I saw this video yesterday and immediately thought “I’m going to get one of those.”
Posts from mobile
The NY Times has a post up this morning about a neighborhood in Brooklyn called Red Hook where they have built a hyperlocal mesh network to service the entire neighborhood, from housing projects to townhouses.
Red Hook is a cool place. We were there last night to sample Hometown Bar-B-Que‘s massive beef ribs and a bunch of other great stuff. Red Hook is isolated from the rest of Brooklyn by the BQE Expressway and sits right on NY Harbor. It has a collection of different housing situations, from single family homes, to factory lofts, to housing projects. The only public transportation in Red Hook are bus lines into downtown Brooklyn and the occasional Ikea Ferry. It’s a neighborhood all to itself in many ways.
Red Hook was badly flooded in Hurricane Sandy and living there in the weeks after the storm was dicey. The neighborhood has bounced back strongly however and there are construction jobs seemingly on every block. In the wake of Sandy, a local group called the Red Hook Initiative led an effort to build a hyperlocal mesh network throughout Red Hook.
For those that don’t know the difference between a mesh network and a traditional network, the big thing to focus on is that the nodes (think of them like public wireless access points) talk to each other and form a network that operates even if its is not connected to the public Internet. Most mesh networks are connected to the public Internet, but if that connection goes down, the local mesh continues to work. In Red Hook that means that you could make voice calls (over IP) from your housing project to the local hardware store to see if its open. Or you could email a friend who lives in the neighborhood.
If every neighborhood in Brooklyn had a public mesh like Red Hook has, and if they were all meshed with each other, then Brooklyn would have its own local Internet of sorts.
At USV, we think this is an important part of how we (meaning the entire world) get a mobile Internet that is not controlled by the large mobile telcos. We have made one investment in this area (which I don’t think we have announced yet) and we are looking to find other smart ways to invest in this trend.
But the biggest investments that will be made in mesh networking will be made by local groups like Red Hook Initiative. It is not terribly expensive to construct one of these mesh networks and every neighborhood ought to be thinking of doing something like this. If everyone did this, the mobile Internet would look a lot different than it does today.
For creators, there are three offerings, Partner, Pro, and Premier. Anyone can be a Partner. For a small monthly fee, you can upgrade to Pro. And if you are really serious, then you can become Premier and make money on SoundCloud.
Every time you see or hear an ad, an artist gets paid
There will also be a subscription offering that will be ad free and offer other features for listeners.
For brands, SoundCloud becomes a popular social platform where they can engage with creators and listeners. Here’s more on SoundCloud’s offerings for brands.
Here’s the thing that many people miss about SoundCloud. It’s not like iTunes, or Spotify, or Pandora. It’s a peer network with a social architecture that emphasizes engagement and sharing.
Like Twitter and Tumblr and a number of other popular social platforms, SoundCloud treats everyone as peers in its network. My profile is almost identical to an artist’s profile on SoundCloud. I can do the same things they can do and they can do the same things I can do. The same is true of a brand’s profile.
This social architecture encourages engagement, sharing, commenting, and favoriting. It’s like the artists, listeners, and brands are all hanging out together at one big party.
These social peer networks treat advertising very differently. The ads are native. On Twitter, the advertising is a Tweet. On Tumblr, the advertising is a post. On SoundCloud, the advertising is a track. You see the ads in your feed and you choose to engage with them if they are inviting. In the best case, you enjoy them so much that you favorite or reblog/retweet them. And brands can sponsor/promote tracks from other users. Think of Red Bull sponsoring and promoting artists on SoundCloud.
The New York Times has an article today about On SoundCloud. It covers all the challenges that SoundCloud has overcome in getting to this place. It’s been a ton of work for the team at SoundCloud to get this launched, and there is certainly a lot more ahead of them as they undertake to get every artist On SoundCloud.
I am very optimistic that will happen because this network of 175mm mobile listeners all over the world connected together and sharing the audio they love with each other is too powerful to ignore.
Since the very beginning of Twitter, users have wanted to take tweets from their timeline and tweet them out to their followers. Initially it was just users copying the original tweet and pasting it into the tweet box. Quickly the user convention became to put the initials RT in front of the pasted text. And the retweet was born. Birthed by the users like many of the best things about Twitter.
When I showed up at Twitter in the summer of 2007, there was a debate about how to productize retweets. Some wanted retweets to be hard coded so that the only thing that got retweeted was the original text. Others wanted to continue to allow users to mark up the tweet while retweeting it. The argument in support of the hard coded retweet was that would treat the original tweet as the atomic unit and retweets could be tracked as a signal of super valuable and popular content. The argument in favor of the marked up retweet was that users wanted to editorialize with stuff like “this is awesome” and such.
The timeline is blurry to me, as is so much about those early years at Twitter. But I think that debate raged on and was not resolved until Ev took over as CEO. It is my recollection, although I could be wrong about this, that one of the first product changes that happened under Ev’s leadership was the hard coded retweet was launched and this button started appearing underneath tweets in your timeline.
Users could still cut and paste and manually retweet but if they wanted it to be counted as a retweet, you had to use the retweet button which did not allow manual editing. Like all product changes at Twitter, that created a fury of outrage from the users. But Twitter stayed the course and the productized retweet has become an enormous success.
At some point, clicking on the retweet button started to support the idea of adding some text to it. I can’t really recall when that change happened.
But recently Twitter has added another solution to the “share this tweet with my followers” need. You can now embed a tweet inside a tweet.
I started seeing embedded tweets in my timeline yesterday. My favorite was this one from Dick Costolo:
— dick costolo (@dickc) August 1, 2014
So this morning I decided to embed a tweet inside a tweet. It’s really simple. You just grab the permalink of the tweet and insert it into your tweet. Here was my first embedded tweet:
You will notice that when you embed a tweet on a blog that has an embedded tweet in it, the embedded tweet doesn’t render. My first embedded tweet looks like this in the timeline:
So Twitter isn’t finished completing this feature. This blog post will suffice as a feature request to Daniel and the product team to do that.
But I’m quite excited about this feature. Sometimes you don’t want to do a hard coded retweet. You want to editorialize the tweet. This is a very elegant way to support that. Well done Twitter.
It seems like every week I read another article about a mobile carrier offering some incredible deal to eat the mobile data costs you rack up using certain apps.
The most recent was the news that Sprint will sell at data plan that “only connects to Facebook and Twitter”.
Many on the Internet are up in arms about “net neutrality” amid concerns that the wireline carriers will discriminate between or block applications on their networks. I’m a supporter of net neutrality regulations, but it’s worth pointing out that wireline carriers haven’t done a lot of discriminating and blocking on their networks over the past 20 years of the commercial internet.
And yet in mobile data, there is discrimination and blocking all over the place. The main kind of discrimination is called “zero rating” in which a mobile carrier makes a deal with certain applications to eat the mobile data charges a user racks up when using certain apps. A good example of that is T-Mobile’s deal with a bunch of music apps announced back in June.
The pernicious thing about zero rating is that it is marketed as a consumer friendly offering by the mobile carrier – “we are not charging you for data when you are on Spotify”.
But what all of this zero rating activity is setting up is a mobile internet that looks a lot more like cable TV than our wide open Internet. Soon a startup will have to negotiate a zero rating plan before launching because mobile app customers will be trained to only use apps that are zero rated on their network.
I strongly encourage policy makers, policy wonks, internet activists, and anyone who cares about protecting an open internet for all to take a hard look at zero rating. Like all the best scourges, it’s a wolf in sheep’s clothing.
I’ve been telling this fictional story about Dentist Office Software for years to describe why we are so focused on our “networks” investment strategy. Yesterday I told it at a HackNY event we did at the USV office and my partner Albert provided a finishing touch that really drives it home. Since I’ve never told the Dentist Office Software story here at AVC, I will do that and then I will add Albert’s alternate (and better) ending.
An entrepreneur, tired of the long waits he is experiencing in his dentist’s office, decides that dentist offices are badly managed. So he designs and builds a comprehensive dentist office management system and brings it to market. The software is expensive, at $25,000 per year per dentist office, but it’s a hit anyway as dentists realize significant cost savings after deploying the system. The company, Dentasoft, grows quickly into a $100mm annual revenue business, goes public, and trades up to a billion dollar valuation.
Two young entrepreneurs graduate from college, and go to YC. They pitch PG on a low cost version of Dentasoft, which will be built on a modern software stock and include mobile apps for the dentist to remotely manage his office from the golf course. PG likes the idea and they are accepted into YC. Their company, Dent.io, gets their product in market quickly and prices it at $5,000 per year per office. Dentists like this new entrant and start switching over in droves. Dentasoft misses its quarter, citing competitive pressures, churn, and declining revenues. Dentasoft stock crashes. Meanwhile, Dent.io does a growth round from Sequoia and hires a CEO out of Workday.
Around this time, an open source community crops up to build an open source version of dental office software. This open source project is called DentOps. The project takes on real life as its leader, a former dentist turned socialist blogger and software developer named NitrousOxide, has a real agenda to disrupt the entire dental industry. A hosted version of DentOps called DentHub is launched and becomes very popular with forward thinking dentist offices that don’t want to be hostage to companies like Dentasoft and Dent.io anymore.
Dentasoft is forced to file for bankruptcy protection while they restructure their $100mm debt round they took a year after going public. Dent.io’s board fires its CEO and begs the founders to come back and take control of the struggling company. NitrousOxide is featured on the cover of Wired as the man who disrupted the dental industry.
That’s the story. I hope to fine folks at YC, Sequoia, and Workday don’t mind me using their names in this fictional story. I picked the very best companies in the industry and my use of their brands is a compliment. I hope they take it that way.
This story is designed to illustrate the fact that software alone is a commodity. There is nothing stopping anyone from copying the feature set, making it better, cheaper, and faster. And they will do that. This is the reality that Brad and I stared at in 2003 as we were developing our initial investment thesis for USV. We saw the cloud coming but did not want to invest in commodity software delivered in the cloud. So we asked ourselves, “what will provide defensibility” and the answer we came to was networks of users, transactions, or data inside the software. We felt that if an entrepreneur could include something other than features and functions in their software, something that was not a commodity, then their software would be more defensible. That led us to social media, to Delicious, Tumblr, and Twitter. And marketplaces like Etsy, Lending Club, and Kickstarter. And enterprise oriented networks like Workmarket, C2FO, and SiftScience. We have not perfectly executed our investment strategy by any means. We’ve missed a lot of amazing networks. And we’ve invested in things that weren’t even close to networks. But all of that said, our thesis has delivered for us and we stick to it as much as we can.
So here’s Albert’s alternate ending (with my editorial license on the colorful aspects of this story):
A young dentist, named Hoff Reidman, just starting up his own private practice, decides that he wants to network with other dentists. Because Hoff went to CMU before going to dental school, he’s pretty technical and he hacks together a site in Ruby called Dentistry.com. He emails all of his friends from dental school and they sign up. Every dentist wants to be on Dentistry.com and the site takes off. Hoff realizes he has to quit his dental practice to focus on Dentistry.com. Albert Wenger, who happens to be a patient of Hoff’s, convinces him to let USV do a small seed round of $1mm to help build a company around Dentistry.com. Hoff comes up with a product roadmap that allows patients to have profiles on Dentistry.com where they can keep their dental records, book appointments, and keep track of their dental health. It also includes mobile apps for patients to remind them to floss and brush at least twice a day. While Dentistry.com is free to use for anyone (dentist or patient), it monetizes with native advertising, transactions between dentists and their patients, and transactions between patients and providers of consumer dental health products, and transactions between dentists and providers of dental equipment and products. Dentistry.com ultimately grows into a $1bn revenue company and goes public trades at a market cap of $7.5bn. Wall Street analysts love the company citing its market power and defensible network effects.
I hope you enjoyed this fictional story. I find it explains our network thesis simply and easily. I will keep telling it to groups I talk to, but now with Albert’s ending. I like it very much. Thanks Albert.
I thought I’d provide a bit of history since this was an interesting investment for us.
Back when Apple was launching its app platform in the winter of 2008, we met with Greg Yardley who had teamed up with Jesse Rohland to build an analytics service for app developers. We had known Greg from his work with Seth Goldstein at Root and we were fans. And it seemed to be a smart idea to give developers the ability to see what people were doing in their mobile apps. So we provided seed financing to Greg and Jesse along with our friends at First Round.
Pinch launched the first iOS analytics service and got rapid adoption. But they ran into some challenges, the two primary ones were monetization and getting onto Android and Blackberry (which was relevant back then). And that’s where Flurry entered the picture.
Flurry was a pivot into the same business as Pinch was in. They were already on Android and Blackberry but were far behind Pinch on iOS. They were led by a hard charging CEO named Simon Khalaf who had big ideas for monetization. It was a match made in heaven. So the two companies merged and Flurry became the surviving company.
Flurry continues to lead the mobile app analytics business. According to Simon’s blog post yesterday, there are 170,000 developers with 542,000 mobile apps using the Flurry service.
And now Flurry becomes a Yahoo! branded offering. There is no question that the Flurry data and its advertising products (powered by Flurry’s data) will be a great fit for Yahoo!’s mobile ambitions.
So we have a happy ending to a startup story with a few twists and turns. This is an example of where 1+1 equaled a lot more than two. I’ve been involved in a number of “startup mergers”. Some work. Some don’t. This one worked beautifully.
I’ve written about this stuff before, but I continue to be interested in it.
I actively use the following messaging apps on my phone:
Kik – my primary channel for The Gotham Gal, my daughter Jessica, and USV people
Snapchat – my primary channel for my son Josh
SMS – my primary channel for my daughter Emily and a lot of my friends
Hangouts – secondary channel for my daughter Jessica and USV people
Twitter DM – primary channel for people who don’t have my cell number
Though I don’t use them, I realize the following apps are quite popular in the US as well
So how is it possible that we can all have and use four, five, six or more messenger apps on our phones?
It’s because the notifications channel is the primary UI on mobile, replacing the home screen, and its easy to communicate with people using a variety of applications on your phone.
What I’m wondering is if we will see even more fragmentation in our messaging behavior on mobile in the coming years, or if five to six apps per person is status quo, or might we see some consolidation?
I personally don’t see any reason for consolidation and if I had to make a bet, it would be on further fragmentation. Each of the apps I use offers something slightly different than the others. And so for certain people, and certain kinds of conversations, one messaging app is preferable to another. It’s very possible that entrepreneurs will continue to come up with unique and differentiated experiences and that will drive further fragmentation.
At USV, we have always been interested in communities. They are, in some ways, the iconic representation of our “large networks thesis”. We have been impressed by communities like Reddit, 4chan, and Hacker News. We love what our portfolio company Disqus has done to turn blogs like this one into vibrant communities. And we have turned our own website at USV into community, using Disqus and Twitter and link sharing.
We’ve long wondered what a native mobile community looks like. A few months ago we saw one when the two founders of Amino came into our office. They have built an app constellation of native mobile apps, each focused on a niche topic (like a subreddit). Examples are Minecraft, K-Pop, and Anime.
My partner Andy wrote a short post on USV.com about our investment in Amino yesterday. If you want to see what the future of communities might look like check out Amino. We are intrigued and excited to see how this plays out.