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Category: Blog

Tech Should be More Than Just Dollar Signs and Deals

#sentimental

Much of the talk recently about the company Oculus Rift has been around the notion that it’s recent $1B purchase by Facebook is a sign of a tech bubble: that companies without clear traction or business plans are being valued for outrageous sums of money.

Without commenting on that particular transaction or idea, I will say that while things like financials and valuations are important (I am a VC after all :-D), those of us in the tech industry oftentimes forget the reason that we’re all here: to help create things which improve people’s lives in transformative ways.

Seeing this article/video on Engadget earlier today about how Oculus Rift helped a terminally ill woman get to virtually walk outside reminded me that there is more to the tech industry than dollar signs and deals: the reason we’re here is to make people’s lives better and that we should never lose sight of that.

 

This won’t (nor should it) resolve any debate or concerns over the technical and financial merits of Oculus Rift. But my point is there is more to tech than just making money and driving up valuations, and if we want the future of the tech industry to be more than just bubbles and crashes, we should keep that in mind.

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Proud of My Friends

I woke up today to the wonderful news that four of my good friends all made various Forbes 30 Under 30 lists – so I had to gloat!

Congratulations to Surbhi Sarna (Science), Roger Lee (Marketing), Ben Jacobs (Tech), and Steve Eidelman (Tech): my brilliantly successful friends who are all building fantastic companies. I can’t wait to see what you guys come up with next!

surbhirogerbenandsteve

(all images from Forbes 30 Under 30 webpage)

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Pace of Mobile

Two slides from NVIDIA’s presentation at CES (captured by the excellent Anandtech team) were particularly stunning to me in terms of illustrating how quickly the mobile revolution is advancing.

This first slide highlights the main NVIDIA product announcement/claim: that starting with their current-generation product, Tegra K1 (cue NVIDIA PR: it was so advanced that they couldn’t just call the successor Tegra 5 :-)), their mobile graphics architecture would be the same as what they are currently selling for their PC products (Kepler).

NVCES-025

That’s not really a new claim — after all, it had been announced previously that Logan (the comic book inspired codename for Tegra K1) was supposed to have Kepler technology inside. What is interesting is when its presented in the following way:

NVCES-030

According to NVIDIA, it took 8 years for the PC technology that supported the Unreal Engine 3 game engine to make it to smartphones (in and of itself an impressive feat if you think about it), but only two years for Unreal Engine 4.

Obviously, there are a lot of caveats here (this is, after all, a press announcement to drum up excitement) – even if the GPU architecture is 100% the same we have no idea what kind of real-world performance or power consumption we’ll get out of this (so word to the wise: ignore a lot of the “core count” crap, its not really apples-to-apples with anything). But it’s a great indicator of how quickly the smartphone/tablet are usurping the role as the primary computing device for the world and how hard that is pushing the broader technology industry to keep up.

More great content on this (and more) at Anandtech

(Images captured by Anandtech team during NVIDIA CES press conference liveblog)

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How Often Does a $3 Billion Valuation Come Along?

Snapchat-reportedly-said-no-to-3-billion-in-cash-from-Facebook

I blogged recently about why companies like Facebook are willing to pay large amounts for barely-in-revenue-if-at-all companies like Snapchat – but that’s a question about the buyer. The question dozens of entrepreneurs and venture investors are asking themselves is: should Snapchat have taken Facebook’s rumored bid?

While the right answer to that is a combination of personal (what does the team want to do) and business (what do we see as the likely path forward for the company), one question we can answer objectively is how often does such an exit happen?

As part of an exercise to try to better understand when and where big venture-backed opportunities lie, I pulled together data from Dow Jone’s Venturesource service and cross-matched it with companies from S&P’s Capital IQ to try to identify the home runs that venture capitalists pat themselves on the back for since 2002 (the end of the 2000’s dot-com bubble and burst).

My dataset showed 23 venture-backed outcomes that exceeded $3 billion in valuation (factoring in a 180-day lockup period that accompanies most IPOs where investors and key employees cannot sell stock, except for companies listed which haven’t had that 180-days of history then which I added the most recent market cap). Five of these (Yandex, Hibu, Biosensor Applications, Carmat SAS, and CTC Media) are not U.S. companies and an additional three (MetroPCS, Antero Resources, and First Republic Bank) are what I would call “unconventional” (i.e., an organization which does VC investments was involved in a pre-exit financing but they don’t fit the usual profile). So, more practically, since 2002, only 15 U.S.-based venture-backed companies have achieved exits in excess of $3 billion.

Company Valuation ($M) Exit Date Type Sector

Google

$53B

Aug 2004

IPO

Search

Facebook

$48B

May 2012

IPO

Social

Twitter

$22B

Nov 2013

IPO

Social

Workday

$9.8B

Oct 2012

IPO

Business Software

LinkedIn

$7.2B

May 2011

IPO

Social

Groupon

$6.9B

Nov 2011

IPO

Coupon

Veeva

$4.8B

Oct 2013

IPO

Business Software

FireEye

$4.5B

Sep 2013

IPO

Security

Tableau

$3.9B

May 2013

IPO

Business Software

Palo Alto Networks

$3.7B

Jul 2012

IPO

Security

Service Now

$3.7B

Jun 2012

IPO

Business Software

Zynga

$3.7B

Dec 2011

IPO

Gaming

Hyperion

$3.3B

Mar 2007

M&A

Business Software

Doubleclick

$3.1B

Mar 2008

M&A

Adtech

Splunk

$3.1B

Apr 2012

IPO

Business Software

Of those 15, only two are acquisitions — Hyperion Solutions (a business intelligence software company bought by Oracle) and DoubleClick (a leading ad exchange bought by Google) – the remainder are IPOs, and only 5 or 6 (depending on if you count LinkedIn) are direct-to-consumer in the same way that Snapchat is.

In short, Snapchat supposedly walked away from an outcome which is extremely rare and so the Snapchat founders/board, if they’re being “rational”, are clearly focused on building a standalone, IPO-able company of the size of a Google/Facebook/Twitter/Groupon/Zynga.

They have had remarkable traction to date and it will be interesting to see if they look back on this as a big mistake or the beginning of when the rest of the world understood just how big of a company they could become.

(Image source – PhoneArena.com)

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The Facebook Hamster Wheel

With a $1 billion price tag for Instagram, a $1.1 billion valuation for Tumblr, and a rumored $3 billion bid for Snapchat, many observers are probably scratching their heads, wondering: why are companies like Facebook and Yahoo willing to shell out this kind of cash for barely-in-revenue-if-at-all consumer startups?

hamster-wheelWhile I can’t pretend that all these valuations are “rational” in a traditional sense, I can say that it becomes more understandable if you think about Facebook’s business model. Plain and simple, Facebook’s business model revolves around taking the total amount of time users spend on Facebook and making money against it, whether its through ads or charging a “tax” on virtual goods (think Farmville items) or gifts bought on the platform.

As a result, for Facebook to grow its core business, it really has two options:

  1. Increase the total amount of time users are spending on Facebook
  2. Increase how effectively you are monetizing existing time spent on Facebook

The challenge with #2 is that there really is an upper limit to how much money you can make on a minute of user eyeball-time before you start annoying the user base (either because there are too many ads or because the ads get kind of creepy). So, what most internet media companies strive for is #1 – increase the total amount of time users spend on their websites/apps.

The challenge with #1, though, is that every additional user-minute a company gets is an incremental minute of some other activity that the user needs to give up. And, since we all only have 24 hours a day (and need to sleep), that’s a limited number of minutes to go around, especially for a company like Facebook, where its users are already pretty addicted.

This means that Facebook (and other digital media companies like Yahoo and Twitter) is in a horrifying never-ending race not only to get more precious user-minutes but just to hold on to what they already have. Any time a shiny new startup takes off which seems to suck up user-time — especially if its amongst teens/adolescents who, because they don’t have tons of friends on Facebook already, don’t have any strong reason to be on Facebook — Facebook needs to find a way to grab that time back just to stay even. It’s a hamster wheel that Facebook can never get off of short of changing its underlying business model.

It’s this attention economy that drives digital media companies to pay up for startups like Instagram or Tumblr or Snapchat — they’re new threats to Facebook’s growth and business model, as well as new opportunities to get new user-minutes. That’s why these companies are so prized – for digital media companies in the attention economy, it’s the user-minutes, stupid.

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Google Loves to Make Marketers’ Lives Harder

Customer acquisition is oftentimes the key cost for a startup, and hence one of the most important capabilities for a startup to build and a key skillset for a startup to hire for. One reason for that is that Google, while a great tool in many ways for helping companies with customer acquisition, can really make customer acquisition hard to do.

Why? Well, the importance of Google to the internet means its algorithm and policy changes have HUGE impacts on customer acquisition costs and strategies.

Case in point: a little over two years ago, content businesses — like Demand Media which had learned to profit on the difference between the cost of acquiring customers from search engines and the advertisement money they could make on their content — woke up to a sudden shock when Google algorithm changes drastically changed their cost of acquiring web traffic. While this was a conscious effort by Google to improve its search results for its users, the result was like a natural disaster: an unanticipated and massive change in the business environment. Investors dinged Demand Media’s stock price by 50%, Yahoo shuttered its Associated Content business and replaced it with Yahoo Voices, and many of the initial big losers from Google’s algorithm updates continue to lag in search rankings.

Just a few months ago, Google again shook the customer acquisition world by introducing a new tabbed interface in their Gmail web email client. While tabbed interfaces have been around forever, what made Gmail’s special was that these tabs also served to filter email messages so that Facebook/Twitter updates, forum posts, and – drumroll – promotional emails/coupons weren’t the first thing a user sees when they open up their mail. The result? All those brilliant subject lines and email marketing campaigns that you’ve come up with? There’s a really big chance they got shunted to a tab that the user is predisposed to ignore or skim with impunity. The result?  Companies who rely on email as a customer acquisition channel have to find ways to counteract this — getting users to (1) open up their “Promotions” tab and (2) designate to Gmail that they want those particular promotions to hit the main inbox – or shift to a new way of getting customers to act.

This type of thing is typical in the customer acquisition world: to succeed, you need to not only get really good at today’s modalities of acquiring customers, you also have to be adaptable – and roll with the sudden changes that Google or Facebook or one of any sudden shifts in the digital world can do.

Update at 11AM PST, 8 Oct 2013: As if on cue for my blog post, I received an email from eCommerce jewelry vendor Blue Nile today about moving their promotions into my main email tab 🙂

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Disruptive Innovation in one Chart

There are few examples of disruptive innovation as clear as what happened to Research in Motion/Blackberry, the former giant when it came to smart mobile devices for businesspeople (and a device which was previously super-important to me). Despite a seemingly unassailable market position and huge profits, they were caught off-guard by the more software-and-consumer centric smartphone wave that followed, the result being an astonishing 94% loss in company value in 5 years (HT: Quartz):

blackberry-share-price-2

Only the paranoid survive indeed…

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Crowdfunding: Hardware Startups Beware

Hardware startups are one area I spend a fair amount of time with in my life as a VC, and while I love working with hardware companies, it should go without saying that hardware startups are incredibly difficult to do. They require knowhow across multiple disciplines — software, electrical engineering, industrial design, manufacturing, channel, etc. – and, as a result, have challenges and upfront capital needs that most software/web companies lack. This has led many angels and VCs to be wary of investments involving building hardware so its no small wonder, then, that many hardware entrepreneurs have turned to crowdfunding websites like Kickstarter and Indiegogo to try to raise funds for development.

While crowdfunding can be a great fit for certain projects, I think early stage hardware startups should beware. Yes, crowdfunding sites can generate upfront capital that can fund development, but unlike traditional equity/debt investments (like the kind an angel or VC or bank will give you), “crowdfunding capital” has a particularly onerous type of “string attached”: it’s a presale.

Obviously, the entrepreneurs trying to raise crowdfunding capital want to push their projects towards real sales – so why might a presale be a bad thing? For hardware companies:

  • Raw production costs are a major percentage of sales – so even if you raised $1 million, you probably are going to be able to keep max $500,000 after the cost of materials/manufacturing
  • These pre-sales are oftentimes discounted – so you are generating lower margins on each unit making these particularly painful sales to make
  • Except in a few instances, the number of presales tends to not be high enough to meaningfully change the cost of manufacturing (i.e. upfront tooling costs or supply procurement) – which further eats into the amount of capital you have left to deploy on development since you probably have to pay the low volume price
  • It means you need to keep to some level of deadline. There is a risk that you won’t make your own deadline and there’s also risk that the time pressure might lead to tradeoffs (leave out a certain feature or asset, run fewer tests, etc.) which could hurt your reputation since the public will be getting its first impressions of your company based on that initial launch.
  • It publicly commits you to a particular product even if you learn that your initial idea is wrong or needs tweaking.
  • It tips off the market and potential competition earlier since you likely are doing this at a point before your product is ready and need to provide a fair amount of detail to get supporters.

In the end this “capital” ends up being a very real “liability”, and is a big part of why serious hardware startups that do crowdfunding almost all go back to the traditional VC/Angel community – it is simply not practical to scale up a meaningful hardware business on crowdfunded capital alone.

That said, there are definitely cases where it makes sense for hardware companies to use crowdfunding – and they are cases where the above problems are irrelevant:

  • If your cost of production is tiny relative to the price (think pharmaceuticals, software, music, movie, etc. – trivial cost of production per unit sold)
  • If you’ve already completed the vast majority of development or managed to get capital from another source and are simply using crowdfunding to either gauge customer interest or raise publicity
  • If your intention is to raise money from a VC/angel using a crowdfunding success story (that you’re positive you will get) to show that a large market exists for your product
  • You couldn’t raise money from VCs period and have no other choice

In the first case, a very low cost of production means that more dollars raised can actually go into development, irrespective of volume of production and discounts. In the second case, the pre-sale becomes a good thing: a market signal or a heavily publicized pre-sale for a product which is/is almost done. The third is very risky – because I would maintain its nigh impossible to know if a crowdfunding attempt will “go viral” and even if it does, you are still left with the liability of these presales that you need to fulfill. The last is self-explanatory :-).

If you are an aspiring hardware entrepreneur, in almost all cases your best bet will be to go with traditional equity/debt financing first. Obviously, I am in part biased by my current choice of profession but while VCs and angels can be annoying to deal with and raise money from, the lack of the pre-sale liability and their potential for connecting you with potential hires and partners makes them a much better fit.

Got any questions? Disagree? I want to hear from you!

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Chipotlefication

I’ve been going with my family to Burger King ever since I was a little kid. But, as I got older, I began going less often – first because there really weren’t too many Burger Kings in the yuppie college town I went to school in and, later, after I joined the upper middle class workforce, because going to a fast food joint carried a social stigma. As a result, for the past few years, I’ve really only been to Burger King a few times a year, and mainly via the drive-thru.

So, I was very surprised to discover when I went to the restaurant for lunch yesterday how much the menu and imagery had changed since the last time I visited:

ribsandwich

What greeted me wasn’t a fast food place – it was a restaurant trying to be anything but a fast food place. Look at the imagery above: the predominant color is green – as if they were trying to evoke a feeling of a upper middle class picnic where the food is all organic and locally raised; it showcased Sweet Potato Fries in a classy fry stand – not your run of the mill French fries in a logo-emblazoned cardboard holder; and the main item – not a delicious ground beef burger, it’s a rib sandwich.

It’s a fascinating case study on rebranding – where a company adjusts its advertising and messaging to try to convince its customers and the public more broadly that its values have changed. No longer is Burger King the store of “have it your way” where you can get customization at a fantastic price – its now about “aspirational” tastes and ingredients about food which is tasty, fast, but also (at least theoretically) good for you and for the environment.

To me this Chipotlefication is a testament to the growth and success of companies like Chipotle and Panera who found a profitable and much larger market than anyone in the fast food industry had expected. Where fast food restaurants once seemed to shrug off criticisms about health and ingredient sourcing in favor of cost and taste, those same restaurants are now much more eager to talk about their vegan/dairy-free/gluten-free options and their commitment to using local, sustainably sourced ingredients.

Only history will tell if Burger King succeeds at this Chipotlefication (or if the market’s demand for this type of food is only a short-lived fad), but its interesting to me both how companies like Chipotle and Panera grow by finding new markets not properly served by the existing incumbents (i.e. Burger King, McDonald’s) and how long lived consumer brands (i.e. Burger King, McDonald’s again) seek to adapt to the changing times.

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Gut Flora Can Keep Species Apart

I’ve been fascinated by the scientific community’s growing understanding of the key role our gut flora plays in our health and wellbeing.

Interestingly, it seems that for some species, the gut flora may function as the type of reproductive barrier which drives speciation (the process by which new species arise from evolution). From this Nature News article (which is ironically about a Science paper)

Robert Brucker and Seth Bordenstein, biologists at Vanderbilt University in Nashville, Tennessee, have found that the gut bacteria of two recently diverged wasp species act as a living barrier that stops their evolutionary paths from reuniting. The wasps have subtly different collections of gut microbes, and when they cross-breed, the hybrids develop a distorted microbiome that causes their untimely deaths.

Why did this blow my mind? Three reasons:

  1. While I had been aware that our gut bacteria could have impacts on our health, other than traumatic cases like systematic inflammatory response syndrome, I had not been aware that they could directly cause death or serious reproductive impairment.
  2. That gut flora may be partly to blame for the unique health/reproductive problems that hybrids (i.e., like a mule [horse + donkey] or a liger [lion + tiger]) experience! Or, as the article puts it:

    “This is an important and potentially groundbreaking study,” says Jack Werren, an evolutionary geneticist at the University of Rochester in New York. “It reveals that problems in hybrids can be due not just to their genetic make-up, but to interactions between their genes and associated microbes.” The next step, he says, is to “determine which genes are involved in regulating which bacteria, and how this is disrupted in hybrids”.

  3. This also means that gut flora (and hence diet and all the other factors which affect our flora) may be a major driver of evolution & speciation!

Mind blown.

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DBX Keynote

My college roommate Eric sent me a link to Drew Houston’s keynote presentation from the inaugural Dropbox developer conference (DBX). While I’m a little sad I didn’t get to attend (*ahem* friends who work at Dropbox who didn’t invite me), I was very pleased to find that some of the major themes of the keynote were very much aligned with some of the things I’ve blogged about recently: mainly, putting together a web file system and creating better synchronized application experiences. While I still have questions about the details on the feasibility of the merge-less syncing back-end they were promising, I hope app developers everywhere pay attention: while DBX might not have gotten as much attention as Google I/O or WWDC, what Dropbox announced is equally important in terms of building the types of services that users will want.

Check out the video below:

DBX 2013 Keynote from Dropbox on Vimeo.

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Healthcare Reform is Coming

3v43sn(I couldn’t resist the Game of Thrones meme :D)

No matter how many health technology events I attend or healthtech entrepreneurs/experts I speak with, one thing that has always jumped out to me is just how big of a change the coming healthcare reforms/mandates feel to the hospitals, practices, payers, and technology vendors who are being charged with enacting the proposed changes.

The chart below gives some indication of some of the major changes that hospitals are both in the midst of implementing as well as in the near future that they are (hopefully) planning for (HT: Dr. John D. Halamka, CIO at Beth Israel Deaconess Medical Center). As is probably painfully clear from the alphabet soup of acronyms, the dizzying array of colors, and wonky terms like “Accountable Care Organization”, there is a LOT of complexity here (“Meaningful Use” alone means hundreds of things, divided across multiple stages).

cms

Each box means new technology systems, new ways of doing things, new ways of paying for things, new ways of being paid, new rules, new exceptions … its that complexity and the fact that all of this is intended to shake up “business as usual” which makes the health technology space so interesting and makes it such a vibrant space for new startups. Healthcare reform is coming, people.

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Tomorrow’s Pets.com

petscomToday, it seems perfectly obvious that building an internet business to sell pet food to customers where shipping and logistic costs (let alone advertising costs, etc.) wiped out any chance of profitability was an idea doomed to fail.

But, was it obvious at the time? While some folks will claim they knew all along, the market evidence suggests that most people had no clue: after all, the company raised over $110M in capital from Hummer Winblad, Comcast, Amazon.com, and others. It went on to successfully IPO in 2000 and at one point employed over 300 people. If it was such a terrible idea, it seems that it took quite a while for people to catch on.

This isn’t to specifically pick on Pets.com – quite the opposite: when you work in technology, there is oftentimes so much change and uncertainty around the future that its not obvious that the “emperor has no clothes” until its too late, oftentimes driven by entrepreneurs, career-seekers, and investors willing to pile on to make sure that they “get in on the action before its too late.”

And therein lies a very interesting question: what are the ideas/companies that have generated a ton of traction today which will become “duh, stupid” Pets.com ideas of tomorrow?

Examples of companies that flew high once and “obviously” crashed afterwards (most of the Dot Com bubble companies, many of the Cleantech bubble companies, some prominent consumer internet companies, etc) suggest that ignoring economic realities is a common refrain. Many of the failed Dot Com bubble companies and many of the challenged consumer internet companies relied primarily on drawing eyeballs to their websites/apps without figuring out how to make money enough on them to recoup their costs of marketing & advertising. The cleantech companies, similarly, gambled wrongly on government support and on their ability to make their technologies competitive with conventional systems.

But, the danger of generalizing from this type of thinking is that are plenty of examples of huge companies which succeeded despite bleak economic pictures in the early days. Amazon.com is a particularly noteworthy company that aimed to grow first before worrying about profitability (something it continues to do in a number of new businesses), not generating profit until late 2001, 7 years after founding, and over 4 years after it went public. Considering the company is worth over $100B today, compared with roughly $400M when it went public, it would seem blindly paying attention to the immediate economic picture would’ve cheated you out of a very impressive investment.

The truth is that I don’t have a good answer to this question. Studying what led to the failure of past startup models can be very informative in terms of how to think about other businesses, but the truth is that we aren’t likely to know until it hits us. Who knows, maybe in a few years “Big Data” or “Mobile advertising’ might all be revealed to have been terrible businesses…?

I would love to hear any thoughts on the subject in the comments below.

(image credit – Pets.com sock puppet – RightStartups)

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The Margin Question

While I’ve never been told this directly, I’m sure that a lot of startups I meet are a little put off as to why I oftentimes ask so many questions about their margins. As a brief refresher, margins are the % of sales that a company gets to pocket, after accounting for the cost of production. So, if it costs Acme Co. $5 to make a shirt that it sells for $10, their (in this case gross) margin is 50%.

Generally, the entrepreneurs are miffed at me because – well, they’re working in startups. They’re too busy trying to build out their product to work on financial forecasts which are likely inaccurate. The savvier entrepreneurs will sometimes throw back some variant of the point I made a while back about how the goal (for a venture-backed startup) is not profitability, but growth. The numbers themselves are also kind of a trap: if they are too high, it makes the entrepreneur seem naïve. If they are too low, it makes the business seem uninteresting.

But, the real reason I ask about margins is not necessarily to get at the precise number, but so that I understand how the management team thinks about their business and how it will grow. I’ve been in many meetings where management teams present a fantastic revenue growth story which relies on expanding product lines with lower margins. The idea here is two-fold: first, products with lower margins are easier to sell (since you’re marking them up less) and, second, as long as you are making money on each incremental sale, why not push lower margin products when venture-backed acquisitions and IPOs are oftentimes mainly evaluated on sales growth?

I tend to view that type of reasoning as a poor rationalization of opportunity costs. Whereas an entrepreneur might see “profitable growth opportunity,” my first instinct is that if a business is forced to turn to lower margin products to grow the business, then they should spend more time building a better product (to get those margins back up) or trying to find markets where the company’s innovations are more highly valued. As is oftentimes said, the most important assets that any startup has are time and money – and every second and every dollar spent chasing a lower-margin sale is a second and a dollar that is not being spent improving one’s products or chasing a higher-margin sale. When you combine that with the fact that lower margin businesses tend to be that way because there is more competition, the idea of pursuing lower margin growth opportunities becomes a lot less appealing.

Now, this isn’t to say that pursuing a lower-margin market is fundamentally a bad thing. Companies like Amazon and Samsung have built impressive businesses going after barely profitable markets (i.e., many types of online retail for Amazon and memory chips & TVs for Samsung). But, its only after a careful consideration of opportunity costs and strategy that such a choice should be made.

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Staying in Sync

While I don’t expect everyone to be as device-crazy as I am, one of the obvious consequences of convergence (the idea that more gadgets will become more computer-like — think smartphones, tablets, etc.) is that more people will have more devices. This creates new problems for users who, especially if they are from the US, were previously used to accessing their services/information mainly from a single device. After all, a well-built service or source of information should optimize experience around the user, not which device.

This proliferation is one reason I think internet services like Evernote and Gmail took off: for someone working with multiple devices, its much easier to make sure every device has access to the same data and functionality when the data and functionality aren’t on the devices themselves but hosted somewhere “in the cloud.” (Thank you, Dilbert)

188737.strip

The same logic applies to syncing services like Dropbox and applications like Netflix and smart syncing software like Chrome: they make it easy to ignore which device you’re using and just focus on the functionality and data that you want access to (in the case of Dropbox, its files; in the case of Netflix, its your viewing history and your place in a given video; and in the case of Chrome, its browser history and preferences).

Its gotten to the point where there are enough app developers and technologists working on this type of syncing that I get disappointed when a service or application fails to intelligently think about syncing as a way to delight the user. For instance, I get regularly irritated by the Twitter app for not tracking which interactions (@replies, favorites, re-tweets) I have previously seen. As I routinely move from one device (a smartphone) to another (a PC) to yet another (a tablet), with each device, I need to recheck which tweets and interactions I have seen and which I haven’t. While this is hardly the end of the world, it is only obvious because apps like Google’s new Hangouts app and Amazon’s Kindle app pass information on what you’ve seen and to where between devices, making it a coherent service completely unchained to the specific device you’re using – you can start a chat/book on one device and transition to another device without a hitch. I especially am a fan of Hangouts’ extra step: if you see an incoming message on one device, it will remove the notification from all the other connected devices (and will even minimize the open windows in other Chrome browsers).

This sort of abstraction is a common theme in the technology industry – where new companies and technologies emerge to simplify new sources of complexity. Its something I believe is becoming key functionality as the underlying problem (people with lots of devices and lots of services) grows. My advice to developers and entrepreneurs out there: don’t assume your users are married to any particular device and help them stay in sync. They will reward you for doing so.

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A Month with the Chromebook Pixel

Last month, I had the pleasure of attending Google I/O – Google’s annual developer conference and product geekfest. To put it simply, it was probably the nerdiest conference I’ve been to (and yours truly has been to some really nerdy conferences) with Google Glass users everywhere and flying, internet-controlled, camera-connected dirigible floating above the conference floor among the attractions.

One of the things that Google tried to emphasize to I/O attendees was the growing idea of Chrome, Google’s web browser, as a key platform for developers to embrace. Part of that message, of course, came from the talks and sessions where Google promoted Chrome’s widespread adoption (if you count mobile deployments, Google claims 750 million users worldwide) and proudly touted Chrome’s support of both sophisticated open technologies like HTML5, WebRTC, and WebGL, as well as proprietary-to-Chrome technologies like Native Client and their new Packaged Apps capability.

Equally (or perhaps more) effective was the conference’s giveaway of its Chromebook Pixel (not to mention some pretty interesting artistic displays showing off the device and its capabilities, see below).

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My generally positive take on the Pixel’s predecessor Samsung’s Series 5 Chromebook is one of the more popular posts on this blog and so I thought I would share my take on Google’s latest and greatest. In a nutshell, I will say that the Chromebook Pixel is light years ahead of its predecessors and is an amazing device which hints at the potential of well-built Chrome OS hardware, albeit one which is probably not worth the $1200+ price tag:

  • Good, not good enough, performance: While the Series 5 routinely stumbled and hiccuped, the dual-core Ivy Bridge processor in the Pixel, while not the fastest chip around, was up to the task of almost any large web workload I threw at it – multiple tabs with Netflix and complex webapps like Tweetdeck and Gmail and Feedly running. Even Evernote, which I had not been able to get working on the older Chromebook, worked without any problems on the Pixel.
  • Amazing display: In the same way that other remarkably high resolution displays make you want to view more content (Nexus 10, Retina Display Macbook Pros), the Pixel has actually managed to steal web browsing and video watching time from my tablets, something I didn’t expect would happen.
  • Touch: I used to be a big skeptic of the importance of touchscreen displays on laptop form factors – no more. As cheesy as it sounds, the type of relationship you have with content is different when you can use touch gestures to zoom in/out and scroll up/down versus using arrow keys or a mouse. I can’t say that I primarily use the touchscreen in navigation, but it’s a nice touch (pun intended).
  • Much better industrial design: I don’t claim to be an ID expert, but the attention to detail on the machine is decidedly impressive for a company that many in the tech industry for years felt just didn’t care about design quality. The touchpad beats most of what the PC industry has put out in feel and responsiveness (although that’s a low bar to beat) and, taking a page from Apple’s playbook, supports multi-finger gestures. The device body is smooth aluminum with only a groove on the body for cool-looking LED lights to come out as a signal that the device is on and an interesting piano hinge for the display which someone engineered to function not only as a hinge but as a heat sink and Wi-Fi antenna. Simply put: it doesn’t feel or look cheap.

Couple that with the advantages I described to all Chrome OS systems (rapid boot, easy multi-user support, frequent and automatic updates, syncing tabs/histories/passwords with all your other Chrome browsers), and I think you have a fairly compelling device.

That said, three major problems are worth calling attention towards:

  • This is still just a browser: granted, most of what we do today is in or can easily be replaced by web-based applications of some form or the other, but, this won’t be playing Starcraft or running Excel or operating a server or doing software build work.
  • Underwhelming Battery life: for an operating system that is effectively a browser, I am surprised that my typical battery life is somewhere in the 3-4 hour range, and significantly lower if I’m using Netflix or YouTube. I can’t tell if this is simply an issue where Google included too small of a battery to save costs, if this is the energy from the extra processing power and backlight needed to run such a high-resolution screen, or if this is a operating system/firmware bug where the video codecs aren’t being used properly, but this is something that will likely need real improvement.
  • Extremely high price: while this is a fantastic device, its usage limitations (to basically being a big browser) and storage and memory and battery life limitations don’t make this a $1200+ machine. Interestingly, I do feel that if they included a dual-boot to Linux option, the screen and industrial design could very well justify a higher price (compare with Linux laptop vendor System76’s new Galago UltraPro)

So, the verdict? I am extremely happy I got this device for free from Google. It’s something I use regularly because it is a delight to use and really does put forward Chrome in a fantastic light for developers (which is really the purpose of the giveaway at Google I/O). This device is also probably more than enough for what the average computer user needs (who is mainly interested in checking email, reading articles, watching videos, and playing webgames) and has unique advantages for enterprise/educational settings. But, the fact that Chrome OS still can’t do everything that I need it to do and has limitations in battery life and storage and memory make it difficult to justify the high price for a regular consumer purchase.

Any other Chromebook Pixel users out there care to share their perspectives?

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Bad Defense of the English Major in New York Times

This past Sunday, the New York Times posted an editorial by a writing teacher lamenting the decline of the English major in today’s universities:

The teaching of the humanities has fallen on hard times… Undergraduates will tell you that they’re under pressure — from their parents, from the burden of debt they incur, from society at large — to choose majors they believe will lead as directly as possible to good jobs. Too often, that means skipping the humanities…

In 1991, 165 students graduated from Yale with a B.A. in English literature. By 2012, that number was 62. In 1991, the top two majors at Yale were history and English. In 2013, they were economics and political science.

The writer believes that one result of this decline is that students (and hence graduates) are now less effective at writing clearly and are losing the “rational grace and energy in your conversation with the world around you” which accompanies an appreciation of and familiarity with great literature.

While the title of this post may suggest otherwise, I don’t disagree with the writer on the value of writing and literature. On a personal level, it was only after I left college that I began to appreciate the perspective on life that the (sadly) limited literature I am familiar with afforded me. On a more practical level, I’ve also witnessed firsthand otherwise intelligent individuals struggle in achieving their professional goals as a result of poor writing and communication skills.

However, what jumped out to me about the editorial was less the message on the intrinsic value of English or the writer’s thoughtful criticisms of how humanities courses are taught today, but more how the writer effectively brushed aside the underlying financial reasons pushing students away from declaring English (or another humanity) as a major. Its easy for the writer to argue that “a rich sense of the possibilities of language, literary and otherwise” as an answer to the question of “what is an English major good for?” But that sort of sense, while personally valuable, doesn’t pay off student loans. Its easy to criticize the “new and narrowing vocational emphasis in the way students and their parents think about what to study in college”, but it doesn’t account for the little choice that parents and students have in the matter when trying to make their checkbooks balance.

And therein lies the weakness of most impassioned pleas for students to pursue English majors and humanities instead of “more practical” majors: we don’t live in the world of the below For Lack of a Better Comic:

Comic #35

We live in a world where, sadly, students need to find jobs that can cover their debts. And the pragmatic reaction for the humanities educator is to either find a way to make their majors better suited to helping students find and compete for jobs that can cover their financial burdens or find new ways to enrich students who have chosen to pursue the “narrow vocational emphasis” they have been forced to.

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Why We All Thought Female Fertility Plummeted After 35

The Atlantic published a great article last week debunking the commonly held view that women must have children by 35 or risk high chance of infertility. Its a very interesting read, and one that I hope reassures young women who are feeling unnecessary pressure to choose between kids and careers.

But, what was especially interesting here was the article’s exploration of why this “fact” was so ingrained into our minds and the minds of fertility experts. Beyond just bad statistics (apparently the “widely cited statistic that one in three women ages 35 to 39 will not be pregnant after a year of trying is based on … French birth records from 1670 to 1830”), the article highlighted the availability heuristic: where top of mind experiences, even if they are statistically unrepresentative, twist your perceptions:

Women who are actively trying to get pregnant at age 35 or later might be less fertile than the average over-35 woman. Some highly fertile women will get pregnant accidentally when they are younger, and others will get pregnant quickly whenever they try, completing their families at a younger age. Those who are left are, disproportionately, the less fertile.

Given that fertility experts, by definition, treat wealthier women wanting children who are having trouble conceiving and routinely deal with in vitro fertilization (which is known to be less effective with older women), is it any wonder that they just assume older women have much lower fertility rates?

This sort of bias isn’t restricted just to fertility – its extremely common amongst entrepreneurs and investors who oftentimes fall into the trap of generalizing their own opinions and the opinions of their friends & family to the broader market, forgetting that the views of middle-aged, highly educated, Silicon Valley, upper-income, tech-savvy folks they know aren’t always indicative of what the broader population (i.e. the broader market) thinks.

Everyone is subject to bias – what’s important is that we constantly ask ourselves if our biases are creeping in.

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Brainteasers are a Complete Waste of Time

In hiring that is.

At least that’s what Google’s Head of People Operations (the Google-y term for HR) Laszlo Bock said in a recent interview with the New York Times. While most of the article is about the fascinating data-driven approach Bock’s group has taken to try to improve how they hire and retain the best employees, his point on the lack of success with using Fermi problems (brainteasers that physicist Enrico Fermi was apparently known for enjoying) that Microsoft and Google were famous for asking in job interviews caught my eye:

On the hiring side, we found that brainteasers are a complete waste of time. How many golf balls can you fit into an airplane? How many gas stations in Manhattan? A complete waste of time. They don’t predict anything. They serve primarily to make the interviewer feel smart.

[emphasis mine]

I personally loathe brainteasers and have walked away from companies who have dared to use those questions on me (I’ve been asked the golf ball question by two interviewers at one company). While they supposedly push the interviewee to demonstrate intellectual horsepower, the complete irrelevance to the important functions of the job, the lack of information this type of question shines on the character or ethic or work experiences of the job candidate, and the fact that many of these are easily looked up online make answers to these questions pretty useless in determining job fit.

So, if you’re an interviewer – do your interviewees and your company a favor: skip the Fermi problems and focus, instead, on ways to probe relevant knowledge and a candidate’s cultural fit in a rigorous, repeatable process.

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Tipping is Stupid

Maybe its because I miss Japan, a land with a culture which prides itself on extremely good service but where tipping is practically unheard of (also where I just spent two weeks on my honeymoon). But, lately, I’ve been thinking that tipping is stupid.

  • I’ve found that, except in rare instances of extremely good or extremely bad service, the amount of tip given has almost nothing to do with the quality of service – which makes it a terrible system for rewarding good service and punishing bad service.
  • It feels horribly arbitrary who and how much you tip. Why do we tip the bagboy but not the people who work at the front desk? Why do we tip cab drivers but not a airplane pilot or a flight attendant? And just how much are we supposed to tip? Why 15% at restaurants…? What about cabs? Bellboys? Strippers?
  • It encourages establishments to pay their employees less, and to be less smart about how they pay their employees. At the end of the day, I tip because I know the recipients tend to be in professions which count on tips for a substantial portion of their income. But this fact begs the question: why should this come in the form of a tip as opposed to a proper wage? After all, employers are in a far better position to have a holistic view on which employees to compensate and how much to insure good service – and why that should be left to the whims of different customer moods and mores is beyond me.

Much to my delight and surprise, while driving home from work, I had the chance to listen to a great story about an establishment called Sushi Yasuda in Manhattan on APM’s Marketplace (the podcast I turn to for news). The quote which caught my attention:

Following the custom in Japan, Sushi Yasuda’s service staff are fully compensated by their salary. Therefore gratuities are not accepted. Thank you.

[Emphasis mine] And, is Sushi Yasuda suffering from bad food and poor service? 987 reviews on Yelp suggest otherwise.

I personally plan to swing by the next time I’m in New York, but I’m hoping more restaurants embrace Sushi Yasuda’s example of paying their workers better and abolishing what, to me, seems like an archaic and irrational practice.

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