While devices and apps get most of the attention, data storage is every bit as important, particularly as objects like phones, tablets, cars and thermostats become appendages of the Internet. Throw in trends like collaboration and big data analysis, and all those bits of data become more dynamic than something in a file cabinet. They are fluid and being entered and retrieved from many points.
Social commentators prognosticating about Google’s acquisition of robot companies note that, having conquered the digital realm, businesses are increasingly turning their attention to the remaining physical frontier. I see a more radical direction: Today’s corporations aren’t simply colonizing the physical world with robotic products—the move toward the so-called Internet of Things. These corporate actors are going to synchronize the digital and physical worlds into a single, fused matrix. Every physical action you take will have a digital consequence, and every digital act will push back on the physical world.
Shift from Telecom-Centric to Application-Focused Investments
Rutberg’s June Wireless Industry Newsletter uses Uber to frame it well:
Uber’s massive $1.2 billion fundraise represents the largest venture capital investment in mobile and wireless of all time. It displaces Clearwire’s $900 million fundraise in July 2006 at the top of the lead tables. It also evidences the dramatic shift from telecom-centric investments to application-focused investments since the launch of the iPhone in 2007.
“One day, seeing Amazon Prime Air will be as normal as seeing mail trucks on the road today, resulting in enormous benefits for consumers across the nation.”—Amazon in their petition submitted to the FAA to test commercial UAVs
Steve Sinofsky on the inevitable disruption coming to the auto industry. It’s well worth a read. But it is highly urban centric - meaning that most of the benefits that he describes (things like ride sharing, shared ownership, avoiding parking hassles, etc.) accrue primarily to those in urban centers. In fact, he makes the shift away from suburbia a central driver in his case. I do wonder how the economics and use cases of autonomous cars play out in areas without the centrality, concentration and density of urban centers.
“But others push themselves into the rotting institutions they want to reinvent. If you are looking for people who are going to be creative in the current climate, I’d look for people who are disillusioned with politics even as they go into it; who are disenchanted with contemporary worship, even as they join the church; who are disgusted by finance even as they work in finance. These people believe in the goals of their systems but detest how they function. They contain the anxious contradictions between disillusionment and hope.”—David Brooks on The Creative Climate
The important point that I want to make regarding the self-driving car is that this shows how Google is willing to take risks to produce breakthrough innovations. The profit potential for a self-driving car might be many years away, but the perseverance to see a project like this through to completion demonstrates that Google is serious about significant innovations. This means that it is likely that the company will introduce other innovative ground-breaking technology in the future.
With their self-driving cars, ballon-powered internet, aggressive indoor mapping and other projects together with the scope and scale of the investments they make through their VC arm, Google is signaling to both investors and potential new hires that they are committed to shaping and creating the future.
Cheap Drones Give Farmers a New Way to Improve Crop Yields
The MIT Technology Review is out with its list of 10 Breakthrough Technologies for 2014. Agricultural drones heads the list. Further evidence that UAVs are transitioning from fun toys to powerful tools.
Relatively cheap drones with advanced sensors and imaging capabilities are giving farmers new ways to increase yields and reduce crop damage.
Back in 2008, Paul Graham wrote a great post about the hierarchy of disagreement. It prompted me to write this post about how great it would be to code a natural language processor that could score content against this disagreement hierarchy. Unleashed on the web, this ability to assess the soundness of argumentation would be hugely valuable across the universe of blogs, product reviews, editorials, journalism, etc.
IBM appears to have taken a step in that direction. They released a new Watson featured called “The Debater" that aims to automatically scan source material, reason from it, and develop pro / con arguments for an open question.
Definition: Rate-of-learning is the velocity at which you are aggregating new insights and deploying them in ways that build value.
While that post focuses on ways for individuals to approach startup career choices, this kind of thinking applies equally well to corporations approaching innovation and new business initiatives. Just replace “Normal jobs” with “Existing lines of business” and “Startup jobs” with “New lines of business” in the below.
When starting out in new, non-core areas, learning should be the primary objective. Those that learn fastest and can deploy that new found knowledge most effectively into the market stand the best chance of winning. This is particularly true in markets marked by rapid change and dynamism. It’s like a gyroscope - the speed of the internal spin rate keeps it orientated when forces try to knock it off-kilter. Companies with higher ROL’s have faster spin rates and can withstand greater disruptions.
This is one reason why corporate venture arms could and should be a source of great value. They allow established companies to significantly expand and accelerate their learning capabilities at comparatively lower cost.
Fred Wilson’s post on “Counting the Hits” led me to William Mougayar’s list of the universe of companies valued at more than $250 million. What I’d really like to see is some data on the *time* it took those companies to achieve those valuations. A chart that plots the time to achieve a $250 million valuation against months from founding parameterized by the year of founding would be quite telling. My guess is that the cohort of companies founded in 2009 and later have been able to achieve that valuation at a faster clip than their peers founded earlier.
I have a thesis that companies matter faster than they ever have in the past. Whatsapp, Instagram, Nest, Snapchat, Oculus, Tumblr and others achieved significant exits after being around for about 5 years or less. Several others have achieved large valuations in their “youth” via funding rounds as well. It doesn’t seem like this phenomenon is limited to lightning in a bottle consumer startups either. Similar trends are occurring on the enterprise side as well.
These companies may be the outliers, but they’re also the ones having an outsized impact on the industry. This has big implications for VCs and corporates alike. When the ability to disrupt an industry happens at a faster rate, you need to engage earlier in the startup lifecycle. This is one reason more corporate VCs and innovation groups are getting involved at the seed stage. Successful startups seem to be growing up faster and faster. And like promising athletes, they seem to be turning “pro” and asserting themselves on the biggest stages at younger and younger ages.
When thinking about new initiatives, lots of big companies talk about needing the “right to win.” I’ve never been a fan of using this entitlement definition of ‘right’ when talking about new market entry.
Yes, companies need to make sure they have the ‘right’ assets and resources to win — meaning the “most favorable or desired” assets and resources to service the opportunity. What they don’t need is the “moral or legal entitlement” to win.
This current age is characterized by a decided disrespect for rights of way. The future yields for no one. Google becomes a car company. Amazon becomes a media company. Nike becomes a technology company. Companies must not wait to till they feel they have the right to win. In this environment, you’re only right if you win.
The future isn’t made by those you feel entitled. It’s made by those you feel empowered to try.
“And here’s a phenomenon often true in innovation stories: The people who go to work pursuing knowledge, or because they intrinsically love writing code, sometimes end up making more money than the people who go to work pursuing money as their main purpose”—from The Moral Power of Curiosity
That twinge some feel at times like this is akin to seeing the fences go up on the frontier, the record companies signing your favorite underground band, or the parents coming down to the basement party just when it was getting good. We may be past the wild part, but there’s far more potential with this inevitable outcome.
If you do feel that way, don’t worry. This is also the week that Facebook made big investments in virtual reality and solar-powered drones that send high-speed data. A representative from Google gave a talk at the University of California, Berkeley, about Google’s experiments in quantum computing that was cautiously optimistic, but not conclusive. Some disagreed.
There’s still plenty of frontier out there for everybody.
Agree with Semil Shah’s view of Marc Andreessen here:
Marc Andreessen, the co-creator of Netscape and the VC firm which bears his name (which invested $75m into Oculus VR about four months ago), is also very close to Zuckerberg as one of the original angel investors in Facebook and a current board member. I have never met Andreessen, but based on watching many of his interviews on YouTube, enjoying his endless Twitter stream, and the bold thesis of his firm (which has correctly predicted many things — I’ll write on this aspect soon), he strikes me as a true intellectual polymath — not just conversant or convincing on a range of complex topics, but one of the earliest people to connect the dots of high technology at the highest of levels. … His firm, a16z, has recently made huge bets across a range of industries which could present platform-esque characteristics — the software layer for drones, the software for three-dimensional printing, the software for transferring value across the Bitcoin protocol, and so forth. In Oculus, they likely envisioned yet another emergent computer science platform which could rewrite how people communicated with the Internet.
Reasons why startups are a lot like driving in India:
Both require healthy disregard for established convention and rules.
Both require absolute fearlessness.
Space fills quickly — White spaces don’t stay white for long. If you identify an opportunity, you have to act fast or it will be filled by someone or something else.
Intense and varied competition — Constantly competing against all manner of man, beast and machine. Jumble of old and new. Shiny Audi A6s jockey for space against heavy trucks, old buses, auto-rickshaws, motorcycles, scooters, bicycles, pushcarts, pedestrians and the occasional camel.
Horn OK Please — Everyone is always making noise to let you know that they are disrupting and overtaking you.
Friends and family — Both often put friends and family at risk. Startups often risk their friends’ and family’s money. Drivers in India often risk their friends and family. Rather disconcerting seeing a family of four, including a toddler and infant clutched in Mom’s arms, atop a Hero motorcycle zipping in and out of traffic.
I love this piece about Elizabeth Spiegel, chess coach of IS 318 in Brooklyn, and her approach to teaching kids how to think without coddling or sugarcoating. Having seen Brooklyn Castle and reading more of her story, it’s clear that she was a special and driving force for that team’s success.
A few of her quotes that stood out:
"Teaching chess is really about teaching the habits that go along with thinking. Like how to understand your mistakes and how to be more aware of your thought processes."
Her writing on the 2010 girls’ national tournament:
"…most people won’t tell teenage girls (especially the together, articulate ones) that they are lazy and the quality of their work is unacceptable. And sometimes kids need to hear that, or they have no reason to step up."
Thoughtful and thought-provoking speech from Dan Geer at RSA this year. Speaks to the cyber challenges arising from our rapidly growing complexities and dependencies. Long and well worth the read. A few choice quotes:
“But from the point of view of prediction, what matters is the ratio of skill to challenge; as far as I can estimate, we are expanding the society-wide attack surface faster than we are expanding our collection of tools, practices and colleagues…..So it is with cyber risk management: Whether in detection, control, or prevention, we are notching personal bests, but all the while the opposition is setting world records.”
“Above some threshold of system complexity, it is no longer possible to test, it is only possible to react to emergent behavior.”
“For $19B, Facebook has bought a lot of user attention and neutered a potential threat to its social graph. What it hasn’t bought is the future of the consumer internet. That is being built elsewhere.”—Hamish McKenzie in $19B doesn’t make it brilliant.
“Facebook notes that WhatsApp has over 450 million MAUs, with 70 percent of those active each day. In a staggering comparison, Facebook also notes that the messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry — and that it’s adding 1 million users a day.”—
By combining the IP address of an always-on Google device with information from devices within the home that may or may not be signed into the user’s own Google account, the company finally has a solid method to associate devices that belong to a household — smart TVs, over-the-top devices, tablets, Withings scales or network-attached printers, to name a few — with Google accounts and households.
More evidence that the holy grail of the internet of things lies in the physical graph. Companies that can create the best visibility into that graph stand to win.
“The combination of anonymity and ephemerality has fostered experimentation and creativity rarely seen elsewhere. It’s incredible what people can make when they’re able to fail publicly without fear, since not only will those failures not be attributed to them, but they’ll be washed away by a waterfall of new content. Only ideas that resonate with the broader community persist…”—Chris Poole on anonymity
When I reflect on the last 10 years, one question I ask myself is: why were we the ones to build this? We were just students. We had way fewer resources than big companies. If they had focused on this problem, they could have done it.
The only answer I can think of is: we just cared more.