WayTooEarly

Lessons From The Jungle

Those who follow my Twitters know that I've just returned from two weeks in South Africa and Zambia, including six days in the game parks at Kruger seeing animals in the wild.  I was amazed at how close we got to the animals - who apparently think of a big open Land Rover as an interesting, but non threatening large companion.  Lions, leopards, rhinos, elephants and the like were in touching distance, while the zebra and giraffe did seem to run at our approach. Maybe they were smart enough to know why the gun was mounted next to the driver.

I find it hard to resist seeing the jungle situations as metaphors for the venture and startup world.  First, Google and Microsoft are the Land Rovers.  They're very big, they're out there, but you have to live your life and go after your own prey, in which case they'll ignore you.  This works well for the lions and leopards, who can go after meat knowing the elephants are vegetarians, and will only trample them if they get in the way. And their trampling won't usually be to get the food source - they have their own.  In our world, this means focus on your own products and customers.

If you have low gross margins, you need to be very big. Elephants excrete, without processng, about 2/3 of their food. Their digestive systems are pretty inefficient. But even on that 33% gross margin from their calorie intake, they have gotten extremely big.  What they don't use, however, provides interesting input for others - here a leopard is eating some of that dung to get at minerals and other nutrients that are easier to find this way.

Specialization is often a way to get big, without conflicting with other parties.  The giraffes mostly eat the high vegetation that the elephants, rhinos and hippos can't reach.  Rather than going for the low hanging fruit - they go after the highest stuff, but have adapted their bueiness model accordingly.

Visiting the awe inspiring Victoria Falls (which the natives call the thunder that smokes), you see the critical nature of timing.  Here are the falls when we were there in March (with flows of millions of kilolitres per second). Here it is in November - almost totally dry.

All in all, it's a trip I recommend to everyone - you recharge the batteries, see where we came from (my 23Across profile makes it clear that my DNA is out of Africa, as is true of all the humans), and puts into context our technology based society.

Of course, I should note that hundreds of miles from civilization, with very slow internet connectivity at the lodges, and no cell phone service in the lodges, you have time to ponder a beautiful sunrise .  Or so I though till we went out on a drive one morning, and, once out in the middle of nowhere, my Blackberry started to vibrate - having caught signal from the only tower for 50 miles. I left it in the lodge for the next rides.

Look Ma, No Wires

There was one new technology that I saw at CES that really does have promise for the future - wireless power.  Though it's been talked about for years, and many schemes have been tried, there are now some truly revolutionary methods for transmitting enough power not only to charge cell phones or iPods, but also to run big PCs and desk lighting.  Of course, all the power on Earth owes it's debt to old Sol, our sun which transmits it's power to the earth in visible and infrared ranges.  And there are some products that use that directly.  The Solio hybrid energy chargers are solar cells that charge an internal lithium battery, which then feeds USB connectors (with the iGo tip system), so that you can keep your phones, etc. charged up directly from the sun.  One of the products has a clip to go on your backpack, another fans out 3 cells to get even more power.

Bt for a real look at the future, you should see what Powermat, eCoupled and Powercast are doing.  Powercast is using RF technology to send the power, while Powermat and eCoupled are using inductive techniques. Powermat is based on the RFID tags and some very clever drive technology and seemed the best of the lot to me. In addition, there is Wipower and some other folks working in this very hot area.  Some of the key issues are how much power at what distance.  Milliwatts at Meters is Powercast's view, while Powermat seems to be able to have much higher power loads with devices placed on their mats (which are only a few millimeters from the device they're powering).

Here's a light just stuck (magnetically) on the wall, drawing power from the wall surface mat.

One of the nice side benefits to Powermat is that of energy conservation.  Since you don't have all those "vampire" power charges plugged in, you're not wasting nearly as much power. And the Powermat system can sense how much power is needed and deliver it on demand, resulting in what could be significant savings.  It will certainly be nice when I can just lay out the powermat, plug it in, and then drop my PC, cellphones, iPOds, cameras, and a small desk lamp, and know that I've saved the charger weight, the tangle of cables (which drives my wife nuts), and be saving power as well.

I'm hoping to be able to make my desks at home and office Powermats in the next year, and lighten my charger load (physically and electrically).

eBooks - No Longer Way Too Early - Kindle vs Sony

I've had the Sony Connect Reader for the last six months or so, and have found it a useful way to lighten my load on trips.  I read about a book every other day, and more on airplanes, so I've always wanted a good eBook.  As some of you know, I'm Chairman of Franklin Electronic Publishers, which has sold almost 40 million eBooks - our electronic dictionaries, spell checkers, bibles, translators and other works. They make great Christmas gifts and can be ordered online :)  We tried a Digital Book System back in the mid 90s, and even published Nicholas Negroponte's ground breaking "Being Digital" on our eBook format.  But the screen size was too smal to make it work.

I've been watching the eInk technology for many years, and it is finally ready for prime time. it's the nonvolatile display technology used in both the Sony Connect Reader and the new Amazon Kindle, which I received yesterday.  I find it quite easy to use in sunlight, on airplanes and in taxis, although on redeye flights, my neighbors sometimes complain about the fact that I do need the overhead light on to read easily.  Here I am showing off both the sony and the Kindle at our 40 person Thanksgiving Dinner.

The consensus feeling is that the Kindle is a better product. And I must agree, even though it's only 24 hours since I put the first book on it.

The Sony has three font sizes, while the Kindle has six.  Family members from 8 to 95 looked at the book, and every type size had at least one champion, with both the 8 and 95 year olds liking the largest font. The Amazon product is based on MobiPocket technology, a company they acquired a few years ago, and one in which Franklin was a major owner. It's a bit cleaner and clearer than the Sony. The Kindle also has a better hand feel, with the ability to turn pages from either right or left sides. In the Sony you can use a rocker near the bottom right, or buttons in the middle of the right side, It just feels a bit more natural on the Kindle.

But the best feature is that the Kindle really is designed as a system and service. Using Sprint's EVDO network as the Kindle Whispernet allows books to automatically download in minutes. And it also lets me get the W all Street Journal or New York Times overnight, and ready for reading on the train to work in the morning, albeit at what seem steep prices, given that I can read them online for free (NYT) or less than half the Amazon cost (WSJ now - going to free once Mr. Murdoch finally gets real ownership).  And I can get the first chapter of any book free, to see if I like it or not.

So while it's still early, and I'm not sure how big the audience is for a $399 device (or Sony's $300), it's no longer Way Too Early. If you travel and read a lot, or want to keep your early adopter credentials, by all means get a Kindle.

Eating Our Own Dog Food

As an early adopter, I usually "eat our own dogfood" as our companies get early betas, etc. But as life gets more complex, some of the more mission critical tasks I do won't brook too many crashes.  This is especially true now that I'm on Vista, and a reboot is 10 minutes or more. So I'd gotten somewhat out of the habit. Fortunately not completely so.

This morning, I was searching for a CD by an obscure jazz singer, Katie Eagleson.  Looking on Amazon (often my first quick look), led to a $39.98 price for the CD, which just seemed way out of line.  Then I thought "I wonder what Bigger Boat would suggest?" Full disclosure - Bigger Boat is a First Round Capital investment, and I'm a board member.   I had used it a year ago when we launched, but got out of the habit.  A quick search on Bigger Boat instantly took me to an $8.90 download of the CD - a quick $31.08 savings!

I've also been using the beta of Xobni which gives quite interesting information on my large (12GB) Outlook files.  I've installed and uninstalled it twice, but it's clearly moving forward and helpful. Now to start seeing what one of our newer investments, Mint can save me:)

So yes, it's a good practice for venture capitalists to eat our own dogfood. Not only can we better advise the companies, often they can help us in the same way we hope they'll help all their other users.

John Rain Has an iPhone and I don't, but I've tried one

      John Rain, the Japanese-American assassin anti-hero of Barry Eisler's great series or novels, already has his iPhone, and they're not even on sale.  I was reading Requiem For An Assassin, the latest in the series, which came out a few weeks ago. Rain arrives in Palo Alto from Asia, and needs to buy his tools, so he goes into a Cingular store (pre ATT) and buys an iPhone.  He proceeds to use it for calls, and to monitor a GPS tracker he's put on someone's car.  He does, of course, assassinate a Silicon Valley CEO while making it look like natural causes (his specialty), something I've often thought of doing at the end of interminable board meetings.

Fortunately, I met a friend last night who,as an important member of the press, already had an iPhone, and got to play with it.  The key reviews (Baig, Levy, Mossberg, Pogue) all pretty much have it nailed. The virtual keyboard is not an issue, the screen is gorgeous, the hand feel and design is tops, and the lack of Exchange server connectivity and the use of only the slower part of the EDGE network are killers.  If i got one (which I do not plan to in this version), I'd try and put a screen saver picture of a Scharffenberger dark chocolate bar on it, since it's about the same size, and just as sweet.

I'm going to see Steve Jobs' other debut this weekend, Pixar's Ratatouille, and just put my Blackberry on vibrate.

Too Early - TechForward Makes It Easier

As readers of this blog know, I like to be an early adopter, and an early investor.  When it come to technology, I want the latest gadgets, most up to date computers, etc. But being too early on these things costs money. I'm often faced with the old question of how early to upgrade to the next new best thing. That's why the business plan for TechForward, our latest First Round Capital investment, resonated so strongly. 

TechForward, started by Jade van Doren and Marc Lebovitz, offers guaranteed buyback prices for your new equipment: laptops today, soon other computers, digital cameras, music players and the like.  The operation is quite simple. When you buy the equipment, you can also buy (either at retail or through the TechMyLife.com website) a contract that offers to buy that equipment back from you over the following 24 months. (I'm not sure I've kept any of my computers that long in the last decade).  There are four prices, one for each six month interval (see the example).

When you're ready, you login and tell them, they send a box and you ship back your machine. Assuming its condition is as stated, you get a check for the contract amount to use as you see fit, or perhaps, with retail partners, a gift card for even more than that amount to be used at their store.  There's a lot of very sophisticated mathematical modeling of large amounts of data to determine the upfront fees and buyback prices. 

I love the idea that I can shop for my next machine as soon as I like, with the knowledge that there is a floor on the value of my old one.  Of course, I can always sell it myself if it turns out to be worth more at the end of a particular period, assuming I don't mind all the hassle. So now I can stay too early or way too early with my computers and gadgets, abetted by the TechForward Guarantedd Buybacks effectively lowering my new machine's price to something a little more reasonable.

3 by 5 Marketing - Shameless Self Promotion

My new book, written with the world renowned Professor Len Lodish of the wharton School and Shellye Archembeau of Metric Stream, has just been published.  Marketing That Works is meant to help entreprenuerial marketers, whether in startups or big companies, understand the many issues surrounding how to market the things you have for sale. These include your actual product, your shares of stock, and your corporate image.

The book is organized around our 3 by 5 marketing concept. Simply put, every venture has three key things to sell, to five different constituents.  The three columns are  Products/services,  Shares,  and Image.  The five constituencies are Customers (those who give you money for something), users (who may or may not pay), investors (who also give you money), employees (who cost you money, but want to know why their options might have value, and why it'll be fun to work with you), and others (suppliers, strategic partners, etc.).

The biggest mistake I see as a venture capitalist is that almost all the business plans I see are about marketing the product to the user.  As a VC, you have to market the stock to the investor (me), which has a different focus.  And understanding your business model means knowing why the customer will pay you for the product. Just knowing that you can get a lot of users (eyeballs) may not be enough to sell me or my partners at FirstRound on a deal.

The devil, as you know, is in the details, hence a 300+ page book.

As a favor to my readers, you can get a 35% discount at Wharton University Press, by using discount code MTW35off until September 1, 2007.  Of course, it is about the same price on Amazon every day:)

Gotcha

Monday night (Jan 29) was one of New York's great networking events, the Genesys Dinner, which Jim Kolleger holds each year prior to the Information Industry Summit, Aside from great conversation, some nice words about Esther Dyson, including a plaintive plea for just one more PC Forum (not happening, alas), the evening ended with an important five minutes from  Mark Walsh.

Mark has transitioned from the straight business world (Verticalnet, etc.) into the more political sphere. He was one of the key players behind Air America, the liberal radio talk network, and is now a commentator on MSNBC and XM.  He was decrying the movement in our political society toward sensationalizing "gotcha" moments. 

George Allen's Macaca moment was just one example, and the pouncing of the press on small individual statements, made in settings that thirty years ago would never have been reported, has led to a mean spirited trashing of people.

But Mark's key point is that in marketing, politics leads business.  Be prepared to see the "Swift Boating" of GM, on a site like www.gmisevil (not a real site I hope), paid for anonymously by one of their competitors. Smear tactics have become one of the unsavory and unfortunate weapons in the arsenal of political candidates. Alas,the Lincoln Douglass debates are no more. While the unexamined life may not be worth living, the fully examined life - each and every minute logged on cell phone cameras and uploaded, may be even worse.  And if businesses try to enhance themselves not with better products, but by trashing their competitors, we'll all suffer.

I think Mark is right that the "Gotcha" blogging and journalism will lead to more divisiveness and bitterness. In keeping with this blog's philosophy, Mark is hopefully a little too early with respect to corporate marketers, I'd like to think we can still avoid some of it.

There are ways of pointing out problems in a constructive way - see Mark Hurst's great www.thisisbroken.com site that let's you post stuff, and posts  FIXED buttons when the vendors fix things.

Perhaps a way too early warning will help - and examining one's own behavior.

Information May Be Free - But You'll Pay

I've always admired Fred Wilson's style of thinking about issues.  As the uber venture blogger, he's made the decision to live a largely blogged life, so we readers know about his musical tastes, his family, his travels and his thoughts about politics.

His latest talk, given to the Information Industry Summit in NY yesterday, is an excellent view of how to make money if information is really free. We're trying to do this with some of our companies at First Round and Idealab as well, but I've rarely seen it articulated this clearly.

See the pdf for the slides and his comments on the Union Square Ventures blog. Highly recommended.

Lenovo is Setting The Table

At Fred wilson's suggestion, I just finished reading Danny Meyer's Setting The Table, a wonderful book about his management philosophy in creating a number of New York's great restaurants, including Union Square Cafe, Gramercy Tavern, and the Shake Shack.  Since my office was on the Gramercy Tavern block, I have had many a tasty lunch there.  The book is really about the difference between service and hospitality, and building a culture that engenders good will with employees, customers, the community and investors. Done right, as he has, it leads to a virtuous circle.

I arrived here at CES Las Vegas yesterday afternoon, and realized soon after that I had left my Lenovo T60 power supply at home.  I love the T60, and kept trying to figure out how I could live for 2 days without it. The Blackberry would show me some of my email, but it would be hard to get my thrice daily crossword puzzle fix, and even harder to blog about CES.  Since the T60 supply has a different connector than the old IBM T and X series, none of my colleagues power supplies had cables that would fit.  I looked in the CES directory to see where the Lenovo booth was, and, to my surprise, there was none.  They had decided not to exhibit.

In this funk, I attended the ShowStopper event, a non-sanctioned, but fun party where sixty or so companies each have a 2 foot long table to show their wares to the media.  There is of course, free flowing drinks and food as well.  Right there on the left was a small Lenovo display.  So I went over and asked if I could plug my machine into one of their supplies to at least get some power.  Without hesitation, the Lenovo representative said, "Wait one minute, maybe we can do better." an almost exact quote from the Danny Meyer method of dealing with customer issues.  She returned a minute later and handed me a power supply with a smile, "glad you're a loyal customer."  I have been, and certainly will continue to be. Any company that has its staff focused on great customer experience deserves my business, and yours.