Posts from July 2016

I saw dozens of pitches for what was essentially YouTube between 1998 and 2005. But when YouTube launched, it was pretty clear pretty quickly that they had nailed it and nobody else before them had.

I saw way more pitches for what was essentially Pokemon Go between the arrival of the iPhone and now. But when my daughter told me to download Pokemon Go and play it, I immediately realized that they had nailed something that nobody had before them

AVC regular LIAD tweeted this today:

Saving myself the anguish of digging up the 2008 game spec & mock-ups we made for a AR treasure hunt/landmine avoidance game. #PokemonGO

— Liad Shababo (@L1AD) July 11, 2016

You are not alone LIAD.

I recall seeing John Geraci‘s ITP senior thesis project in 2005 which was a web version of this idea powered by Google Maps, and understanding that we all want to interact with interactive media in the real world.

I’ve always loved the idea that we could do a massively public treasure hunt together using the web and mobile. But it took over ten years since I first saw this idea to have it really happen.

It made me smile when Emily told me to download it and I am still smiling days later. And I have a gym right outside my front door.

I’ve been thinking about Amazon’s Lambda service which I mentioned in the Hacking Echo post last week. Lambda is not new, but last week was the first time I saw it in action. I need to see things in action to understand them.

Business model innovation is interesting to me, maybe more than technology innovation. Because new business models open up new use cases and new markets. And new markets create a lot of new value. And I am in the new value business.

Think about this value proposition:

AWS Lambda lets you run code without provisioning or managing servers. You pay only for the compute time you consume – there is no charge when your code is not running. With Lambda, you can run code for virtually any type of application or backend service – all with zero administration. Just upload your code and Lambda takes care of everything required to run and scale your code with high availability. You can set up your code to automatically trigger from other AWS services or call it directly from any web or mobile app.

“You pay only for the compute time you consume, there is no charge when your code is not running”

So we have gone from “you have to buy a server, put it in a rack, connect it to the internet, and manage it” to “you can run your code on a server in the cloud” to “you can run your code on a shared server in the cloud” to “you can pay for code execution as you use it”. And we have done that in something like ten years, maybe less. That’s a crazy reduction in price and complexity.

But we also have put a ton of code in an open repository that anyone can access and copy from.

So, like we did in the Hacking Echo situation, you can now browse GitHub, find some code, use it as is or modify it as needed, and then put it up on Lambda and pay only when you execute it.

I think this is going to make for a lot more hacking, experimentation, and trying new things.

And that is going to result in new use cases and new markets. It may already have.

Here’s a talk my colleague Nick Grossman gave at Personal Democracy Forum last month. We have been advocating for some time with anyone in government who will listen that we need to change the paradigm of regulation from yes/no to yes,if and the if is all about data. We call this new data driven regulation paradigm “Regulation 2.0”. Nick walks the audience through this thinking in this talk.

And here are his slides from the talk

Typically on fridays, we do something light and easy to get the conversation flowing here at AVC. Fridays are less about me writing and more about us talking.

But I’m not feeling very light and easy today. It’s been a bad week here in the US. It started with yet another fatal shooting of a black person by law enforcement and ended with snipers killing officers in Dallas last night.

We have a problem in the US with gun violence and race relations. And our law enforcement professionals are at the epicenter of these issues.

It is all so tragic and ghastly and awful.

Larry Summers has a post in the Washington Post about the incredibly low interest rate environment we are witnessing right now.When you consider the effects (slim as they are) of inflation, there are cases where the rates borrowers are paying are zero and even negative.

That means the lender is happy to get back less than they lent because they think that’s a better deal than they can get elsewhere. Think about what that says about the mindset of lenders (or holders of capital assets writ large) right now.

My partner Albert has written a book called World After Capital in which he argues that what has been scarce until now (capital) will no longer be scarce and that we will move on to other forms of scarcity. 

When capital is abundant and when you are getting paid to access it temporarily that leads to a very different set of decisions.

What we don’t know is whether this is a temporary situation (as Larry Summers hopes and policy makers are attempting to ensure) or a more permanent situation as Albert envisions. That is an important question.

My friend Stephen and I have been talking about hacking the Amazon Echo so it can be a front end to our Sonos systems. Stephen decided to make it more than talk and downloaded some code on Github and stitched together a system that works. I was at his house yesterday evening and he showed it to me. Here’s a blurry video taken from a phone that shows it in action.

Stephen’s system uses the cloud based Skills interface to parse the commands, then sends instructions to some of that Github code running on Amazon’s Lamba cloud based code execution service, which then sends instructions to a local server on Stephen’s laptop that runs the code that controls the Sonos locally on his home network. It’s a kludge for sure, but it works and I am going to get this hack working on my Sonos system over the next few weeks.

But the whole experience got me thinking about hacking the Echo to do other things. The possibilities are endless.

Here’s an idea for some enterprising engineer out there. We own some bungalows in Venice that are rented out on Airbnb and VRBO. We have a Sonos Play in each of them. And we have a Google Doc that has frequently asked questions on it hanging in the kitchen of each bungalow. What if there was an app for Amazon Echo that could take in that Google Doc, parse the frequently asked questions and answers, and train Alexa (the voice command interface in Amazon Echo) to answer the frequently asked questions. That would get me to swap out the Sonos Plays in each bungalow for Amazon Echos. And Airbnb could promote that app to all of its hosts.

Anyway, there are all sorts of things that would be fun to make by hacking Echo. And I suspect they will. These voice based devices could be the next big platform for developers to make things on.

I recall reading a history of The Beatles and as it is told, they developed their performance skills playing in rock clubs in Hamburg Germany in the early 60s. They played night after night and developed a style and technique that formed the essence of the band for the next decade.

I thought of that today when I read a NY Times piece on our portfolio company YouNow.

My long time friend Steve Greenberg, a thirty year veteran of the music industry, is quoted in the piece talking about one of his young developing stars who performs on YouNow:

In the old days, an artist would have to find some club to get good about relating to an audience. With YouNow she can just go online and play, whether it’s for hundreds or thousands of people, and get real-time feedback.

What used to require moving to Hamburg and playing clubs every night can now be done in the comfort of a teenager’s bedroom, it seems.

I’ve written many times about how I/we prefer to invest in mission driven founders vs mercenary founders. The former starts a company because they see a problem they feel compelled to fix. The latter starts a company because they see an opportunity to make money. There is nothing wrong with the latter. It is likely the reason that the vast majority of companies are started. But we prefer to invest in the former because there is an extra something going for a founder who starts with a mission. It leads to more tenacity, more passion, more feel for the product and market, and ultimately a higher probability of success.

For role models for the mission driven founder we need to look no farther than the founding fathers and the opening line of the Declaration of Independence, published 240 years ago today:

When in the Course of human events, it becomes necessary

The key word being necessary. These people had had enough and NEEDED to forge a new path.

So when thinking about starting a company, ask yourself if it is necessary. That will tell you a lot.

We are entering the summer months when things move slower in the investor community. This is true of venture capital, but it is also true of other investment sectors as well. Summer vacations slow things down and investors also use the time to step back a bit and evaluate how the first half of the year has gone and plan for the second half.

I know many companies don’t like to raise capital in the summer months. While I understand that approach and it is conventional wisdom, I think the contrarian approach of raising in the summer can also work.

Raising money in the summer months will go slower and can be frustrating as you lose weeks at a time to vacations. Partner meetings are harder to get scheduled. And trying to get multiple potential investors on the same time frame is nearly impossible.

But the benefit of raising in the summer is that you are not competing with as many other companies to get the investor’s attention. You can more easily rise above the noise in the summer. Investors don’t take the summer off, they just slow things down a bit. So if you need to raise capital in the summer or just want to, you can make it work. You just need to allow more time for the process and be patient and flexible.

One advantage of raising in the summer is that you can take care of fueling the tank when things are slow with customers and be ready to step on the gas in the fall when things pick up again. The last four months of the year are often a sprint to the finish line and using up some of that energy raising is often suboptimal.

So if you find yourself in the market for capital this summer, don’t fret. But be prepared for a slog that doesn’t move as fast as you’d like it to. It’s the doldrums after all.