Month: January 2007
After a brief email exchange today from an extremely smart and capable friend suggesting a potential feature for my blog, his response was “As usual, I’m nobody’s market.” He provided a humorous followup to the comment “that’s a great blog title” from one of the people on the email thread with “Ah, if only I didn’t have to suck up to the world, that would be a great title for my contrarian-curmudgeon blog.”
Since I don’t feel the need to suck up to the world, I’ve stolen my friend’s blog post title. It’s a great one that every investor and entrepreneur should keep in the front of his mind. In one of my meetings today, someone asked me “Brad – I get what you are saying – but don’t you worry that you are too close to the technology and – as a result – too far ahead of the market?”
I responded that I’m quite clear that I’m not the broad target market. I’m always trying to invest in (and help create) markets well before they are defined – and often build off a techy protocol that hasn’t yet emerged in the mainstream. For example, when I started playing around with RSS in 2004, there were plenty of technical folks that understood it well, but most of my conversations went “RS-what?” whenever I brought it up. Today, the majority of people I talk to have heard of RSS and a surprising number of them think they understand what it is, why it’s relevant, and what it enables.
Part of the fun (at least for me) of the way I approach things is that I love to get close to and roll around in the technology. I’m nerdy enough to be able to be a very early adopter, fierce beta tester, scary difficult user, and occasional implementer. But – I never forget that I’m not the ultimate market as – thankfully – the world isn’t made up of people like me.
At dinner the other night with an old friend, we somehow ended up discussing TV shows. I don’t watch much TV beyond my obsession with 24 and my relatively new infatuation with Gray’s Anatomy. He was explaining several shows to me that he thought I would enjoy. In response to his suggestion that I would enjoy Monk, I responded that the one time I watched it I was so unbelievably anxious that I had to leave the room, wash my hands, and count to nine three times.
I’ve been on the road all week. When I left on Monday morning, I felt great – I’d had a nice restful weekend and was ready to go. On Tuesday morning, I woke up with a sore throat and a headache. As the day went on and I had more meetings, I noticed that every interaction started with a handshake. I started trying to dodge these – both because I didn’t want to spread whatever I was coming down with and I didn’t want to pick up more.
By Tuesday night my cold was in full bloom. Thankfully a good night sleep wiped it out and I woke up Wednesday with that horse sexy voice that I wish I could figure out how to have permanently, but I felt fine.
I’ve always disliked “the handshake.” I already wash my hands a dozen times a day – every incremental handshake increases the number of hand washes. It’s a weird custom that I’ve never really understood and – with 25% of the people I’ve been meeting with sniffling, coughing, or working hard to keep their noses from dripping – seems absurd this time of year.
So – the next time you see me, just raise your hand in a greeting. There’s no need to shake my hand. And – in case you are wondering, I wash my hands both before and after I go to the bathroom.
Brad Burnham of Union Square Ventures has an important and thought provoking post up titled What’s next? Whenever Brad writes something, I read it carefully – not only because he has a fantastic first name – but because he usually nails something important.
Brad’s description of the progression of the “central value proposition” in the computer system over time – from hardware, to systems software, to application software, to networks, and ultimately data is a great framework. He asserts that the next layer of value will come from governance.
If you are an entrepreneur or an investor in tech companies, it’s worth a slow, meditative read.
If you are a Second Life dude and live in Boulder / Denver, there is now a local Meetup for you. The organizer – Richard Hackathorn – who is the president of Bolder Technology dropped me a note about it. Apparently Richard’s son Eric has created a NOAA Island as part of NOAA’s (the National Oceanic & Atmospheric Administration – which every Boulderite knows as the folks that have a building on the best real estate in town) education outreach program.
The next Meetup is on March 22nd at 6pm. It’s limited to 20 people so if you are interested, sign up now (Greenstein – you crazy sailor – that means you.)
I haven’t written much on failure since December so I was delighted to see several really insightful posts on the benefits and chocolatey goodness of failing. It started with Jeremy Liew’s (a partner at Lightspeed) post titled Failure IS an option. James Hong (the cofounder of HOTorNOT) followed up with a post titled Do YOU have the balls to try? Part 1 and Robert Young finished it off with a guest column on GigaOm titled Bankruptcy: The Opportunity to Fail. Just remember – failure and success go together like chocolate and peanut butter.
I love books. I love cool things. I love when cool things and books collide. Some folks at Google have started a fantastically neat project. They are “mapping books” – think of the intersection of Google Maps, a book, the locations in the book, and some of the content at the various locations in the book. Here is an awesome example – The 9/11 Commission Report.
Last year, the meme of “you can start a company for minimal capital” made the rounds. This is still true. But – it’s not trivial to scale a company for minimal capital (it’s possible, but an exception, not the norm.) This meme is starting to make the rounds – Heather Green at BusinessWeek just wrote an article titled Make-or-Break Time For The Net Newbies.
Heather interviewed me for the article. Since I only do interviews by email, I asked her if I could post our email exchange as further background to the article. She kindly agreed as long as I waited until the article came out. Here is the actual interview we did. The questions Helen asked me are in italics.
Are we seeing companies getting wound down and why? (I.E. Is something deliberate going on rather than just observers making something out of nothing). This is all totally normal. There should be plenty of mortality among young, venture backed companies. If there’s not, something weird is going on. At this point, there were a lot of Series A investments in “Web 2.0” stuff done in 2006 – those companies are now running out of money and need to raise a Series B. Some non-trivial percentage of these companies should not be able to raise a Series B for a variety of reasons, including (a) poor performance, (b) overly crowded segment where the companies are “me too” companies, (c) difficulties between management and the investors, and (d) “stuff just didn’t work.” There’s nothing special going on here – it’s just the normal VC-backed company cycle.
Do you think that entrepreneurs and VCs are finding that though it is much much cheaper to start up companies these days, because of the rising competition with more companies getting funded, you now need to put in more money to make your company stand out? Any ballpark estimate of how much more? It’s much less expensive to get started – that’s been well documented. However, at some point you have to go from a web-based prototype to a business. Many of the companies that were acquired by Google and Yahoo in the past 18 months were in this zone and they ended up getting bought before the moment of truth came. This prompted lots and lots of me too companies – none of which will be bought by Google, Yahoo, or anyone else. So – once these companies get a prototype up and running (their “beta”), the probably will need some money to get to the next level. We’re now in that zone – where the rapid prototypes have flooded the market – and the companies that emerge will actually need to build out infrastructure (that costs money), a team (that costs money), a salesforce or channel (that costs money), deeper technical capability to scale the business (that costs money), and so on. Fortunately, this time around, most rational people realize that it doesn’t take $75m to build a web-based software company – the number is more like $15m – $25m. So – the money is spent slower and more intelligently in the success cases.
If that’s the case, how do you spend that money? What can work to help you stand out? (Examples would be great). “Build it and they will come” happens rarely (e.g. Youtube). However, when they come, you’ve got to put together a bunch of infrastructure and that costs money. Most of the money is being spent on three things: (1) distribution, (2) engineering, and (3) infrastructure. Distribution is the tricky one – it’s a combination of marketing, sales, and business development and you’ve got to get the mix right. Many early stage companies don’t really know who their customer is, what their channel is, or how they are going to get to it, so the spend here is inefficient.
What lessons can be learned from the companies that are getting wound down? If you aren’t going to make it, take your medicine gracefully and move on. Life is long and most successful entrepreneurs (and investors) have plenty of failures in their past.
Are any companies you’re involved with going through this? Not right now, but it’s inevitable that some will.
Do you expect more companies shut down either soon or later this year? What kind of companies? (IE are there areas where there simply are too many companies?) I think there will be a steady stream of failures. That’s normal and should be no surprise to anyone.
At the National Center for Women & Information Technology we are about to embark on a “heroes campaign” – a new project to highlight 20 successful women IT entrepreneurs via 15 minute podcast interviews accompanied by text transcriptions. We’ve got a great initial set of women that we’ll be interviewing but are casting our net far and wide to find interesting, amazing, and inspirational stories. If you fit the profile (female IT / software / Internet entrepreneurs) or know someone that does, please give me a shout.
Over the holidays I read a magnificent book titled Designing Interactions by Bill Moggridge. It’s an incredible collection of history combined with interviews from many of the great computer interface designers and entrepreneurs from the past 30+ years. The stories are superb, the interviews well done, and the pictures are incredible. It’s a must read for anyone serious about designing computer software of any sort. It’s a big book – I petered out about two thirds of the way through it as Moggridge shifted from storytelling to predicting the future – but I fault myself for trying to consume it at one time (and expect I’ll go back and try some of the later chapters again.)
The other day, as I pounded away on my keyboard and moved my mouse around the screen clicking away feverishly, my mind started wandering on the “there must be a better way theme.” My mind wandered to an afternoon that I spent playing Guitar Hero with my friend Dave Jilk and it occurred to me that there have been three companies that came out of my fraternity at MIT (ADP) that have built companies commercializing unique models of human computer interaction.
Guitar Hero from Harmonix Music Systems is the first and one that Dave and I were both involved in early in their life. While the first person shooter video game metaphor has been around forever (think Asteriods and Space Invaders – the category was NOT created by Doom – just made more fun and bloodier), I eventually wore out on video games because I got bored of killing things. When Harmonix came out with Guitar Hero, I got a copy but didn’t do anything with it. A few months ago I finally started playing with it and immediately became addicted. So have a bunch of other people as it became one of the top ten games of 2006. Interestingly, much of the buzz around the Nintendo Wii has been similar – rather than using a joystick to move a killing machine around a fantasy world, we get to interact with games much more physically – through a different interaction metaphor.
The Roomba from iRobot is another example of this. Colin Angle and his partners ultimately created a consumer based robot that does one thing extremely well – vacuum your floor. Metaphorically, they’ve simply wrapped a bunch of software in a consumer device that enables a radically different and fascinating human computer interaction model. If you’ve got a Roomba and a dog, you’ve also learned that the animal computer interaction model is a blast to observe.
Oblong is another company that came out of someone’s brain that resided at 351 Mass Ave in Cambridge (yup – it must have been something in the water.) The best way to describe Oblong is to ask the question “do you remember Tom Cruise in Minority Report? Remember the wall sized computer he controlled with his hands. That’s what John Underkoffler and his partners at Oblong have created.
It didn’t dawn on me how important this was until I started putting the pieces together that our current UI metaphor – which started at Xerox, was popularized by Apple, and mainstreamed by Microsoft – is starting to grow long in the tooth. I’ve been using a T-mobile Dash for the past few months and while I love the device, the Microsoft UI is immensely frustrating. I’ve trained myself to be incredibly efficient with in (and largely control the phone functions with speech), but the iPhone bashed me over the head with the current level of fatigue that I (and I expect others) have with their current UI metaphors.
While Amy likes to ask me – when she gets frustrated with Windows – “what was wrong with DOS and the command line anyway?” it prompts me to wonder why I’m sitting at my desk pounding away at a keyboard. There are – and will be – better ways. It’ll be fun to look back N years from now and say “boy – that WIMP UI sure was quaint” kind of the way we think of “C:\>” today.