There is usually so many things I want to write about that I end up overdigesting my ideas and write very little… and when I do write it tends to be long and expansive and hard to process in one gulp.

I had drinks last week with Josh Kopelman and Rob Hayes of First Round Capital. I have the unique distinction of having Josh as an investor in companies I founded (Majestic Research, Root Markets), of being an investor in Josh’s fund as an LP, and of investing directly alongside of Josh (del.icio.us and Aggregate Knowledge). Suffice it to say that Josh knows my many sides and so I appreciated his perspective on my blogging: “Seth, all you ever seem to write are long, esoteric posts about… Attention. You have such great, funny perspective to share.” He wanted to know not what I thought of metadata ownership, but rather my off-the-cuff reflections as a recent New York transplant in Silicon Valley.

I told Josh and Rob how enthusiastic I was about the Facebook ecosystem that seemed to be bubbling up like thick layer of foam over a double shot of Google. It is as if in a matter of months, both the high end of LinkedIn and the high-end of MySpace had been absorbed into the Facebook social graph. LinkedIn is suddenly no longer the social network of choice for us chic geeks. Yes, we learned how to tell our professional stories these past few years in the LinkedIn profile fields, but- as in summer of our 8th grade- we are now ready to lose the awkward friends we had accumulated , and start from scratch in a new environment.

Meanwhile, the kids who treated their MySpace profile, and concomitant friend requests, with the same reckless abandon that we have done with our LinkedIn profiles, have now de-camped for Facebook. While I don’t have fresh data on hand to support this hunch, the well-sourced rumor I heard last week ab out MySpace scrambling feverishly to open their API’s reinforces what is becoming obvious: MySpace’s Kremlin-esque behavior towards 3rd party widget developers -”we buy them or we crush them!”- is on a crash course with the debauched dirty-dancing going on amidst the MySpace spring-breakers. As these kids move from junior high to high school, from high school to college, and from college to the work force, they are increasingly choosing the meritocratic social logic of Zuckerberg over MySpace’s “hot or not?” popularity contest

There can be little doubt now that Facebook is a platform for social media, as opposed to simply a web site community. Time will tell whether it can continue to scale through opening up its audience to 3rd party developers like Microsoft did in the 80’s. This weekend I watched the Gates/Jobs conversation from D on my iPod. The elephant in the room that nobody really discussed was the fact that competition stopped at a certain part in their relationship, Microsoft became a monopoly, and Gates became the richest person in the world.

This was not an accident, but was in fact a direct result of the platform strategy that Microsoft so successfully pursued. Back in March, 2005 in a blog post, I recounted a meeting that taught me more about platforms than anything since:

In 1999 I sat down with Brad Silverberg of Ignition VC who Microsoft recruited out of Borland in the early 90’s to become the lead developer and project manager of Windows 95. Never has there been a more valuable platform. He described 3 things that platforms needed to have:

• wide distribution
• application developers making money
• good tools

Let’s test those three axioms against the preeminent platform play of our time, Google:

• Wide distribution? YES
• Application developers making money? YES (if you count all the adsense publishers)
• Good tools? YES (all the adwords and adsense self-service goodness)

Now let’s test these axioms against Facebook:

• Wide distribution? YES
• Application developers making money? NO (at least not yet, I will comment on 3rd party Facebook developers such as Slide, Rockyou, and AttentionSoft)
• Good tools? YES

So, the question for establishing Facebook’s value as a platform is no longer whether Facebook itself can make money but whether its developers can do so. And in a world where retail software sales are no longer a legitimate business model for developers, the default assumption is that these developers will make money through advertising. Which begs the question as to whether there is a pragmatic alternative to Google adsense (no) and therefore suggests that Facebook will need to create this for its developers.

Later in that post from March 2005 I related platform strategy to API structure:

Nobody controls the web as a platform the way that Microsoft controlled the desktop. But certain parties do control enormous pools of user data and direct their behavior…API’s are fountains of data, mostly consumer meta data, that are the byproduct of some other functionality… The value of a web service API is tied to its ability to convert granular feeds of individual data into useful social media contexts.

I wrote this before I had ever used Facebook but the implication is clear now. Google does not offer this Social Media API. Facebook does. Here is an example of its API syntax:

facebook.friends.areFriends

Returns whether or not each pair of specified users is friends with each other. The first array specifies one half of each pair, the second array the other half; therefore, they must be of equal size.

What could be more useful as a social media context for a software application than being able to ask whether two users are friends with eachother?

It has been hard to write of late. There is so much going on right now in terms of new social media experiences. My wife said it was so “cute” that I was just getting into Facebook now, after it had been open for 18 months already. I snapped back that it was really just opening up now. My spontaneous application promiscuity on its platform is embarrassing. I feel like a teenager with raging widget hormones.

It is a lot of work to express yourself uniquely online. You need to manage all of your various profiles across so many networks. Each network and engine represents a different source of traffic to your personal stream- Google, LinkedIn, WordPress, MySpace, Facebook, etc. Furthermore, they each provide different degrees of control over how your electronic likeness is distributed to others. In Media Futures speak, these are your various API’s (some which you control fully like your blog, others not at all like your PageRank) that together form your unique Algorithm identity in the online world.

This all makes sense, from the 30,000 feet perspective that I typically have written from in the intellectual capital that is New York City. But now that I meet with folks at Grove in the Marina instead of La Fortuna on West 71st street, I am both more engaged in the “real” world of Internet startups but also that much more conflicted by it.

While there are certain voices out here that call for radical transparency so as to keep any unsavory data mongers at bay, those same voices forever remain two cycles ahead of what gets funded and remain marginalized to watch as others commercialize their ideas from two cycles hence. The Internet is a data platform and therefore Internet businesses need to generate cash flow off of people’s data. This is the reality of the multi-billion dollar cookie cocoon that we are all clicking away within.

Still, regardless of how hopeful or hopeless the open Attention ecosystem proves to be, there are early traces of “mass market” Internet services paying Attention to Attention. For example, YouTube now enables me to “broadcast” what I am watching as a form of entertainment for others:

And LinkedIn now enables me to see who else has visited my profile

Granted these are small steps, but they are small steps by large players. Not to mention some truly open Attention thinking practiced by Google in both their Reader and Web History products that I will discuss in a coming post.

Tom Glocer,  CEO of Reuters, stands in front of  Media Futures at the Open Data Conference in NY

And so, what does exhibitionism have to do with Wall Street?

How does the voyueristic behavior of 20-somethings relate to the commission decisions of hedge fund masters of the universe?

Traditionally, very little.

Or at least we weren’t aware of these connections.  Now, however, the advent of personal surveillance technologies has begun to popularize processes that up until now have been unavailable to individuals.

This resonates with a comment that Reuters CEO Tom Glocer made at the Open Data Conference.  It was the night before the conference, over dinner, that Glocer gave his perspective on the evolution of "open data" in the context of financial services. 

He told a story about the transformation of individual data points into market data.  Surprisingly, he didn’t start with a traditional financial services firm, like Reuters, but rather with an individual Schwab customer.

This retail trader, by virtue of her decision as to what to buy or sell and at what price, is the most granular actor in the price discovery machine.  As Glocer told the story, the online retail investor was the proverbial butterfly flapping its wings in Hawaii causing hurricanes in China.  Her only action was to trade a stock in her 401K account online; but unbeknownst to her, Schwab took this trading data, along with that of all of the other individual retail investors, and established a higher level trend.  This process reverberated up through larger institutional brokers like Goldman Sachs and ultimately exchanges like the NYSE.   At each step up in aggregation and abstraction, significant economic value was extracted.  Although this individual’s behavior is too volatile in and of itself to offer much in the way of trend analysis, this does not mean that her behavior is worthless.

This is the foundation of Wall Street 2.0:  the individual data producer is beginning to wake up to the economic value she is creating.

This economic value had in the past been appropriated by those aggregating up the data from above.   Our electronic behavior, whether it be querying a search engine, clicking on an ad, checking out a stock, or trading a share, is generating value for other people that are in a position to aggregate and sell this information to institutions, who in turn transform it into some other form that ends up getting sold back to individuals.   Alchemy… to… Arbitrage.  This is nothing new.  What is new, however, is the extent to which our behavioral trails are no longer hidden, but are instead now available to us via various modes of personal Attention services, also known as myware.   This is the window that Open Data flows through:

Open data is to media what open source is to technology. Open data is an approach to content creation that explicitly recognizes the value of implicit user data. The internet is the first medium to give a voice to the attention that people pay to it. Successful open data companies listen for and amplify the rich data that their audiences produce.