37.180 --> 31:41.160]  database and that will allow me to capture trends as
[31:41.160 --> 31:45.620]  they happen in real time and I guarantee you that there's people out there right now that are doing it.
[31:46.200 --> 31:49.600]  I did it. I wrote a little piece about 6 months ago.
[31:49.660 --> 31:53.220]  It has some technical problems but you can easily get around them if you spend
[31:53.220 --> 31:57.180]  enough time on it. I have a lot of other things to do but there is a lot of value
[31:57.180 --> 32:01.320]  to be done in applying this methodology to pulling down real time
[32:01.320 --> 32:05.240]  RSS feeds, building a database and looking at rates of change that are
[32:05.240 --> 32:07.940]  happening in keywords. I believe there's a lot of value there.
[32:09.040 --> 32:12.100]  We already talked about skewing factor. One of the problems is
[32:12.100 --> 32:15.720]  you lose abstract relationships with the way you store the RSS.
[32:15.720 --> 32:18.220]  There's some things there but they can be gotten around.
[32:20.580 --> 32:23.700]  Okay, so now we did the business process.
[32:23.700 --> 32:28.500]  We did a tactical implementation that gives us real decision making tools.
[32:28.560 --> 32:31.800]  Now what we're going to do is we're going to push this back up into a strategic framework
[32:32.500 --> 32:36.260]  that will let us make decisions about more than just about what technology
[32:36.260 --> 32:39.540]  I choose. And this, I admit, this is going to be kind of flaky.
[32:42.000 --> 32:44.360]  One of the big justifications for Moore's Law
[32:44.360 --> 32:47.640]  people like to quote Moore's Law. Everybody knows Moore's Law, right?
[32:47.640 --> 32:49.540]  How many people don't know Moore's Law?
[32:52.620 --> 32:56.220]  It's a trade off. I can't let Moore's Law go.
[32:57.520 --> 33:00.140]  It gets quoted a lot because it's used as a justification
[33:00.140 --> 33:02.960]  that the number of transistors will double every year
[33:04.040 --> 33:07.960]  so there will always be an IT industry that will continue booming.
[33:09.260 --> 33:10.660]  And I would agree with that
[33:10.660 --> 33:12.720]  if there were no other factors.
[33:15.360 --> 33:19.160]  People have a finite amount of time and effort to spend on anything.
[33:21.940 --> 33:23.320]  Geeks, techno geeks,
[33:23.320 --> 33:26.460]  they like technical things, they like trends, they like
[33:27.240 --> 33:30.660]  detail, but ultimately people are social animals.
[33:30.660 --> 33:34.540]  They will spend time on things that they enjoy
[33:34.540 --> 33:38.680]  or things that they're forced to do. Other things they will throw
[33:38.680 --> 33:42.520]  away in favor of things that they enjoy or things that they're forced to do.
[33:42.800 --> 33:46.640]  And this is part of the reason why the Memminer works off of Deja News. People talk about
[33:46.640 --> 33:50.120]  things that they enjoy or that they're forced to do.
[33:51.200 --> 33:54.660]  For the average person, they spend their time sleeping,
[33:55.280 --> 33:58.900]  working, I'm glad I got a laugh, that's good, shopping,
[33:58.900 --> 34:02.780]  eating, having sex. The range of that
[34:02.780 --> 34:07.480]  variance is not a lot from person to person on average.
[34:07.840 --> 34:10.900]  So if I want somebody to read the internet two hours a day and I get
[34:11.020 --> 34:14.800]  a certain level of growth, now to double that, I've got to have them read the internet
[34:14.800 --> 34:18.840]  four hours a day, it's not going to happen. They've got other things they want to go do.
[34:18.840 --> 34:22.280]  They want to go eat, they want to go have sex, they want to go visit Las Vegas.
[34:22.380 --> 34:27.580]  So there is a fundamental limiting factor in the growth of the internet based on what people's time is.
[34:27.580 --> 34:31.600]  There's other factors on top of that. Now for some people,
[34:32.660 --> 34:34.440]  you do get a wide variance.
[34:36.860 --> 34:37.580]  For instance...
[34:41.670 --> 34:44.650]  But I don't think we're going to see a society that looks like this.
[34:47.700 --> 34:50.260]  Now we're going to look at Deja News again, and what we're going to do
[34:50.260 --> 34:54.180]  is we're going to invert. What I was looking for was uniqueness, right?
[34:54.800 --> 34:58.440]  What we're going to look for now is the ether of
[34:58.440 --> 35:01.300]  Deja News. We're going to look for the rate of growth of Deja News
[35:03.080 --> 35:04.600]  abstracted of all uniqueness.
[35:06.040 --> 35:09.800]  What I'm going to do is I'm going to use keywords that have no
[35:10.660 --> 35:13.560]  identifying ability, that are used in anything, anytime.
[35:14.120 --> 35:17.820]  This, have, one, all, them, will, other. That comes out of the top number
[35:17.820 --> 35:22.900]  of people that do crypto analysis. E-T-A-O-N-R-I-S-H-D, right?
[35:22.900 --> 35:26.420]  That's what you do a frequency analysis to be able to crack codes that are not well done.
[35:26.420 --> 35:30.640]  Well, you can do the same thing with keywords. What I did was I went through the top 100 keywords
[35:30.640 --> 35:34.240]  and I picked out ones that were fairly generic, and then I did a search
[35:34.240 --> 35:38.280]  and you can see very clearly exponential growth in Deja News.
[35:38.400 --> 35:42.420]  This is one reason why the MemMiner works is because over any small period
[35:42.420 --> 35:44.660]  like from here to here, it looks linear.
[35:45.800 --> 35:50.400]  There's not skew being introduced by Deja News into the uniqueness of a meme.
[35:50.400 --> 35:52.260]  There's a little bit, but not enough to matter.
[35:52.260 --> 35:57.320]  Okay, so this is what the ether of Deja News looks like.
[35:57.960 --> 35:58.920]  The transport.
[36:00.020 --> 36:04.340]  If you do a really detailed search, you can pick out events that cause excitement on the internet.
[36:05.520 --> 36:09.720]  And these are admittedly, I guessed at them, I think I'm right on most of them.
[36:09.800 --> 36:12.780]  JFK crash, a lot of people can't see this, but there's a spike right here.
[36:14.220 --> 36:17.020]  Y2K causes a spike, there's a spike here I didn't hunt down.
[36:17.180 --> 36:20.020]  Bush election 2000, that definitely caused a controversy.
[36:20.020 --> 36:23.160]  9-11 causes a big spike. What's interesting about 9-11
[36:24.020 --> 36:25.860]  is that if you do keyword searches
[36:28.520 --> 36:31.860]  on other terms, you get spikes.
[36:31.860 --> 36:35.940]  If you look for death around that time period, you get a spike. If you look for
[36:36.400 --> 36:39.980]  peace, you get a spike. What you don't get a spike in...
[36:39.980 --> 36:43.060]  Okay, remember, we're talking about people that have finite bandwidth, right?
[36:43.060 --> 36:47.300]  They're using more bandwidth to talk about 9-1-1, they're using more bandwidth to talk about death,
[36:47.300 --> 36:51.420]  they're using more bandwidth to talk about peace. What is being cut out
[36:51.420 --> 36:54.660]  of the equation to free up that bandwidth for those things?
[36:54.920 --> 36:58.700]  Can anybody give me an idea or a guess? It took me weeks to figure this out.
[37:00.360 --> 37:03.100]  No, there's, well, there's a particular thing that
[37:03.100 --> 37:05.940]  it cuts into, and I think it'll make sense to everybody once they hear.
[37:06.700 --> 37:14.380]  No. Work, who said work?
[37:14.460 --> 37:18.880]  T-shirt. Work goes down. And I remember 9-1-1, what did I do on 9-1-1?
[37:18.880 --> 37:21.140]  We all sat around talking, we didn't do any work.
[37:25.550 --> 37:27.410]  Now, here's the bad news.
[37:29.990 --> 37:32.450]  Deja News gets very flaky after 2004.
[37:33.530 --> 37:35.590]  I got a couple theories about it.
[37:37.530 --> 37:39.390]  I have three theories about it.
[37:39.910 --> 37:44.270]  One is the shift of blogging, clearly. What people were using Deja News for, they now use blogging for.
[37:44.270 --> 37:47.890]  But that does not account for the rate of change that you see here. This is almost instantaneous.
[37:47.890 --> 37:52.110]  You see the moving average here, but the actual numbers,
[37:52.110 --> 37:56.870]  it changes within like two months, and I know that's not happening. Blogging is taking away chunks.
[37:57.390 --> 38:00.110]  Google changes their methodology, their search methodology.
[38:00.110 --> 38:03.930]  If I go back and I run a query two or three months later, it changes. They're doing subtle
[38:03.930 --> 38:08.290]  shifts in the way they do things, and it shows up. And I do think that there's some kind of
[38:08.290 --> 38:12.090]  error in the way that they're manipulating or accounting for things
[38:12.090 --> 38:15.730]  after 2004. But I think a lot of what you're seeing
[38:15.730 --> 38:19.030]  is the inflection point in the internet itself.
[38:19.250 --> 38:23.610]  If you read enough articles, you see a couple articles came up in the past year or two
[38:23.610 --> 38:27.830]  that talk about a slowing rate of growth in the internet. I think that that's what you're seeing.
[38:27.830 --> 38:31.870]  I think you're seeing a slowing rate of growth in the internet, and it will impact
[38:31.870 --> 38:36.450]  all the other industries that are associated with that, mostly consumer-related industries.
[38:36.630 --> 38:39.910]  Chip industry, business software, it won't affect
[38:39.910 --> 38:44.110]  niche markets so much. And it probably won't affect security very much.
[38:44.110 --> 38:47.850]  And now, we're going to take a look at a couple concepts
[38:49.630 --> 38:52.310]  to make strategic
[38:52.310 --> 38:54.610]  decisions about how you're going to spend your resources.
[38:58.030 --> 39:01.330]  Very abstract concept. What caused the IT boom?
[39:02.070 --> 39:05.790]  If I were to create a market basket of all the items
[39:05.790 --> 39:09.810]  that create a cost of how I get information, chips cost
[39:09.810 --> 39:13.630]  me money, people cost me money, I have to develop methodologies, there's a lot of
[39:13.630 --> 39:17.570]  communications costs, I could create a market basket of the cost of
[39:17.570 --> 39:21.590]  information, assign it to a unit of information, and I would be able to get a rough number
[39:21.590 --> 39:24.950]  that each unit of information cost me a certain amount of money.
[39:25.830 --> 39:29.530]  Now, up until 2000, everybody was making money, right? That's because
[39:29.530 --> 39:33.570]  I have a price of information. I'm selling that information to somebody somewhere
[39:33.570 --> 39:38.770]  and I'm making a profit margin on it. As we get down to 2000,
[39:38.770 --> 39:41.930]  cost of information is not decreasing like it used to,
[39:41.930 --> 39:46.370]  and companies that are used to this curve, you know, they get into this mindset of seeing this,
[39:46.370 --> 39:49.250]  they overran it and they went into debt and they went out of business.
[39:49.630 --> 39:53.570]  Some companies veered off to the side and adapted and survived.
[39:53.770 --> 39:58.010]  But ultimately, if the cost of information stops falling,
[39:58.010 --> 40:02.270]  there are fundamental changes in the marketplace that companies are going to have to adapt to.
[40:02.270 --> 40:05.750]  And ultimately what you have to do, because market forces
[40:05.750 --> 40:10.150]  force you to adapt to a pricing model that the public sets, or governments,
[40:10.150 --> 40:14.250]  you have to find some way to drop your cost of information.
[40:14.250 --> 40:17.950]  And that's why you see outsourcing over the last 3 or 4 years. Companies have to.
[40:17.950 --> 40:23.110]  They have no choice. Otherwise they'll go out of business, because there is a ceiling on what they can charge.
[40:23.590 --> 40:25.370]  That's a very strategic concept.
[40:25.990 --> 40:30.070]  It sets the stage. You can't do anything with it directly. It's not a tool.
[40:31.390 --> 40:34.050]  And this is another picture that shows you roughly the same thing
[40:34.050 --> 40:37.970]  from an economic standpoint. As a market matures, your marginal cost
[40:37.970 --> 40:41.890]  of processing stuff rises. Your marginal return falls.
[40:41.890 --> 40:46.310]  You eventually reach a point where there is no profit margin, as you pick up all the easy things.
[40:46.710 --> 40:49.250]  What that means is that there is money in hard things.
[40:50.170 --> 40:54.510]  And the same difference. Now this is a theory of my own, just from watching the market.
[40:55.030 --> 40:58.830]  Watching the IT market for the last 10 or 15 years,
[40:58.830 --> 41:01.990]  the market rewarded diversity. As I created programs
[41:01.990 --> 41:05.710]  that did more and more stuff like Word, it does all the bells and whistles and stuff,
[41:05.710 --> 41:09.250]  I got a bigger and bigger share of the market, and people bought my product.
[41:09.930 --> 41:12.950]  But once I reached the point, the inflection point,
[41:12.950 --> 41:16.850]  the inflection point punishes diversity, and it rewards cost-cutting.
[41:16.850 --> 41:21.290]  And that's the point that we're at right now, for consumer-related industries.
[41:21.290 --> 41:24.810]  Like I said, there are niche markets that don't get impacted this way right now.
[41:26.170 --> 41:28.810]  So, from my standpoint, this is what I see.
[41:29.430 --> 41:33.110]  I see the up-cycle favoring diversity, and everyone pursuing that,
[41:33.110 --> 41:36.530]  and they get into a mindset over the last 20 years that diversity, diversity, diversity,
[41:36.530 --> 41:39.550]  I want to create a diverse product and get as much market share as possible.
[41:39.550 --> 41:45.030]  We've seen a fundamental change around 2000, which now punishes diversity and rewards cost.
[41:45.090 --> 41:48.130]  And most people's minds are still in this state.
[41:54.300 --> 41:56.540]  I don't know if I should go into this or not.
[41:59.920 --> 42:03.380]  This is the single most read picture on my site.
[42:05.680 --> 42:07.240]  And it surprised me a little bit.
[42:08.780 --> 42:11.240]  In a nutshell,
[42:17.060 --> 42:20.600]  diversity functions on contexts that are mismatched.
[42:21.480 --> 42:25.020]  If I had two clones, and they had identical information sets,
[42:25.020 --> 42:27.360]  and they know the exact same information,
[42:27.360 --> 42:32.300]  and they've had the exact same experiences, their communications and teamwork will be perfect.
[42:32.300 --> 42:34.760]  There will be no miscommunications, correct?
[42:34.760 --> 42:38.900]  As those clones have different life experiences,
[42:38.900 --> 42:43.260]  their contexts will shift apart, and there will be a set in the middle that they share,
[42:43.260 --> 42:48.220]  but there will be unique features that they each have, and then you'll start getting miscommunications.
[42:48.340 --> 42:50.780]  If I wanted to cut my cost of information
[42:52.340 --> 42:55.160]  in teamwork or software development,
[42:55.160 --> 42:58.660]  what I would do is I would try to get contexts to be
[42:58.660 --> 43:01.800]  as matched as possible within a team framework.
[43:02.800 --> 43:05.940]  Like I said, this is very high level, and there's some other things I played around with it,
[43:05.940 --> 43:09.720]  but I put it in there just to maybe get people thinking about ways that they could
[43:10.520 --> 43:15.240]  drive their teams or their software development towards a
[43:15.680 --> 43:18.160]  competitive methodology, and what you have to focus on
[43:19.120 --> 43:25.940]  is reducing transaction costs internally in your organization.
[43:26.040 --> 43:30.340]  There's a couple other things here. I'm sitting in a microbrewery, and I realized, wow, microbreweries are a lot like the software industry
[43:30.340 --> 43:33.900]  in certain ways. The company that I work for right now
[43:35.420 --> 43:38.360]  basically resells IBM software, but what we do
[43:38.360 --> 43:42.100]  is we tweak it to a very minimum level, five or ten percent,
[43:42.100 --> 43:45.760]  and match it to that set of customers that are willing to deal with
[43:46.180 --> 43:49.840]  changing their business processes to map to what the software does, and that's a very
[43:50.260 --> 43:54.200]  efficient model that I think can last over time. I don't think a lot of very
[43:54.200 --> 43:58.280]  customized software, it's going to have a very hard time surviving in business software over the next
[43:58.280 --> 44:02.280]  ten years. And we'll
[44:02.280 --> 44:04.620]  let that go. I'll go ahead and I'll take some questions.
[44:19.030 --> 44:22.050]  The question is, do I think that the difference between
[44:22.050 --> 44:26.710]  the dichotomy between diversity and cost-cutting is driving some of the open source movement?
[44:27.090 --> 44:30.330]  I don't know. I don't... I've looked at the open source movement
[44:30.330 --> 44:34.330]  and I still honestly don't have an opinion about it one way or the other. I can't get a reading
[44:34.330 --> 44:38.010]  on it out of the graphs that I've run. I can't speak to it one way or the other.
[44:44.450 --> 44:48.190]  I haven't done any analysis of that, but I would say companies that are doing Six Sigma are probably
[44:48.190 --> 44:51.530]  unless they're in like a financial industry, I think they're probably
[44:52.530 --> 44:56.570]  at a competitive disadvantage. I think they're producing quality that the market isn't going to reward.
[44:58.450 --> 45:00.350]  That's a guess off the top of my head.
[45:05.890 --> 45:07.670]  Yeah, you can use the search engines. You can
[45:07.670 --> 45:11.510]  get a lot of the same data out of Google. It comes out in a different format
[45:11.510 --> 45:15.270]  and you've got to massage it and you've got to work with it and it's very crude. It doesn't give you the same
[45:16.610 --> 45:19.390]  detail. But yeah, you can pull it out
[45:19.390 --> 45:23.350]  of other sources. I used to use Monster. I used to run queries against Monster. I used to use Dice.
[45:23.350 --> 45:27.630]  I used to use Miscellaneous Jobs News Group for people that remember that far back.
[45:36.010 --> 45:37.370]  No, I haven't done anything on security
[45:37.370 --> 45:41.470]  because that's not my field. One more.
[45:43.230 --> 45:45.390]  A lot of what you just saw, not in so much detail.
[45:45.390 --> 45:49.070]  There's more business here than I have on my website because I haven't updated for a while.
[45:49.070 --> 45:52.770]  There's a lot more graphs that show you more detail
[45:53.750 --> 45:57.050]  in different industries like religion. I did some queries on religion,
[45:57.050 --> 46:01.650]  social trends, things like that. So you can get an idea of different things. And actually, I did mean to bring that up.
[46:03.610 --> 46:04.890]  I'm not out of time yet, but
[46:05.610 --> 46:07.470]  we can look at a couple of those real quick.
[46:13.940 --> 46:35.200]  Or maybe not. There's no doubt in my mind
[46:35.880 --> 46:39.160]  after watching what's going on in the marketplace, there are a lot of people
[46:39.160 --> 46:42.860]  that are smarter than me. MBA program teaches all these things. I haven't been through MBA.
[46:42.860 --> 46:46.580]  I did a little bit of an MBA, but they teach you these kind of concepts and there are guys out there that are applying them.
[46:46.580 --> 46:51.480]  I have no doubts. You can see it in the way the information has been changing over the last five years.
[46:51.480 --> 46:55.660]  There's someone that's taken a chunk, taken a slice of the profit margin out of it.
[46:57.760 --> 46:59.300]  Let's see, what can we look at?
[46:59.300 --> 47:03.180]  Oh, here's saving J2E. If you go through here, you can see that J2E
[47:03.180 --> 47:05.160]  looks a lot like it's topping out.
[47:06.100 --> 47:08.740]  Yeah, these are good right here, Republicans.
[47:09.380 --> 47:11.520]  Does anybody care about the federal deficit?
[47:13.140 --> 47:18.200]  You bet people care. Whether the media tells you they care or not, it's being talked about a lot.
[47:18.720 --> 47:21.240]  Trade deficit. Does anybody care about the trade deficit?
[47:22.520 --> 47:25.980]  Media doesn't talk about it, but people are talking about it.
[47:27.040 --> 47:29.240]  You can get a lot of interesting information that runs
[47:29.240 --> 47:33.260]  counter to what the media is telling you. As a closing comment, I'll tell you
[47:33.260 --> 47:37.440]  that when you see Alan Greenspan talking on TV, don't listen to his words
[47:37.440 --> 47:41.760]  anymore. Watch the beads of perspiration on his forehead.
[47:41.760 --> 47:45.440]  That's what matters. And that's it.
[47:45.680 --> 47:49.460]  I got two more t-shirts up here. Two more t-shirts if people want to nab them.
[47:56.040 --> 47:58.140]  Oh, am I out of time?
[47:58.360 --> 48:00.180]  Do I have like two more minutes?
[48:06.420 --> 48:09.800]  Real meme. R-E-A-L-M-E-M-E.
[48:15.820 --> 48:17.940]  Yeah, yeah, that's what I'm doing right now. I'm going to run it.
[48:18.180 --> 48:19.420]  I got like a minute.
[48:30.500 --> 48:35.120]  It's a very simple program. Send me an email and I'll send you the base to it.
[48:35.120 --> 48:39.400]  I'm not going to support it because it's got a couple bugs in it that I work around because I don't want to spend time on it.
[48:41.360 --> 48:43.600]  But we'll run one real quick here that might be funny.
[49:00.470 --> 49:01.750]  No, I think there's profit.
[49:01.750 --> 49:05.750]  I think ultimately what you're going to be driven into is, at least in the United States,
[49:05.750 --> 49:07.710]  I think you're going to be driven into niche markets.
[49:10.990 --> 49:12.990]  In a single phrase.
[49:13.490 --> 49:17.910]  Niche markets that are supported by small industries that have high profit margins
[49:17.910 --> 49:21.550]  that are willing to pay for some level of customized software development.
[49:22.550 --> 49:25.670]  But that's a trend that's going to run over, I think, five to ten years.
[49:25.670 --> 49:29.930]  It's hard to say. I do think, for anybody that cares,
[49:29.930 --> 49:34.010]  I do think J2EE has peaked. And if I were entering the market, I don't think I would put any effort
[49:34.010 --> 49:39.250]  into trying to learn J2EE as an enterprise system.
[49:39.250 --> 49:41.790]  I think there's alternatives that are on the horizon.
[49:42.530 --> 49:45.570]  I think your time would be better spent in other things that are built upon the infrastructure
[49:45.570 --> 49:50.110]  of the existing S-curve that's already run.
[49:51.550 --> 49:53.690]  Oh, I was going to mention Newbridge.
[49:54.070 --> 49:57.430]  The Newberry guys in there. The Newberry guys in there that are running that
[49:57.890 --> 50:02.030]  that tracker, that wireless tracker, that's an example of a technology that's built on
[50:02.090 --> 50:05.530]  a foundation that's been built over the last ten years. That's the kind of thing I would look at.
[50:07.490 --> 50:08.210]  Okay.
[50:27.600 --> 50:32.120]  I look for it. I see it. It comes up in different places
[50:32.120 --> 50:35.240]  in different ways. It's intuitive. It's from seeing it so often.
[50:35.240 --> 50:38.260]  It happens around 2004, 2005.
[50:41.700 --> 50:44.540]  Gosh, I'm really sorry here. One more minute.
[51:06.720 --> 51:08.160]  Well, if I have a good net connection
[51:08.160 --> 51:11.120]  and I'm running it threaded, probably 20, 30 seconds.
[51:14.080 --> 51:16.680]  Yeah, I have done run RFID and that's on my site.
[51:17.740 --> 51:20.180]  It's in an uptrend. It's in a pre-inflection state.
[51:21.640 --> 51:23.300]  Definitely worth putting money into.
[51:25.880 --> 51:26.500]  Hmm?
[51:34.030 --> 51:38.610]  That's a whole other session. That's a political session.
[51:40.150 --> 51:41.390]  No, I don't blame you.
[51:42.290 --> 51:44.090]  Anyway, here's Paris Hilton.
[51:45.750 --> 51:49.590]  She's still got some life there. I'm surprised. I didn't expect it.
[51:50.470 --> 51:51.710]  Okay, thank you.