Edge Perspectives with John Hagel

Ready for Web 3.0?

Are we really ready for Web 3.0?  Phil Wainewright seems to think so.  In a series of postings here, here, here and here, he  argues that we are embarking on a transition to Web 3.0.

I have enormous respect for Phil, one of the most insightful analysts regarding software trends.  I am a loyal reader of both his Loosely Coupled and Software as Services blog. But, having participated in the discussion about the emergence of Web 2.0 here and here, I have to admit that I am a bit skeptical about rushing to announce the arrival of Web 3.0.

What Phil really seems to be talking about is the migration into the enterprise space of many of the technologies that are shaping Web 2.0 in the consumer arena. As Phil suggests, this is part of the broader “consumerization” of IT.  This is an important development and it is only in its earliest stages.

One significant barrier delaying deployment of these technologies is the cultural gap separating many of the early pioneers of Web 2.0 initiatives and enterprise CIOs. The pioneers of Web 2.0 generally view large enterprises as dinosaurs. Enterprise CIOs, if they are even aware of developments associated with Web 2.0, tend to dismiss them as marginal novelties with little relevance for “real” business. 

One of the few large enterprise CIOs to anticipate and act on Web 2.0 developments is JP Rangaswami, CIO of the global investment bank Dresdner Kleinwort Wasserstein. Phil has just returned from a gathering organized by JP to explore new principles of software architecture for the enterprise that he discusses here and here.

Phil believes the on-demand architectures that are re-shaping Web 2.0 consumer applications will have an even more profound impact on the enterprise marketplace:

Don’t be surprised, then, if Web 2.0 also turns out to be just a staging post on the way to a much more mature and durable Web 3.0 era. . . . As with any shift from one generation to the next, there’s plenty of scope for new leaders to emerge – and for established front-runners to stumble – in the battle for supremacy.

I take all that as a given, but I still resist categorizing this change as “Web 3.0” (I have even more trouble with Phil’s more recent efforts to label this change as “Enterprise 3.0” – by my count, enterprises have been through at least five or six major generations of technology shifts).

Phil is focusing on two related changes. First, the emergence of the traditional enterprise as a significant new customer set for the technologies that are shaping Web 2.0.  Second, and related to the first, an urgent need to define and deploy more sustainable business models. In particular, he has been hammering appropriately on the need to define other revenue models beyond advertising for the enterprise market. But these are not profound technology shifts.  These are marketing opportunities and business challenges created by Web 2.0 technology.

Certainly the building blocks in the form of XML, RSS and Ajax (among others) are all in place. Yes, a profound re-architecture of software applications will be required to effectively exploit these technologies in the enterprise market (a while back, Phil did a great riff on Same old Software, as a Service driving home this point), but there is still a profound re-architecture of software applications pending in the consumer space as well.

Bottom line, if you take the definition of Web 2.0 that I offered in a previous post - "Web 2.0 refers to an emerging network-centric platform to support distributed, collaborative and cumulative creation by its users" - the issues identified by Phil all fit comfortably within this definition. Phil is discussing with great insight how Web 2.0 will play out in the enterprise market, something that few others have even addressed – but he is not pointing to a new generation of foundation technology.

I have two reservations about Phil’s specific perspectives on the migration of these new technologies into the enterprise:

• Phil suggests that application services will be the most economically attractive layer in this new software architecture. I am more skeptical – these application services will certainly be profitable, but will they be scalable?  I suspect that most application services will address very profitable, but very small, niches. The real way to create scalable value in this new world will be to find out how to become someone else’s platform - in other words, to persuade others to develop services on top of one's own services. Rather than thinking about software as a service, from my perspective, it will be much more productive and rewarding the re-conceive software as a platform, but that’s the topic for another posting.

• Phil doesn’t explicitly discuss the potential for service grids in his topology (although they might be implicitly covered in his notion of aggregation services).  JSB and I have written about service grids here (pdf) and here (abstract only, purchase required).  We continue to believe these will be a significant source of value creation, especially as Web 2.0 technologies disseminate into and across enterprises. Ensuring that services are reliable, secure and warranted will be critical - and more and more challenging as services get nested in more complex ways within other services.

Unbundling Time Warner

Having lived through decades of M&A in the media industry, we are now on the cusp of another major restructuring of the industry. The previous rounds of M&A focused on two objectives: vertical integration tying content businesses with major distribution channels and efforts to build scale by buying properties across different media types. It is becoming increasingly obvious that neither strategy works very well.

The battle by Carl Icahn and Bruce Wasserstein to mobilize investor support for a break-up of Time Warner is one early indicator of the coming restructuring. Icahn and Wasserstein want to break-up Time Warner into four separate companies – the AOL Internet business, Time Warner Cable, the print publishing business and the video and movie business. Yesterday, Steve Case joined Icahn and Wasserstein in advocating a break-up of Time Warner, indicating that he had proposed this move to Time Warner’s Board of Directors last July, shortly before resigning as a Director of Time Warner.  In a column in the Washington Post, Case indicated that:

Although I played a key role in bringing AOL and Time Warner together six years ago, it's now my view that it would be best to "undo" the merger by splitting Time Warner into several independent companies and allowing AOL to set off on its own path.

At one level, Icahn, Wasserstein and Case have it right.  The earlier wave of M&A was largely driven by an assumption that physical distribution channels (e.g., broadcast or cable channels and movie theaters) were the key bottleneck in the media business.  If you didn’t own your own distribution channels or build sufficient scale to achieve greater negotiating power with distribution channels, the thinking went, your content businesses would be at a permanent disadvantage.  The growth of the Internet challenges this assumption at its core.

As the bandwidth of Internet connections, both wireline and wireless, steadily increases, physical distribution constraints erode rapidly.  But media companies face a different challenge and opportunity that could provide a basis for restructuring the media business. We are seeing content proliferate and a new bottleneck emerging: our attention. We each have only 24 hours of attention each day – no amount of technology innovation will change that basic fact of life. How we choose to allocate that attention among a growing array of options competing for our attention will determine who creates value and who destroys value. I have posted about the significance of this development in transforming brands.

This same development will also force a restructuring of the media industry.  Content will not be king – audiences will be king.  The largest media companies will restructure around specific audiences.  Several years ago, I used Martha Stewart as an early example of this new strategy. Martha Stewart has a very specific audience focus – homemakers – and she has built a new kind of media conglomerate consisting of media properties all focused on addressing the needs and interests of this one audience.  She has steadily expanded her share of mind of this audience and, increasingly, also her share of wallet (through direct marketing on her Internet properties and through her branded product offerings available in retail channels). Stewart is not alone in this – many celebrities (for example, Oprah Winfrey and Russell Simmons) have started to build media conglomerates targeted to specific audiences.

In contrast to Martha Stewart, I looked at Time Warner three years ago and offered the following advice (reproduced with a few minor edits):

• Divest the distribution business and retain the content business.

• Create audience segment business units to address specific audiences that are economically attractive and fit with some of Time Warner’s existing properties - some natural examples: business executives, sports enthusiasts and teen-agers.

• Assign content businesses to report to specific audience segment business units (e.g., Sports Illustrated would report to the sports enthusiast business unit) or establish content production businesses as shared services units (e.g., Warner Brothers movie studio) to support the targeted audience segments

• Build distinctive overarching audience-centric media brands aggressively

• Invest in businesses and skill sets to deepen database marketing capabilities

• Acquire businesses selectively to broaden share of attention and share of wallet within targeted audience segments and develop licensing relationships to access an even broader range of relevant resources to serve target audience segments.

That was three years ago.  My recommendations still stand, not only for Time Warner, but for the other four major US media companies – Disney (which actually would face the least amount of restructuring, given its traditional focus on parents with small children as a distinctive audience), NBC Universal, News Corporation and Viacom.

For these media conglomerates, this kind of restructuring would be the only viable option to the break-up championed by Icahn and Wasserstein. It would require a significant shift in mindset, organizational structure and skills. In the terms of my broader perspective on the unbundling of companies, these companies would need to morph from a portfolio of product commercialization businesses to a portfolio of customer relationship businesses. If successful, the specific content assets of these reconstructed companies would eventually become secondary. Their primary asset would be deep relationships built with individual members of specific audience segments. Companies targeting large audience segments could achieve significant scale by leveraging powerful network effects.

The alternative is simple: the managers of these unwieldy conglomerates should unbundle their product businesses. This would let the owners of the independent and focused content businesses develop the edge competencies that Umair Haque argues will be required to maximize the value of content assets in the networked media world. Their survival will depend upon it. If they don’t do it to themselves, impatient investors will do it for them.

Dubai - Global Talent Magnet

Dubai is not China or India.  Far from it.  In fact, in terms of population, it is entirely at the other end of the scale.  But, having just returned from a trip there, I came back with a growing sense that Dubai has an opportunity to become a much more significant player in the global economy.

Urgency

What Dubai has in common with China and India is a sense of urgency.  This urgency is deep and it is pervasive, starting at the top with Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s crown prince and de facto leader of the country. Mohamed Ali Alabbar, the founder and chairman of Emaar, one of the leading real estate development companies in Dubai, provided an example of this urgency in a recent article:

This region is way behind all the regions of the world, except sub-Saharan Africa.  There’s no time to stop, the world is so advanced compared to us, we’ve been sleeping for so long.

Unlike many of its Arab neighbors, Dubai’s oil is going to run out soon, some time in the next 5 to 15 years. From the outset, Dubai has been serious about using its oil revenue to bootstrap its way into a much more diversified economy.  While Dubai can continue to prosper from the petroleum wealth of its neighbors, Dubai’s aspirations are much grander.  As grand as these aspirations are, Dubai has even greater potential.

Dubai, along with Abu Dhabi, is one of the most significant participants in the United Arab Emirates, a federation of Arab states along the Arabian Gulf.  The people of Dubai have historically been traders, successfully participating in both regional and global trade flows. Over the past 30 years, Dubai found innovative new ways to play the role of middleman. I spent quite a bit of time in Dubai almost 30 years ago and the transformation since then has been staggering.

The development of a vibrant tourist industry is the most apparent transformation. One source of urgency on this front involves the troubles further north in Beirut.  Thirty years ago, Beirut was a key tourist center for the Middle East.  Famed for its cosmopolitan atmosphere and wonderful climate, Beirut attracted affluent tourists from the rest of the Middle East as well as from Europe.  After the civil war broke out in Lebanon in the 1970’s, Dubai saw an opportunity to step into the vacuum and launched an ambitious program to establish itself as a major tourist destination. But Dubai had a limited window – as the civil war subsided (even if random car bombings continue to scare away more risk averse tourists), entrepreneurs were scrambling to re-establish Beirut as a regional pleasure center. With a less accommodating climate (temperatures in the summer average 104 degrees Farenheit), Dubai sought to compete with Beirut in terms of physical facilities.

The building boom

The construction boom playing out is awe-inspiring as Dubai seeks to establish itself as a combination Miami/Orlando (another analogy would be Las Vegas, but Dubai lacks the gambling) for tourists from Europe, Asia and Africa. Extraordinary resort complexes continue to rise along the beaches of Dubai. Hotels compete for opulence – the winner so far is the Burj al Arab, the world’s tallest hotel built on an artificial island and boasting a distinctive and eye-catching shape like a spinnaker filled with wind. The Burj al Arab bills itself as the world’s only seven-star hotel, with Rolls Royces and helicopters ready to ferry its guests to and from Dubai’s airport. Among many other hotel projects, plans are under way to build the Hydropolis, a large five star hotel completely under water in the Arabian Gulf.

Since beach real estate was relatively limited, Dubai addressed that natural constraint by launching massive programs to fill in land in the Arabian Gulf, initially in the shape of massive palm trees (the first – and smallest – of these covers an area of several square miles) and then in the shape of the world itself (I kid you not, The World is a major real estate development three miles off Dubai’s coast consisting of over three hundred man-made islands designed to mirror a map of the world – interested investors can buy an island in the shape of France or India). These developments will create almost 400 miles of new waterfront property to augment the 40 miles of natural beachfront. Hotels will occupy some of this new land, but an increasing amount of the land is being set aside for posh villas and apartments. Residential developments sell out almost as quickly as they are announced.

Dubai lacks much in the way of natural attractions other than desert (covering over 90% of the 1,517 square mile country), so it is building massive recreational facilities to keep its tourists entertained. Ian Parker’s fascinating article on “The Mirage: The Architectural Insanity of Dubai” in the October 17, 2005 issue of the New Yorker (the article itself does not appear to be online, but an audio slide show based on the article is available here) provides some sense of the scope of Dubai’s ambitious construction projects.

Modern shopping malls sprout up almost overnight, each one out-doing the previous ones in terms of scope and amenities. One of the newest, the Mall of the Emirates, boasts over 400 retailers and an indoor skiing facility (no, I am not kidding, it produces over 6,000 tons of snow), including a choice of five ski and snowboard runs, with the longest measuring 1,300 feet long with a 200 foot vertical drop, a black diamond run of 900 feet and a ski jump.

Offices are going up even more rapidly, with the foundations of the world’s tallest new building, the Burj Dubai, already in place (the final height of the building is a closely guarded secret, but it is expected to be on the order of one hundred and sixty stories). This contender for the tallest building will have an Armani-run hotel on the lower floors, about one hundred floors of apartments and fifty or more floors of office space above that. As one further sign of the urgency in Dubai, the crews on many construction projects work 24 hours a day, seven days per week.

Dubailand – Dubai’s competition to Disney World is under construction. Dubailand, of course, will be bigger.  Covering a one hundred square mile area, the five billion dollar Dubailand project will be three times the size of Manhattan.  When it is built out, Dubailand will include Eco-Tourism World, Sports & Outdoor World, Auction World, Virtual Games World and Themed Leisure & Vacation World.  It will include replicas of the Eiffel Tower (70 feet taller than the original), the Taj Mahal (150 percent bigger than the original) and other major attractions

A vibrant night club scene with hundreds of night clubs featuring a bewildering array of world music from reggae and salsa to hip hop and bhangra attracts some of the hottest DJ’s from around the world, keeping tourists entertained until late at night. In this context, the Las Vegas analogy becomes more appropriate – a vast entertainment complex is arising out of the desert.

Insourcing human capital

But the physical facilities, as impressive as they might be, aren’t the most interesting aspect of Dubai’s tourism play.  It’s the human capital that Dubai has mobilized to support this initiative.  Just the construction projects alone require more people than Dubai has (there are only about 120,000 citizens of Dubai), so Dubai imports construction workers by the hundreds of thousands from a broad range of countries, especially India and Pakistan. In fact, over 80% of Dubai’s population consists of expatriates from over 160 countries.  About 200,000 of these expatriates provide a diversified managerial class for many of Dubai’s commercial enterprises. Unlike many other countries where immigrants are resented as potential competitors for jobs, Dubaians recognize that they cannot realize their ambitions without lots of foreign labor.

Richard Florida in his book The Flight of the Creative Class reports one study showing that Dubai leads global cities in the proportion of foreign born population to native born population.  Even more significantly, Dubai ranks third in the world on Richard Florida’s Mosaic Index, measuring immigrant population diversity.

In staffing its hotels and entertainment facilities, Dubai has taken a very targeted approach to attracting appropriate talent.  Tourists could spend weeks in Dubai without ever meeting a native of Dubai.  The hotels are largely staffed by people imported from countries known for their hospitality, including Thailand, the Philippines and Indonesia. Tourists venturing out into the desert for a camel ride are apt to find that the “Bedouin tribesman” tending to the camel is actually an immigrant from Tunisia. In effect, Dubai has become a new kind of tourism middleman – it attracts tourists from around the world and serves them in great style with highly trained hospitality staff also imported from around the world. This strategy is paying off – the World Tourism Organization recently declared Dubai to be the fastest growing tourism destination on earth.

Expanding the role of middleman

In commercial activity, Dubai has also capitalized on its role as a middleman, spawning a growing financial services industry (it has created a free zone known as Dubai International Financial Centre) and trading industry (it built the world’s largest man-made harbor in 1976 to expand its role in the shipping industry).  I wrote earlier this week about Dubai’s growing role as a global outsourcing provider of containerized port management services.

Building a global e-business hub in Dubai

Dubai also has aspirations in the e-commerce and Internet arena.  It is building Dubai Internet City in the hope of attracting and incubating a growing set of e-businesses.  It is in this area that Dubai’s aspirations fall short of its potential.  Dubai’s government and business leaders tend to talk about its opportunities in this area in terms of becoming a center of e-business for the Middle East.  Why stop here? Why not seek to become a center of e-business for the world by pursuing the same kind of human capital insourcing strategy that has driven its success in the tourism industry?

Given Dubai’s growing attraction as an entertainment and pleasure center, it could potentially attract techies from around the world to build entrepreneurial e-businesses targeting global markets.  With enterprise zones offering modern telecommunications infrastructure and office facilities along with the lure of no corporate or personal income tax, many Internet entrepreneurs might be willing to brave the summer heat to build promising e-businesses headquartered in Dubai and staffed with skilled techies imported from Eastern Europe and Asia.

Of course, potential tech immigrants would have to forego the pleasures of pornography and drugs (Dubaians tend to be pretty unforgiving about such vices, even though they are in general much more liberal than their Saudi neighbors).  Those with families might find it an attractive environment to raise their children and others might be enticed to come for a few years in search of interesting business and technology opportunities. Given the growing global shipping, trading, financial services and travel and leisure businesses being built in Dubai, there are ample opportunities to extend these business initiatives on the Internet.

Opportunities in global education

On a related note, Dubai has a similar opportunity to use its insourcing strategy to build out innovative educational businesses targeting faculty and students on a global scale.  By creatively using the Internet to extend its reach, Dubai could establish itself as a major educational destination for students from Asia and Africa as well as the rest of the Middle East to come for technical and professional training. It could then provide continuing learning services over the Internet after the students return to their home countries.  Once again, Dubai’s growing status as an entertainment and pleasure center might be helpful in attracting both faculty and students from around the world.

The bottom line

If they play their cards right, Dubai’s leaders could establish their country as much more than a tourism and trading center.  Harnessing the capabilities of global technology networks and an innovative insourcing strategy attracting talent from around the world, Dubai could become a global e-business and educational center as well.  Dubai’s leaders have the sense of urgency and the ability to think big in their construction projects.

The irony is that they just may not be thinking big enough.  The formula driving the success of their tourist industry is much more robust than they realize.  The tourism industry could serve as a powerful bootstrapping device to position Dubai as a global talent magnet. Sure, it is hot in Dubai but, with some creative promotion, business investment could get a lot hotter – and it is tax free.

Private Equity and Offshoring

Buried on page 22 of the Financial Times today is a brief news item announcing that Michael Marks, the outgoing CEO of Flextronics, is joining Kohlberg, Kravis and Roberts.  Marks was a key architect of the aggressive move by Flextronics, one of the world's leading contract manufacturers for the high tech industry, into China and India.

This is a significant signal regarding the growing interest of private equity firms in the offshoring market.  Private equity firms look for situations where companies are slow to restructure their operations in response to intensifying competitive pressure.  Many Western companies have been slow to exploit the potential created by offshoring, both to reduce cost and, more importantly, to participate in skill-building arbitrage.

Private equity firms see a substantial opportunity to accelerate this process. They can take companies private that are under-performing, re-structure them by stripping out operations that can be better performed offshore and then take the company public at a much higher valuation. There is a key message to senior executives - if you don't move aggressively to take advantage of offshoring opportunities, private equity firms may step in to do it for you.

Dubai as Router for the World - Containers and Packets

It was probably a mistake for me to begin my last post talking about a bad case of the flu and then to go radio silent for three weeks.  A lot of people sent messages asking if I was OK. Not to worry, I’m fine, having finally beat the flu that would not leave.

In fact, I have just returned from another edge – Dubai.  Dubai represents a geographic edge, sitting near the intersection of Asia, Africa and Europe (OK, the latter is a stretch, but in this jet age it is close enough).  I want to blog more extensively about Dubai in a separate posting – my focus here is on the recent announcement that DP World concluded an agreement to acquire the venerable British company, Peninsular & Oriental Steam Navigation Co., created by a royal charter back in 1840, at a price exceeding $5 billion.

This news received a lot of play in the international business press, but barely received any comment in U.S. publications even though it marks a significant milestone in the restructuring of the global trading infrastructure.

It is significant on a number of levels.  First, it drives home the growing prominence of Dubai in world trade. With this acquisition, DP World, which is owned by Dubai’s Ports, Customs and Freezones Authority, catapults from the sixth largest port operator in the world to third in terms of capacity. It also significantly expands DP World’s presence in China and India. Earlier this year, DP World made another significant acquisition when it bought CSX World Terminals, the international terminals business owned by CSX, the U.S. railroad and shipping company.

The scale of Dubai Ports (the parent of DP World) is in part due to the size and growth of its Dubai operations.  In 2004, its Dubai operations ranked among the top 10 container ports in the world, surpassing Antwerp in throughput.  Dubai Ports has been growing its throughput at a rate exceeding 20% over the past several years at a time when most other ports were growing at less than half that rate. Its growth rate last year was exceeded only by the Shanghai Port and the Shenzhen Port in China.

But that is only part of the story.  DP World was formed as an international arm of Dubai Ports in 1999. It has been growing by leveraging the expertise acquired in operating Dubai’s own port operations to provide port management services to large container ports around the world.  It has in effect become a major outsourcing services provider in the container port business, offering a broad range of services including management of container terminals, free zones and related infrastructure. In the words of the company, DP World “can completely turn around the performance of ports, rather than just achieve small incremental improvements solely through better management practices.”

In effect, DP World has been capitalizing on an even more fundamental shift in world shipping that has played out over the past 50 years.  Back in 1955, an American entrepreneur, Malcolm McLean, came up with the ingenious idea that the efficiency of loading and unloading ships could be dramatically improved by modular design.  Rather than having shippers use any size container they wanted, McLean defined and tirelessly promoted adoption of a new shipping standard – the twenty foot container.  McLean formed Sea-Land, one of the most successful contemporary shipping companies, to pioneer container shipping techniques.  The fascinating story of the impact of this innovation is told by Stewart Taggart in a great article entitled “The 20-Ton Packet” that originally ran in Wired magazine back in October 1999.

Why did Taggart call the article “The 20-Ton Packet”?  Simple – he was making a compelling case that containerization did for the global shipping industry what packet switched networks did for global information flows decades later:

Just as the Net and deregulated telephony spelled the death of distance for telecommunications, containers spelled the death of distance for manufacturing.  By breaking down cargo into standard units, greater amounts  could be more efficiently pushed through a network.

While other factors were certainly at work, containerization played no small role in the dramatic growth in world merchandise trade over the past 50 years and has been instrumental in facilitating the offshore movement of manufacturing.  As Taggart reports,

From a small base of 6.3 million in 1972, the number of containers handled by the world’s ports had risen 26-fold, to 163.7 million, by 1997. As scale efficiencies grew, prices dropped.  Over the past 20 years, nominal unit-transport costs on the key Asia-US route have fallen by about one-third, or roughly two-thirds in inflation adjusted terms.

For those interested in a great techie build on the original Taggart article, please see the PowerPoint presentation by Nick Gall of the Meta Group on “TCP/IP and Shipping Containers: How to Architect Freedom” delivered to OSCON 2005.  This presentation was covered by both Daniel Steinberg and Phil Windley.  Gall draws attention to an even more techie piece by David Clark at MIT on “Interoperation, Open Interfaces and Protocol Architectures” which highlights the importance of “spanning layers” in achieving interoperability. The standards around container format represent just the kind of spanning layer that Clark is talking about.

Containerization has not only transformed the maritime shipping industry; it has led to a transformation of truck and rail transport as the need to unpack and repack goods disappeared with the spread of containers across all forms of transport.  Containerization has posed a challenge for older ports as they sought to re-tool for this new technology.  DP World has been riding this transition, offering world-class management techniques to take full advantage of the efficiencies created by containers.

But here’s a key lesson.  Modularization does not necessarily lead to fragmentation.  In fact both the container shipping business and the port operation business have been rapidly consolidating.  As containerized shipping becomes more pervasive, both sets of players are realizing significant economies of skill.

Both of these businesses are what I call infrastructure management businesses – businesses that focus on high-volume routine processing activities.  As the unbundling of the corporation proceeds, these businesses are getting carved out of traditional companies and, in the process, rapidly consolidating.  Modularized technology and management techniques are accelerating this consolidation on a global scale.

Modularization will intensify fragmentation for another kind of business – product innovation and commercialization businesses – but that’s another story for another time.

So why should business executives care about what is happening in the container port business in Dubai?  It provides insight into much more fundamental trends that are re-shaping our global economy at an awesome pace.  It shows that countries and companies on the edge have an opportunity to become significant global players by understanding and harnessing the forces at work.  It also drives home that our most well-known and well-established companies, even those granted royal charters in 1840, are vulnerable to these same changes and can succumb quickly to the initiatives of more aggressive competitors, even those just formed in 1999.