"But it's critical to keep tabs on the ratio known as 'glue versus thought.' Sure, both imply progress and both are necessary. But the former is eminently mundane, replaceable, and outsource-able. The latter is typically what gives a company its edge, what is generally regarded as a competitive advantage."
I am in finance. I am glue. I take existing people, things (read: capital), and ideas and bolt them together. Glue is the socioeconomic fabric that gives value to ideas, things, and ultimately people.
It's not just finance. Craigslist? Airbnb? Facebook? Apple? Glue. Put it this way: if you walked out the door with their source code, how much of their value could you replicate? Put it another way: how much would you pay to walk out the door with their source code and physical assets? Put it another way: how much would you pay to walk out the door with their source code, physical assets, and low to mid-level developers but none of their senior guys?
We have laws to protect intellectual property because thoughts and technologies are copyable, fungible, and ultimately outsource-able. We don't need such laws to protect relationships, the gluiest of glues. In fact, we need laws to break down their strength.
I think that his point is that glue is only as valuable as the product in which it's used.
In the case of finance, it's the fact that they operate as the middleman, getting money from one place to another. The product isn't just getting people together, it's providing a smooth way to move money around.
The other examples have a product where individual technologies were melded together to produce that specific product. They did much more than just take a few technologies, then bolt them together.
On the other hand, Summly seems like the technology should be the product. NLP is a very hot research topic, and when I first saw that the product went for $30 mil, I thought that they had some brand new NLP technique or algorithm that Yahoo was snapping up. In fact, several articles, like this NY Times article(http://www.nytimes.com/2013/03/26/business/media/nick-dalois... ) supported that view.
However, the truth is that they just took a pre-existing tech, and bolted it onto an iOS application. I can't comment about the app, since it's been pulled from the iOS store, but it does sound like they attempted to do something new with the interface, but that's about it. So Yahoo basically bought 2 engineers and a Siri NLP engine license, the later of which will undoubtedly become more expensive when the contract is renegotiated.
I'm commenting less on Summly and more on the general case. People who bolt together existing tech into something people want are extremely valuable. They have identified demand and found a way to address it using off-the-shelf components. The risk, often, is that someone else can just as easily bolt together the same components. This risk is mitigated by locking in the demand source, e.g. through brand recognition from your first-mover position. Someone able to rapidly bolt together a product that they subsequently ensconce with piercing marketing or another form of customer lock-in is a gold mine.
Interestingly, $30 million for the license is probably relatively cheap. I imagine that had Yahoo licensed it directly, that they'd be paying a lot more for it.
I really like this reply. I was both in finance and technology and there is a degree of glue and thought in both. However, in this case it's about the false perception that was created to the outsiders about Summly's level of innovation.
> It's not just finance. Craigslist? Airbnb? Facebook? Apple? Glue. Put it this way: if you walked out the door with their source code tomorrow, how much of their value could you replicate?
You are conflating the "thought vs. glue" ratio with the "past thought vs. currently generating thought" ratio.
In terms of the first three, a lot of the value is in what economists call "positive network externalities", or "network effects".
If you walked out the door of Apple with source code and "source code" for their hardware, you could replicate a lot of their value for the immediate future, until they had time to cook up new stuff.
"If you walked out the door of Apple with source code and "source code" for their hardware, you could replicate a lot of their value for the immediate future, until they had time to cook up new stuff."
You are correct in that more of Facebook or Craigslist's values are comprised by network effects, but I still believe more of Apple is network effect than not.
Consider the walking-out-of-the-door-with-the-blueprints hypothetical. You would still need to cobble together a supply chain, i.e. glue together a string of "doers" and make sure the glue is strong enough so the whole thing doesn't fly apart like a 787.
Remember the Hacker News refrain about execution versus MBA-style "ideation"? The execution guys are valuable because they know where to find what and whom, not because they ninja together the eleventh hour code themselves.
> Consider the walking-out-of-the-door-with-the-blueprints hypothetical. You would still need to cobble together a supply chain, i.e. glue together a string of "doers" and make sure the glue is strong enough so the whole thing doesn't fly apart like a 787.
Maybe a more interesting hypothetical is "what could the 2nd place competitor do if they got blueprints and source code, and could use it freely?". In terms of Facebook and Craigslist, nothing much. In terms of Apple, Samsung could probably go to town with it, although I suppose you could also argue that "the right to use it freely" is in some ways the most important bit, as Samsung can probably replicate the hardware, and has good enough software at this point.
"You are conflating the 'thought vs. glue' ratio with the 'past thought vs. currently generating thought' ratio."
Glue takes thought, so the dichotomy is a bit rickety out of the door. I'm taking it as network value versus technical value. Both take present thought.
If you are glue, there is a terrible problem. When you are in finance you should be in the "Thought". You should think on who can pay the bills and who can not, so you could give loans to them or not.
You should be on thinking what is going to be the future and the business strategies that makes sense, business that are sound and solid versus scams to get people's money.
The fact that you consider yourself glue is the main problem. We are in a society when finance means "too big to fail", "we make bad decisions but do not pay for it", and "if people can not pay back its loans(because we lended irresponsibly) , we have to lower the requirements for loans even more".
I don't think is the right way to think about things. How much sense does Instagram make in 2010? How much sense did Twitter make in 2006? How much sense did Amazon make after the dotcom crash? No one has perfect information, and "business that are sound and solid" aren't the ones that need loans. Sound and solid businesses don't need help from finance guys.
The people that connect people, things (i.e. capital), and ideas are not naturally less valuable than the people that come up with ideas or who have things. If you have someone who is able to whip together existing technologies into something that's tractable they very well can be more valuable than someone who invents new technologies all day. There is more information needed beyond "that's glue, it's worthless".
> The people that connect people, things (i.e. capital), and ideas are not naturally less valuable than the people that come up with ideas or who have things
I don't think anyone would argue that glue is naturally less valuable. The problem is that our current economic structure treats glue as if it creates approximately ALL of the value because we haven't figured out a good way to split value between different stages of the pipeline (IP isn't a good way).
Over-investing in glue is bad insofar as it comes at the expense of investing in fundamental technologies/research. Since our (over)valuation of glue currently places a rather heavy opportunity cost on performing said research and endorses the "academia is a waste" attitude, I tend to agree that our economy is too focused on glue.
I think the point of the OP is not that glue is not an essential part of a product. It is that when you start making things exclusively out of glue, then the all "glue and thought" ultimately worthless.
I am in finance. I am glue. I take existing people, things (read: capital), and ideas and bolt them together. Glue is the socioeconomic fabric that gives value to ideas, things, and ultimately people.
It's not just finance. Craigslist? Airbnb? Facebook? Apple? Glue. Put it this way: if you walked out the door with their source code, how much of their value could you replicate? Put it another way: how much would you pay to walk out the door with their source code and physical assets? Put it another way: how much would you pay to walk out the door with their source code, physical assets, and low to mid-level developers but none of their senior guys?
We have laws to protect intellectual property because thoughts and technologies are copyable, fungible, and ultimately outsource-able. We don't need such laws to protect relationships, the gluiest of glues. In fact, we need laws to break down their strength.