There is a great deal of advice in the world for entrepreneurs, and some of it is contradictory. There are fits and starts and there is occasional follow-through. There is plenty of formula, but each situation is different. There are charts and relational schematics, there is data and visualization, and at times the result is like a ball of yarn all tangled up in a mess that denotes the competitive environment. And yet, most situations are simple when stripped down to an elemental core. Elements are pure and the core of most subjects is accessible; but organized thought is required. Sometimes this is a matter of reduction, sometimes elimination, or it needs lining up in an ordered row, and it’s always a matter of filtering out excess. There is plenty of that.

The ancients, I’ve tended to conclude, were better suited to the task, better conditioned for clarity. Maybe they had more time on their hands, or maybe they were more patient, more meticulous, in carrying arguments through. Sometimes, although not often enough, when I am able to hide away and block out the noise, I try to remember the ancients. If read figuratively rather than for literal meaning, the parallels and lessons for business building are almost startling in these ancients. The Republic, for instance, is not only a treatise on the building of a city, and The Politics is also about preparation and execution. There is a wealth of such material worthy of keeping on one’s shelf, and just knowing that it’s around sort of clears one’s head.

There are, as well, one or two books for the nightstand. These are not quite as actionable, strictly speaking, as the aforementioned. Those being for the day, as it were, these others are for bedtime. In ways these are meant for balance and easier rest, to keep readers and other decision makers grounded: The Meditations and The Book of Ecclesiastes come to mind. Calculation, clarity, strategy, vision, management and all that, are well and good, but one shouldn’t ever lose one’s cool and forget the truth of seasons, tides, and the sun’s rotation. The ancients, I think, were mindful of this also.

In the four spheres of media – social, information, entertainment and transactional – we look to Facebook, Google, Apple and Amazon respectively for illustration. That Facebook benefits from network effect is essentially a given, and after years of building one’s user profile and accumulating associations, a subscriber’s cost to discontinue use is almost frighteningly real. The other three have networks of their own, and switching cost strategies that go hand in glove, although perhaps less obviously. These often have to do with hardware and software combination, or with the blending of other seemingly disparate codependencies: payment systems, messaging tools, email protocols, recommendation engines, file storage, device integration, retail outlets, and other imaginative ways of building consumer dependence in an otherwise commoditized environment.

An iTunes library, for example, is something you wouldn’t want to lose, and when access to this is consolidated across multiple devices – iPhone, iPad, iPod, MacBook – you probably don’t want to lose these either. You probably want to upgrade, in fact, and visit the Apple store on occasion to keep up with the latest. This is network effect also, in a sense, and now that iMessages are being rolled out across the spectrum of products, the network is no longer merely proverbial. Seen in this context, Amazon’s aggressive move into hardware and integrated software and eBooks and now also a store outlet is almost a perfect replica. In this context, again, Gmail and Wallet and (coming soon) Drive and all the other apps and paraphernalia in the Android ecosystem are a collection of hooks to grab us back. A time may come when a more popular search experience is introduced elsewhere, and then these hooks could really prove their mettle.

As we consider these and related sector trends – strategies pursued and behavior observed – the thought occurs that social networks are not the only networks in new media realms. The thought also occurs that old networks – the telephone and cable systems – are losing some of their fabled cachet. This leads us to consider: In an environment of media innovation on one hand and technical commoditization on the other, network effect requires constant nurturing, and switching costs have always to be multiplied.

And now, as if to mock the suffering of fans all over New York and in an especial way as to leave no doubt about the mockery, the Knicks have produced a legitimate sensation (although, in fairness, they did stumble upon him bass-ackwards), are on a five-game win-streak with a cast of rookies, journeymen, and castoffs, the whole world gets to watch and cheer… but New Yorkers do not. From the perspective of art, I have to say this is genius. This sets a new standard of irony that will be hard to match, even in New York. (For those of you who are not aware, Knicks games are not televised by the local cable system this season on account of a contract dispute. The situation had escaped the notice of many locals until recently, because, you know, so many of us had reached a point of inertia vis-à-vis caring.)

All of which said, there is no better time to formulate opinions than when one doesn’t have full access to the matter at hand. The more informed one is, the more complicated and nuanced a subject becomes, and you get to a point of paralysis eventually. Not so with the Knicks, it’s a very simple subject, and rendered more so because none of us have seen them play. At the beginning of the season I was contacted by an old friend, who, aware of my long suffering, was cheering me on with the All Star front line the Knicks had accumulated. I questioned his optimism, in part because it’s been a long ten years, but mainly because of this: basketball is a game of chemistry and rhythm. Unlike, say, baseball, where individual statistics rule, basketball is not about numbers in isolation but about striking the right formula. It isn’t easily predictable, and far more complex a task than accumulating talent.

With history as a guide, let’s take a look: Michael began his legendary run only when the right coach with the right system were introduced; Shaquille, with the same coach, still needed the right partner, who wasn’t his first; the San Antonio Spurs have won their litany of titles with one of the lower payrolls in the league and a revolving door around a systemic core; and even the current Heat with three of the current league’s best have had to implement a system in which each of the three has made substantial adjustments: It’s the system, the chemistry, the formula, not merely the statistics. In the case of the Knicks, we note that their recent success has come precisely in the absence of the All Star flash, two of which players have not participated in this stretch of games.

Somewhere I saw someone post that the next commentary he sees about Jeremy Lin and the Knicks as analogous to enterprise building will prompt him to stop reading. I understand and sympathize. So let’s say that my commentary is not about any of that, let’s say that it’s strictly about the notion that success begins with a system and is perfected by chemistry. Let’s say that this is not only about business, but about many things. And let’s say that sports can teach us many lessons, and that ten years of suffering by Knicks fans has not been for naught.

This reduction is a necessary step in technological evolution, which in the last century (and the last decade even), has made huge strides. But there is a risk, I think, in premature celebration and basking in the glow of what is still an intermediate step. If our digital solutions end here, if our communication mechanisms stop at the current 1s and 0s and simplistic LOLs, this will have been an underachievement. The next goal, at least to my way of thinking, should be to capture the space between the digits, the nuance; and when this occurs – when the grandeur of analog is recaptured by digital – the truer potential of technology should be one step closer to realization. (Artificial intelligence, as a general field, is possibly the forefront in this effort, and it is indeed a very large field and work-in-progress. Siri itself would undoubtedly confess to that, in its monotone.)

To ellaborate the point, and what got me thinking about these digital subjects recently, let’s sample three different Bob Dylan releases of Idiot Wind. Each is the same melody, with more or less the same lyrics, telling the same story (“Someone’s got it in for me, they’re printing stories in the press…”) in the same key with the same chords. And yet, each is an entirely different song because the author’s voice is different in each of them. There is the Blood on the Tracks official-release version, marked by anger, defiance, and occasional sarcasm; there is the outtake in the Bootleg Series, on which the voice is toned down and the song becomes a melancholy, often heart-wrenching, reflection; and there is the live rendition on Hard Rain, care-free, liberated, almost jubilant. The same song, three different songs… and what galaxies of meaning there are surely in each trifle of an LOL.

The point here, again, is not to pick on text messaging or emoticons or social graphs and big data and high-frequency trading, but only to illustrate the diminishing and constraining quality of these methods that underly much of our communication and digital technology. To continue with the analogy, these are often like song lyrics read in the manner of text, in isolation, without melody, tonality, and the singer’s interpretation. From the perspective of the audience, these are like mere boos or cheers, 1s and 0s, the only possible reaction.

Nor is the point to pick on technology and its many gifts – that have caused such advances in science, economies and human progress. The commentary, rather, is in relation to the distance that must still be traveled before we can rest (if even then). And on some level, I suppose, it’s also a call that we shouldn’t settle, content to reside in some demographic definition, some trading algorithm, some social graph. These are all intermediate stages towards a goal, means to other means to others, and so on, rather than a discrete conclusion. Anyway, I was thinking about these things the other day as I was listening to Bob Dylan.

The reason for the introductory bombast is more than stylistic, and really quite substantive; it has to do with valuation. As the punditry are already circulating financial metrics and operating assumptions, seeking to benchmark these against an expected $75-100 billion reported value range, I say this already misses the point. Because Facebook is not merely a large business, or merely a dominant product, but rather a global network with its precedent elsewhere. Were Facebook a growing and substantial business alone, were it a utility only, then revenue multiples and such conventional analysis would apply. As a global interconnection of massive scale, however, as a standard of interpersonal communication – like, possibly, the telephone or email before it – conventional analysis is rendered secondary.

Let’s assume for a moment that Facebook’s current revenue model collapses immediately. Let’s assume that advertising goes away. Does this mean that a network of 800 million registered users has lost its value? This would imply that the value of a global network of such scale resides within the confines of foreseeable business prospects, which begs the following question: If email or phone technology were owned by one entity, would its current monetization mechanism really matter or would its existence alone suffice? The rhetorical point being this: A network transcends fleeting business models and products that come and go. A network makes business and products possible, and it can’t be circumvented.

Valuing such a thing, putting a number to it precisely, is no easy feat. If absolutely pressed, I’d be inclined to go with something like a customer lifetime value calculation, but staring into the unknown. I would ask myself: How much, on a present value basis, would the total of all current and future entities in this world pay Facebook to gain access to its average current user? This is overly simplistic, of course, because the user base grows and also churns with time, and a lot depends on which of these outpaces the other. A lot also depends on the cost to maintain the user base and secure the network, whether growing or shrinking, and capital cost plays a circular sort of role in the calculation, as always. It is not an easy trip, like I said, but we should at least start on the proper track, in the correct direction; I don’t believe conventional metrics are appropriate.

In coming months we should expect a great deal of arguing to happen, as is fitting for a financial event that defines our era. When the dust settles and the deal gets priced, the market will have, as always, passed its sage judgment. When this occurs, I would look for Facebook to become the benchmark against which other digital media businesses are valued, rather than the other way around, and I would look for standards to be established on its basis.

February 3 Update:

Facebook has filed its S-1, as expected, to launch its monumental IPO. As is natural, the punditry and analyst community have been vocal, and my partners and I at CoRise have contributed to the dialogue. Please see our overview presentation, seeking to develop the ideas expressed in the preceding commentary and to quantify some of the variables described. This may be accessed through our website or directly here.

I still think this, a year later, and because it is a year later and evidence keeps pouring in, I now think a little more. It was my recent introduction to Instagram that planted the seed. A friend turned me on to the picture sharing platform the other day. As I played around with it and as it quickly grew on me (I had been a viewer but now also as contributor), it dawned on me that social networks are different from applications – say, search – because networks mirror our mental processes and the variety of our daily existence, while applications are strictly utilitarian. Instagram is about as pure an illustration of what I mean, functioning as it does as an outlet for its users to describe how they see. By the same token, Spotify or other music networks are a reflection of how they hear. To extend this reasoning a bit more broadly, Twitter is an outlet for how we think (sure enough, in snippets), Facebook for what we like, Foursquare for where we go, LinkedIn for what we do.

More than to (hopefully not) state the obvious – and certainly not to diminish the scope of large global platforms – the point of the above is principally to say this: Just as we don’t, strictly speaking, see with our ears or hear with our eyes, we have tended not to intermingle the networks that reflect our assorted states. And unlike our use of functional applications – say, search – which is perhaps more truly attributable to habit, social networks are profound elements of who or what we are. A corollary to this generalization is that a utilitarian application – a search engine, for instance – depending as it might on mere habit in a commoditized environment, will be at risk of being displaced (because habits can be broken), while a network is much less exposed to this risk. It also follows that elemental networks have an ingrained asset-value that functional applications have to perpetually build.

Having jotted down these thoughts, I’m going to post a link on Twitter, which is where my snippets are carried every day. Because this article relates to sector analysis and certain stocks, I’ll take it directly to StockTwits, where the audience shares my analytic interests most of all. Follow me there, if you like, or if you’re curious to see how I see, check out this batch of pictures I loaded up on Instagram. These were taken on a recent trip to Los Angeles, which is a city I love.

Mainly, I suppose, this is driven by the reality that all enterprise takes place in a market, and markets consist of people. All business is operated by people, and as much as scientists try to explain human activity with formula, there is no formula for people; artists have done a much more masterful job depicting, if not explaining, the slippery subject. And this is where the little print of the cited article becomes, frankly, annoying: Oh I don’t know… some stuff about some portion of the brain that responds to fiction in some scientific way; some condescending reference to Henry James, who was apparently right just by accident, unwittingly, when he put forth that ”a novel is a direct impression of life,” because only now can we confirm this observation scientifically; and worst of all, there is a fiction reading-list selected for business people on the basis of plots about business and its people. This misses the point altogether – I think – of business creativity and business building; of, in a word, entrepreneurship.

I do not even know where to begin, and I won’t. Let me only suggest that entrepreneurship – and most business people are entrepreneurs, whether realizing this or not - and Anthony Trollope don’t actually mix, even if the author wrote a book about a business person once. (Any entrepreneur who has finished the full length of a Trollope novel by choice and enjoyment should consider an alternate career, urgently.) For a book to speak to entrepreneurs it doesn’t need to be about a business person, or a business motive, or a business setting. It only has to be truthful, and real. It only has to be beautiful. It doesn’t even, you know, have to be a book. It could just as easily be some other thing, say, a city.

The extent to which this field is truly new or is just now getting more widespread attention is debatable. Although the concept was perhaps around for many years, if not decades in one form or another, perhaps it now more truly “exists” because it has a name: Big Data. (It’s catchy, a little bit like a frat bro’s nickname, at least at the more technical schools.) Regardless of when the field was in actuality born, it’s fair to say that it too, like other invented products before, is undergoing evolution. It is an enormously complex product – much more so than the wheel, at least in some ways – that incorporates issues of science as well as law, art as well as commerce, consumption as well as production. It is a highly specialized field, in which expertise is difficult to come by. I’m not an expert, but working very hard to learn.

An initial conclusion that I draw – reserving the right to change my mind as I learn more about the subject – is that, like other invented products, big data will follow an evolutionary path to commoditization. From up in the clouds, the landscape and its horizon are looking roughly as follows:

Let’s call the starting point creation, which is the collection or accumulation of massive amounts of data in a variety of on- and off-line platforms. The subsequent locale is analysis, an increasingly popular neighborhood of which is visualization. This allows our minds to extract meaning from otherwise impossible jumbles of raw information. Analysis has been with us since the point of creation, but visualization is now coming to its own, and it truly makes a world of difference: Images and symbols often convey a rich message, despite the seeming superficiality.

The next destination along the path is going to be valuation, which is not only an appraisal of product worth, but also a setting of standards. The two disciplines are closely related, and one drives the other as much as vice versa. While data is being collected and visualized, in many cases for the first time, we are still in a state of excitement, as it were, discovering new ways to play with this big data toy we now hold. Some of these ways will have not much more than entertainment value, while others will transcend the razzle-dazzle. As the distinction between the two and the nuances in between fall into place, so too will processes and procedures and standards of measure and accepted practice… And the next step from that – when the mystery and unlimited potential have been revealed and thus narrowed – is price competition: More generally termed, commoditization.

This is not to say that big data will necessarily be bought or sold, although a lot of it will be and already is – directly or indirectly – but its relative merits, its differentiators, are prone to become standard. This follows the theme of all invented products, and it isn’t to say that these turn obsolete. The wheel hasn’t, but the differences between one wheel and another have turned minor. So too, a time may come when differences between one dataset and another will not be a matter of quality as much as quantity. If so, the label Big Data may prove to be more correct than we might currently imagine.

When I saw the music headline described above, the one with 300,000 labels, at first I thought there was a typo, that the subject was in fact artists. (That too would have been quite a number.) But it was actually labels, 300,000 of these, which is a reality so far beyond my comprehension that it may as well be 18 million or infinity, or, in a certain sense, zero. The point here is not only one of individual dilution, but the impact that this has on the value of the whole. The travails of the music industry have been widely remarked upon, and one has to wonder if the mounting piles of product are a solution or a cause. When the tech blogger complains about his Facebook experience, as indicated, it is because the numbers to keep up with are so staggering that he’s reached a point where he can’t be bothered anymore.

The idea around which I’ve been dancing is not so much about curation, which has to do with filtering and delivery of disparate objects into a pool that is manageable for human experience. This is part of it, but doesn’t quite arrive at the essence of where I’m going. Because curation, in its currently understood form (for instance, RSS feeds or Twitter follows), is only an organization of fragmented pieces and the delivery of these to a fragmented user base. The fragmentation is no less pronounced, but is merely transfered from one side of the transaction to the other. Rather, I’m thinking about consolidation. I’m thinking about the social importance of the “water cooler” and the value of personal bonds.

Here is what I mean: At the time I was in high school Emotional Rescue and Tattoo You were being released. We all knew the songs by heart, backwards and forwards, and we cracked jokes about Keith as if he was in our inner circle. We did not have access to 300,000 indie labels, but we bought bootleg recordings of the Stones down in the Village. We did this together, and if some of us still listen to those tracks it may be as much for the lasting quality of the music as the depth of the experience back in the day. A decade or so later, Seinfeld captured our imagination, and I vividly remember the mob scene around a television monitor in LAX, when the final episode aired while I was waiting for a redeye back home. I think we would find philosophy, enjoyment, lessons, or wonderment, in a shoe – not that any of these examples are comparable – if that was our only subject and our only reason to congregate. The congregation is all-important… content misses its mark without it.

Fast-forward to January 2012 – the 300,000 music labels and the millions of artists, the thousands of Facebook friends, the endless Twitter stream and the countless bloggers – and we begin to suspect that, contrary to the accepted belief about openness and flow, the congregation is being undermined. It is a physical impossibility to keep up, and the common ground between one person’s keeping up and another’s is narrower than it might be. The evolution of modern media has taken us from the birth of the Internet to vast content fragmentation and more recently to the curation and sorting of content within this massive universe. The next wave, if history and common sense serve as a guide, will be a return to congregation. Perhaps we are seeing early manifestations of this coming wave in specialized networks and in the comment sections of certain blogs.

We tend to be reminded of our humanity more in our failures than our successes, and the greatest technical successes happen when humanity is remembered. The success of a leading technology entrepreneur and investor was largely determined when his fiancé lost her engagement ring in a movie theater. The succes of another began with the study of penmanship and its artistic meanings. By the same token, when complex products fail it might be for the simplest reasons. A software project depended on coordination of teams; a promotional campaign was run at the wrong time of day. Human behavior, human motives and decisions – not access to tools – were at the core.

Certain action movies are worthwhile to see beyond the entertainment value, because these sometimes impart lessons about business. Action movies are certainly closer to the subject than, say, romantic comedies, or at least should be. The latest installment in the series is Mission Impossible, in which a small team with access to the most sophisticated gadgetry that modern engineering has to offer, succeeds in its mission – I don’t think I’m giving anything away here, does anyone going into the theater actually think Tom Cruise will fail? – on account of a well-timed kiss. Aspects of leadership, chemistry, planning, and communication are also interesting to observe – during the fifteen minutes or so of non-action sequences – without which the technical execution that dominates the plot would have (in theory) been a discombobulated mess.

These musings are hopefully as interesting to others as they are to me, because, in my case at least, these serve as a reminder of basic principles in enterprise and investing that, at least for me, require a conscious effort to remember. The way to judge the merits of technology and innovation, of startups as well as mature businesses, is not only on the basis of technology (and innovation). These qualities may in fact be the least important aspects, in the last analysis. Neither Twitter nor Facebook nor Groupon nor Zynga nor Amazon – nor, truth be told, Apple – are based on major technical breakthroughs, but all these have touched on human fundamentals. The next major breakthrough, which may not be in the consumer area, will likely follow the same precept.