The China Vortex

Gold prices are going up.

Jim Rogers has long been a bull on China, to the point where his daughter’s first language is Mandarin, and is betting on a rise in commodity prices because of demand from China. He highlights this point in his new book A Bull in China: Investing Profitably in the World’s Greatest Market.

The recurring theme is not so much demand from China, but that people in Asia are turning to gold as an investment, safer than property. In my previous article, I mentioned that gold is often an investment of last resort which is safe when all the other investments have gone down the tubes. Obviously Vietnamese and other Asian investors have the same belief and affinity for the metal as Chinese do, and as I’m sure Jim Rogers does.

The astute investor will notice that it isn’t so much that they believe in gold, as it is that they are rushing to get out of US dollars.

When Jim Rogers talks about the commodity demand from China, the flip side of the story (which he is not talking about so much) is that he is using US dollars to buy those commodities.

When you have too much of a currency in circulation, you get inflation and the currency loses value until a new floor is found and supply and demand reach equilibrium. Right now, Asian investors do not feel that they know where this new floor will be; that explains the rush to gold and gold futures.

That is what’s going on now.

Yesterday, the new national aquatics center was unveiled in Beijing. This will become the venue for the leading water events of the Beijing Olympics. After the Olympics are over, it will be converted to a shopping mall for Beijing’s masses.

Beijing is now the site for some of the most exciting architecture in the world. For many Chinese though, there is an underlying uneasiness. Is all this dramatic futuristic architecture the beginning of a new and exciting future of wealth and prosperity which Chinese have never experienced in their long history?

Or is this instead a blip of prosperity, and will the future be much less bright, and will their children and grandchildren look back and see the Beijing Olympics as the apogee of what has since become a downward trajectory? And will this architectural marvel become dirty and dusty and seedy?

China has seen prosperity before, only to have its dreams shattered. Westerners today see China as a rich, prosperous and growing power, but it has run into the wall before, and on many different points in history. The first Chinese industrial revolution, when Chinese factories started making goods for the Chinese market started at the end of the nineteenth century, with textile mills and flour processing factories spouting up in the Yangzi river delta, mostly started and financed by entrepreneurs from Shanghai and Wuxi. Then China went into political chaos in the period following the revolution which overthrew the Qing dynasty in 1911.

Another period of short-lived period of prosperity came in the early 30s, this was cut short by the Japanese invasion of China in 1937.

Then, in the period following the end of WWII, China fell into civil war between the two leading political parties, with the Nationalists losing and retreating to Taiwan. Following the establishment of the PRC, China was very poor, and then made even poorer by the Cultural Revolution. In 1978, the Chinese government essentially decided that they were tired of being poor and moved ideology off the national agenda. From now on, it would be about making money.

Even today though, with all their savings and comfort, Chinese feel that it can all change and all go away. That is why they save and sit on their cash.

Americans are the opposite. Until very recently, most Americans believed that the future would always be brighter, that although there were things that they did not understand, America was the strongest and most prosperous country in the world, and that there would always be a way. This is why theyspent their savings, and when their savings were gone, they would take loans on easy credit terms, promising to repay the loans and credit when they had income again. It led to a bigger and bigger mountain of debt. And now, Americans are much less sure about their ability to repay the loans.

This is a way of thinking which is completely foreign to Chinese, and makes no sense at all to them. For Chinese, the only real money is cash. And when money goes bad in times of high inflation, they don’t even believe in cash.

They believe in land, and if the politics becomes unstable, they go to gold.

Runaway inflation is something the Germans experienced in th 1920s, then again in the postwar period. Japan experienced it too in the postwar period. China also experienced it in the postwar period when the Nationalists had to change national currencies three times in the period up to 1949. With the runaway inflation in the cities, people had to carry their money in paper sacks to do their shopping. They would go to the markets carrying bags of money to buy their groceries, then they would use the same bags to carry their groceries back home.

When the Nationalists lost control of inflation, they lost the Chinese cities and the support of the business community. This paved the way for the establishment of the PRC in 1949. The first task for the government was then to stabilize the currency.

While China was very poor in the fifties, sixties and seventies, there was virtually no inflation.

Today in China, we are seeing the early signs of inflation again in food prices and property prices. For any Chinese government, and this government is no exception, inflation is the greatest single and most frightening enemy it faces. It may creep up slowly, but it unleashes forces which can easily spin out of control.

If a government cannot maintain the value of its currency, it cannot protect its citizens, and the people end up in the poor house. It’s that simple.

This is why the Chinese government will not easily revalue the yuan upwards, and why the government keeps such a tight control on credit.

One of the upsides for Chinese businesses investing in Africa is that although the people are poor, at least they pay cash. When times turn hard, you want to be paid in cash.

For most Chinese, you aren’t rich unless you own cash.

Credit is just a derivative and in tough times, no one wants derivatives.

I just came across this Ogilvy Mindshare report on Chinese consumer behavior which goes beyond the normal reports which cover exclusively the Tier 1 cities.

This one also covers the tier two and three cities, which are becoming increasingly important for marketers. According to the report, consumers are still frugal, and are reluctant to go into debt.

How old-fashioned can they get? And I’ll be that they think savings are a good thing…

Sheeesh…

Chinese can be very peculiar about some things.

One thing which is especially peculiar by western standards is that they get really annoyed and angry when a lot of money is lost, and they are not afraid to say so. Take the Chinese government’s loss, er investment, in Blackstone Group for example.

Within several weeks of the investment being made, Blackstone’s share price took a bath, and many Chinese got really angry. As a matter of fact, they got so annoyed that they actually demanded accountability. They reasoned that since this was their money, they had some say about it.

Obviously not a rational move. They just don’t understand the rules of the game.

Compare this with the subprime mortgage scandal in the US, which has morphed into a never-ending nightmare, seemingly growing bigger and bigger all the time…

Has anyone been blamed or gone to jail? No. Has anyone been held accountable? No. Have newspaper editorials placed the blame on anyone for the disappearance of billions, maybe trillions, in dollars? No. Is anyone angry because the futures of millions of Americans have been put in financial jeopardy? No. Have you heard any of the candidates talk about doing something about this? No.

We are above such petty finger-pointing, which won’t do any good anyway.

We’ve got more important things to worry about like race, and the right to life, and illegal immigrants taking American jobs, just to name a few…

In the meantime, the Chinese are having a hard time finding Chinese fund managers who want to invest and manage their trillion+ in reserves, especially since the Chinese manager of the Blackstone Group investment was unceremoniously removed from his post. Managing all this money sounds like an invitation to an execution.

Your own.

In the meantime, the French are partying with recent events of their own at Societe Generale…

In light of recent events, many Chinese can be excused if they think that globalization sounds more than a little like an invitation to the premier crossing of the Titanic from Southampton to New York.

UPDATE: Just in case you had any doubts the inmates might indeed be running the insane asylum, read this.
(hat tip to Chris Masse).

Chris Masse’s excellent MidasOracle.org, which focuses mainly on prediction markets, has a posting called Journalism Failures – Big Time.

The Midas Oracle article links to an article by Risk magazine nominating Societe Generale as the equity derivatives house of the year.

(You better check out the link soon before the magazine’s management takes it down.)

In case you haven’t heard, Societe Generale has been having some problems lately. We’re talking about US$7B losses because of a rogue trader, which even with the dollar falling, is not chump change.

I couldn’t invent this kind of shit even if I wanted to, and I’m a pretty creative guy.

Now if this is the kind of advice the western risk experts dish out, kind of makes you wonder, doesn’t it?

I’d say that the Chinese way of the CEO making all the risky calls himself according to his or his mistress’s mood at the moment is more reliable, and maybe, even more scientific…

The emperor has no clothes.

Everything else being equal, it is safe to assume that human language-specific search should closely map to populations. For example, the US population is 300M, Canada’s is about 30M, the UK is about 60M, and Australia is about 15M and New Zealand is about 4M. These are the main English-speaking populations, and they total about 4.1B, and make up most English-language search. Of course, there are many other English speakers living in other countries, and there are many non-native speakers who also choose to search in English for their own reasons.

Most of them use Google as their leading search engine.

There are about 1.3B Chinese who use Chinese as their language of choice for search; for the most part, they use Baidu.

If the Chinese searched as much and as frequently as Americans, Canadians, Britons, Australians and New Zealanders combined, it is safe to assume that Baidu’s Chinese-language search would have about three times the volume of Google’s English language search.

This has not happened yet, but this report shows that the growth trend for Baidu’s Chinese language search is beginning, since it has already overtaken Microsoft, according to this report from Techcrunch. In China, Baidu commands more than 60% of the search market share, while Google’s Chinese-language search in China has only 20+%, and the gap appears to be growing…

In the US, Google is putting its efforts into the mobile Internet, and sees the mobile phone as soon replacing the PC-based Internet as the access device of choice for most people, even in the US. In China, South Korea, Japan and Europe, the mobile phone already is the access device used by most people, which accounts for the huge volume of SMS traffic.

Google Android is the major part of Google’s effort to define a mobile platform for communications. Since the Chinese carriers, especially China Mobile, and Baidu, have not yet defined an SDK for the mobile platform, many assume that Google will soon have a mobile strategy in China which will turn the tables on its Chinese competitors.

My answer to this: “Dream on…”

China Mobile has a well-deserved reputation as a very tough company to deal with in China, but they are not stupid…

The Economist has an excellent article on Rupert Murdoch which is in fact a review of a book titled: “Rupert’s Adverntures in China: How Murdoch Lost A Fortune and Found A Wife”.

All’s well that ends well…

It makes me wonder if the presence and performance of many western companies in China can be explained as company-financed executive wife searches?

Maybe Google should take heed.

As China becomes more developed and sophisticated, more westerners are coming to China to understand the reasons for its success. I don’t believe that the Chinese success can be fully ascribed to China’s rising wealth and development; a good deal also has to deal with how western countries have screwed up in their politics and policies.

In the kingdom of the blind, the one-eyed man is king. Right now, China is the one-eyed man.

Setting this aside, there are areas where China’s growth is remarkable.

In a recent blog posting, Henry Jenkins of MIT shows how much more willing Chinese youth are to live their lives out and share their behavior with complete strangers in a manner American youth are not yet willing to. Here are some of the statistics (mostly in percentages) of what he has observed:

# Almost five times as many Chinese as American respondents said they have a parallel life online (61 percent vs. 13 percent).

# More than twice as many Chinese respondents agreed that “I have experimented with how I present myself online” (69 percent vs. 28 percent of Americans).

# More than half the Chinese sample (51 percent) said they have adopted a completely different persona in some of their online interactions, compared with only 17 percent of Americans.

# Fewer than a third of Americans (30 percent) said the Internet helps their social life, but more than three-quarters of Chinese respondents (77 percent) agreed that “The Internet helps me make friends.”

# Chinese respondents were also more likely than Americans to say they have expressed personal opinions or written about themselves online (72 percent vs. 56 percent). And they have expressed themselves more strongly online than they generally do in person (52 percent vs. 43 percent of Americans).

# Chinese respondents were almost twice as likely as Americans to agree that it’s good to be able to express honest opinions anonymously online (79 percent vs. 42 percent) and to agree that online they are free to do and say things they would not do or say offline (73 percent vs. 32 percent).

Some of the differences can be accounted for because, until recently, Chinese played relatively few games using game consoles, an area American youth have long had free access and exposure to. Instead, they play games in the Internet cafe, which offers an online and offline social experience which has not existed until very recently on the Microsoft and Sony platforms, and which has been addressed very well with Nintendo’s Wii.

These statistics do not tell us much about China on their own; I frequently insist that if one is to really understand what makes China’s Internet different it is necessary to dig deeper and look at its development at least from the application level. If one were to make even the most cursory look at users in any Internet cafe in China, one would find that most if not all, would have an instant messaging (IM) window open and are chatting with their friends while they are playing an online game. Lately I have noticed that in the Starbucks I frequent near Guomao in Beijing (Starbucks in China often offers free WiFi, compared with the US which charges users a daily subscription through its partnership with T-Mobile; go figure), many office types often have an IM window open even when they are busily working through their Excel spreadsheets.

For this reason, I particularly welcome the recent report by Plus8Star on Tencent’s QQ which started as a simple IM client and has now metamorphosized into China’s largest online company, and which has more than than 270M users in China. Basically, it has become what AOL would have become if it had been able to pull everything off with its acquisition of ICQ in 1998. In fact, the first version of QQ was called OICQ, standing for “open ICQ”; in its early days the company approached AOL seeking to become its China partner; it was brushed off. Now the company is listed on the Hong Kong stock exchange and has a market cap of US$11.4B.

The report is available in a free downloadable PDF version; the full version costs US$3,000. The greatest value of this report for those coming into China is that it provides valuable context and answers the “how” and “why” China’s Internet has developed the way it has.

Too much of the time, western observers claim that China’s Internet has changed the way it has because of Chinese government control and policy; not enough is mentioned about the business reasons why local competitors have succeeded why western companies have failed. This reports does a good job of plugging that hole in most peoples’ knowledge.

The title of the report sums it up: “Inside QQ: Learning from China’s leading online community”. An especially helpful page is page 23 of the report “Why do global giants fail in China?”. There have been billions of dollars which have been expended, and mistakes have been repeated over and over again in their quest for western dominance of the Chinese consumer market. I’m amazed that it continues to this day. This page alone is worth the price of the whole report; just read it.

If you are a business person anxious to break into the Chinese consmer market, or are just interested in learning more about the Chinese Internet, this report is a must-read.

I have been spending some time researching Ruby on Rails, how it works, its development philosophy, and how it has affected web development, and will affect business in the near future.

The Ruby on Railsframework was released by David Heinemeier Hansson(it’s open source) in July 2004 has had a profound effect, and has been especially important in the development of the Web 2.0 movement.

Most importantly, Ruby on Rails simplifies the web development process through its “convention over configuration” and “Don’t repeat yourself” it fundamentally changes the role of the programmer in web development. Instead of asking questions like “How do I get function x to call method y?”, he is able to focus or how to do something, he is freed to focus more on the general business logic of the application.

This is why Ruby on Rails and the Agile software development movement go hand in hand. The Agile movement places a premium on human interaction and communication between programmers and business experts over software tools, process and methodology. The relationship between the Agile movement and Ruby on Rails is most clearly defined in the book Agile Web Development with Rails. Although the book is written for programmers, an intelligent lay reader and business person can also get a lot out of it, and understand the business implications of Agile development for web application development.

What does this mean? Basically, web application development as it is done by most businesses today is broken. Here are the two most common approaches:

• Designer-driven development. In this model, the client is non-technical and is more focused on “look and feel” than functionality. The web design firm uses Photoshop and Fireworks (or similiar applications) to create mockups to show the client. When the client finally selects the look and feel he likes, it is then handed over to the front-end developers to start coding the HTML, CSS, JavaScript and Flash files as necessary, while the backend developers create the databases and tables, and finally hook up the backend to the assets. The problem which happens when the website is prototyped, the client inevitably wants to make changes to the look and feel, and sometimes functionality. Changes to look and feel mean that assets have to be found, destroyed, created and moved around. Changes to functionality mean that new databases and tables have to be made and old ones destroyed. On the business side, this means that the projects inevitably go over budget, and often the client and web design end up in an unfriendly state of affairs.
• This is backend driven by database developers and developers who have good database and networking experience, and focus on creating the databases and tables, with little care, and often even less interest in the look and feel of the website. The most frequent result of this is a website which works fine on the functionality and business logic level but is butt-ugly. In projects of this kind the designers come in to mount rescue jobs, trying to turn a website only a mother could love into something which does not scare visitors away. In effect, the designers end up playing the role of the cosmetic surgeons in “Nip/Tuck”. Sometimes it works, often it doesn’t.

For a non-technical client more interested in creating a working application from the user point of view, this constant back and forth between client-side (front-end) design and backend programming throws them off completely from their established business goals. This is frequently made worse by the whole process: The client gives a brief then goes away, comps are submitted for approval by designers, then they go away, then the whole completed web application is shown to him, and he is expected to sign the check for the final payment with very little recourse if he is not pleased with the results, and all changes incur extra charges.By the time they have finished the project and made their final payment, they are often walking wounded.

Obviously, there is something very wrong with this development process. The designers get frustrated by limited client feedback until the project is nearly completed, the programmers get frustrated when the client changes the business logic, and the account people get frustrated at everyone, including the client.

This is what the Agile development process attempts to address. Basically, the client is asked to be fully engaged throughout the development process, sitting with the developers throughout and providing feedback all the while through while the developer is programming. The client can makes changes at anytime, and the website can even be tested in production mode to get user feedback, and more changes are made.

How is this made possible with Ruby on Rails? Since RoR is a framework, it creates default folders or directories in a basic configuration. The business logic is fixed by the MVC (model, view, controller) multitier architecture so that if the client wants to make changes, it is very easy to do so since the relevant files will always be in the same folders. There is no need to worry about where to find files to make changes. This design philosophy fits in very well with the web standards movement, which has focused on separating client-side development into HTML for structure, CSS for presentation and JavaScript for behavior on the browser side.

So how will Ruby on Rails change the role of the developer? It will no longer be enough for a programmer to be only a coder; a good developer will also have to understand business goals and user experience. With its emphasis on convention and process simplification, it is very likely that some of the best developers will come from client-side programming, while the best programmers will be those who have worked in business and understand business goals.

Does this mean that budgets for development will go down? In many cases it will probably be “yes”, but for developers who know how to understand communicate with their clients, and understand business, it’s more likely that their services will be especially in demand, and their fees will most likely go up.

Programming will be taken out of the lab, and it may well be that if you see two or three people sitting together over a notebook computer (most likely a MacBook Pro) in a cafe in Beijing, London or Pretoria, they are creating a new web application.

In the west, there is a whole industry called “risk consultancy”. Basically, this industry is built around informing large- and medium-sized corporations about risk. Originally, this was built around business risk and would answer questions like “How safe is it to invest $500M in an industrial diamond mine in the Congo (formerly Zaire)?” The consulting firm would then send practice consultants to the target country, where they would study sunk costs (including bribes which were never written about in the report, regulations, who was related to the president, political opposition, major competing firms, etc.) Most of these questions were positioned as questions which any board would ask the CEOs before they would greenlight an investment.

Underlying all this is the belief, at least in west and among western corporations that “risk” is something which can be quantified and measured objectively.

One of the big topics in the west now is China’s investments in Africa. What is fascinating about China’s investments in Africa is that while the amounts of money and people who go to Africa are huge, China really doesn’t have risk consultancies, and Chinese really have not yet started thinking in terms of quantifying risk in the ways western corporations have.

So how have the Chinese judged risk so far, and will the present method change over time to something more akin to the western way of thinking? When it comes to Chinese investments in Africa, many of the early-stage investments were a part of Chinese foreign policy aimed at securing raw materials for manufacturing, and more importantly, energy sources. The typical model has been to find a country, build a new palace for the president and a new sports stadium to win over the people. This would help state-owned construction firms to gain a footing in the country, which were then quickly followed by Chinese logistics firms and wholesale distribution firms which would sell products to the local African population.

Viewing the local African population as customers were one area where Chinese viewed Africa fundamentally differently from the west. While Beijing, Shanghai and the Chinese tier one and tier two cities are relatively modern, it is very easy to forget that when it comes to pervasive poverty, China is only 10-20 years removed from the levels of African poverty. Basically, Chinese companies know how to sell to poor people because they had lots of practice in China.

When you are working from a low cost basis, there really is not a whole lot of need to measure risk because the only way to go is up. Remember, in China labor is still very cheap compared to the west, and the Chinese government is always interested in keeping people employed in the interests of social stability. On the other hand, when you have large risks but your investments are backed by the Chinese government, there is not a need to measure them either. But things get complicated when you are in the middle, and are a mid-sized Chinese company (US50M-1B) which is private and are looking at Africa, as many are now.

Right now, the path many are taking is to send executives, management and staff wholesale to Africa, and basically telling them to figure things out on the ground. This is the Chinese version of “Let’s throw spaghetti at the wall and see what sticks” approach. But what happens when you don’t really have the protection of the Chinese government and local Chinese embassy, and the Africans start complaining that Chinese companies aren’t creating enough local jobs for local Africans? Obviously, these are the sorts of questions which are very complicated, since they include a social factor, in addition to the corporate and economic equation.

Will the Chinese companies turn to the western risk consultancies? Not likely. First of all, they are too expensive by Chinese standards; Chinese management is still very price-sensitive and is not likely to be willing to spend the large amounts which these companies charge. Also, they are not likely to entrust this kind of sensitive information to an outside firm which may recirculate some of the data for a competitor. Most Chinese companies are very tightly held, and risk is whatever the CEO thinks it is at that moment in time.

For western corporations which work from a high-cost basis, risk consulting is an item on “research” for executives, even though it may easily run into the millions of dollars.

For the Chinese, that’s way too much…

One of the frequent questions I run into in China is how western Internet companies coming into China should position themselves for growth in China.

Should they try to be western, or should they try in the shortest possible time, try to become Chinese, hiring Chinese for their local staff and management? Under what circumstances is it best to be western, and under what circumstances is it best to be Chinese? And what if a company has been in Taiwan, Hong Kong and/or the US; how should they position themselves for future growth in the Chinese market?

Their positions are made more complicated because it is now hard to find good management people they can trust locally in China; as an organization becomes larger the camaraderie and culture which forms in the management team becomes increasingly important. Over time, this builds into trust, especially if they need to deal with problems and challenges which need to be overcome on a daily basis. This comes face to face with another China reality: it simply is not easy to find people you can trust in China. Backgrounds can be fudged, headhunters want to push their candidates; the list goes on and on.

Internet businesses are especially complicated; most founders come from technology backgrounds, even today, and they have very little understanding of marketing, company positioning, and yes, national and corporate culture. Many still have dreams of serving the world from one virtual data center in Redmond, Mountain View, Beijing, Hong Kong or elsewhere, and letting more junior management deal with the soft and fuzzy stuff like “culture” and “marketing”. Even relying on ethnic Chinese management from Taiwan or Hong Kong has not really worked, as China is littered with Internet startup failures led by Taiwan and Hong Kong management teams who really did not understand the dynamics of the market in China. There have been many western executives who have said “How was I supposed to know that they didn’t understand China; they told me that they were from Hong Kong/Taiwan?”

For anyone from established business service sectors, such as banking, these ideas seem silly, even foolish. And they are. A simple reality of the Internet is that it is going to come under more national jurisdictions and regulations as it becomes a more important part of peoples’ lives. Just as it is inconceivable that banking would not be government regulated (unless you count the ongoing subprime mortgage crisis as a failure of the government’s regulatory system), it is becoming inconceivable that the Chinese, US or other governments would not want to have a say in how the Internet is run.

These established sectors know only too well how important it is to somehow find a way to live with government regulatory bodies. In China, successful new startups have almost always come from new areas which the Chinese government has not figured out regulations about and does not yet know how to regulate.

The perfect example is the online gaming industry. This industry was basically an import from South Korea, and took root in China because gaming consoles are technically illegal. (Sony PS2 and 3, Nintendo Wii and xBox360 are all freely sold; that law is seldom enforced, and all of the games sold are cracked versions.) The Chinese government’s rationale for that law was because way back in the nineties, the Chinese government saw PCs as a valuable educational tool, but considered gaming consoles to be expensive frivolous tools for kids to waste their time. At a time when the Chinese had much less buying power than they do today, it seemed like a good idea to ban gaming consoles.

This created an opportunity for Shanda, which was the first company to launch online games (almost all from South Korea) in the Chinese market. This idea caught fire with many younger Chinese and spawned the Internet cafe industry, where many younger Chinese choose to spend/waste their time and has also popularized QQ, the ultimate social networking application if there ever was one, and which for many Chinese, is the Internet.

This industry has swiftly matured, and with success has come regulation. Online gaming companies have tried to adapt, some have adapted (or tried to adapt) by moving into the online game publishing business from online game distribution. The transition from online game distribution to online game publishing has been a rocky road for companies like Shanda. The company has in the past acquired studios and titles, but many of the creative pros have left post-acquisition. A new wave of game publishers with strong titles have come up, led by Perfect World and the highly-contentious Giant Interactive.

On the regulatory and marketing fronts, the online game publishing company has become a victim of its own success: the huge amount of revenue it generates has created something the government and other regulators call a “social problem”, and it has fallen into a rut on the creative side, adding more titles in what are basically the same genre with very little to differentiate each other. The result: titles with diminishing shelf lives and ROI. People who are not addicted to games (i.e. people who have lives) have an increasingly bad view of the industry and game titles.

Unless you have some way to break out of your core audience, which is exactly what Nintendo did with the Wii. The greatest contribution of the Wii is that it has forced people to take a second look at gaming, as something other than just frivolous entertainment which wastes a lot of time and is anti-social for people who do not play games. (Heavy game players would argue that game players are social; they are just online.)

So the Nintendo Wii is halfway there; it has offered a new paradigm for games and gaming.

Now, if gaming is going to really succeed, it will have to get non-gamers to think that they are not playing a game. Then we are talking breakout.

And the game publishers (creative people) will have to learn how to get along and work with the marketing pros, and will have to understand that there is much more to marketing than press releases, press conferences, paying off the media to pick up their stories, planting stories and fake planted conversations on Chinese BBSes, etc.

To really go big, they will rely on a new class of professional and and a new kind of strike force.

We’re not there yet, and we’re not moving fast enough. But there is a way.

I believe in the value of history, but I also believe that there are times when we have to stop referencing the past for what we do in the future.

This is one of those times.