Mary Meeker recently released her annual overview of internet trends, and I found it to be very insightful. You may remember that I have discussed Mary’s research and opinions on this topic in some of my previous blogs. She pushed forward as a leader in this space with different investment banking firms and is now a partner at one of the most prestigious venture capital firms, Kleiner Perkins.

Meeker’s overview includes more than one-hundred slides, so I have summarized some of what jumped out at me. The general theme is that internet growth is still significant and mobile adoption is still in the early stages. Many of the slides show examples of how this connected world is creating the Re-Imagination of everything.

The Smartphone has penetrated only 953 million users when compared to the 6.1 billion mobile phone subscriptions as shown on slide 11. This is a huge upside. Think about all the new businesses and people considering apps moving forward. Is your business prepared to benefit from this growth?

Next, on slide 10, compare the global penetration between the Android and iPhone shipments. Android has over 250 million compared to over 60 million with the iPhone. This is a four times difference, and it makes you think about for which one you would build an app. Looking at your demographic, area, and global reach will help to determine if you choose to create an app for one or both.

Slide 18 shows India’s usage of the internet on a desktop has decreased over time, and their usage of internet on mobile devices has increased over the period 12/08 to 5/12. Mobile usage has currently surpassed that of desktops, which should be considered for the monetization of sites. Most sites make more money from ads on the desktop than on mobile. This will changes things.

Mary also makes several points about how things are changing in the world with the internet. In 2010, after 305 years, newspaper ad revenue was surpassed by internet (slide 32). The trend lines for the newspaper ad revenue were declining much faster than the internet was sloping up.

From a technology investment perspective, be careful. Look at slide 108. Out of the 1,720 IPOs over the periods 1980 and 2002, only 2% of these companies accounted for 100% of net wealth creation.

Mary states that the “Magnitude of upcoming change will be stunning. We are still in spring training.” She gives a long list of reasons in slide 85. A few key elements include nearly ubiquitous high speed wireless access in developed countries, fearless and connected entrepreneurs, and inexpensive devices and services, including apps.

How are you benefiting from these major trends taking place right before our eyes?

In business we refer to a sandbox as the area in which you play or conduct business. It consists of three things: your geographical boundaries, your products or services, and either your client description if you sell direct or your distribution channel if you sell there.

When determining your sandbox, one area of thought is to make sure that the sandbox you are playing in is capable of getting you to the goals you have created for yourself. Problems could include not having enough customers or not having the right customers in your geographical boundaries. The product or service may have saturated the market you’re in, and the client description could have changed or expanded.

In our situation, we found that to reach our goals we need to add a geographical boundary that is larger and more diverse than our existing one in Knoxville, TN. We have the opportunity to open another office in a market that provides this, and we feel this will open the sandbox for us to get where we want to go.

April Cox, my partner and co-founder of Efficience, will be going to Dubai in the beginning of June to start our new office in that fast growing and dynamic city. April has contacts there from her husband and EO members that we have met over the years, so she will be off and running to network and increase our reach in our new expanded sandbox.

Not only will she be in fast growing market, it is also a modern city adapting to the latest technologies. This will be a plus for us at Efficience because we believe there is a better way to leverage technology and growing in a new environment with other companies that believe this also will be mutually beneficial. It takes four hours by plane to get to our office in India from Dubai, so working with our team there will be more “local” for the companies we connect with as we work together.

We are excited for this expansion and the chance to open the door to new relationships, customers, and product opportunities.

Is your sand box big enough to get you where you want to go?

Have you thought about how fast things change and how really different things have become with how you work and live? Think about the companies that you use every day that didn’t even exist ten years ago. Think about how you use your smartphone today and access Facebook. How different, both good and bad, was your life back then?

Consider all this from a business perspective. What new companies have appeared or disappeared because of a new innovative idea? Things move so rapidly! A company can go from zero to hero in a flash, but one can also go from kingpin to trash bin in the blink of an eye. What happened to MySpace, and what is occupying that building near you that was once Blockbuster?

The point is that technology and connectivity are changing the world so fast that items and companies we consider staples, such as Google and Facebook, may not even be around in 5 or so years. I recently read a Forbes article that shared a perspective on this topic.

According to the article, companies in the early years of the web 1.0 like Yahoo, Amazon, or Google didn’t see the social aspects of web 2.0. Now in web 3.0, the social companies have not adapted to the current world of the Smartphone.

Will Google face a challenge as better ways to search on smartphones appear? Will Amazon and Facebook keep up as more people use their phones to shop and connect instead of the desktop? Which one of these companies will be hit by a new idea brewing up in the garage right now?

Is there an opportunity for you in this space? If mobile can disrupt Google and Facebook what can it do to your business?

Let’s continue our discussion from last week’s blog. How does Abundance solve the future problems that seem to loom before us like population growth, water needs, hunger, and power?

Abundance Thinking holds the understanding that we have the capability to solve our pains with the technologies we have already created. Those technologies are at such a level that the continued connectivity of each of them creates exponential opportunities for solving all the issues of the day and the problems out ahead of us.

Click Image below for TED Talk.

When I talk about technologies, I am referring to ubiquitous broadband networks, nanomaterials, digital manufacturing, synthetic biology, artificial intelligence, robotics, and infinite computing. These areas of exploration are a game changer for the world in which we live. For those skeptics out there, let’s look at a few examples.

Consider the issue of water needs, which is a major one. Dean Kamen was working to get sterilized water to dialysis patients, when he realized he could solve a problem of clean water for billions of people by creating the Slingshot. This device is the size of a dorm room refrigerator and has an intake hose and an outflow hose, so you could stick it into anything wet, and out would come pure pharmaceutical grade injectable water for dialysis. Great for drinking also! Anything wet includes salt water, arsenic-laden water, and even the latrine. Can you imagine that?

This ultimately translates into helping to solve the population explosion. How? Most people that have large families are rural farmers that need more people to work their farms. They have more children because they tend to have a higher mortality rate in rural areas without clean drinking water. Solve the water problem, and you take huge steps toward the over-population problem.

Next, let’s tackle food. Vertical farms will change the game here. This would consist of utilizing buildings that would be immune to weather changes, so crops could be grown year round. It would take ten to twenty soil-based acres to produce the same amount of crops as one acre of skyscraper or vertical farm. This also means no pesticides or herbicides to runoff and effect the environment.

Now, we will take a look at the power issue. An updated version of the stirling engine can burn almost anything, and it is being used to power things like cell phones and lights. This engine can also power the Slingshot. Guess what powered it during a six month trial in a Bangladesh village? Cow dung!

All these examples prove that we really can solve huge problems and realize how abundance will raise the living standards, save resources, and provide ecological benefit to all on the planet.

If you are wanting to explore this more or still not convinced check out the TED Talk by Peter Diamandis or read the book.

As an entrepreneur, I consider myself a pretty optimistic person.  I look to the future and see a rosy picture filled with visions of a lifestyle that incorporates my dreams.  I will sacrifice now acknowledging that I will see better times ahead.  Knowing that the little steps of progress I see in my company is leading to something better really gets me excited, and the optimism overflows even more!  Have you ever thought this could be a little risky?  I didn’t, but let’s explore this some more.

When I was preparing for India, I knew I needed some good reading material to entertain me on the 24 hours of travel time I would have each way.  I went to Barnes & Noble to search and came upon a really good book called “Thinking, Fast and Slow” by Daniel Kahneman.    Daniel won the Nobel Memorial Prize in Economics in 2002, and with this book he aimed to “improve the ability to identify and understand errors of judgment and choice in others, and eventually in ourselves, by providing a richer and more precise language to discuss them.”

 I have found this book to be very interesting and mentally stimulating in the same vein that I did with “The Black Swan,” which you can read more about here on my blog.  I have not finished the entire book yet but was very intrigued with a chapter called “The Engine of Capitalism.”  Here, Daniel discusses the advantages of optimism and how it leads to happier, healthier, more resilient people.  The optimists are the inventors, the entrepreneurs, and the political and military leaders, which he points out are not the average people.  They get there by seeking challenges and taking risk.

Most interestingly, he discusses how an optimistic bias can blind an entrepreneur from seeing the full risk of an undertaking or the decisions they make.  In study after study, Daniel shows that optimistic people were not capable of predicting or generating the results they expected.  What do we do with this overconfident optimism?  Daniel suggests one option would be to do a “premortem,” and I see another option of firing “bullets.”

The premortem occurs when the organization has almost come to an important choice but still before the big decision.  They gather a group of people involved in the assessment, and they write a brief history imagining that they implemented the decision and it died, so now they have to imagine they are looking back and come up with reasons why it might have failed. Daniel says this does two things.  First, it overcomes group think when it appears a decision is moving forward.  Second, it opens up the floor for knowledgeable individuals to express their doubts when they may have been suppressed by the leader before.

I think there is another way to handle overconfident optimism, and that is to fire bullets, as Collins discussed in “Great by Choice.”  When you test the market reaction by looking for empirical evidence with small, low risk exposure (firing a bullet), your confidence comes from real world market feedback.  Only then do you fire the big cannon ball without worrying that your optimistic bias got in the way of a venture that could have been devastating to your company.

I know my over eager optimism has gotten in my way and has been costly. How are you managing yours?

Side note on the 4 Billion Customers’ blog last week:  I read David Meerman Scott’s blog this week, reinforcing the mobile expansion to all parts of the world.  He was in the jungles of Central America and experienced tribal people with no running water or electricity using mobile devices to better their world.  Check out his blog.

I am currently at the EO Amsterdam University, which is a 5 day conference packed with amazing speakers (even 2 Nobel Prize Winners), incredible, fun loving, successful entrepreneurs and exciting activities and venues.  One of the most interesting things we’ve done is take a canal ride through the city, making our way through the canal system and on to dinner, where we wore Dutch Clogs.  The really cool thing about this conference, though, is that it’s centered on changing the world and how each of us can do our part to make a difference.  The only thing stopping us is our own self imposed limitations.

Before I go any further, I first want to send out a thank you to those of you who sent me email, texts and Facebook messages about my 9/11 experience.  Your thoughts were very heartfelt and appreciated.  Something I wanted to add to my story is that the following day I rented a car and drove to Rochester, NY to see my family.  I arrived about 30 minutes after my brother Mark delivered his 3rd daughter Ava.  After witnessing so much death and destruction, it was incredibly uplifting to walk into the hospital room and be greeted by my entire family, including the latest addition, baby Ava.  Happy Birthday Ava, and thank you for spreading so much light on all our lives!

Now back to change. I’ve talked a lot about the social aspects of entrepreneurialism, how to approach change and make a positive difference, both personally and professionally.  What we’ve done at the conference is break out into groups to do some creative brainstorming with creative specialists, which proved to be a very stimulating and educational process.  We focused on what brings about change in our lives and what experiences we’ve had that caused major change to take place.  We then discussed what kind of change we would like to see for future generations.

On the topic of change, Dr. Muhammad Yunus spoke to us about change that benefits and empowers poor people around the world.  Yunus is founder of the Grameen movement and winner of the 2006 Nobel Peace Prize.  He’d heard some years back about people in Bangladesh working with loan sharks in order to purchase things needed to run their businesses and just survive.  The loan sharks were charging interest as high as 1500%.  Yunus went to Bangladesh and pulled together a group of business owners.  When he asked them the total that they had borrowed, combined it came out to be the equivalent of around $43.  He proceeded to loan them the money to repay the loan sharks at no interest.

Once they all paid him back, he gathered others to help raise money to loan the people, who continued to repay him around 98% of what he’d lent.  This was the catalyst that started the Grameen Movement that has raised millions of dollars to be lent to thousands of people as they seek to change and better their own lives.

You might recall my mentioning a desire to start a microfinance opportunity in Pondicherry, India where Efficience has our software development office.  I spoke to Dr. Yunus, who gave me his card and offered to help me.  If you’re seeking something, the universe might just put the right people in your path to help you, so keep your eyes peeled.

I will use this opportunity to do my part and try to create a positive change in the world, to try and help others have better opportunities and hopefully better lives.

How are you changing the world?

Our nation is struggling to create jobs.  You’ve likely heard that regulations have limited businesses’ capital, making it difficult for them to hire or expand.  Have you wondered what types of changes to these regulations would help this economy create more jobs?  Let’s discuss a few key changes that have worked in the past to encourage companies to grow and hire more people.

Many regulations create a big problem for the economy.  Which regulations and policies are stopping us from creating the jobs that we are missing?  Amity Shlaes writes an interesting article in the Wall Street Journal, Three Policies That Gave Us the Jobs Economy.” 

The first game changer implemented a venture capital investment increase from $39 million in 1977 to $570  million in 1978, an increase of 15 times!  What policy changed?  They cut the capital gains tax rate from 49% to 25%.  In the 1960s, the rate had been raised.  What happened then?  As Amity says, “The mid-1970s were a dead period.”   The decrease in the capital gains tax rate generated investments and growth in businesses, which actually brought in more tax revenue for the government.  

The second big policy change adjusted the ERISA law, which regulated pension and retirement plans.  In 1974, they instituted the prudent man rule, which said that pension plans would be violating their fiduciary responsibility if they invested in risky startup companies like Apple at that time.  They relaxed these regulations in the late 1970s, and as a result, more money was invested in small, younger start-up companies that create most of the jobs, as I discussed in an earlier blog post. 

The third major policy change centered around intellectual property rights and clarified how ideas in universities and research departments could be sold or used for commercial benefit.  Subsequently, so many great ideas surfaced after having been pushed aside on a desk or stuffed into a file cabinet simply because, until that moment, no one had the incentive to go out and reap the benefits.

The lessons here are plentiful!  We need to continue to lower the cost of capital transactions and capital gains.  When we take from the people with capital, we always get slow growth or dead periods, not more jobs or government revenue.  Amity suggests the major regulations of today include Dodd-Frank and Sarbanes-Oxley.  We need to change these policies and reduce the burdens they place on businesses. 

Most entrepreneurs understand this instinctively, but we need to share this data with others.  Shout it out loud and clear to the policy makers because this information is vital if their real agenda is to create jobs and improve the economy and not just to maintain power.

Last week, I traveled to Dallas, TX for a guys’ weekend with my son Tony, his close friend Steven, and my brother Mark. While there, we also attended the Bills vs. Cowboys football game. Having grown up in Rochester, NY, I am a Bills fan, which is often difficult to endure. That weekend was no exception. Even after a great start to the season, the Bills lost 44 to 7. Other than that, we had a great time, and the Cowboys’ stadium is off the charts!

You seem to open your eyes more to what is around you when you’re in a new environment, so being a bit more observant, I watched the nonstop mobile usage around me. These observations made me want to share some recent research that has been released. Based on the research and my own thoughts, mobile devices are becoming a powerful force in our lives.

As we went to restaurants, the social watering holes, the tailgate party, and even in the stadium, I noticed how many people were using their mobile devices to stay in touch, update Facebook and Twitter, and take pictures to upload or send out to everyone. Sitting in Cracker Barrel next to a table filled with the 60 plus crowd waiting on their food, I watched all of them tapping away, or reading what was on their phones. This is universal and will expand as speed increases and apps are introduced, making our lives easier as well as more resourceful and connected.

In a previous blog, I discussed the research of Mary Meeker, a leader in mobile technology research. She released new data at the Web 2.0 Summitrecently, and it showed the continued surge of mobile usage, traffic, and e-commerce.

In the area of e-commerce, she discussed how eBay’s mobile sales have reached $4-billion, Paypal has hit $3-billion, Amazon has made $2-billion, and Square is at $1-billion. All had big increases with Square up 20,000% year over year growth! From what I observed, it is just going to continue to be off the charts!

Meeker explained that over the past year, the use of mobile search has increased four times, and the mobile app and advertising revenue combined has been growing at 153% annual compound rate since 2008. At that time, the revenue was at $700-million, and now it has hit $12-billion! This is amazing growth!

For internet services like Pandora, Twitter, and Facebook, a large portion of their traffic is from mobile devices. Actually, for Pandora and Twitter, the majority of their traffic is mobile with Pandora generating 65% of traffic and Twitter gaining 55% of traffic this way. Approximately 33% of Facebook traffic comes from mobile devices, and it is increasing dramatically.

This all means we are entering a world much different from where we have been, and it is changing fast. We will be doing so much more on our mobile devices, and this will drive how we work and play. How does this affect you and your business? Can you improve your service to allow easier access to your products and services over mobile devices?

As I contemplated these questions over the weekend, I had an idea dealing with mobile devices and connecting people that has been brewing for awhile now, but it was solidified in Dallas. What ideas do you have to connect people, share information, or simplify things? The next Gates, Jobs, or Zuckerberg is brewing and will show up soon. Why not you?

Have you ever noticed how things work in cycles with observable patterns? As someone whose strength is observing and seeing patterns, I find it helpful to know that these patterns exist and to see if this awareness generates some form of opportunity. This may be because I have that entrepreneurial instinct that draws out this intrigue, but whatever the case, they seem to pop up everywhere.

You can find these patterns in the stock market, football teams, the weather, time to market saturation for products, and a multitude of other things. For example, look at the stock market over a long period of time. You will see that over time the price to earnings ratio (PE) tends to expand and contract over a longer time horizon than the normal business cycle.

From 1903 to around 1920, you should notice a contraction of PE from around 24 to 5. From 1920 to 1930, the PE surged from 5 to 28. From 1930 to 1950, it contracted back to 9. From 1950 to 1969, it expanded from that 9 to about 23. Then from 1969 to around 1980, it dropped back down to 7. From 1980 to 2000, you should see it surge up to 42 (can you say bubble?). We have been on a PE contraction since then. The sad news, as you can see from the pattern, is that a long uptrend does not typically start until the price to earnings ratio falls into the single digits.

Being a University of Tennessee football fan, I observe the patterns there also. As fans, we have high expectations every season, which makes it difficult to see the patterns. However, you can go back to the 1960s and see a good decade for the UT program. The 1970s were tough. The 1980s bounced around with big ups and downs. The 1990s were great, and the decade of the 2000s has been sad. You would think from this, the current decade will improve.

If you listen to the news, you would think we have been on a warming trend from the past 100 years. Actually, we have been on a warming trend since the late 1970s. In the mid-70s, all the major news stories reported how the average temperatures had been dropping since the 1950s, so we would all starve to death because of crop failures. Last winter, we had snow on the ground in Knoxville, TN for over three weeks. Typically, snow only stays on the ground here for a couple of days, and this was the first time since I started living here in 1981 that this has happened. Could this be the start of something new?

Finally, notice the trend of how breakthrough technological inventions saturate the market. In a general sense, the automobile, television, and radio each took about 30 to 40 years to fully saturate the market. The VCR took at least 15 years. The internet reached saturation after around 8 to 10 years, and it only took Facebook around 3 years once it opened up to everyone.

This pattern is obvious, and we will see new products, services, and software tools reach full penetration within a year in the near future. This results from how connected everyone has become, and this connectivity continues to increase. I would say that at some point in the near future, products and especially software will reach full market saturation within weeks and even days.

What patterns do you see around you? Will these patterns affect your business? Are there opportunities in those patterns or just the satisfaction of knowing this is just one of those cycles and will eventually change?

When you run a business, various opportunities often present themselves and persuade you to run off in different directions, pulling you away from your focus.  This happens to me frequently, and I find it difficult to avoid being sucked down a path that sounds like the next great avenue for huge success.

Thankfully, my partners, EO Forum,  or my team usually slap me back into reality.  Taking a closer look at what you are doing can also help you discover if these opportunities are worthy or if the current focus is best.

As my success coach Steve D’Annunzio asks:  Where have the most profitable clients come from over the past 3 months?  What is the common theme across those clients and what is it you are providing that makes the clients happy to pay you?  What is the common size of these clients?  What category are they generally from?  What are their locations?

If the answers point towards the companies paying me the most profit, why would I not want to go get more of the same?  Why would I not want to build on this synergy and find a way to get the most scalability possible by giving the clients what they love while also getting paid at the most profitable level?

Steve tells me that when those things happen, you are in “FLOW.”  When it’s right, you notice it in the areas of time, energy and currency because they will all be jamming together like a great jazz band or orchestra.

As we close in on the end of the year, many businesses are looking deeper at what they are doing and may be considering these same types of questions.  Another beneficial exercise that can help to open your awareness to all the options is the basic Strengths, Weaknesses, Opportunities, and Threats or SWOT analysis.  We utilize this every quarter to challenge our business and ensure we are considering all possibilities and are not about to get eaten by something sitting around the corner waiting to pounce.  Remember the Software Monster.

We found that we spent too much time gathering data from all the participants for SWOT, leaving us little time to really dig into the data we had pulled out.  To fix this, we built a tool that has helped us ramp this up before we start our planning meeting and has given us much more time to go deeper.  This tool, called MeetingHabits, can now be utilized for free, and it may stay that way as we study how it benefits us.  We would also like hearing how it helps you if you would like to share your experiences.

As you work to focus more on bringing the most value to a core group of clients that will put you in the best FLOW, what are you doing to make sure your business is harmonizing the best tune?