Apr 17, 2016

Bots, Messaging and SmarterChild


If I gave you my love, I tell you what I'd do
I'd expect a whole lot of love out of you
- Al Green


Smart people believe that messenger type interfaces and associated “bots” will become a primary way people access new services going forward. We at USV certainly find truth in that, see both Kik and Koko and Libov’s thoughts here.

There are a bunch of reasons why this could be the case. First, the primacy of messaging - in all its various forms - appears to be growing as fast as ever. The conversational nature of messaging and chat also feels natural. Finally, the reduced load on a user from having to switch contexts to do different things appears as a major benefit to the different interface.


I’ve seen this before, as one of my first investments ever in 2000 was leading the first financing in SmarterChild, where that product and company faced many of these same questions. What did they see and do?


  • Given that it was 2000-2001, SmarterChild launched on the then dominant (only?) messaging platform - AOL’s instant messenger (AIM). In no way did we think this was a wholly original idea - it was inspired by Eliza, Alice, and many others. Instead, the implementation and technology were more unique.


  • SmarterChild was not designed to live as simply one of many names on your contact list delivering services. The goal was for it to be your primary portal into the world - to be the one “bot” that ruled them all.


  • As a result, the company spent an inordinate amount of time upfront building personality libraries. The idea was that since SmarterChild was interjected into a place that was exclusively where personal conversations occurred with friends, the service (or bot) had to act like your friend in addition to being a utility service. Otherwise it would too interruptive or, worse, easy to ignore.  


  • This required SmarterChild to be able to respond to not only informational queries but also, well, sex and profanity. Chris Bray, one of the original developers, was once asked how people were using SmarterChild. He replied:
Cf4JPVCXIAAjmNy.jpg


  • The implicit assumption here was that the utility services would take time to perfect, so you had to give people a reason to stick around while that happened. A domain library that responded to profanity was thus a necessity, along with weather, sports scores, stock quotes, news, dictionary, yellow pages and search.


  • Making SmarterChild appear as a friend (albeit a strange one) would become the primary way people would then tell their other friends about it. And alot of people told their friends. At the peak, SmarterChild had tens and tens of millions of followers on the IM platforms. I am pretty sure this was - at the time at least - the most followed “user” in the history of AIM. People posted thousands of screenshots of their interactions with and feelings about SmarterChild:


Screen Shot 2016-04-16 at 3.38.39 PM.png

Screen Shot 2016-04-16 at 6.38.55 PM.png

  • The other area that the company invested heavily into was response time. A first principle was that unless the bot could answer in under 10 milliseconds to each and every request it would be a failure. Speed, speed, speed.


SmarterChild worked well until it didn’t work well. For one, at some early point it needed explicit agreements with the platform owners because it quickly ran into rate limits. The volumes were also so massive it needed technical cooperation with them. And, finally, there was the constant tug back and forth with the platforms. 

ActiveBuddy, the parent corporation of SmarterChild, lived virtually every day with both the excitement of massively increasing user numbers and fear that they would be shut down because they neither owned nor had any control over their distribution. Ultimately, that tension was too much to manage against.





Dec 30, 2015

Somewhere In The Middle


Change, nothing stays the same
- Van Halen

2015 was in some ways the year that the science of gene editing - or Crispr - came into the public consciousness. As part of that, large incumbent players made big moves. For example, this joint venture involving Bayer (a $40B company).

There were other examples of the “incumbents” in the health and medicine space making significant investments into innovation in 2015: Memorial Sloan Kettering Cancer Center built a $300 million, state-of-the-art outpatient surgery center that uses beacon based tracking of patients, HD based anatomical imaging, and an Xbox for fitness activities.

Yet, at the same time things are happening at the same or a faster pace at the edge - in a “bottoms up” manner - businesses and products that could potentially be major transformations. Amino is a desktop bioengineering system that will cost less than $700. There is also the frugal science movement, "the endeavor to create low-cost, easy-to-use tools that address serious problems."

This dynamic - with incumbents making what appear to be aggressive, risky and expensive moves and at the same time new entrants chipping away at the margins and edges - is also being replicated in other industries.

Take the beer business. On the one hand, the number of craft breweries in the U.S. surpassed the historic high set in 1873, topping 4,100 (see: America Has More Breweries Than Ever Before).

Then look at the M&A activity from incumbents in 2015 alone (from “Why 2015 Was Such a Historic Year for Craft Beer”):

Screen Shot 2015-12-29 at 8.52.46 AM.png

Business moving from the top down, and from the bottom up, simultaneously.

In the technology world things look the same. Google, Microsoft, Apple, Facebook, Alibaba, Tencent and Amazon, to name just a few, are moving on many, many fronts. “There’s one theme this year that seems to run horizontally across many of the top tech companies we cover: everyone wants to do everything” (Lauren Goode in the Verge).

Or, as Jeff Bezos, CEO of the “retailer” Amazon.com said just the other day: “We want to win an Oscar. Amazon has already won Golden Globes and Emmys. Our current target is to produce 16 home movies a year.”

But not only are the big firms expanding - dozens of new companies are being started yearly. In 2015 over $4B was invested in digital health startups alone by over 300 venture firms. Similarly, about $4 billion has been invested in VR in the past few years.

And while Silicon Valley is the gravitational center of technology industry, Stockholm is “the second largest producer of billion dollar start-ups after Silicon Valley on a per capita basis.”

What is going on here, is this anything new? Who knows, for sure, but I do think there is a potentially new dynamic playing out. That is, the terms “innovation” and “disruption” (as vague as they may be) have become mainstream, and are no longer the secret, province, or modus operandi of a smaller subset of businesses. As Jonathan wrote in an email to us the other week - the leaders of this era have been trained in the art of disruption.

This is a sign of market maturity but it also feels like something more - because while the players at the top move aggressively, the ones at the bottom do not appear to be slowing. To the contrary, they too are aggressively trying new models and businesses. It’s like full stack innovation being played out on a global scale. :-)

The next few years are going to be interesting.

May 6, 2015

No Stack Startups

“Who can unlearn all the facts that I've learned”

One way of looking at a publisher’s chain of business operations is that there are five core things it must do: (1) produce content; (2) market/promote content; (3) distribution; (4) figure out the best user interface or experience for its content; (5) and monetize the business. This applies, really, to any publisher: both content and commerce, for example. So, to maximize end user experience and value, and from there enterprise value, a company needs to maximize its ability to deliver across those components. Of course, technology infuses them all.

One way to accomplish this was suggested by Chris Dixon last year. He called it the “full stack startup”:

"The new approach is to build a complete, end-to-end product or service that bypasses existing companies. . . you need to get good at many different things: software, hardware, design, consumer marketing, supply chain management, sales, partnerships, regulation, etc.”

“You need to get good at many different things” being the key proposition.

But maybe, a year or so later, we are seeing something different emerging. Something closer to the actual unbundling of content and commerce businesses themselves from the web at large (and the apps thereto). The unbundling of the full stack startup. Where instead of being good at many things, companies can just focus on the last mile of value they provide, the one thing they can excel at better than anyone else. Maybe this should be called the No Stack Startup - services that can focus on doing only one thing - hopefully well - and utilize other services for everything else.

This is not totally new but is challenging some of established orthodoxy by assuming there are some things - design for example - that may not be core competencies.

Some examples made me think of this:
The Shade Room - an Instagram based entertainment publisher, that only does the content sourcing and production 
Stefan’s Head - a text based commerce company, that only designs the products and uses Twilio (I think) on the front end and Stripe on the back end, to deliver via SMS its offers 
Weiguofang - a fruit seller that operates on WeChat 
TextRex - restaurant recommendations over SMS 
Some characteristics all these share is that they use other platforms and APIs (or protocols, in the case of SMS) to cobble together a service and in doing so rely almost wholly on those platforms and APIs for every function of the business other than the one they can be the best at. And, maybe more importantly, they all are using those other platforms to define their users experiences. 

Take Facebook, for example. At some level, the Facebook is a very good platform to market, distribute, promote, and - now, maybe - monetize content on. The UX is well known to its users - and optimized over years through billions of interactions for commenting and sharing. In this way, Facebook performs 4 of the 5 components listed above. All, except making the content itself. Similarly, take other platforms, such as Instagram:

“If you have an Instagram account, you can slap a price tag on anything, take a picture of it, and sell it. For instance, you could take this can of San Pellegrino, paint it pink, put a heart on it, call it yours, and declare it for sale. Even my grandmother has an Instagram business! She sells dried fruit. A friend’s cousin is selling weird potted plants that use Astroturf. People are creating, you know, hacked products.”
These No Stack businesses may not offer a “great experience” (traditionally defined) but they likely are “good enough” (see this presentation for a great overview of how this is happening in Asia).

Of course, most of these are not even "mobile-first" businesses - they are "mobile-only". They often don’t even have web sites (or, apps for that matter): "the homepage once conferred some sense of reaching your canonical destination, it’s now your name on Facebook, Instagram, Twitter, Amazon etc. that consumers are searching for” (Jonathan Libov).
Historically there have always been services and APIs to string together capabilities.  Until recently, most of these have been back-end infrastructure types.
Now it feels like there is something additional going on. For one, the back end services have gotten really, really good and really varied (see, Stripe, Twilio, Shippo, Kabbage, Ziggeo, Layer as just a few examples covering payments, messaging, shipping, financing and video).

But moreso, the No Stack services are utilizing other front ends layered on top of the back end services. They are utilizing front ends that may not have even been initially designed for those purposes. But they work because in many ways they are optimal user experiences that are already market tested.

The No Stack Startup thus does not attempt to recreate a user experience, instead relying on other UX that are good enough, and getting better. This obviously inverts the notion of user experience and even design (my partner Albert's great TEDx talk is all about inversions in fact).

Even better, in relying on the UX of other platforms, the No Stack Startup also relies on the users of those platforms. In some ways, and to paraphrase Jeff Bezos, this new class of services looks at other platforms, builds upon them, and thinks: "your users are my opportunity."

I have been trying to figure out what the implications of this might be. A few ideas:
* the platforms themselves may have different and even stronger network effects than previously imagined (though in different ways), as springboards to other services 
* it feels like it is an amazing time to be a creative entrepreneur utilizing emerging no stack techniques, though it is wholly unclear how to measure the sustainability of the no stack approach via the full stack approach 
* the environment for incumbent publishers is even more competitive with a faster feedback loop then we probably realize.
Regardless of the implications, it seems that when there is continuously less "there" needed to create value, we might at a minimum require some new definitions.

Apr 10, 2015

Changing Metaphors


"Photograph - all I've got is a photograph. But it's not enough"
Def Leppard



Wikipedia tells us that the word "photograph" derives from the Greek words phos and graphĂȘ, together meaning "drawing with light."

I suppose that for a hundred or so years that general definition worked as a metaphor to describe a new technology and medium and what could be done with it, whether that be still, animated or in motion images.


But sometimes metaphors stop working as a way to mentally conceive, and build off of and from, new technologies.

When the "web" first came into mass consciousness and culture, the metaphor that was initially used was the web "page". By using the word "page" as the defining principle, we then logically used other pages that we knew - magazine pages, in particular - to define what web pages were and could be. Interactive magazines, in a way. So, perhaps, the initial wave of web innovation was about making better magazines - interactive, specifically targeted pages for sure, but pages and the attributes of pages nonetheless. Design - user interface and experience - then also followed this line of thought. Thus, it's no surprise that the first search engines used directories - indexes, of a sort - as their jumping off point metaphor for organization.

It took a while to bust out of the "page" metaphor for web services experiences, maybe 10 years or more. And one could argue that the page metaphor itself was limiting, and then the results therefrom were also limited. Ultimately, the stream and other ideas became dominant, and what was (and still is) exciting about those is that they feel more native to the Internet (and mobile). There is no strong analogy for an analog stream experience.

I think we are in the same place right now with "drawing with light." While functionally that definition may still be correct, what words do we use to make sense of a "drawing with light" that later disappears (Snapchat)? Or that moves and is remixed (animated gifs)? These things are no longer designed per se to capture and be archival. They are meant to enhance current experience.

Or, how do we think about new forms of medical imaging, like figure 1, which take an image (or an ekg, or xray) that is about a local, health experience, and broadcast it all over the world for advice, consensus and, yes, ego? Or Epibone, which uses 3D images to grow bones. What about
 Mapillary - crowdsourcing street level photos of every place in the world. What do we even call a map once we have that? Similarly, Hivemapper, which is a network of social flying cameras. Finally, the idea of "drawing with light" hardly captures something like Cornar which attempts to record what is beyond the line of sight.

And, once images are digital, and copying them becomes trivial, how do we think about ownership, attribution, and things like that?

Luckily, smart people are thinking about this. Evan Nisselson's LDV Vision Summit (http://www.ldv.co/visionsummit/) on May 19 & 20 in NYC, for one, is two days exploring specifically and only this. New metaphors - computer vision, artificial intelligence, deep learning - that may help. It should be really interesting, and Evan and I will be talking about these themes at the event.

What's great is that we are busting out of the limited, existing "incumbent" metaphor, and inventing new things based on what may now be possible. We'll just need some new words to describe them.

Feb 13, 2015

The Chaos Theory Of Startups


"Since we don't know where we're going, we have to stick together in case someone gets there" - Ken Kesey


I was flying from NY to SF the other day and at one point the gentleman I was sitting next to asked me if I was flying towards or away from home. I told him NYC was my home and I was on a business trip. He then said, "let me guess, Internet business." I was momentarily self conscious (was it my shoes? laptop stickers?) but then figured it was a nice bit of self-reflective cultural commentary: everyone flying to SF is going there for the Internet.

We chatted about it and he asked me something I've been asked many times over the years - "how do these Internet companies make money." Which was nice because we discussed all the "Internet companies" that actually do make money because they are, in fact, good businesses. Points scored.

But then we got talking about what startups are, or aren't, and what that word actually means, or doesn’t mean. At that point I got more tongue-tied then earlier in the conversation. I couldn't totally describe the meaning of the word.

I still can't. But I thought more about it overnight and then had a notion this morning that maybe startups are actually about chaos. Not necessarily chaos meaning "a state of confusion," but instead chaos meaning systems that are explicitly designed to be dynamical and highly sensitive to initial conditions. Indeed, chaos theory provides an almost-perfect description here of the outcomes of startups:

"Small differences in initial conditions yield widely diverging outcomes for such dynamical systems, rendering long-term prediction impossible in general."
The process of starting something up, then, doesn't view that chaos as a bug, but as a reality. Even as a competitive advantage, if you will, because if the conditions are actually right, the outcome and its impact will be oversized (indeed, massively oversized). 

In chaos systems, one of the challenges then is to determine what is random, or chaotic, and what is meaningful. One of the hard things about being in a startup in this state of chaos is to actually figure out what course of action leads to randomness or instead leads to signal to build upon and grow into and out from. In short, the difficulty is how to decide what to do.

If one believes this, it probably follows then that the decision making process itself that goes into startups is primary: it's less about the actual decisions themselves then it is about the process used to make those decisions. In any given scenario there are three potential outcomes. The best outcome is that you make the correct decision. The second best is that you make the wrong decision. The worst outcome is when you can't make a decision.

So then, “process” becomes a defining characteristic. Your framework for making decisions matters as much or more than the decisions themselves, because the "chaos" of the system makes most outcomes indeterminate (again, chaos theory: “long-term prediction [is] impossible in general”).

So you need a framework, a set of first principles. That then guide your decision making and problem solving.

Taken a step further, I've always thought the most useful thing a venture investor can then do for a company is simply help them come up with that framework, that scaffolding, to throw all those choices into. And not specifically to help make the choices themselves. After all, one of the primary ways venture investors can add value is through having seen dozens and dozens of these chaoses. Presumably, we are well-suited to help determine frameworks for decision making in future, similar chaotic scenarios.

I think there are lots of different frameworks or first principles for decision making; it’s not a limited set. This may mean that figuring out the framework may be the hardest question of all. Determining what successful startups are outliers or are patterns may be less relevant, as we only need to look for the frameworks they use and then copy or fork them for our situation.

Phil Jackson believed this too. He wrote "the road to freedom is a beautiful system." The winningest coach in NBA history believed that his success was developing a framework for his players to guide the dozens and dozens of decisions that they have to make each game, each play. He actually believed then, that his job as a coach during games was just to watch. If he had helped the team develop the right framework, then his role would at its optimum - at decision-making time – simply to sit back and let them process. 


This doesn't always lead to the right decisions, but has reminded me that maybe our role as venture investors is precisely the same.
 

Nov 20, 2014

Looking More Closely


I was talking when I should have been listening 

- Grant Hart

As venture investors, we look at our investments and investment strategy continuously at a macro level. Questions like: how much are we investing and how fast? How does that compare to our other funds? What are our ownership levels and how are those changing? 

We run Monte Carlo simulations regularly to analyze the future capital requirements of companies, and whether we have reserved enough capital to support them in the out years. We look at the geographical distribution of our investments. We try to correlate all these data points to our investment thesis

It's constant self-analysis, and it is part of how a VC fund should operate.

But I find it's also helpful to sometimes zoom in closely, almost microscopically, at the companies themselves. To forget about portfolio diversity (or even returns), or the ups and downs they go through, and remind myself of what it is they do at a discrete level, and why they use the Internet to do that. 


So after our weekly meeting on Monday I poked around the USV portfolio a bit. I learned about:


* The 100+ pages of poetry on Wattpad, many with tens of thousands of reads and thousands of comments. This writer invents poetry forms too. People like poetry, apparently.


* The (more than) than 7,000 Etsy results for "magic wand" - there are some incredible, handmade, wands for sale there.

* The Black&Sexy network of videos and films and programming over on VHX - "programming focused on a young, progressive, Black audience who seek a truer reflection of their modern culture." This group makes short videos and sells them for between $2 and $5 and also gives them away for free on Youtube. They have sold tens of thousands of these Internet-only shows.

* I found this fundraiser on Crowdrise that supports an organization that teaches Filipino folk dance to Filipino-American youth in Stockton, CA. Micro-support ftw.

* This small fashion accessories company in London borrowed $100k from over 1,000 people via the lending platform on Funding Circle.

* A guy on Skillshare who uses his 100 year old family recipe to teach you how to brine.  

* And, Liz from Seattle started a new career at age 55 after learning how to code for free on Codecademy.

These surely are not necessarily signs of ultimate start-up success (though I might argue they are directional indicators of such). 

But it makes things more meaningful for me to dig a little deeper sometimes to see what is really going on. It keeps me optimistic, and optimism may be a core competency of a venture investor, after all.




  

Aug 13, 2014

Experience


God, what a mess, on the ladder of success

Where you take one step and miss the whole first rung
- Paul Westerberg

I was in a board meeting the other day at a company we have been investors in for a bunch of years. It is run by a small, great group of people, who built a good social product that did reasonably well - many users - but never broke out and achieved those hyper growth rates associated with services that have network effects.

Until this spring, when the service caught fire, adding hundreds of thousands (or more) of users a week, tens of millions of sessions a day, top 20 status in app stores the world over. Many things they had been thinking about for years started to work. At this meeting, I listened to updates from a bunch of the team members including the founder and in areas such as systems, community, product and analytics. And as I listened to these people I knew well and had heard from many times over the past few years, it occurred to me they had changed. It was not that they had suddenly become successful - after all it's early days and this company will face many more ups and downs in its journey. It was that they have been through a transformative business experience. Rebuilding a product on almost no budget, making gut calls and decisions, managing a massive growing, international and vocal community. They were now presenting to us as experienced business people, confident in their plans and in command of their data and themselves. 

They now had experience. And it is going to be fun to watch what they do with it.

As amazing as it was to see, it also humbled me. For how could I possibly advise and counsel them on the things they had experienced? I know nothing about operating a distributed moderation team in multiple languages. Nor little about building a redundant real time system handling millions of requests a day with almost zero latency and no down time. 

I remember when I started to work at AOL in mid-1990s and on my second day there I was told to negotiate and document a relationship with AOL's then-largest marketing partner, American Express. I was given the old deal to refer to, and little else. Everyone else was too busy to guide me. I cried at home at night with what seemed to be an insurmountable task - I had never done this before. But we got it done - I don't recall we even got it done particularly well - but it was done. The next deal we did was better because by then I had at least a modicum of confidence, of experience. The next one even better. I imagine in some way it got me here, so I can bank on that journey as my way to add value.

I've always been a big believer in the concept of the "beginner's mind" - that “in the beginner’s mind there are many possibilities, but in the expert’s there are few.” But I'm not so sure that principle is always applicable. A little experience also goes a long way, which I re-learned this week.

Jul 15, 2014

Sometimes wrong


"I ain't often right, but I've never been wrong"

About seven years ago I came across an online music service that, instead of charging fixed fees for the digital files (there was no streaming back then), instead used a formula based on demand where the price changed over time. For example, a song 
initially would cost $0, thus appealing to the trend setters who want to discover something first, and be incentivized to download and share. Later the price would rise as demand increased, to $0.99 or more. And, finally, even further down the road, the prices could decrease as demand waned.

This service was called "Amie St" and I titled the blog post Amie Street Is The FutureBut I was badly, badly off in my profuse praise and prediction (Ugh - I wrote: Amie St "is the future of music distribution."). For Amie St's model and business did not really survive. My incorrect praise and predictions, however, do survive.

I was reminded of this of a few weeks ago when Songza, which arose out of Amie St and by the same team, was sold to Google. Reminded of how misguided I was, but also that sometimes maybe in one's errors of judgement there exist some pieces that make sense.

VHX is a company we have invested in that empowers artists to sell their work directly. It is platform with a number of components that connect various artists together. Very different from Amie St. Maybe. 

Yesterday, a bunch of disparate filmmakers who have used VHX before joined together to sell their films collectively, as a bundle. These artists don't necessarily have to have any relationship with each other - VHX allows these bundles to occur on the fly if they desire.

The bundle is called The Creativity Bundle because each of the films deals with the creative process of different kinds of artists - video game makers, font designers, sign painters. Two interesting things about the bundle are the bundle itself (allowing different filmmakers to become, in real time and on the fly, digital distributors  - studio like, if you will), and that the price is "set your own." You can pay as little as $1 for the bundle. 

VHX and the filmmakers are publishing the results, on the bundle page itself, right below the "buy" button. As of this morning at 6am ET, the average price paid was $7 for the bundle, with 25% paying $15 or more, 15% paying $1, and people from Germany and Italy being the most generous, on average, in paying for the bundle.

This is an experiment of sorts: about giving artists more control (and money) with distribution of their films and how they are sold; about looking at the role of a media distributor in a different, and more fluid and digital, way; about not assuming that one price fits all. Some of those principles may not work. But also all of them may be right. 

I'll hardly make the mistake again of making an out-loud proclamation that something is the "future" of anything. But I woke up this morning with a little less despair about my past incorrect public predictions. I wasn't right, but maybe also I wasn't totally wrong.

Mar 28, 2014

Ego

Ain't lost yet, so I gotta be a winner
- Paul Westerberg

A number of years ago we were fundraising for betaworks. I can't remember if this was the first or second financing, 2007 or 2008, but we'd been out talking to various financial and strategic investors for a few months explaining the story and model. One of those investors was someone we had previous close relationships with and one who potentially could be strategically relevant and important to our business; we assumed we'd get a warm reception there, which we did. This investor was indeed receptive, but was taking a while getting convinced that our model made sense for them. They didn't say no, but they didn't say yes either. This was frustrating, as it is for anyone raising money, because we couldn't seem to fully interest them over what felt like a long period of pitching. We knew that the betaworks "story" was different, but we were ourselves convinced we could describe it and model it in a way that made sense, and thus we had conviction that this was a rare investment opportunity (which is not to suggest it actually was a "rare investment opportunity" - it may or may not have been - just that we believed that to be true, and more than that we believed it actually to be a truism). 

The financing round ultimately came together with a bunch of other investors, as these things do, with a lot of momentum and demand towards the end of this process. In fact, there was more demand than we actually needed or likely wanted. After we had agreed to the outlines and terms and amount of the fundraise, we went to work putting the documents in order and moving to a close, without the investor mentioned above that we couldn't earlier convince. A few days before the close, this investor reached out and said that, yes indeed, they would like to participate, in a material but very small (relatively to the amount of money we were raising) way.

These people were friends; this entity was strategically relevant to things we were doing; the amount was small. But we said no to them. They had plenty of time earlier, they had their chance, it was a hassle for us to now deal with it. No.

On a Sunday afternoon, the next day or so, an old friend of mine called me. He had no stake in this investment whatsoever, but he knew the parties involved. He said to me, in effect, think about this entities money, this investment, another way: if we thought it made sense for us at one point why did it not now, at the end?

At that point, I realized that it was our egos that had rejected this investor, not good business judgement. Ego has to come into play in starting a company, some solid belief that what you are doing is right even though it hasn't been done or other people tell you it's stupid. Ego allows you to face the rejection and the ups and downs. Ego enables you to convince other people to come on board when they have numerous other options. Ego matters.

But ego can also be short sighted, if you allow it only to be a shield for the rejection that inevitably comes, instead of a way to seize opportunity. We decided we wanted to reject the investor, as part of that shield.

The good news is, we reconsidered it later on that Sunday, after I got that call, reevaluated the whole situation, called them up, thanked them for their interest, and they became an investor the next Monday. A good one too, over time. Years later, I am still trying to make sure that I don't again let ego get in the way of a good deal.


Feb 10, 2014

Amazon Web Services as Metaphor

Amazon Web Services are defined as "a set of services that together form a reliable, scalable, and inexpensive computing platform in the cloud.” This definition belies just how profound those sets of services actually are. I remember back in 2008 watching Nate, Todd, Kortina, others, spin up web apps in seconds, letting their creative juices flow almost instantaneously from idea into live services (from thought into expression), some that worked and some that never saw widespread visibility. Those that worked, we added capacity, services, as needed, thus variablizing the entire product development process. For someone like me who grew up in the Internet of 1997, to watch this was nothing short of revelatory. 

But aside from the technical aspects of AWS, as impressive as they may be, maybe they also created another more meaningful change in the way we all work. By changing the context of the provision of back end technical services, AWS created an explosion in the types of content - web services - that were then created (context > content).

But maybe they also shaped, or rather re-shaped, the metaphor of creation in a fundamental way, by breaking down what was once thought of as core and instead providing those on a variable, unbundled, basis. And by doing so dramatically expanded what was possible for entrepreneurs.

I think the same thing, the same metaphorical change, is happening now in domains outside pure Internet services. As such we are seeing emerging "AWS like" stacks that support the creation of new businesses in other areas and ways, but represent the same type of profound change in freeing up the creativity of people to build. And as I think about it - this is thrilling.

For example, take the world of science, scientific discovery, scientific entrepreneurialism. Here's what a potential "AWS" stack looks like today: Experiment is a way to fund scientific discoveries; qb3 is a biosciences incubator network in California; Science Exchange is a marketplace for experiments from leading and upcoming labs; Peerj is an open access research publisher. This stack (and I am just listing four pieces) thus supports science entrepreneurs through a set of services that includes research, funding, incubation and experimentation. And this is not theoretical - it's happening - Pearlstein Lab has used a combination of Experiment, Angel List, Rocket Hub, Science Exchange and qb3 to assist and fund their scientific and innovative endeavors. 

The same thing is happening in the consumer products space. Here is the emerging stack for consumer products startups: Incubation Station, in Austin, an accelerator for CPG; Circle Up, connecting consumer brands with investors; Whole Foods, through their local producer loan programs; and Storefront, temporary retail space. 

What about film making - maybe the stack here includes Kickstarter, VHX and VimeoUSV has made multiple investments in all these areas.

What these all represent to me are new stacks for different domains that help solve financing, production and distribution problems. But also something much more - they are the result of a profound shift in the way creation happens, a shift away from friction to free form, on-the-fly, componentized innovation. Just like Amazon Web Services taught us.