This weekend, I paid a visit to The Henry Ford. Its a combination of multiple venues — a museum, an outdoor “innovation village”, a Ford Motors factory tour — which collectively celebrate America’s rich history of innovation and manufacturing and, in particular, the legacy of Henry Ford and the Ford Motors company he built.
While ambitious super-CEOs like Larry Page (Google), Elon Musk (Tesla), and Jeff Bezos (Amazon) with their tentacles in everything sometimes seem like a modern phenomena, The Henry Ford shows that they are just a modern-day reincarnations of the super-CEOs of yesteryear. Except, instead of pioneering software at scale, electric vehicles, and AI assistants, Ford was instrumental in the creation of assembly line mass production, the automotive industry (Ford developed the first car that the middle class could actually afford), the aerospace industry (Ford helped develop some of America’s first successful passenger planes), the forty hour workweek, and even the charcoal briquet (part of a drive to figure out what to do with the lumber waste that came from procuring the wood needed to build Model T’s).
In the same way that the tech giants of today pursue “moonshots” like drone delivery and self-driving cars, Ford pushed the frontier with its own moonshots: creating cars out of bioplastic, developing biofuels, and even an early collaboration with Thomas Edison to build an electric car.
It was a striking parallel, and also an instructional one for any company that believes they can stay on top forever: despite the moonshots and the technology advantages, new technologies, market forces, and global shifts come one after the other and yesterday’s Ford (eventually) gets supplanted by tomorrow’s Tesla.
If you follow the tech industry at all, you will have heard that consumer app darling Snap Inc. (makers of the app Snapchat) has filed to go public. The ensuing Form S-1 that has recently been made available has left tech-finance nerds like yours truly drooling over the until-recently-super-secretive numbers behind their business.
While full-time Wall Street analysts will pour over the figures and comparables in much greater detail than I can, I decided to take a quick peek at the numbers to gauge for myself how the business is doing as a growth investment, looking at:
What does the growth story look like for the business?
Do the unit economics allow for a path to profitability?
What does the growth story look like for the business?
As I noted before, consumer media businesses like Snap have two options available to grow: (1) increase the number of users / amount of time spent and/or (2) better monetize users over time
A quick peek at the DAU (Daily Active Users) counts of Snap reveal that path (1) is troubled for them. Using Facebook as a comparable (and using the midpoint of Facebook’s quarter-end DAU counts to line up with Snap’s average DAU over a quarter) reveals not only that Snap’s DAU numbers aren’t growing so much, their growth outside of North America (where they should have more room to grow) isn’t doing that great either (which is especially alarming as the S-1 admits Q4 is usually seasonally high for them).
A quick look at the data also reveals why Facebook prioritizes Android development and low-bandwidth-friendly experiences — international remains an area of rapid growth which is especially astonishing considering how over 1 billion Facebook users are from outside of North America. This contrasts with Snap which, in addition to needing a huge amount of bandwidth (as a photo and video intensive platform) also (as they admitted in their S-1) de-emphasizes Android development. Couple that with Snap’s core demographic (read: old people can’t figure out how to use the app), reveals a challenge to where quick short-term user growth can come from.
As a result, Snap’s growth in the near term will have to be driven more by path (2). Here, there is a lot more good news. Snap’s quarterly revenue per user more than doubled over the last 3 quarters to $1.029/DAU. While its a long way off from Facebook’s whopping $7.323/DAU (and over $25 if you’re just looking at North American users), it suggests that there is plenty of opportunity for Snap to increase monetization, especially overseas where its currently able to only monetize about 1/10 as effectively as they are in North America (compared to Facebook which is able to do so 1/5 to 1/6 of North America depending on the quarter).
Considering Snap has just started with its advertising business and has already convinced major advertisers to build custom content that isn’t readily reusable on other platforms and Snap’s low revenue per user compared even to Facebook’s overseas numbers, I think its a relatively safe bet that there is a lot of potential for the number to go up.
Do the unit economics allow for a path to profitability?
While most folks have been (rightfully) stunned by the (staggering) amount of money Snap lost in 2016, to me the more pertinent question (considering the over $1 billion Snap still has in its coffers to weather losses) is whether or not there is a path to sustainable unit economics. Or, put more simply, can Snap grow its way out of unprofitability?
Because neither Facebook nor Snap provide regional breakdowns of their cost structure, I’ve focused on global unit economics, summarized below:
What’s astonishing here is that neither Snap nor Facebook seem to be gaining much from scale. Not only are their costs of sales per user (cost of hosting infrastructure and advertising infrastructure) increasing each quarter, but the operating expenses per user (what they spend on R&D, sales & marketing, and overhead — so not directly tied to any particular user or dollar of revenue) don’t seem to be shrinking either. In fact, Facebook’s is over twice as large as Snap’s — suggesting that its not just a simple question of Snap growing a bit further to begin to experience returns to scale here.
What makes the Facebook economic machine go, though, is despite the increase in costs per user, their revenue per user grows even faster. The result is profit per user is growing quarter to quarter! In fact, on a per user basis, Q4 2016 operating profit exceeded Q2 2015 gross profit (revenue less cost of sales, so not counting operating expenses)! No wonder Facebook’s stock price has been on a tear!
While Snap has also been growing its revenue per user faster than its cost of sales (turning a gross profit per user in Q4 2016 for the first time), the overall trendlines aren’t great, as illustrated by the fact that its operating profit per user has gotten steadily worse over the last 3 quarters. The rapid growth in Snap’s costs per user and the fact that Facebook’s costs are larger and still growing suggests that there are no simple scale-based reasons that Snap will achieve profitability on a per user basis. As a result, the only path for Snap to achieve sustainability on unit economics will be to pursue huge growth in user monetization.
Tying it Together
The case for Snap as a good investment really boils down to how quickly and to what extent one believes that the company can increase their monetization per user. While the potential is certainly there (as is being realized as the rapid growth in revenue per user numbers show), what’s less clear is whether or not the company has the technology or the talent (none of the key executives named in the S-1 have a particular background building advertising infrastructure or ecosystems that Google, Facebook, and even Twitter did to dominate the online advertising businesses) to do it quickly enough to justify the rumored $25 billion valuation they are striving for (a whopping 38x sales multiple using 2016 Q4 revenue as a run-rate [which the S-1 admits is a seasonally high quarter]).
What is striking to me, though, is that Snap would even attempt an IPO at this stage. In my mind, Snap has a very real shot at being a great digital media company of the same importance as Google and Facebook and, while I can appreciate the hunger from Wall Street to invest in a high-growth consumer tech company, not having a great deal of visibility / certainty around unit economics and having only barely begun monetization (with your first quarter where revenue exceeds cost of sales is a holiday quarter) poses challenges for a management team that will need to manage public market expectations around forecasts and capitalization.
In any event, I’ll be looking forward to digging in more when Snap reveals future figures around monetization and advertising strategy — and, to be honest, Facebook’s numbers going forward now that I have a better appreciation for their impressive economic model.
Technology in the 1990s and early 2000s marched to the beat of an Intel-and-Microsoft-led drum.
Intel would release new chips at a regular cadence: each cheaper, faster, and more energy efficient than the last. This would let Microsoft push out new, more performance-hungry software, which would, in turn, get customers to want Intel’s next, more awesome chip. Couple that virtuous cycle with the fact that millions of households were buying their first PCs and getting onto the Internet for the first time – and great opportunities were created to build businesses and products across software and hardware.
But, over time, that cycle broke down. By the mid-2000s, Intel’s technological progress bumped into the limits of what physics would allow with regards to chip performance and cost. Complacency from its enviable market share coupled with software bloat from its Windows and Office franchises had a similar effect on Microsoft. The result was that the Intel and Microsoft drum stopped beating as they became unable to give the mass market a compelling reason to upgrade to each subsequent generation of devices.
The result was a hollowing out of the hardware and semiconductor industries tied to the PC market that was only masked by the innovation stemming from the rise of the Internet and the dawn of a new technology cycle in the late 2000s in the form of Apple’s iPhone and its Android competitors: the smartphone.
A new, but eerily familiar cycle began: like clockwork, Qualcomm, Samsung, and Apple (playing the part of Intel) would devise new, more awesome chips which would feed the creation of new performance-hungry software from Google and Apple (playing the part of Microsoft) which led to demand for the next generation of hardware. Just as with the PC cycle, new and lucrative software, hardware, and service businesses flourished.
But, just as with the PC cycle, the smartphone cycle is starting to show signs of maturity. Apple’s recent slower than expected growth has already been blamed on smartphone market saturation. Users are beginning to see each new generation of smartphone as marginal improvements. There are also eery parallels between the growing complaints over Apple software quality from even Apple fans and the position Microsoft was in near the end of the PC cycle.
While its too early to call the end for Apple and Google, history suggests that we will eventually enter a similar phase with smartphones that the PC industry experienced. This begs the question: what’s next? Many of the traditional answers to this question – connected cars, the “Internet of Things”, Wearables, Digital TVs – have not yet proven themselves to be truly mass market, nor have they shown the virtuous technology upgrade cycle that characterized the PC and smartphone industries.
This brings us to Virtual Reality. With VR, we have a new technology paradigm that can (potentially) appeal to the mass market (new types of games, new ways of doing work, new ways of experiencing the world, etc.). It also has a high bar for hardware performance that will benefit dramatically from advances in technology, not dissimilar from what we saw with the PC and smartphone.
The ultimate proof will be whether or not a compelling ecosystem of VR software and services emerges to make this technology more of a mainstream “must-have” (something that, admittedly, the high price of the first generation Facebook/Oculus, HTC/Valve, and Microsoft products may hinder).
As a tech enthusiast, its easy to get excited. Not only is VR just frickin’ cool (it is!), its probably the first thing since the smartphone with the mass appeal and virtuous upgrade cycle that can bring about the huge flourishing of products and companies that makes tech so dynamic to be involved with.
The chart above shows how Renaissance Capital’s US IPO index (prospectus), which tracks major IPOs in US markets, has performed versus the broader market (represented by the S&P500) over the past year. While the S&P500 hasn’t had a great year (down just over 10%), IPOs have done even worse (down over 30%).
In recent years, it’s been the opposite of controversial to say that the tech industry is in a bubble. The terrible recent stock market performance of once high-flying startups across virtually every industry (see table below) and the turmoil in the stock market stemming from low oil prices and concerns about the economies of countries like China and Brazil have raised fears that the bubble is beginning to pop.
While history will judge when this bubble “officially” bursts, the purpose of this post is to try to make some predictions about what will happen during/after this “correction” and pull together some advice for people in / wanting to get into the tech industry. Starting with the immediate consequences, one can reasonably expect that:
Exit pipeline will dry up: When startup valuations are higher than what the company could reasonably get in the stock market, management teams (who need to keep their investors and employees happy) become less willing to go public. And, if public markets are less excited about startups, the price acquirers need to pay to convince a management team to sell goes down. The result is fewer exits and less cash back to investors and employees for the exits that do happen.
VCs become less willing to invest: VCs invest in startups on the promise that future IPOs and acquisitions will make them even more money. When the exit pipeline dries up, VCs get cold feet because the ability to get a nice exit seems to fade away. The result is that VCs become a lot more price-sensitive when it comes to investing in later stage companies (where the dried up exit pipeline hurts the most).
Later stage companies start cutting costs: Companies in an environment where they can’t sell themselves or easily raise money have no choice but to cut costs. Since the vast majority of later-stage startups run at a loss to increase growth, they will find themselves in the uncomfortable position of slowing down hiring and potentially laying employees off, cutting back on perks, and focusing a lot more on getting their financials in order.
The result of all of this will be interesting for folks used to a tech industry (and a Bay Area) flush with cash and boundlessly optimistic:
Job hopping should slow: “Easy money” to help companies figure out what works or to get an “acquihire” as a soft landing will be harder to get in a challenged financing and exit environment. The result is that the rapid job hopping endemic in the tech industry should slow as potential founders find it harder to raise money for their ideas and as it becomes harder for new startups to get the capital they need to pay top dollar.
Strong companies are here to stay: While there is broad agreement that there are too many startups with higher valuations than reasonable, what’s also become clear is there are a number of mature tech companies that are doing exceptionally well (i.e. Facebook, Amazon, Netflix, and Google) and a number of “hotshots” which have demonstrated enough growth and strong enough unit economics and market position to survive a challenged environment (i.e. Uber, Airbnb). This will let them continue to hire and invest in ways that weaker peers will be unable to match.
Tech “luxury money” will slow but not disappear: Anyone who lives in the Bay Area has a story of the ridiculousness of “tech money” (sky-high rents, gourmet toast, “its like Uber but for X”, etc). This has been fueled by cash from the startup world as well as free flowing VC money subsidizing many of these new services . However, in a world where companies need to cut costs, where exits are harder to come by, and where VCs are less willing to subsidize random on-demand services, a lot of this will diminish. That some of these services are fundamentally better than what came before (i.e. Uber) and that stronger companies will continue to pay top dollar for top talent will prevent all of this from collapsing (and lets not forget San Francisco’s irrational housing supply policies). As a result, people expecting a reversal of gentrification and the excesses of tech wealth will likely be disappointed, but its reasonable to expect a dramatic rationalization of the price and quantity of many “luxuries” that Bay Area inhabitants have become accustomed to soon.
So, what to do if you’re in / trying to get in to / wanting to invest in the tech industry?
Understand the business before you get in: Its a shame that market sentiment drives fundraising and exits, because good financial performance is generally a pretty good indicator of the long-term prospects of a business. In an environment where its harder to exit and raise cash, its absolutely critical to make sure there is a solid business footing so the company can keep going or raise money / exit on good terms.
Be concerned about companies which have a lot of startup exposure: Even if a company has solid financial performance, if much of that comes from selling to startups (especially services around accounting, recruiting, or sales), then they’re dependent on VCs opening up their own wallets to make money.
Have a much higher bar for large, later-stage companies: The companies that will feel the most “pain” the earliest will be those with with high valuations and high costs. Raising money at unicorn valuations can make a sexy press release but it doesn’t amount to anything if you can’t exit or raise money at an even higher valuation.
Rationalize exposure to “luxury”: Don’t expect that “Uber but for X” service that you love to stick around (at least not at current prices)…
Early stage companies can still be attractive: Companies that are several years from an exit & raising large amounts of cash will be insulated in the near-term from the pain in the later stage, especially if they are committed to staying frugal and building a disruptive business. Since they are already relatively low in valuation and since investors know they are discounting off a valuation in the future (potentially after any current market softness), the downward pressures on valuation are potentially lighter as well.
Better late than never, but a few weeks ago, I got the chance to attend Google I/O — this time, not just as a fan of the Android platform but representing a developer. Below are some of my key takeaways from the event
Google‘s strategic direction – there were three big themes that were emphasized
Next Billion – a lot of what Google is doing (like making Google Maps / YouTube work without internet) is around making Chrome/Android/Google Search the platforms of choice for the next billion mobile users — many of whom will come from Brazil, India, China, Indonesia, etc. Its important for us to remember the US/Western Europe is not the totality of the world and that there’s a big chance that future major innovations and platform will come from elsewhere in the world.
Machine Learning – I was blown away (and a little creeped out!) by the machine learning tech they showed: Google Now on Tap (you can hold the home button and Android will figure out what’s on your screen/what you’re listening to and give you relevant info), the incredible photo recognition tech in the new Photos app (which you should all try! unlimited storage!), innovations Android is making in unlocking your phone when it knows its been in your pocket and not your desk. Every company should be thinking up where machine intelligence can be used to enhance their products.
Everything Connected – it reminded me of Microsoft’s heyday: except instead of Windows everywhere, its now Android/Chrome everywhere: Android Wear, Chromecast, Android TV, Android Auto, Brillo/Weave, Cardboard for VR, Nest/Dropcam for the home, things like Jacquard & Soli enabling new user interfaces, etc.
I sat through a panel on how Google does personalized recommendations / search on Google Play — long story short: keywords + ratings matter
Google will now allow A/B testing of Google Play store listings
Google Play console now directly integrates App Install advertising so you can run campaigns on Google Search, AdMob, and YouTube
Google Play console will also track how users get to Play Store listing by channel and how many convert to install
Android M – a lot of tweaks to the core Android app model for developers to pay attention to
Permissions: Android M moves to a very iOS-like model where app permissions aren’t granted when you install the app but when the app first uses them; they’ve also moved to a model where users can go into settings and manually revoke previously granted permissions; all Android developers will need to eventually think about how their apps will work if certain permissions are denied (see: http://developer.android.com/preview/features/runtime-permissions.html)
Doze and App Standby: Applications will now have two additional modes that the OS may enforce — one called Doze that keeps all apps in sleep mode to reduce power drain and Standby where the OS determines an app is “idle” and cuts off network access, syncs, and jobs — apps in both modes can still receive “high priority notifications” (see: http://developer.android.com/preview/behavior-changes.html under Power-Saving Optimizations)
Fingerprint API, Direct Share, and Voice Interactions: universal fingerprint rec API + ability to share specific content with specific favorite users (i.e. send to someone over Facebook Messenger, etc) + new way to build voice interactions in app (see: http://developer.android.com/preview/api-overview.html, starting from Authentication)
For free/automatically: pound on every button / interface on your app that they can see after launch for 1 min and see how many crashes they can get on a variety of Android devices (which helps given the sheer number of them that exist)
Paid: run custom Espresso or Robotium tests on specific devices (so you can get test coverage on a broader range of devices doing a specific set of things)
Places API: a lot of talks promoting their new mobile Places APIs (which will let iOS and Android apps have better mapping and place search capability)
One of the most fascinating things about the technology industry is how the lines between markets and competitors can shift all of a sudden. One day, Nokia is mainly thinking about competing with phone makers like RIM and Motorola on getting influence with carriers and upselling text messaging services / ring tones and, the next, they need to deal with players like Apple and Google, fostering a strong app ecosystem, creating intuitive user experiences, and building a brand that resonates with users.
One interesting case that has emerged in the past couple of days is the electric car company Tesla entering the Home and Industrial energy market. In much the same way that software let Apple and Google build operating systems that could double up as phones, the manufacturing prowess and battery technology which let Tesla take on the electric car market also gives them the ability to offer energy storage solutions for the utility market.
When I was a VC looking at energy storage opportunities, there was a fair amount of discussion in the industry about the future potential for electric cars connected to the grid to themselves to operate as energy storage / load balancing. I never expected this to amount to much for at least a decade — when the penetration of electric vehicles would be high enough to make sense for utilities to invest in this capability. Never would I have imagined the path to anything even remotely like this would be through an electric car company directly making and offering electric batteries to supply the market. While history will judge whether or not Tesla is successful at this (a lot of unanswered questions around the durability of their Li-ion batteries for utility purposes and how they will be serviced / maintained), you can’t fault Tesla for lack of boldness!
Its hard for a device to get noticed in a world where new phones and tablets and smartwatches seem to come out every day. But one device unveiled back in March did for me: Motorola’s new smartwatch, the Moto 360 (see Motorola marketing video below).
So, being a true Fandroid, I bought a Moto 360 (clarification: my wonderful wife woke up at an unseemly hour and bought one for each of us) and have been using it for about a week — my take?
While there’s a lot of room for improvement, I like it.
This is by far the best looking smartwatch out there. Given how important appearance is for a watch, this is by far the most important positive that can be said of the Moto 360 — it just looks good. I was a little worried that the marketing materials wouldn’t accurately represent reality, but that fear turned out to be unfounded. The device not only looks nice up close, especially since its round design just looks so much better than pretty much every other smartwatch’s blocky rectangular designs, it also feels good: stainless steel body, a solid-feeling glass surface, and a very nice-feeling leather strap.
The battery life is nothing to brag about but will last you a full day. The key here is that the watch display can be used in two modes: (1) where the display is always on (and, from what I’ve read, will get something like 12 hours of battery life which won’t last you a whole day) and (2) where the display only turns on when you’ve triggered it which, in my experience, will get you something more like 20 hours of battery life — enough to get through a typical day. Obviously, I use (2) and what makes this possible is that turning on the screen is quite easy: you can do it by tapping on the touch-sensitive screen, by pushing the side button, or (although this only works 80% of the time) by moving your arm to be in a position where you can look at it. Now, I’d love a watch that could last at least months with the screen on before needing a charge but since I’m already charging my phone every night and since the wireless charging dock makes it easy to charge the device, this is an annoyance but hardly a dealbreaker.
The out-of-the-box experience needs some work. While the packaging is beautiful and fits well with how nice the watch itself looks, the Moto 360 unfortunately ships needing to be charged up to 80% before it can be used. Unfortunately this is not clear anywhere on the packaging or in the Android Wear smartphone app that you’re supposed to use to pair with the device or on the watch display so let me be explicit: if you buy the Moto 360, charge the device up before you download the Android Wear app or try to use it. Otherwise, nothing will happen — something which very much freaked out yours truly when I thought I had gotten a defective unit. Also, while I haven’t heard about this from anyone else, the Moto Connect app that Motorola wanted me to install also failed to provision an account for me correctly, leaving me unable to customize the finer details on the watchface designs that come with the watch. Not the end of the world, but definitely a set of problems a company like Motorola shouldn’t be facing.
I’m not sure the pedometer or heart rate sensor are super-accurate, but they’ve pretty much killed any need/desire on my part for a fitness wearable. The fitness functionality on the watch isn’t anything to write home about (its a simple step counter and heart rate sensor with basic history and heart-rate goal tracking). I’m also not entirely convinced that the heart rate sensor or the pedometer are particularly accurate (although its not like the competition is that great either), but their availability on a device I’m always going to be wearing because of its other functionality may pose a serious risk to fitness wearable companies which only do step tracking or heart rate detection.
Voice recognition is still not quite where it needs to be for me to make heavier use of the voice commands functionality.
The software doesn’t do a ton but that’s the way it should be. When I first started using Android Wear, I was a little bummed that it didn’t seem to have a ton of functionality: I couldn’t play games on it or browse maps or edit photos (or send my heartbeat or a random doodle to a random person…). But, after a day or two of wearing the device to social gatherings, I came to realize you really don’t want to do everything on your watch. Complicated tasks should be done on your phone or tablet or PC. They not only have larger screens but they are used in social contexts where that type of activity makes sense. Spending your time trying to do something on your smartwatch looks far more awkward (and probably looks far more rude) than doing the same thing on your phone or other device. Instead, I’ve come to rely on the Moto 360 as a way of supplementing my phone by letting me know (by vibrating and quickly lighting up the screen) about incoming notifications (like from an email or text or Facebook message), new alerts from Google Now (like access to the local weather or finding out about sudden traffic on the road to/from work), and by letting me deal with notifications the way I would if they were on my phone (like the ability to play and pause music or a podcast, or the ability to reply using voice commands to an email or text). This helps me be more present in social settings as I feel much less anxiety around needing to constantly check my phone for new updates (something I’ve been suffering from ever since my Crackberry days)
Android Wear’s approach makes it easy to claim support for many apps (simply by supporting notifications), but there needs to be more interesting apps and watchfaces for the platform to truly get mainstream appeal
All in all, I think the Moto 360 is hands down, the best smartwatch available right now (I’ll reserve my judgement when I get a chance to play with the Apple Watch). Its a great indicator of what Google’s Android Wear platform can achieve when done well and I’ve found its meaningfully changed how I’ve used my phone and eliminated my use of other fitness tracking devices. That being said, there’s definitely a lot of room for improvement: on battery life (especially in a world where the Pebble smartwatch can achieve nearly a week of battery life between charges), on voice recognition accuracy, on out-of-the-box setup experience, and on getting more apps and watchfaces on board. So, if you’re an early adopter type who’s comfortable with some of these rough edges and with waiting to see what apps/watchfaces come out and who is interested in some of the software value I described, this would be a great purchase. If not, you may want to wait for the hardware and software to improve another iteration or two before diving in.
I think the industry still needs a good answer to the average person around “why should I buy a smartwatch?” But, in any event, I’ll be very curious to see how this space evolves as more smartwatches come to market and especially how they change people’s relationships with their other devices.
I’ve always been blown away by the richness of the Minecraft “game engine”. While ostensibly a game about breaking and placing blocks (while potentially surviving against monsters and other players depending on the server and the game mode), its “creative mode” as well as widespread user modifications to the game have unleashed an amazing amount of creativity resulting in people building amazing worlds including (but not limited to, HT: Mashable for a lot of these)
Knowing how much kids enjoy Minecraft made me wonder if it would be possible to use the game and these sorts of rich models as an education tool to complement the traditional “blackboard lecture” model of teaching which does a very poor job of imparting intuition and understanding. The beauty of something like Minecraft is that it can be used to produce a visual, modifiable simulation in a format that students are probably already consuming (or can probably learn how in a short amount of time), and as a result, it lends itself to exploration and to students making or modifying things to demonstrate and improve their understanding.
Building a microprocessor or digital storage system may be too difficult for a class assignment (although at a reduced level of complexity, they could become very useful teaching aids), but a digital tour of ancient Rome or an assignment to build an Egyptian pyramid or a basic AND or OR circuit? I think that type of learning could benefit a great deal from some Minecraft-ification :-).
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.
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).
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:
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.
While 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:
Increase the total amount of time users are spending on Facebook
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.
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):
Capitalizing on widespread interest in companies built around “Big Data”, VC firm Accel yesterday unveiled its “Big Data Fund 2”, a $100M fund aiming to make investments in technology companies which help their customers make sense of the massive volumes of data that they are now able to gather and generate.
While I personally have gotten a little sick of the “Big Data” moniker (its become like “cloud computing” – just one of many buzzwords that companies slap on their websites and press releases), what jumped out to me in reading the press release and the tech blog coverage was the emphasis of the fund away from companies commercializing Big Data infrastructure technology and towards companies building “data driven software”.
Now, no VC’s “rules” about a fund are ever absolute – they will find ways to put money into (what they perceive as) good investments, regardless of what they’ve said in press releases – but the message shift jumped out to me as potentially a very bold statement by Accel on how they perceive the state of the “Big Data” industry.
All industries go through phases – in the early days, the focus is around laying the infrastructure and foundation, and the best tech investments tend to be companies working on infrastructure which ultimately serves as a platform for others (for example: Intel [computing] and Cisco [internet] and Qualcomm [mobile]). Eventually, the industry moves on to the next phase – where the infrastructure layer becomes extremely difficult for small companies to compete in and the best tech investments tend to be in companies which take advantage of the platform to build new and interesting applications (for example: Adobe or VMWare [computing] and Amazon.com [internet] and Rovio [mobile]).
Of course, its hard to know when that transition happens and, as often happens with tech, the “applications” phase of one industry (e.g., Facebook, Salesforce.com, etc.) can oftentimes serve as the infrastructure phase for another (e.g., social applications, CRM-driven applications, etc.). But, what Accel’s “Big Data Fund 2”’s mission suggests is that Accel believes the “Big Data industry” has moved beyond infrastructure and is on towards the second phase where the most promising early-stage investments are no longer in infrastructure to help companies manage/make use of Big Data, but in applications that generate the value directly.
A colleague of mine shared an interesting article by Sarah Lacy from tech site Pando Daily about the power of technology building the next set of “digital skyscrapers” – Lacy’s term for enduring, 100-year brands in/made possible by technology. On the one hand, I wholeheartedly agree with one of the big takeaways Lacy wants the reader to walk away with: that more entrepreneurs need to strive to make a big impact on the world and not settle for quick-and-easy payouts. That is, after all, why venture capitalists exist: to fund transformative ideas.
But, the premise of the article that I fundamentally disagreed with – and in fact, the very reason I’m interested in technology is that the ability to make transformative ideas means that I don’t think its possible to make “100-year digital skyscrapers”.
In fact, I genuinely hope its not possible. Frankly, if I felt it were, I wouldn’t be in technology, and certainly not in venture capital. To me, technology is exciting and disruptive because you can’t create long-standing skyscrapers. Sure, IBM and Intel have been around a while — but what they as companies do, what their brands mean, and their relative positions in the industry have radically changed. I just don’t believe the products we will care about or the companies we think are shaping the future ten years from now will be the same as the ones we are talking about today, nor were they the ones we talked about ten years ago, and they won’t be the same as the ones we talk about twenty years from now. I’ve done the 10 year comparison before to illustrate the rapid pace of Moore’s Law, but just to be illustrative again: remember, 10 years ago:
the iPhone (and Android) did not exist
Facebook did not exist (Zuckerberg had just started at Harvard)
Amazon had yet to make a single cent of profit
Intel thought Itanium was its future (something its basically given up on now)
Yahoo had just launched a dialup internet service (seriously)
The Human Genome Project had yet to be completed
Illumina (posterchild for next-generation DNA sequencing today) had just launched its first system product
And, you know what, I bet 10 years from now, I’ll be able to make a similar list. Technology is a brutal industry and it succeeds by continuously making itself obsolete. It’s why its exciting, and it’s why I don’t think and, in fact, I hope that no long-lasting digital skyscrapers emerge.
I’ve blogged before about the strengths of the web as a software development platform and the extent to which web apps are now practically the same thing as the apps that we run on our computers and phones. But, frankly, one of the biggest things holding back the vision of the web as a full-fledged “operating system” is the lack of a web-centric “file system”. I use the quotes because I’m not referring to the underlying NTFS/ExtX/HFS/etc technology that most people think of when they hear “file system”: I’m referring to basic functionalities that we expect in our operating systems and file systems:
a place to reliably create, read, and edit data
the ability to search through stored information based on metadata
a way to associate data with specific applications and services that can operate on them (i.e. opening Photoshop files in Adobe Photoshop, MP3s in iTunes, etc)
a way to let any application with the right permissions and capabilities to act on that data
Now, a skeptic might point out that the HTML5 specification actually has a lot of local storage/file handling capabilities and that services like Dropbox already provide some of this functionality in the form of APIs that third party apps and services can use – but in both cases, the emphasis is first and foremost on local storage – putting stuff onto or syncing with the storage on your physical machine. As long as that’s true, the web won’t be a fully functioning operating system. Web services will routinely have to rely on local storage (which, by the way, reduces the portability of these apps between different machines), and applications will have to be more silo’d as they each need to manage their own storage (whether its stored on their servers or stored locally on a physical device).
What a vision of the web as operating system needs is a cloud-first storage service (where files are meant to reside on the cloud and where local storage is secondary) which is searchable, editable, and supports file type associations and allows web apps and services to have direct access to that data without having to go through a local client device like a computer or a phone/tablet. And, I think we are beginning to see that with Google Drive.
The local interface is pretty kludgy: the folder is really just a bunch of bookmark links, emphasizing that this is a web-centric product first and foremost
It offers many useful operating system-like functionality (like search and revision history) directly on the web where the files are resident
Google Drive greatly emphasizes how files stored on it have associated viewers and can be accessed by a wide range of apps, including some by Google (i.e. attachments on Gmail, opening/editing on Google Docs, and sharing with Google+) and some by third parties like HelloFax, WeVideo, and LucidChart
Whether or not Google succeeds longer-term at turning Google Drive into a true cloud “file system” will depend greatly on their ability to continue to develop the product and manage the potential conflicts involved with providing storage to web application competitors, but suffice to say, I think we’re at what could be the dawn of the transition from web as a software platform to web as an operating system. This is why I feel the companies that should pay more close attention to this development aren’t necessarily the storage/sync providers like Dropbox and Box.net – at least not for now – but companies like Microsoft and Apple which have a very different vision of how the future of computing should look (much more local software/hardware-centric) and who might not be in as good a position if the web-centric view that Google embodies takes off (as I think and hope it will).
In the Pipeline’s Derek Lowe wrote a very thoughtful opinion piece for the ACS (American Chemical Society) journal Medicinal Chemistry Letters where he does something which I encourage all career-minded working people to do: hold up a mirror to his own industry (medicinal chemistry … obviously) and then gaze into his crystal ball to see where it might go in the future:
it is now the absolute worst time ever to be an ordinary medicinal chemist in a high-wage part of the world. The days when you could make a reliable living doing methyl–ethyl–butyl–futile work in the United States or Western Europe are gone, and what mechanism will ever be found to bring them back? There’s still a lot of that work that needs to be done, but it is getting done somewhere else, and as long as “somewhere else” operates more cheaply and reasonably on time, that situation will not change.
This means that the best advice is not to be ordinary. That is not easy, and it is no guarantee, either, but it is the only semisafe goal for which to aim. Medicinal chemists have to offer their employers something that cannot be had more cheaply in Shanghai or Bangalore. New techniques, proficiency with new equipment, ideas that have not become commodified yet: Those seem to be the only form of insurance, and even then, they are not always enough.
In the same way that the medicinal chemists from 5-10 years ago that Derek Lowe is writing about were caught off-guard by the impact of globalization, people in the postal service are watching technologies like email and internet advertising change the foundation of their jobs, people in the healthcare industry are watching new laws and regulations slowly come down the pipeline, and people in the book publishing industry are watching as eBooks and eReaders take off. I’m not claiming that these changes were obviously predictable – that’s what makes my job in venture interesting! — but, changes in science & technology, in globalization, and in demographics have and will dramatically impact every aspect of life/business and, frankly speaking, its the people who work in an industry (in the case of medicinal chemistry, it was guys like Derek Lowe) who have the best shot at gazing at a crystal ball, predicting and understanding the changes that will come down the pipeline, and, then, figuring out ways to get ahead of it (whether that means changing jobs, learning new skills, etc).
So, do yourself a favor 5-10 years from now – and gaze into your crystal ball.
Long story short: I still prefer my DROID2(although to a lesser extent than before).
So, what were my big observations after using the iPhone 4 for two weeks and then switching back to my DROID2?
Apple continues to blow me away with how good they are at
UI slickness: There’s no way around it – with the possible exception of the 4.0 revision of Android Ice Cream Sandwich (which I now have and love on my Motorola Xoom!) – no Android operating system comes close to the iPhone/iPad’s remarkable user interface smoothness. iOS animations are perfectly fluid. Responsiveness is great. Stability is excellent (while rare, my DROID2 does force restart every now and then — my iPhone has only crashed a handful of times). It’s a very well-oiled machine and free of the frustrations I’ve had at times when I. just. wished. that. darn. app. would. scroll. smoothly.
Battery life: I was at or near zero battery at the end of every day when I was in Asia – so even the iPhone needs improvement in that category. But, there’s no doubt in my mind that my DROID2 would have given out earlier. I don’t know what it is about iOS which enables them to consistently deliver such impressive battery life, but I did notice a later onset of “battery anxiety” during the day while using the iPhone than I would have on my DROID2.
Apple’s soft keyboard is good – very good — but nothing beats a physical keyboard plus SwiftKey. Not having my beloved Android phone meant I had to learn how to use the iPhone soft keyboard to get around – and I have to say, much to my chagrin, I actually got the hang of it. Its amazingly responsive and has a good handle on what words to autocorrect, what to leave alone, and even on learning what words were just strange jargon/names but still legitimate. Even back in the US on my DROID2, I find myself trying to use the soft keyboard a lot more than I used to (and discovering, sadly, that its not as good as the iPhone’s). However:
You just can’t type as long as you can on a hard physical keyboard.
Every now and then the iPhone makes a stupid autocorrection and it’s a little awkward to override it (having to hit that tiny “x”).
The last time I did the iPhone/DROID comparison, I talked about how amazing Swype was. While I still think it’s a great product, I’ve now graduated to SwiftKey(see video below) not only because I have met and love the CEO Jonathan Reynolds but because of its uncanny ability to compose my emails/messages for me. It learns from your typing history and from your blog/Facebook/Gmail/Twitter and inputs it into an amazing text prediction engine which not only predicts what words you are trying to type but also the next word after that! I have literally written emails where half of my words have been predicted by SwiftKey.
Notifications in iOS are terrible.
A huge issue for me: there is no notification light on an iPhone. That means the only way for me to know if something new has happened is if I hear the tone that the phone makes when I get a new notification (which I don’t always because its in my pocket or because – you know – something else in life is happening at that moment) or if I happen to be looking at the screen at the moment the notifications shows up (same problem). This means that I have to repeatedly check the phone throughout the day which can be a little obnoxious when you’re with people/doing something else and just want to know if an email/text message has come in.
What was very surprising to me was that despite having the opportunity to learn (and dare I say, copy) from what Android and WebOS had done, Apple chose quite possibly the weakest approach possible. Not only are the notifications not visible from the home screen – requiring me to swipe downward from the top to see if anything’s there — its impossible to dismiss notifications one at a time, really hard (or maybe I just have fat fingers?) to hit the clear button which dismisses blocks of them at a time, even after I hit clear, I’m not sure why some of the notifications don’t disappear, and it is surprisingly easy to accidentally hit a notification when you don’t intend to (which will force you into a new application — which wouldn’t be a big deal if iOS had a cross-application back button… which it doesn’t). Maybe this is just someone who’s too used to the Android way of doing things, but while this is way better than the old “in your face” iOS notifications, I found myself very frustrated here.
Cursor positioning feels a more natural on Android. I didn’t realize this would bug me until after using the iPhone for a few days. The setup: until Android’s Gingerbread update, highlighting text and moving the caret (where your next letter comes out when you type) was terrible on Android. It was something I didn’t realize in my initial comparison and something I came to envy about iOS: the magnifying glass that pops up when you want to move your cursor and the simple drag-and-drop highlighting of text. Thankfully with the Gingerbread update, Android completely closes that gap (see image on the right) and improves upon it. Unlike with iOS, I don’t need to long-hold on the screen to enter some eery parallel universe with a magnified view – in Android, you just click once, drag the arrow to where you want the cursor to be, and you’re good to go.
No widgets in iOS. There are no widgets in iOS. I can see the iOS fans thinking: “big deal, who cares? they’re ugly and slow down the system!” Fair points — so why do I care? I care because widgets let me quickly turn on or off WiFi/Bluetooth/GPS from the homescreen in Android, but in iOS, I would be forced to go through a bunch of menus. It means, on Android, I can see my next few calendar events, but in iOS, I would need to go into the calendar app. It means, on Android I can quickly create a new Evernote note and see my last few notes from the home screen, but in iOS, I would need to open the app. It means that on Android I can see what the weather will be like from the homescreen, but in iOS, I would need to turn on the weather app to see the weather. It means that on Android, I can quickly glance at a number of homescreens to see what’s going on in Google Voice (my text messages), Google Reader, Facebook, Google+, and Twitter, but on iOS, I need to open each of those apps separately. In short, I care about widgets because they are convenient and save me time.
Apps play together more nicely with Android. Android and iOS have a fundamentally different philosophy on how apps should behave with one another. Considering most of the main iOS apps are also on Android, what do I mean by this? Well, Android has two features which iOS does not have: a cross-application back button and a cross-application “intent” system. What this means is that apps are meant to push information/content to each other in Android:
If I want to “share” something, any app of mine that mediates that sharing – whether its email, Facebook, Twitter, Path, Tumblr, etc – its all fair game (see image on the right). On iOS, I can only share things through services that the app I’m in currently supports. Want to post something to Tumblr or Facebook or over email in an app that only supports Twitter? Tough luck in iOS. Want to edit a photo/document in an app that isn’t supported by the app you’re in? Again, tough luck in iOS. With the exception of things like web links (where Apple has apps meant to handle them), you can only use the apps/services which are sanctioned by the app developer. In Android, apps are supposed to talk with one another, and Google goes the extra mile to make sure all apps that can handle an “action” are available for the user to choose from.
In iOS, navigating between different screens/features is usually done by a descriptive back button in the upper-left of the interface. This works exactly like the Android back button does with one exception. These iOS back buttons only work within an application. There’s no way to jump between applications. Granted, there’s less of a need in iOS since there’s less cross-app communication (see previous bullet point), but when you throw in the ability of iOS5’s new notification system to take you into a new application altogether and when you’re in a situation where you want to use another service, the back button becomes quite handy.
And, of course, deluge of the he-said-she-said that I observed:
Free turn-by-turn navigation on Android is AWESOME and makes the purchase of the phone worth it on its own (mainly because my driving becomes 100x worse when I’m lost). Not having that in iOS was a pain, although thankfully, because I spent most of my time in Asia on foot, in a cab, or on public transit, it was not as big of a pain.
Google integration (Google Voice, Google Calendar, Gmail, Google Maps) is far better on Android — if you make as heavy use of Google services as I do, this becomes a big deal very quickly.
Chrome to Phone is awesome – being able to send links/pictures/locations from computer to phone is amazingly useful. I only wish someone made a simple Phone-to-Chrome capability where I could send information from my phone/tablet to a computer just as easily.
Adobe Flash performance is, for the record, not great and for many sites its simply a gateway for advertisements. But, its helpful to have to be able to open up terrible websites (especially those of restaurants) — and in Japan, many a restaurant had an annoying Flash website which my iPhone could not open.
Because of the growing popularity of Android, app availability between the two platforms is pretty equal for the biggest apps (with just a few noteworthy exceptions like Flipboard). To be fair, many of the Android ports are done haphazardly – leading to a more disappointing experience – but the flip side of this is that the more open nature of Android also means its the only platform where you can use some pretty interesting services like AirDroid (easy-over-Wifi way of syncing and managing your device), Google Listen (Google Reader-linked over-the-air podcast manager), BitTorrent Remote (use your phone to remote login to your computer’s BitTorrent client), etc.
I love that I can connect my Android phone to a PC and it will show up like a USB drive. iPhone? Not so much (which forced me to transfer my photos over Dropbox instead).
My ability to use the Android Market website to install apps over the air to any of my Android devices has made discovering and installing new apps much more convenient.
The iOS mail client (1) doesn’t let you collapse/expand folders and (2) doesn’t let you control which folders to sync to what extents/at what intervals, but the Android Exchange client does. For someone who has as many folders as I do (one of which is a Getting Things Done-esque “TODO” folder), that’s a HUGE plus in terms of ease of use.
To be completely fair – I don’t have the iPhone 4S (so I haven’t played with Siri), I haven’t really used iCloud at all, and the advantages in UI quality and battery life are a big deal. So unlike some of the extremists out there who can’t understand why someone would pick iOS/Android, I can see the appeal of “the other side.” But after using the iPhone 4 for two weeks and after seeing some of the improvements in my Xoom from Ice Cream Sandwich, I can safely say that unless the iPhone 5 (or whatever comes after the 4S) brings with it a huge change, I will be buying another Android device next. If anything, I’ve noticed that with each generation of Android, Android devices further closes the gap on the main advantages that iOS has (smoothness, stability, app selection/quality), while continuing to embrace the philosophy and innovations that keep me hooked.
As a nerd and a VC, I’m very partial towards “enabling technologies” – the underlying technology that makes stuff tick. That’s one reason I’m so interested in semiconductors: much of the technology we see today has its origins in something that a chip or semiconductor product enabled. But, despite the key role they (and other enabling technologies) play in creating the products that we know and love, most people have no idea what “chips” or “semiconductors” are.
Part of that ignorance is deliberate – chip companies exist to help electronics/product companies, not steal the spotlight. The only exception to that rule that I can think of is Intel which has spent a fair amount over the years on its “Intel Inside” branding and the numerous Intel Inside commercials that have popped up.
While NVIDIA has been good at generating buzz amongst enthusiasts, I would maintain that no other semiconductor company has quite succeeded at matching Intel in terms of getting public brand awareness – an awareness that probably has helped Intel command a higher price point because the public thinks (whether wrongly or rightly) that computers with “Intel inside” are better.
Well Qualcomm looks like they want to upset that. Qualcomm make chips that go into mobile phones and tablets and has benefitted greatly from the rise in smartphones and tablets over the past few years, getting to the point where some might say they have a shot at being a real rival for Intel in terms of importance and reach. But for years, the most your typical non-techy person might have heard about them is the fact that they have the naming rights to San Diego’s Qualcomm Stadium – home of the San Diego Chargers and former home of the San Diego Padres.
Will this work? Well, if the goal is to get millions of people to, overnight, buy phones with Snapdragon chips inside – the answer is probably a no. Running this sort of rebranding for only 10 days for games that aren’t the SuperBowl just won’t deliver the right PR boost. But, as a test to see if their consumer branding efforts raises consumer awareness about the chips that power their phones, and potentially demand for “those Snapdragon watchamacallits” in particular? This might be just what the doctor ordered.
I, for one, am hopeful that it does work – I’m a sucker for seeing enabling technologies and the companies behind them like Qualcomm and Intel get the credit they deserve for making our devices work better, and, frankly, having more people talk about the chips in their phones/tablets will push device manufacturers and chip companies to innovate faster.
If it hasn’t been clear from posts on this blog or from my huge shared posts activity feed, I am a huge fan of Google Reader. My reliance/use of the RSS reader tool from Google is second only to my use of Gmail. Its my main primary source of information and analysis on the world and, because a group of my close friends are actively sharing and commenting on the service, it is my most important social network.
Yes, that’s right. I’d give up Facebook and Twitter before I’d give up Google Reader.
I’ve always been disappointed by Google’s lack of attention to the product, so you would think that after announcing that they would find a way to better integrate the product with Google+ that I would be jumping for joy.
[A]fter reading Sarah Perez and Austin Frakt and after thinking about just how much I use Google Reader every day, I’m beginning to revise my initial forecast. Stay calm is quickly shifting toward full-bore Panic Mode.
(bolding and underlining from me)
Now, for the record, I can definitely see the value of integrating Google+ with Google Reader well. I think the key to doing that is finding a way to replace the not-really-used-at-all Sparks feature (which seems to have been replaced by a saved searches feature) in Google+ with Google Reader to make it easier to share high quality blog posts/content. So why am I so anxious? Well, looking at the existing products, there are two big things:
Google+ is not designed to share posts/content – its designed to share snippets. Yes, there are quite a few folks (i.e. Steve Yegge who made the now-famous-accidentally-public rant about Google’s approach to platforms vs Amazon/Facebook/Apple’s on products) who make very long posts on Google+ using it almost as a mini-blog platform. And, yes, one can share videos and photos on the site. However, what the platform has not proven to be able to share (and is, fundamentally, one of the best uses/features for Google Reader) is a rich site with embedded video, photos, rich text, and links. This blog post that you’re reading for instance? I can’t share this on Google+. All I can share is a text excerpt and an image – that reduces the utility of the service as a reading/sharing/posting platform.
Google Reader is not just “another circle” for Google+, it’s a different type of online social behavior. I gave Google props earlier this year for thinking through online social behavior when building their Circles and Hangouts features, but it slipped my mind then that my use of Google Reader was yet another way to do online social interaction that Google+ did not capture. What do I mean by that? Well, when you put friends in a circle, it means you have grouped that set of friends into one category and think of them as similar enough to want to receive their updates/shared items together and to send them updates/shared items, together. Now, this feels more natural to me than the original Facebook concept (where every friend is equal) and Twitter concept (where the idea is to just broadcast everything to everybody), but it misses one dynamic: followers may have different levels of interest in different types of sharing. When I share an article on Google Reader, I want to do it publicly (hence the public share page), but only to people who are interested in what I am reading/thinking. If I wanted to share it with all of my friends, I would’ve long ago integrated Google Reader shares into Facebook and Twitter. On the flip side, whether or not I feel socially close to the people I follow on Google Reader is irrelevant: I follow them on Google Reader because I’m interested in their shares/comments. With Google+, this sort of “public, but only for folks who are interested” sharing and reading mode is not present at all – and it strikes me as worrisome because the idea behind the Google Reader change is to replace its social dynamics with Google+
Now, of course, Google could address these concerns by implementing additional features – and if that were the case, that would be great. But, putting my realist hat on and looking at the tone of the Google Reader blog post and the way that Google+ has been developed, I am skeptical. Or, to sum it up, in the words of Austin Frakt at the Incidental Economist (again bolding/underlining is by me)
I will be entering next week with some trepidation. I’m a big fan of Google and its products, in general. (Love the Droid. Love the Gmail. Etc.) However, today, I’ve never been more frightened of the company. I sure hope they don’t blow this one!