Creating money is easy

Physical cash drives 60% of all transactions. Everyone knows it has a few issues though: production/distribution costs, counterfeiting/terrorism use, loss/theft, coinage doesn't pay interest, you need a purse/wallet and a digital divide (cannot use a physical $1 note to pay for a digital newspaper) amongst others.

Why can't we directly replace physical cash with digital cash?

By digital cash here, I mean specifically anonymous digital cash: a $10 note simply being a string of digits - a number. This number would most usefully be stored on a mobile for payment purposes (or anything else digital). What stops people inventing their own numbers – making their own money? - Cryptography. Cryptography acts like the intricate banknote design/watermark – preventing counterfeits.

How does it work? At a high level, validators and consumers have public-key encryption keys. Public-key encryption keys come in pairs. A private key known only to the owner and a public key, made available to everyone. Whatever the private key encrypts, the public key can decrypt and vice verse.

Digital cash itself accumulates the complete path the digital cash made through the economy and therefore "grows" each time it is spent. The history of each transaction (minus the identities involved) is appended and travel with it as it moves from person to person, merchant to vender. When deposited (or validated), the validator checks its database to see if the piece of digital cash was double spent. If it was copied or spent more than once, it will appear twice in the "spent" database. The validator uses the transactional history to identify dates and potentially locations associated with the double-spend and reacts appropriately e.g. contacts authorities/blacklists etc. It has more tracking potential than physical cash (despite still being anonymous).

The validator can always reconstruct the path the digital cash took through the economy (except who owned it). The validator will know what was bought, where it was bought, when it was bought and how much was paid. A side benefit of anonymity i.e. not including identities in transaction history means that the war being fought over global Internet identity is conveniently side-stepped (Facebook, Google, Twitter, OpenID [even Angry Birds] etc.).

If your mobile (or any other device containing your digital cash) is stolen or lost, you could remotely deactivate the cash (and additionally claim it back). This process would not (by necessity) be fully anonymous but it could be just tied to your mobile number, making it semi-anonymous in much the same way that Standard Bank in SA have done with mimoney.

In respect of transactional proof, the basic rule is: everyone can prove that they took part in a transaction but no-one can prove that someone else took part in a transaction.

Why is digital cash a good idea for both consumers and merchants? Simply, cost, convenience and privacy in that order.

1. Cost
   1. Credit/debit card based solutions are expensive. Merchants prefer cash since it is the cheapest to process. A British Retail Consortium (BRC) survey claims that credit cards account for 11% of transactions (but 49% of merchants' costs in accepting them). The biggest single cost of card payment collection is the bank merchant service charges. These cost the UK merchant 2p per transaction for cash, compared with nearly 8p for debit cards, 35p for credit cards and 53p for cheques. These costs are inevitably passed onto the consumer in the form of higher prices. Credit/debit cards companies simply cannot reduce this charge and are obliged to focus on target based rewards programs in order to compete. Credit/debit card solutions may not be available to all. Finally many consumers have bad credit ratings and find it difficult to obtain credit/debit cards. This also affects PayPal since it takes these cards into its wallet. In the US, this figure is reportedly 25%. Finally, merchants are never quite sure how much a credit card transaction will cost. MasterCard and Visa charge hundreds of different rates (interchange fees) for every type of card that runs through their network. MasterCard for example has 243 different fees.
      
   2. PayPal based solutions are commonly portrayed as the liberator of cashless payment however they also incur substantial fees: +2.9% + 0.30$ per transaction, +1% for transactions from abroad and +3% for transactions in a different currency. This could reach +6.9% + $0.30. This is 2-4 times as much as banks charge. Again, these costs are inevitably passed onto the consumer in the form of higher prices.
      
   3. Carrier billing based solutions are new and very considerably in terms of cost. However they also make money/transaction. It depends on volume e.g. takes around 5-10%. On top of this, there are carrier charges. They take anywhere from 25-45% of the transaction amount. Carrier billing solutions typically pay merchants once a month which affects their liquidity. Carriers are currently reticent of supporting transactions of physical goods due to issues of returns/payment disputes and so typically have $100 transaction limits for virtual goods only. Finally, carrier billing solutions are not widespread. They are unsuitable as a complete replacement for physical money, particularly in the developing world due to mobile coverage.
      
2. Convenience
   1. Card/PayPal/Carrier solutions are all centralized, you lose a bet and want to give your friend $10; one of you has to pay the cashless overhead? Who? You and three friends share a dinner at a restaurant and you pay the bill in full. Your three friends each then need to be able to transfer a quarter of the total amount to you – creating four transactions in total (and four times more transactional revenue for payment processors). You all also need to be online.
      
   2. Card/PayPal/Carrier solutions just don't work offline. With digital cash, if you and a friend are both offline, as your friend is in your social graph, you can accept it money he gives you at face value (and then perhaps validate it later when you are online). A bit like a cheque. The concept of trustspace could also be used to grade and evaluate trust outside a user's social graph.
      1. With trustspace, consumers would be rated by how many times their balance has reached zero (since here you have contributed exactly as much to society as society has contributed to you). To avoid rating manipulation (a sort of new credit rating), trustspace could be parameterized by personal turnover, a damping factor and a connectivity index derived from the number of other people you have dealt with. Your rating would diminish over time and so you would need to continue earning/purchasing with digital cash to stay active.
         
3. Privacy
   1. Card/PayPal/Carrier solutions log all transactions made by the consumer. If you lose a bet and give your friend $10, that transaction is recorded. If you go into a bar and rack-up a large tab, that transaction is recorded. If you pay for prescription medicine, a DVD in a bar, "herbal" remedies, a massage or Playboy magazine; all –all those transactions are recorded and used, at the very least, to target marketing to you. There is a growing demand for data privacy and consumers want the option to remain invisible to a payment made on their behalf. Privacy is not so much a blanket consumer need to be unseen in terms of online/digital activity but a desire for easy control. The recent WikiLeaks scandal compelled some services to stop handling Wikileaks' business including payment services (inc. PayPal). Anonymous digital cash helps fund enterprises that, for whatever reason, others object to.
      

Additionally, there are wider economic benefits to digital cash:

1. Being a zero transaction cost solution enables consumers to sell online content and would be an alternative to advertising revenue meaning a reduction in distracting/invasive banner ads (micropayment). The fact that it is free means that it will stimulate a free market economy on the web where the best people, organisations and content will rise to the top because they can be directly paid. This, in turn, would make it easier to find things of most importance (currently we are spending 53% of our time searching for the right information).
   Consumers should also see an improved web experience through a freer market economy.
   
2. A 10% shift in consumer spending, from chains/Internet to locally owned retail (currently being driven out of business due to Internet purchases), would create nearly 1,300 new jobs and over $190M in increased economic output for San Francisco alone. More jobs and more economic output in a specific geography where you own a house also means houses increase in value.
   

Twenty years ago, a digital cash solution was developed called ecash. It was sold by a company called DigiCash. A now defunct US bank and a handful of small European banks went live with it in the mid nineties but DigiCash went bankrupt later that decade and assets were acquired by InfoSpace in 2002. There was a similar story with CyberCash (over a similar timeframe). They went bankrupt in 2001 and assets were acquired by PayPal in 2005. No commercial organisations are now known to be operating these or similar systems.

Both organisations are considered to have failed due to security, implementation and administrative problems. They also made the validators – banks (when they really just needed to be web-services) which added unnecessary overheads/slowed down time-to-market. Countries historically used to back bank notes with gold but this is barely done any more. Canada for example has no gold backing for its currency.

Media interest in digital cash coincided with the dot-com bubble of 1995-2000. The vast majority of books on the subject date from that time. Online finance in general has stalled since then e.g. W3C abandoned attempts to incorporate micropayment into HTML. InfoSpace itself was a notorious dot-com casualty (in March 2000 stock reached $1,305/share but by April 2001 had crashed to $22/share).

Other than the fact that over two-thirds of the world still have no Internet access, there are several convergent trends right now that could build a landscape for a digital cash solution:

1. Smart-phones replacing traditional dial and text mobile phones.
   
2. Cheap/pervasive contactless NFC technology with an open API. Estimated 40-50M phones on market in 2011. Widespread NFC adoption of payments (149+ projects worldwide). High-profile assertions that mobile is the safest way to pay.
   
3. A thriving start-up culture (possibly due to the recession?).
   
4. Widespread and growing mobile/app culture. Mobile app market to be worth $25BN by 2015. App downloads to increase 605% by 2014. There is also more evidence that consumers are more likely to buy using a mobile app than regular web applications. Location services are on the rise.
   
5. General distrust of existing financial services (esp. banks) with consumers being open to alternatives. With both cash and clients in limited supply, barter networks e.g.
   Dibspace , ITEX, BarterCard and IMS are becoming popular. P2P lending in particular e.g. Zopa, FriendsClear, LendingClub is becoming accepted.
   
6. Rising social graphing acceptance (bolstering trust issues).
   
7. Widespread acceptance of storing personal details in the cloud via trusted sites.
   
8. Digital signature/public key based cryptography acceptance.
   
9. 25% of consumers have poor credit scores.
   
10. Distinct lack of retail banking innovation.
    

What about other forms of cashless payment?

Visa's payWave system was introduced last year as a digital wallet for the iPhone although this requires a separate case for the mobile (basically containing the same chip as new Visa cards). AT&T, Verizon and T-Mobile also announced as Isis, a joint venture to equip mobiles with NFC chips; linking them to credit/debit cards. Barclaycard has signed on to issue credit accounts through this system. Google have said that they will work with industrial partners for their digital wallet solution and with them pulling players together (highlighting better loss rates); previous collaboration issues should be resolved. Google clearly say though they want to replace your credit card not your cash.

Square allows anyone to accept physical credit card payments through a mobile or computer by plugging in a free sugar-cube-sized device so no expensive card reader is required. Of course this solution suffers from credit/debit card dependency.

Obopay lets consumers and businesses purchase, pay and transfer money through a mobile phone using a mobile application, text message, mobile Web or Obopay.com. It works on any mobile phone and any US carrier; again though it is tied to a card, in this case MasterCard debit.

Start-up Bling Nation went live in the US last year. They partner with both PayPal and banks, who then offer consumers a Bling Nation and "Bank" branded chip that can be stuck onto any mobile device. The chip allows any user to make a payment directly out of their checking account similar to a debit payment.

Rovio is taking a carrier billing approach with their payment system Bad Piggy Bank, intended for in-app payment of virtual or online goods. Zong have a similar approach. They also run a points system if you link your credit/debit card to your mobile and have reportedly processed transactions from 15M unique consumers.

All of these solutions are various themes on Card/PayPal/Carrier solutions and so also carry their failings. It could be argued that consumers and merchants are having installed on their behalf technological solutions that continue established order in preference to directly addressing their needs. In much the same way that PayPal principally extended the credit card model into the online world, current social/cashless payment solutions are seemingly doing so now.

Digital cash, in theory at least, straddles online and physical worlds better than any other solution. It empowers consumers and merchants through clear cost, convenience and privacy benefits over existing/planned solutions (physical cash or cashless payment solutions) and affords wider economic benefits to both.

The market has moved away in the last couple years from online/online solutions (payer/payee respectively) e.g. PayPal toward online/offline e.g. Groupon, Uber. On the topic of Groupon, receiving/generating a coupon then integrating this with digital cash (applying usage constraints/"increasing" your digital cash as appropriate) automatically within your digital wallet would be very powerful. It is quite possible the market will shift again to an offline/offline model in the near future. Is the best way to realise this - digital cash?

Obviously, big issues of system and national security, cryptography restrictions, economic stability and consumer acceptance would need to be overcome. As Minsky said "creating money is easy; the hard part is getting it accepted". However, alternative payment systems are already being adopted; being 20% of all online transactions. We are also seeing a surge in self-organized /managed citizen activism especially around finance and digital cash perhaps hooks into this trend too.

UPDATE: There are several ways to obtain digital cash.
UPDATE: Possible ways to monetize digital cash.

Time to stop checking-in & start checking-out

Thinking about geo-location (GPS) and its mobile under-utilization, I considered what applications it actually is well suited to. Checking-in and earning badges to become major of somewhere just has to be a short-term fad even if they do begin to enable deals (?).Obviously there is finding local stores/services but that is pretty well covered by Google Maps and others. Crowd-sourcing e.g. seeing where contacts have been might work if your contacts left comments about stores/services (which they don't). Seeing your contacts are close-by so you can call them and meet-up doesn't appear popular (you kind of already know where your close friends are). The forecast for the geo-location market leader - foursquare is hazy.

So what mobile app could really make use of it? Unlikely as it may seem at first, I came up with dating; although as we'll see it may be unattainable for social reasons (much like even though we already have well implemented video chat, people reject it).

Why what's the problem with online dating?

As online dating becomes more main-stream/more commoditized – even reportedly now used by celebrities, it also suffers from lack of innovation/differentiation. Online dating came to prominence on sheer convenience; being able to trawl through hundreds of profiles w/out leaving the comfort of your home. But scanning through ever more prospects due to poor matching/sparse profiles and an increased social need to be mobile/online have eroded this convenience.

Social and mobile technologies should be able to add value but they seem only to be starting to. Looking at online dating as an application area (I had to research it) and comparing it with the speed-dating space (slightly more experience) there is perhaps a solution waiting to be found.

Some sites solve several issues but, in general, online daters need to:

1. Maintain a separate/proprietary profile.
   
   1. Tedious to enter/maintain personal information already online. Few dating sites are really focused on matching anyway; too complex/expensive and not immediately appreciated by the dater. It's about minimizing acquisition cost/extending CLV. They don't necessarily want to get people off the site.
      
2. Periodically check to see if there are people to contact/someone has contacted them (pull).
   
   1. Average visit/site time is 22 minutes. Finding time for dating is a real problem, necessitating some to even look for ghost-writing solutions.
      
3. Deal w/ communication awkwardness.
   
   1. Communicating by sending messages to strangers and then being rejected more times than not is unnatural, demoralizing long term and doesn't fit w/ the personality of anyone but extroverts.
      
4. Determine the best way to leave a date if they don't click w/ the other person.
   
5. Pay on a subscription basis.
   
   1. Market leaders for online dating – Match and eHarmony monetize on subscription. Plenty of Fish is the only free site in top-10. Sites charge $35/month on average.
      
      1. Free sites have their own issues though. As there is no barrier to entry, profile quality is poor as people put less work in. Many actually prefer paid sites for this reason.
         
6. Deal w/ incomplete information.
   
   1. Feedback that could be useful to prospective daters is lost.
      
      1. People typically don't reply if they feel there wasn't a connection. Consequently, the rejected person is unsure whether to approach the person again.
         
      2. Future prospective daters of the rejected person cannot take previous criteria (from others) into account before meeting.
         
7. Handle remaining social stigma among peers (despite relaxing recently).
   
8. Infer second degree social graphing.
   
   1. Having 175 friends (pretty typical for those dating) means people can have 60,000 friends of friends (Friend of a Friend - FOAF). It is likely that many of these people are dating. Identifying these people is useful since their immediate friend can be contacted as they will provide a source of additional information (about their friend). Determining these connections becomes part of the date.
      
9. Cancel their account after a few successful dates.
   
   1. After a few dates if the daters vaguely consider themselves "in a relationship", then it is expected that they cancel their accounts and live happily ever after.
      
10. Work w/ poor, non-existent or additionally paid for mobile versions of sites.
    

How could these problems be solved?

A free mobile app, connected to an existing/widespread profile that, once you register (one time/through Facebook) pushes meetings to you i.e. the solution opportunistically knows that you are available (from looking at respective schedules) and are physically w/in a five minute journey (from GPS) of someone that matches you/you match (based on filter criteria you have previously entered) and so arranges it automatically (pushes it). You get the other persons picture, a profile summary and a named coffee shop (in-between you both) together with a time. You can accept/reject there and then. If you reject, the meeting is simply off (could be because the solution itself decided there simply wasn't enough time for it so fewer social rejection issues). If you accept, you meet for a time-boxed duration at a coffee shop w/ the app managing the duration and other details (like a speed date assistant).

It prioritizes similar people (of the correct orientation). Everyone needs a facial photo on their profile so that they can be recognised. Basically, you don't need to log into the site again (unless you want to) as the mobile app will push everything to you.

No-one meets up anywhere other than a coffee-shop halfway between the two people and no-one knows where the other person is other than at the coffee shop. Coffee shops are necessary since they are an easily found public space. As such the solution would work better in cities. The solution is more general than dating i.e. intended to be used by everyone. For example, you could express an interest in whether to buy the new iPhone and then meet someone who has one. Online dating would certainly be the beach-head application though.

Post meeting, you "thumb-up" or "thumb-down" the other person. If you both mutually thumb-up each other, the solution informs you and gives you the ability to exchange 1:1 contact details. This information can be condensed into a simple personal reputation score which can be used as selection criteria e.g. you can elect to only meet people w/ a high reputation.

Since the solution is not specifically dating related, reputation scores can be made available (via API) to other sites. Existing reputation solutions are principally based upon Twitter followers/retweet activity e.g. Klout, Peerindex or Tweetreach. This allows those that don't use Twitter to compete online. Since it is more personal than tweeting, it is also potentially a more accurate reputational assessment for other sites to use e.g. when offering deals. Wider reputation usage helps drive traffic and because it is solution specific – makes replication by competitors difficult.

The solution described above addresses the online dating problems in the following ways:

1. Maintain a separate/proprietary profile.
   
   1. Solution uses Facebook Connect to enable one-click login. Truncated versions of people's Facebook profiles also become their dating profiles. It is not a Facebook app and no-one can see whether you use it or not. People are already using Facebook to flirt and this solution extends that but removes the bad etiquette associated w/ trawling for dates.
      
2. Periodically check to see if there are people to contact/someone has contacted them.
   
   1. Solution saves time. Trawling through online dating sites to find (pull [rather than push]) someone interesting to you is time-consuming. Push model enables solution to work around your schedule. Increased efficiency e.g. people can email each other for weeks but only really know whether they connect after a few minutes conversation. Makes the whole experience low expectation (good for first dates).
      
3. Deal w/ communication awkwardness.
   
   1. Relying on the mutual knowledge aspect of mutual thumb-ups e.g. I know that you don't know that I thumb-upped you unless you thumb-up me - would remove much communication awkwardness.
      
4. Determine the best way to leave if they don't click w/ the other person.
   
   1. Meetings are for five minutes only. After five-minutes, an alarm would sound through both phones. Timing starts once both people's phones are in immediate proximity to each other (to handle one/both people being late to the meeting).
      
5. Pay on a subscription basis.
   
   1. Solution is w/out cost (clearly a winner). Barrier to entry/profile quality issues are partially addressed by the reputation score.
      
6. Deal w/ incomplete information.
   
   1. Through the reputation score.
      
7. Handle remaining social stigma among peers (despite relaxing recently).
   
   1. Solution is not specifically a dating solution. Even people that don't want to date may be interested as it enables them to opportunistically and simply meet new and interesting people or discuss specific topics w/out planning in advance.
      
      1. People's lives are increasingly scheduled and many are drawn to the idea of occasional "curve balls".
         
      2. Can offer beforehand to buy someone a coffee if they are able to discuss a particular issue from a position of experience e.g. rearing a puppy, fixing a computer, getting into a particular industry or continuing online questions from Q&A sites e.g. Quora. This could also work for sales e.g. you get a free coffee if you sit through a five minute pitch.
         
         1. Similar to Facebook Like button, a "Meet" button could be federated to other sites to indicate a willingness to discuss a particular topic.
            
   2. Since it is based around your schedule i.e. whether you are physically close enough to meet there is less dating investment enabling it to be treated casually.
      
   3. The time-box nature makes it more akin to speed dating which inherently carries less social stigma than online dating.
      
8. Infer second degree social graphing.
   
   1. Through Facebook social graph. This has a freely available API.
      
9. Cancel their account after a few successful dates.
   
   1. The solution moves on from scheduling that initial coffee shop date to bars for successive dates to theatre/film scheduling for later dates. Even years after two people have got together through the solution, they could still use the solution as a proximity meeting facilitator.
      
10. Work w/ poor, non-existent or additionally paid for mobile versions of sites.
    
    1. Solution uses location awareness on exception basis (push)/much more simplified than current mobile dating sites (basically simplified versions of web sites). Conversation topics based on mutual interests could also be suggested seconds before you meet. It is the only access point to the service and free.
       

The solution would certainly be open to abuse. People are travelling five minutes for a five minute meeting. They can set filters to ensure the solution just pushes meets that they want and if it's apparent that the person is disingenuous - they leave after one minute (total six minutes wasted) then leave poor feedback or report/block the person - similar to email spam. It should actually be easier to control than email spam since you can leave poor feedback/report the person. It's true you have potentially wasted 5-10 minutes of your life though (w/ email spam it will be seconds to read the email). Then again consider risk/reward: W/ email you risk minutes/day w/ spam against the reward of instant written communication anywhere in the world. W/ mobile dating (or meeting), you risk 5-10 minutes against the reward of meeting someone cool/learning something new. People are already risking 22 minutes every time they visit an on-line dating site to meet someone cool (and unable to multi-task), so it could be posited as a time saving.

Following on from our high-level design, some detail on how to potentially realise it. Starting with - how might it make money? It would always be free to use but development cost should be able to be offset in short-term:

1. Short-term. Affiliate marketing would be impacted due to the "proximity/push" model i.e. people are not regularly hitting a specific site w/ which to see ads.
   
   1. Small, targeted ads would need to be embedded and cycled w/in the mobile app and shown when date messages are pushed. The option for a paid version of the mobile app could remove those ads e.g. the Angry Birds model.
      
   2. There is a trend for free online dating sites to be launched to great press (focussing on some minor innovative angle) and then closing down several months later e.g. Thread (FOAF), CrazyBlindDate (randomness). Likealittle (flirty commenting) has only recently been launched and received 1M uniques in first month (reportedly 20M page views). Conservatively taking uniques and using the Amazon Affiliate program, this would have generated $10,000 affiliate revenue (assume 1% click-through rate on average price $10). On page views this would have been $200,000.
      
   3. Online donations e.g. through Flattr can generate a surprising amount of income e.g. Flattr reportedly kept WikiLeaks afloat for a period.
      
2. Medium-term. Assuming the solution successfully transcends short-term "viral effect", the amount of active registered users dictates revenue.
   
   1. Plenty Of Fish for example, reportedly makes $30/registration and £10M annually through affiliate advertising. This is on 250,000 uniques each day.
      
   2. Once the concept is proven, it could pivot to become a back-end service (accessible via API) for other dating sites i.e. they provide their own user experience and value adds e.g. specialist matching algorithms, niche markets. The solution would handle Facebook integration, tracking, messaging, rating/feedback and meeting handling. The solution becomes a natural monopoly (due to network effects) that future dating sites need as daters expect it. It could conservatively be licensed to the top-50 dating sites for $500/month ($300,000/year).
      
   3. Equivalent services/outlets available around the interim point e.g. coffee shops/bars can compete for business w/ the solution paying the solution for "referrals".
      
3. Longer-term. A working solution would be attractive to acquisition.
   
   1. Facebook may see it as a way to extend its brand - moving out of the digital world into the physical world/gaining deeper social data.
      
   2. Coffee shops e.g. Starbucks may simply see the solution as a means to drive sales (interim coffee shop meeting points). Starbucks are keen to develop their loyalty programme e.g. they recently partnered w/ foursquare to unlock a "Barista badge".
      
   3. Location-aware apps e.g. foursquare may view it as a way to extend the short-term conceit of checking-in/obtaining badges etc.
      
   4. Other dating solutions may find it attractive to compete/diversify (much like Match tried to compete at the free end w/ Plenty of Fish by releasing Down To Earth.
      
   5. Personal assistants e.g. Siri may see it as complementary.
      

What competition is there?

There is a much competition. Some solutions solve some of the problems above but none solve all of them and none have the proximity/push cornerstone approach supported by a speed dating assistant:

1. Classic online dating sites e.g. Match, eHarmony and Plenty of fish.
   
   1. Market is fragmented/specialized e.g. 50+, Jewish, European (Meetic) etc. at the lower/start-up end.
      
2. Local speed dating outfits that also have an online presence e.g. SpeedDater.
   
3. Dating Facebook applications e.g. Zoosk and Flirtable.
   
4. Dating sites that use Facebook social context e.g. AreYouInterested.com, DateBuzz, SpeedDate.com and Chemistry.com.
   
   1. DateBuzz has gained press for its innovative use of letting daters rate other dater's profiles. Profiles provide a fraction of the detail gained from even a five minute meeting though and are open to gaming/deception. Also, there is a case to be made for saying that daters don't actually know what they want until they experience it.
      
5. Friend locators e.g. Facebook Places, Google Latitude and face2face.
   
   1. Facebook Places is geared toward friends/checking-in much like Gowalla or foursquare. Latitude is more organic in that it simply tracks you and allows you to see other friends. Both Facebook and Google are unlikely to provide direct online dating support themselves in order to protect their brand but it is conceivable.
      
6. Mobile dating apps that use location awareness e.g. Grindr, Skout, Flirtomatic and MeetMoi.
   
   1. Grindr is very niche. MeetMoi is more general. Neither have speed date assistant capabilities e.g. interim coffee-shop scheduling, strict date timing and reputation scoring. Both also require proprietary profiles.
      
   2. Skout and Flirtomatic use Facebook profiles and are probably closest to the solution however they hamstrings themselves by focussing on chatting w/ others in your location rather than proactively scheduling a meet with them while it is possible (they may only be there for a few minutes). You can chat anywhere. Geo-location only becomes useful to online dating once the opportunistic meeting element is introduced.
      
   3. This approach is widespread in China although this is done on older technology e.g. many Chinese wireless service providers offer dating services based upon signal triangulation to drive text message usage.
      
7. Sites that use scientific matching foundations e.g. ScientificMatch and GenePartner.
   
   1. These two actually use DNA comparison. While this may be more accurate than proprietary matching algorithms, it is still reliant on matching rather than chemistry and chance. Cost too is prohibitive for now.
      

To sum-up, a mobile dating solution (essentially: Social + Mobile + Speed dating) bought to market now could earn distinct competitive advantage if the social adoption question could be resolved:

1. Market. Online dating in general is a $1BN global market (some say $4BN), has yearly 10% growth and is known to weather economic storms. Market for free online dating solutions is fragmented. Plenty of Fish is the only one that has a real market (followed by OKCupid) yet the paid market is market is shrinking. This solution is wider than online dating; effectively creating a new market – proximity meeting enablement.
   
2. Innovation. Online dating solutions have yet to capitalize on mobile and (to a lesser extent) social. W/ smart-phones set to be ubiquitous, this is a clear opportunity for innovation. The infrastructure/audience for geo-location in particular is there but wasted on games e.g. earning badges/becoming mayor etc. Mobile usage also enables new approaches to online dating. In particular, the opportunistic proximity/push feature is a clear differentiator. Ultimately though, the innovation here is - to handle the ten problems w/ current online dating slightly better than everyone else. It is this that gives the solution a real chance of progressing past being a short-term trend to become a brand.
   
3. Risk/Reward. Roughly six weeks to build onshore on Android (assuming design completed) and cost around $35,000 to get a first release out from good developer. Refine app (assume 80 hours costing additional $8,000). Releasing a beta then would cost roughly $51,600 ($35,000 + $8,000 + 20% contingency). Plenty of Fish is reportedly mostly a one-man band. Development cost could be offset by combination of affiliate advertising/ad-free payments and donation w/in 3-6 months. A separate upper limit estimate for total cost (complex Android app) is $80,166. If the solution took just 10% of Plenty of fish business, this is £1M/year revenue on low overheads. Finally, there are clear approaches to extend solution functionality and acquisition from several varied sources would be possible.
   

Ultimately, this solution could potentially create an important new communication channel while addressing the online dating problem. By far, the biggest question is simply whether people (particularly women) would adopt the concept of having meetings (dates) proactively scheduled for them on-the-fly as they go about their lives. Conversely, there is a sort of chance/synchronicity element that they might consider romantic while men might be drawn more to the time saving/efficiency angle. As no-one has really done anything like this before, no-one can say. What can be said though is that it isn't a huge investment to find out and like many of the dates that would be pushed to your mobile; it is probably worth checking-out.

The project failure & cloud connection

Around 2000, I worked on a project with a co-worker – he was maybe fifty and had worked in the IT industry – initially at IBM then contracting and consulting for nearly thirty years. At the time; he was heading up a web-development and creative team for a small consultancy firm which he saw as a new opportunity for him. He had a good reputation, people liked him and he had a vast amount of experience from being involved in literally hundreds of projects – developing, managing, business developing etc.

One day he slips into conversation – as an aside really; that he has never worked on a project that was delivered. Every project he worked on had been cancelled, merged into another programme, didn’t meet its financial goals (as with infrastructure consolidation) or his involvement ceased before it ever went live (if any of them ever did – he didn’t know). He said it in a resigned manner, almost as a badge of honour that he had got through all that with no job satisfaction in terms of delivery payoff whatsoever.

I have seen this scenario repeated many times in the decade since; although perhaps none quite so extreme. I have myself worked on hundreds of projects in many roles and can count the number of successful systems deliveries on one hand. People naturally want to associate themselves with successes rather than failures so it is perhaps understandable that this is not a common consultant topic.

A whitepaper released late last year attempts to put a figure on the worldwide cost of IT project failures. This turns out to be $6.2 Trillion and it doesn’t look like sensationalism. The US in particular is apparently losing almost as much money per year to IT failure as it did to the financial meltdown (with no end in sight). The paper makes an attempt to factor in what it calls indirect costs; basically a lost opportunity cost from the time wasted on failed/abandoned projects. It does not however take into consideration the wider indirect costs of people training for careers that are not actually delivering, IT staff disillusionment (turnover), operational failures for delivered IT systems (one in five businesses lose £10,000/hour through systems downtime) and associated security failures.

The paper has received some condemnation (due to its base assumption of a 65% IT project failure rate) but there is dearth of analysis in this area and quoting this figure is about as good as it gets right now. 50-80% figures have been quoted in one form or another for decades. CIO thinks rates are actually rising due to the recession. People have the choice of either working with a figure (challenging assumptions/statistics etc) or burying their head in the sand.

We will never know the exact figure for IT project failure. Similarly, we will never know whether efficiency/functional benefits of those systems that have worked have paid for the failures i.e. What has IT really given us? We are simply reliant upon these systems going forward. What can we do to reduce future project failure rates?

Although there are superficial similarities with scientific/experiment and IT/project communities respectively, the "accept defeat" approach of the former is routed in constant learning whereas IT is surely about delivering benefit now. Learning is only the priority for the largest, most stable, lowest turnover organisations; that is to say - next to none of them. The scientific regimen of independent assessment however is invaluable for IT projects. Tool-based PM consultants such as Bestoutcome are probably as good as the big management consultants for this purpose though. Techniques from the engineering community (when introduced to IT) have not had a huge effect.

The paper ends with a call to arms to simplify – IT/business communications, projects goals etc.

I agree in principle but this is oversimplification - when your realm of influence is the organisation you are in. I have seen many projects that although conceptually simple and with genuine IT/business agreement start to fail the moment integration with other organisations – vendors/hosting providers/recruiters/sub-contractors/data sources are required. Despite solutions being simple and manageable inside your organisation – just a few touch-points with others (basically anything worth doing) cause them to be complex and therefore unpredictable/at risk no matter what your collective capabilities. There is even a case for blinkered-simplification/procedures actually contributing to project failure: Complexity at least brings an element of flexibility, allowing you to react if the project starts going bad.

Better project managers, SOA, ramped-up co-worker involvement, Facebook-like "hackathons", daily IT/business meetings, PRINCE certifications, extranets, more rigorous cost control and mathematical complexity models within your organisation will have minimal effect on the success of your multi-touch-point projects – for they are already in the realm of chaos. Even improved PM collaboration through tools such as Asana will have a minimal effect on success rates. The role of the “good project manager” is perhaps the most scrutinized, personality-driven, divisive and misunderstood of all IT positions. Radical open enterprise models such as BetterMeans that effectively remove Project Managers in favour of automation and decentralized decision making will similarly be ineffective. Although in the case of the open enterprise model, I do agree that this will ultimately prevail (crowd-sourcing, creativity enabling and ultimately efficiency/cost) but not for decades (due to the need to directly attack the failure rate first).

Although there are certainly sizeable success increases to be made if you are experienced in the particular technology, the IT project failure rate will only consistently and materially fall once there are flexible cloud services that organisations can get 80% of all their needs by just subscribing to them.

Integration ceases to be the bottleneck. The other 20% being “secret sauce” value-add-ons developed in-house; probably mainly algorithms that, by definition, do not require integration with other organisations or heavy project governance. Other components of the 20% would be device specific exploitation code; essentially building the so-called App-Internet model (rather than full-Cloud). Organisations already recognise the economic justification for cloud computing so it is perhaps inevitable that project failure rates will eventually fall by default.

Cloud transition will take organisations years yet however. Both InfoWorld and Gartner have arrived at 2013 for broadly when the majority of organisations will run cloud. This may be optimistic. In the interim (three more years+ of high project failure rates?), delivery is simply better served by being built upon cloud solutions now; building partnerships with cloud providers if they can and leveraging their buying power if they cannot. Also, interim/limited functionality cloud solutions must be considered in preference to bespoke development/on premises deployment. In a real sense the project (that they would have otherwise completed themselves) becomes a creativity-driven; architectural investment and commercial partnership instead. Both Project Management and Enterprise Architect roles will need to shift accordingly.

It would be interesting to see any future IT project failure analysis split between organisations that have implemented virtualisation, those that have implemented private cloud and those that have implemented public cloud. The project failure and cloud connection is not well documented.