We “added 120,000 jobs in November” and have added over 100,000 jobs per month for the last 5 months.

I found the birth, death and marriage rate on the CDC website. For December 2009 we had 344,000 live births per month, 216,000 deaths per month and 138,000 marriages per month.

Our population is increasing by roughly 128,000 per month, which is 8000 more than the number of jobs we added. Looking at marriages per month gives you an indication of how many new couples are starting life and presumably expecting full employment. That’s 18,000 more than the maximum number of jobs we added per month in the last 5 months.

I don’t think we’re ever going to get the jobs we lost back because the financial crisis of 2008 was a trigger that caused companies that have become more efficient to cut a workforce that is no longer needed. That is why corporate revenue has not declined even though unemployment has increased. The grey marks the recession, click the graph to go to ycharts for a live version.

The only way to solve this is to bring our education syllabus up to date. The chinese have a few ideas how to do that: They’re cutting majors that produce unemployable graduates. 

During my roughly 20 year career in IT, Ops and software engineering there is one thing that has been universal and consistent. IT vendors lie through their teeth about ROI and how their product will save you money or make you more money.

• Buy our OS because it’s “enterprise” and “best of breed”. No thanks I’ll use Linux which is free and better.
• Buy our database “solution” because it’s a new paradigm in “scaleability”. No thanks I’ll use MySQL because it’s better and it’s free and you know this which is why you bought them.
• Use our translation service. Why translate once for a fixed low price when we can use it as an excuse to move your I18N pages into the cloud and charge you per page served. [Two companies have now pitched this exact service to me]
• Why pay $12.99 for an SSL certificate when you can pay $1,499 for an EV SSL certificate that will quadruple your conversions.
• Why buy 20 servers for $50k and lease your own rack for $3k per month when you could be in our “mission critical” cloudified data center spending $20K per month for the same thing.
• Why use Nginx free for load balancing when you can get this dedicated hardware balancer hardware for $40K that can barely keep up.

If the loading animation won’t disappear then try viewing the video on this page.

This has been shown recently to be true with Mortgage backed securities, credit default swaps, the black box that is the hedge fund industry and even sovereign debt may qualify.

When you are shielded from your investment by layers of structure, marketing, repackaging and sales teams, you are too far away to hear the alarm bells when they’re ringing.

That got me thinking about the relative risk of being an angel investor in young companies. Angel investors meet with the founders, use the product and in many cases craft the investment terms themselves. Spending a few weeks negotiating a deal with an entrepreneur is itself a revealing process. The investor is exposed to a mountain of data on the underlying asset they’re investing in.

The recent excellent Bloomberg article on the under performance of commodity ETF’s brought this difference home for me. Suited and booted bankers sell commodity ETF’s daily with a prospectus that tells you you’re investing in gold or oil or copper. The impression created is that you’re investing in the underlying asset when in fact you’re investing in a fund that is trading monthly futures contracts for the commodity. Two years later you’re left wondering why your investment has lost 20% while the underlying commodity has gained.

The complexity of financial products and the distance between the average investor and the underlying assets they’re investing in has, I believe, peaked. As the financial crisis that was started in 2008 continues to play out, during next decade I strongly suspect there will be a return to less complexity and a desire to know, touch and meet with the assets that underlie each investment.

While the likelihood of failure in young businesses is high, as an angel investor you know exactly what you’re getting and you have the ability to influence the performance of your asset. Try finding that on Wall Street.

Google on the other hand have a $27B revenue run rate for 2010 [based on Q1 2010 earnings]. With similar on-site traffic they are doing 25 times Facebook’s revenue. Google have had a long time to learn about printing money efficiently, but even so that’s a blush-worthy statistic for the Facebook executive team. So why the difference in performance?

Facebook has a crisis of intent. When a visitor signs in to Facebook their intent is to socialize. They don’t want to buy anything and they certainly don’t want to click on ads that lead them to buying something. Facebook has the best data on the web about the people using their service. But all that wonderful data is useless without intent.

When a visitor hits Google their intent is to see something, learn something, do something etc and these can be cajoled into buying decisions. If Google guides the user to the right vendor, they make a vendor money and can share in some of the revenue. Google’s data on each visitor pales in comparison to Facebook. But Google catches each visitor at the moment they have intent. And that is the power of the search business.

Facebook needs to solve their crisis of intent. Intent is the missing ingredient that stands between Facebook and $27 Billion in revenue multiplied by the social graph and profile data that Google doesn’t have.

Changing Facebook.com to capture visitor attention when they have buying intent risks destroying a valuable asset. So instead Facebook have decided to take their data to the places where visitors have intent: The rest of the web.

“If intent won’t come to Facebook, we’ll take Facebook to intent.” ~Mark Zuckerburg [may have said this]

In the next 3 to 12 months Facebook are going to roll out their own ad network for publishers – a direct competitor to Google AdSense.

If Facebook can use my interests, sex, age, location, who I’m friends with and their age, location, interests etc. to infer that when I’m searching for a ‘bobbin’ it’s probably because I want to tie steelhead flies with it, then it makes more sense for every publisher on the web to use Facebook’s ad network than Google or anyone else because they will simply make more money.

Facebook’s Ad Network will make publishers more money and increase engagement.

Facebook Connect was phase 1: “Lets see if a distributed Facebook gets traction and doesn’t raise privacy flags.” It was a resounding success.

The Social Web and Open Graph is phase 2: “Lets see if we can share some user data using an opt-out model.” From the Facebook blog: “For example, now if you’re logged into Facebook and go to Pandora for the first time, it can immediately start playing songs from bands you’ve liked across the web.”

There have been the usual privacy rumblings, but so far the Facebook community seems to be OK with an opt-out model of distributed data sharing.

The significance of this is staggering: Facebook have positioned themselves for the perfect AdSense kill-shot. 6 to 12 months from now publishers will  be able to integrate Facebook’s applications and ad network on their blog or website and get:

• Better revenue than Google AdSense or any other ad network due to better targeting
• Increased user engagement through social features
• Increased virality through recruiting other Facebook members
• Increased data on each visitor from their very first pageview reducing bounce.

Advertisers will get:

• Less click fraud because you’re no longer just an IP address and a cookie.
• Better targeting including the holy grail of demographics: Age, Sex, Location.
• Ability to show your ad at the moment a user has buying intent on a search engine, a blog about visiting Egypt, etc.

A significant portion of Google’s $27 Billion in revenue this year will come from their publisher ad network. Google knows what’s at stake. That is why they are willing to bet GMail on products like Google Buzz.

Facebook is the most serious threat to Google’s business that they have faced. If Facebook plays this perfectly, they will kill the bear and 5 to 10 years from now will be the largest and most profitable ad network on Earth.

Anyone who plans to compete with them will have to do better than textual ad targeting.

Twitter Investor Fred Wilson wrote a much talked about post earlier this week that sparked a discussion about whether Twitter would implement critical apps themselves. Seesmic founder Loic issued a stark warning to Twitter developers today. Apple continues to bar Adobe’s Flash platform from Apple’s iPhone platform and Adobe evangelist Lee Brimelow pulls no punches in his “Apple slaps developers in the face” post today.

Ten years ago a developer was faced with a much scarier platform landscape. You either build on Microsoft’s monopoly operating system and risk them implementing your app themselves, or stop being a desktop developer. Web Applications were really Web Sites, web platforms didn’t exist and mobile platforms were completely proprietary.

These days playing with platforms is a little easier because you have a range of platforms and integration methods to choose from. You can build a Facebook app that runs inside Facebook or integrate via FB Connect. You can choose to build on Twitter instead. And if you like you can integrate both to hedge your bets and add social features of your own on a completely external website. If you’re building a mobile app you have Droid and the iPhone to choose from and if both suck, well both platforms have a web browser so a lightweight web interface is an option too. Even in the desktop OS arena if Microsoft rubs you the wrong way there’s always the smaller but more spendy Apple market to go after.

When formulating your platform strategy it’s important to put yourself in the providers shoes and think about the following:

1. Are they wildly profitable or is it possible they might go out of business or radically redefine their business?
2. Have they figured out their business model yet or might your app become their model?
3. Is their API locked down and unlikely to change or is it evolving as they figure out what business they’re in and how much of their revenue they want to give away via their API?
4. Are they waging a strategic war with anyone that may affect your business and your app?
5. Does any part of your own business compete with any part of their business? How about in future?

Being first to market on a new platform has it’s advantages. My former colleagues at UrbanSpoon got their iPhone app in an Apple ad because they were early adopters of the platform. Smart move – and smarter given that they weren’t betting the farm on the platform. But early adopters of the Facebook platform saw revenues and traffic change as Facebook evolved the platform early on.

So when building your app, first carefully assess the state of the platform and then decide how and at what level you want to engage it.

Most of Google’s revenue comes from their Ad business. Half of it comes from their own properties and the other half from a distributed network of sites. (sounding familiar already I’m sure).

There is a lot of noise around Google’s other apps and experiments, but from a business perspective that’s all it is. Noise. Google is a cash creation machine and the cash is created by the ad network both on and off-site. To give you some perspective, Gmail ranks a distant third among email providers with 37 million uniques vs Yahoo Mail’s 106 million uniques 5 months ago [Comsore].

So Google’s business is relatively simple. It’s a the best search engine in the world and an ad network with themselves as their own biggest customer.

Google built this business by first creating an incredibly hot property that gave it’s users an incentive to provide it with awesome targeting data. Then it built an ad network around the targeting data.

The hardest part about building Google was to create the hot property (the search engine) that incentivises users to keep coming back and feeding it more targeting data. The next part of creating Google was a little easier because if they screwed it up the first time they get to try and try again until they succeed in building a money printing machine on the back of this hot-property-with-targeting-data that really does print money.

Facebook have the hot property that keeps users coming back and feeding it targeting data. They really screwed up the Ad network the first time they had a crack at it with Beacon. But, predictably, their users forgave them and they’ll keep having another crack at it until their money printing machine is running at optimum efficiency.

There are a few reasons I believe Facebook may be a bigger success than Google long term:

1. They have better data in the form of individual demographics, interests and data inferred from the social graph.
2. They already have a distributed network of sites in the form of Facebook Connect which has deeper integration than AdSense. That means Facebook gets more data about visitors to those sites than Google AdSense.

Possible risks:

1. Their management team doesn’t have Eric Schmidt. Eric spent years getting schooled by Microsoft when he ran Novell. So he has the hunger, the scar-tissue and battlefield awareness that you need to compete with juggernauts.
2. The hasbeen factor. Facebook has had a surprisingly good run and has proven to me it has legs because I’m still going back after a few years. But lets see if they can maintain that over the next decade.

As he finally lost all hope he hit the ground. But instead of shattering into a billion little birdy bits, he landed in a large and very fresh pile of cow dung. He couldn’t believe his luck. And it was warm too! As the storm raged around him his wings started to thaw and his ice-cream headache disappeared. In fact he started feeling better than he had felt in a long while. He felt so good that he started wiggling about and he even let out a few chirps.

A cold and hungry fox passing by  heard the chirps and quick as a – well, as a  fox – he leapt on the cow-pile and gobbled up the little bird.

The moral of the story is:

1. When things seem really really bad don’t lose hope.

2. Everything that looks like shit and smells like shit isn’t always a bad thing.

3. When things are going well, shut the fuck up!

[My dad gets credit as the source of this story]

If I ever decide I need the security of a day job I’ll go back to London and work in Canary Wharf. The London banking sector is the most bomb proof industry on the planet. Canary Wharf is also a pretty darn cool place to work.