Robotics: the inevitable future

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Seen by its makers “more R2D2 than RoboCop,” the autonomous policing robot Knightscope K5 promises to patrol geo-fenced beats in hopes of reducing crime by 50 percent.

As a late-stage investor, I’m often waiting on the edge of my seat for technologies to mature to a point when IVP would typically get involved. For me, robotics is one of those exciting areas where I have to unfortunately sit on the sidelines, for now. 

Some quick thoughts on how robotics will develop over the next couple of years:

  • Forget the consumer angle (see: the Jetsons), as with other next-gen devices such as Google Glass, robotics will first find their plateau of productivity in the enterprise. (see: AMZN / Kiva Systems)
  • The future is friendly – robots should be made to look as innocuous as possible. (see: Eve from Wall-E)
  • Robots will not only replace human functions, but enhance them too. In the example of Knightscope, the robot can analyze data, such as hundreds of license plates, in a way much faster than a human can. In other words, go for a revenue-generating sales pitch, not just a cost-saving one. 

I have to admit that my understanding of robotics is still elementary Any suggested readings for me?

(PS. Speaking of Wall-E, this cruise ship is just missing those personal hovercrafts…)

Robotics: the inevitable future

Fundraising Acceleration as a Flawed Paradigm

For the last 12 to 18 months, the private technology market has seen sky high valuations and a significant disconnect from the public markets. Recently, much talked-about startup Slack raised $120M at a $1.12B valuation with just $1M in monthly revenue. My friend, Danny Crichton, wrote a really insightful piece on TechCrunch regarding this new trend of “fundraising acceleration”.

Crichton outlines the factors that have created such a fundraising strategy and also carefully points out the disadvantages of raising too much at too high a price. Namely, he highlights the increasing bifurcation of the have’s and have-not’s (high and low-growth companies, respectively), as well as consequences with equity compensation for employees.

Here are some pitfalls I see with this kind of investment strategy:

  • High risk of a down round: Macro conditions are nearly impossible to predict. Unless the mega round is meant to fully fund a company from one bull cycle to another, it’s likely that the next funding round will be a difficult one.
  • Capital inefficiency: This type of fundraising strategy is also counter-intuitive to the lean startup philosophy. Raising such a large amount of capital creates negative incentives to be capital efficient, and in the hands of an un-experienced team, can lead to higher burn rates.
  • Increased execution pressure: With a valuation so far beyond fundamentals, management teams will and should feel an increased pressure to perform. It’s no longer enough strive to deliver on a vision you’ve sold because you’ve already committed to deliver it. Traditional “Plan B” options, such as acqui-hires, will become harder to sell to the board.
  • Diminishing returns: The reason that market leaders are often rewarded by an order of magnitude is that idea that in a networked world, winners take most (if not all). With funding acceleration, VC’s are not only increasing the risk of betting on the right horse, but also driving down their own gains. As the adage goes, capital flows into an asset class until returns revert to the mean. When that happens for the VC asset class, it’ll be a painful day for those holding such over-valued assets in their portfolios.

Crichton also writes, 

The person who most popularized this notion of investing was Marc Andreessen (who ironically also happens to be one of the earlier investors in Slack), as well as Peter Thiel, whose experience with Facebook’s growth encouraged his investment thesis for Founders Fund.

While I’m a big fan of both, we should also consider the fact that neither of these two investors have long enough tenures as VC’s to have experienced a downturn in the markets, and more specifically, a downturn within the technology sector.

Silicon Valley’s Youth “Problem”: A Rebuttal

By now Yiren Lu’s “Silicon Valley’s Youth Problem” has made it way around both my personal and professional circles. As a young person living and working in Silicon Valley, I felt a strong sense of resentment after reading the article. The author focused on specific and superficial examples to build a case against many of the talented founders and engineers I know, and thereby, completely missed what makes Silicon Valley great. 

In the section titled “Unhappy Valley”, Lu outlines a phenomenon that the layman knows as FOMO: Fear Of Missing Out. But it’s not just a “Silicon Valley problem”, but a symptom of our generation as a whole. Sure, FOMO could make us feel like we’re trapped a giant hamster wheel, forever playing catch-up to the Jones. Every generation has a certain amount of FOMO, and given the speed of information today, our generation just feels it that much stronger. I think of FOMO instead as part of the reason why technology cycles have shortened and innovation has accelerated.

The article also questions whether today’s Silicon Valley has created anything of value. To be fair, many of the buzziest startups are consumer-oriented ones, and the value of a Facebook, Snapchat, or Twitter is undoubtedly tied to ad dollars. Money talks, and naturally, VC’s will continue to fund startups with advertising business models because the advertising market is enormous. Instead of asking whether Valley startups are doing anything worthwhile, shouldn’t the question be instead, what good does advertising do for society? By the same token, the author also discounts the importance of startups such as Uber and Airbnb, who have not only provided an additional revenue stream for thousands of people worldwide, but have also fundamentally changed some of the ways that humans interact.

Naturally, Silicon Valley will always have a so-called “Youth Problem”. Startups are risky, and by and large, younger people will have a higher risk tolerance. That doesn’t mean that substantial valley startups, like Dropbox and Stripe, are not striving to recruit tech veterans in leadership positions (in this example, former Motorola CEO Dennis Woodside and former Google executive Claire Johnson, respectively). Startups, especially venture-funded ones, do not have the hubris to believe that inexperienced 20-somethings are equipped to run billion-dollar businesses on their own.

Perplexingly, the author also tries to paint some of the most positive externalities of Silicon Valley in a poor light, for example, the democratization of tech and the consumerization of the enterprise. Isn’t it great that today’s teenagers, with just a conceptual grasp of computer science, could build an app for his/her own use and/or entertainment? Shouldn’t we support the notion of making enterprise applications easier to implement and more user friendly?

Most importantly, I’ve always believed that the most innovative companies are not necessarily apparent at first. One very prominent example of this is Google, a startup founded by two 23-year-olds in a garage at a time when there were already several search engines on the internet. (Maybe yesterday’s search engine is today’s texting app?) Larry Page, in a recent interview, spoke about grander ambitions for Google:

Even Google’s famously far-reaching mission statement, to “organise the world’s information and make it universally accessible and useful”, is not big enough for what he now has in mind. The aim: to use the money that is spouting from its search advertising business to stake out positions in boom industries of the future, from biotech to robotics.

New Numbers Reveal Asian Wage Gap in Tech – NBC News

The article points to the fact that many H1-B workers are Asian, which contributes to depressing the average salary across the tech industry. As an ethnically Chinese person on the H1-B, I think the stat actually demonstrates that Asians are culturally and systematically discouraged from being demanding or confrontational. 

As an Asian woman, I don’t always feel comfortable in negotiating what I want and promoting myself to an employer – a shortcoming that I learned the hard way when interviewing for an investment banking position alongside other white male candidates. The real action point from this data is that Asians need to better learn how to negotiate their salaries (and not let “karma” take care of it, à la Satya Nadella.)

New Numbers Reveal Asian Wage Gap in Tech – NBC News

Marriage Success Rate as a J Curve?

My friend, an Econ PhD candidate at Berkeley, and I have often debated the merits of online dating. (Fun fact: we actually met on OkCupid.) Our conclusion is that online dating is best for folks with edge preferences, as it offers better filtering and wider top-of-the-funnel. 

I like Yagan’s answer on the paradox of choice because it proposes marital satisfaction in America as a “smile” or J curve. Social media and online dating has decreased friction for unhappy relationships/marriages to end and for folks to start new relationships. At first, this could contribute to an uptick in divorce rates, but over time, the hope is that more data and wider top-of-the-funnel will result in happier couples.

Marriage Success Rate as a J Curve?

Found: The Manhattan Apartment that’s the Farthest from any Subway

iquantny:

If there is one thing I learned while living on the Upper East Side many years ago, it’s that York Avenue is quite a hike from the subway (at least as far as hikes from subways in Manhattan go). That fact can sometimes help keep housing prices down, at least until the 2nd Avenue Line comes in.

Found: The Manhattan Apartment that’s the Farthest from any Subway

First Thoughts on Meeker’s Internet Trends

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I’ll always remember how excited I was every time Mary Meeker’s report came out – especially when I was still a banker at Barclays. It not only contained tons of useful market data (a gold mine for analysts), but it also marked the steady passage of time. You could always count on a new Meeker presentation every 6 months, or so, and the topics she discussed often had a nice continuity. Today, these reports are a pleasant reminder of how lucky and excited I am to work with companies that will shape our future.

Some of my initials thoughts:

  • Slide 8: Very surprising that PC users are still lagging global TV users. This data shows that technology platform shifts can leapfrog each other. The “next big thing” (in this case, PC’s) may not be as big as the “next next big thing” (mobile phones). 
  • Slide 9: It’s no longer enough to be the “largest in the U.S.” – companies need to think globally. It’s disappointing that those of us in the Valley still tend of think of tech as being very US-centric. For example, most people can name tons of early-stage startups in SF, but haven’t heard of companies like Alibaba or Baidu. Meeker goes long on China later in the presentation (slides 127 – 136).
  • Slide 10: If it wasn’t clear enough already, platform wars are over and Android is a clear leader (though not without its problems).
  • Slide 15: Meeker has underlined the disconnect between “time spent” and “ad spent” for years now. The hold that print advertising has comes from the strength of traditional advertiser/publisher relationships and the traditional budget split between branding and performance campaigns. 
  • Slide 55: Meeker positions the “Internet Trifecta” as getting a critical mass of content, community, and commerce. I believe these criteria mainly fit e-commerce companies. Other consumer web startups, such as Dropbox or Uber, have focused instead on delivering unparalleled value to the user, without the 3 C’s.
  • Slide 161: This slide is probably the most valuable to founders & entrepreneurs. Particularly this piece of advice: great companies grow revenue, make profits, and invest for the future. 

I’m an investor, and since most of Meeker’s analysis is backward looking (historical trends and “re-imagined” use cases), I try synthesize some of her forward-looking takeaways. Most prominently, Meeker’s presentation sheds light on three major markets: Online Video, Healthcare, and Education. Some of our most recent IVP investments tie directly to these themes, such as ZEFR and General Assembly, and I’m excited to discover other great startups in these verticals.

What the @Facebook @Oculus acquisition tells me about the future

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Both the Internet and my own circle of friends have debated this issue to death (so price. much social.) And as Fred Wilson puts it, 

It isn’t clear if the next thing is virtual reality, the internet of things, drones, machine learning, or something else. Larry doesn’t know. Zuck doesn’t know. I don’t know. But the race is on to figure it out. 

What we can expect, however, is increased VC interest in companies that could potentially bring us a new future. This is true for companies who are both competitive and complimentary to products by Nest or Oculus. Competitive companies stand to gain from these acquisitions because VC’s know that it’s rarely a one-horse race. Complimentary companies stand to gain even more as many tech incumbents have already signaled that this is where the future is going. 

I’m bullish on VR, and FB/Oculus’ upcoming challenges will prove whether the Oculus Rift is more of a Segway or an iPhone. The best step that the iPhone took was to create an ecosystem that was both open and controlled – any third party could build on top of the iPhone, but the quality of the apps were held to a high bar.

There are startups that are already building technologies that would be a great fit for the Oculus Rift. Thalmic Labs, based in Canada, has created the Myo armband for accurate and granular gesture control. Nymi and InteraXon are two bio-sensing startups – they measure heartbeat and brain activity, respectively, to control a connected device. And the quantified fitness space continues to grow with startups like Push and Hexoskin.

As I look at the new crop of hardware startups that will help create the next platform, it’s easy to see two things:

  1. As Chris Dixon said, the next big thing will start out looking like a toy
  2. Many of these next-generation hardware startups are based in Canada, where cost of living is cheaper, recruiting is less competitive, and the government has been supportive of startups by offering R&D tax incentives and offering a start-up visa

From where I stand, the future is both fun (toy!) and friendly (Canada!). I, for one, cannot wait. 

Learned Behavior: how the best products eventually change their users

When I evaluate product, either at the early or late stage of a startup, I’m always looking to see if the product has the potential to permanently modify user behavior outside of the product itself

A few examples of this:

  • Instagram : double-tap
    Apple designer Bill Atkinson devised the double-click, and soon it became the de-facto way to open files across all desktop GUI’s (Windows, Linux). The clever folks at Instagram appropriated it for their Mobile application to “like” a post. I’ve found myself mindlessly double-tapping photos in other applications. (NB: In light of this, I’m not sure I agree with secret’s choice to make the “like post” gesture as a left-to-right swipe.)
  • Netflix : binge consumption
    The way today’s content travels is much more binary – you’ll either never see the light of day or go viral (think: YouTube videos, 2048, any Upworthy article). To put it differently, today’s content distribution models enable and encourage binge consumption. Netflix is one of the first large tech companies to realize and capitalize on it by releasing traditional content in a way that enables binge consumption. Will that eventually put pressure on other content distributors?
  • Uber : pay through app
    It has become so easy to take an Uber that I’ve found myself walking out of regular cabs without paying. Embarrassment aside, it comes to show that Uber is creating a new behavior of seamless payment, something that Square and other startups have been attempting to do. 

The best products eventually change user behavior because they simplify those existing user behaviors; making it so natural that users have incorporated the habits into their regular lives.