WayTooEarly

CES by the Alphabet

CES by the alphabet

ABC - A Big Crowd - this year's CES seems back to normal after last year's dismal economy caused huge numbers to cancel and bail out. We're now back to long taxi lines, crowded aisles, and a highly optimistic feelings in the halls.Part of this is consolidating all exhibits at the Convention Center and Hilton, which works out better.  It's great to be back and presages well for consumer spending late in the year.

D - this year there are 3 of these everywhere.  3D TV is the hot new thing. While we've seen 3D TVs several times over the past few years, the real push is beginning.  Live 3D cameras are showing how good the quality can be.  With the June 2010 World Cup to be broadcast in 3D, content creation is beginning in earnest.  And of course, James Cameron's brilliant billion dollar blockbuster, Avatar, showed everyone that the public does like it. the cable and broadcast companies are creating 24/7 3D channels so that there will be something to watch. That said, I think 3D sets become a big item for Christmas 2012, if the 2013 SuperBowl gets broadcast that way.  Before that, it's the crazy early adopter market like me that will be willing to wear the glasses around the house..

E- This year's E is eBooks.  There's even an eBook zone in the Central Hall, showcasing many products like the two screen readers from Entourage (the dual-book Edge Interactive), and readers like the Nook, Kindle with many accessories, and software to read eBooks on pretty much any device with a screen,  Several Asian contract manufacturers showed white labeled ereaders, and I'm sure there will be many such devices offered.  Lots of controversy about which digital rights management solutions (DRM) will be acceptable to consumers and others.  For my part, I'll stick with the Kindle on its various platforms (DX, iPhone, PC) until I need the two screens.

F- Floor care. The new Mint from Evolution Robotics is truly intelligent care for hardwood, lineoleum, tile etc. the small square device uses the popular pads such as Swiffer or 3M, and, using it's intelligent navigation, covers each area only once, but quite thoroughly cleans.  And because it is a square design, it gets into all the corners.  cute video.

G-Z  Gee Whiz, there's so much more to look at, -digital cameras, phones (Palm, Google, Microsoft) and Panasonic's astonishing 152 inch super high def flat screen TV. it's a little large for my apartment, so I'll stick with the modest size ones. After walking the floors for two full days, what I really need is sleep ZZZZZZ.

January 08, 2010 | Permalink

ABC - A Big Crowd - this year's CES seems back to normal after last year's dismal economy caused huge numbers to cancel and bail out. We're now back to long taxi lines, crowded aisles, and a highly optimistic feelings in the halls.Part of this is consolidating all exhibits at the Convention Center and Hilton, which works out better.  It's great to be back and presages well for consumer spending late in the year.

D - this year there are 3 of these everywhere.  3D TV is the hot new thing. While we've seen 3D TVs several times over the past few years, the real push is beginning.  Live 3D cameras are showing how good the quality can be.  With the June 2010 World Cup to be broadcast in 3D, content creation is beginning in earnest.  And of course, James Cameron's brilliant billion dollar blockbuster, Avatar, showed everyone that the public does like it. the cable and broadcast companies are creating 24/7 3D channels so that there will be something to watch. That said, I think 3D sets become a big item for Christmas 2012, if the 2013 SuperBowl gets broadcast that way.  Before that, it's the crazy early adopter market like me that will be willing to wear the glasses around the house..

E- This year's E is eBooks.  There's even an eBook zone in the Central Hall, showcasing many products like the two screen readers from Entourage (the dual-book Edge Interactive), and readers like the Nook, Kindle with many accessories, and software to read eBooks on pretty much any device with a screen,  Several Asian contract manufacturers showed white labeled ereaders, and I'm sure there will be many such devices offered.  Lots of controversy about which digital rights management solutions (DRM) will be acceptable to consumers and others.  For my part, I'll stick with the Kindle on its various platforms (DX, iPhone, PC) until I need the two screens.

F- Floor care. The new Mint from Evolution Robotics is truly intelligent care for hardwood, lineoleum, tile etc. the small square device uses the popular pads such as Swiffer or 3M, and, using it's intelligent navigation, covers each area only once, but quite thoroughly cleans.  And because it is a square design, it gets into all the corners.  cute video.

G-Z  Gee Whiz, there's so much more to look at, -digital cameras, phones (Palm, Google, Microsoft) and Panasonic's astonishing 152 inch super high def flat screen TV. it's a little large for my apartment, so I'll stick with the modest size ones. After walking the floors for two full days, what I really need is sleep ZZZZZZ.

Thoughts for a new decade

I can remember talking with Idealab’s Bill Gross just before the Millenium about themes for the coming decade.  At Idealab we decided on more internet (Bill having created Citysearch and Overture among others in the prior decade), energy and robotics.  A number of excellent companies were spawned as a results of this, including eSolar which is now putting solar energy into the Southern California grid, Evolution Robotics, about to announce some exciting products at CES, and Snap, Perfect Market and Insider Pages (since sold to IAC).

In mid-decade,  I helped Josh Kopelman as we started First Round Capital.  Josh and I had similar thematic discussions, and decided that the space between angels and VCs could provide real opportunities to invest, and that the Web 2.0 and social media phenomena should be areas of extreme interest.  I am proud to be part of First Round’s growing success, and our recent sale of Mint to Intuit, and our growing portfolio  serves as evidence that we got at least something right.

Now, we’re about to start a new decade, and I’ve been pondering what themes will make sense as we move into the teens.  As readers of this blog know, I have a tendency to invest at the way too early stage. This tendency is fortunately tempered by the various wonderful people I’ve been able to partner with, so my current thoughts should not be seen as a blueprint for First Round, Idealab, or any specific investments.

It is clear to me that one of the great revolutions in the next decade will be the exploration and exploitation of the personal genome.  Further this will largely, but not exclusively, be done using the tools of information technology that will later drive various pharma and other technologies. There should be lots of opportunity to find and invest in companies that lead and ride this wave.  First Round already has a small toe in this water.

Second, I have always found it useful to think about what could happen when a constraint is removed from present day computing.  In the decade just ending, one of those constraints was storage, which cost an enormous amount at the start of the decade, when the concept of a terabyte was large, and moved towards free by the end of the decade, when I could buy terabyte drives at Costco for $150 or less.  Wireless bandwidth will move in this direction over the teens , whether via WiMax or other technologies.  This means that all sorts of applications that need to move large amounts of data to and from servers will be economical.  As a corollary, mobile apps will become the norm, as the iPhone has shown the way.  I’ve even been watching Stanford’s CS 193P (programming the iPhone) course during this vacation. It’s available on iTunes University.

Third, I’m beginning to see people start to deal with processing massive amounts of data and making new sense out of it. The tools developed for handling giant datasets are important (First Round’s AsterData provides an example), but so are the applications. In particular, companies such as Neurovigil, making sense out of brainwave patterns, FitBit, aWare Technolgies and others making sense of accelerometer data, and other using vital signs, can lead to a revolution in personal health.

Finally, having been a participant in the eBook world as Chairman of Franklin Electronic Publishers, which sold the early Rocketbook, the eBookman,  and then sold it’s ownership in Mobipocket to Amazon, as a key part of the Kindle’s software technology,  I would say this is the decade of the eBook. And as we’ve watched the various music discovery and other sites grow during the past decade, we’re likely to see many new companies created in the eBook space – both better and more interesting hardware, and in software.

In any case, I’m going to enjoy watching the decade unfold, and will keep looking to be just a little too early, though maybe not way too early in my investing. 

Happy New Year to all.  #FRC

First Round Comes To NYC

When Josh Kopelman and i started First Round Capital in late 2004, we viewed it as an extension of the investing we had been doing for a while. Nurturing great entrepreneurs and interesting ideas in the new environment, one of capital efficient startups.  Part of our shared style was being location agnostic - we wanted to work with the best entrepreneurs, whether they were in the Philadelphia area we called home, in the Bay area, or anywhere else in the US. It was not a great surprise to either of us that more than half our deals were California based  - necessitating more than 20 trips a year for each of us, and leading to Josh's widely read and aptly title blog RedEyeVC.  To help in evaluating all the Bay area deal flow, we opened a San Francisco office, ably led by our Partner Rob Hayes.

I have always spent a fair amount of time in my native city of New York, and helped David Rose when the New York Angels was founded early in this decade.  So it was only natural that we tried to see as many New York deals as we could. In fact, we've now got more than 10 companies that are based in the NY area.  We've finally decided to formalize that, and ease the Amtrak redeye equivalent (6:30am Ben Franklin from Philadelphia) by opening a New York office of First Round Capital.  I'll spend a lot of time there, but continue working from the Conshohocken office as well - and don't see cutting down on CA trips. My partner Chris Fralic, and Phin Barnes will also spend time in the NY office.

I'm excited to announce that we've added one of New York's best known entrepreneurial community members,  Charlie O'Donnell as our first full time Entrepreneur in Residence.  Charlie has been very influential in creating and nurturing the infrastructure for startups in NY. He's helped create events where budding entrepreneurs, startup talent, angels, venture capitalists and the other service providers that make for a vibrant startup community have gotten together to share ideas, tips and moral support.  And he is an entrepreneur in his own right.

New York is seeing a surge in new company creation, fed by this environment and a growing number of experienced high tech and digital media savvy people in this great city. First Round is proud to become a resident member of this community.

Gresham/Morgan Internet Law - Cheap Tweeting Drives Out Dear Blogging

In the 1500s Sir Thomas Gresham observed that Cheap money drives out dear.  This originally applied to two types of money, e.g. gold coins and cheaper metal coins. The reasoning is that people with two types of money will hand over the bad or cheap ones, and hold onto the dear ones. The law was actually named after him by another British economist in 1858, and has been applied to many areas where the true value is different than what people need to accept.

Twitter has triggered a similar tendency on the internet.  Cheap comments (140 character tweets) are driving out dear comments (multiple paragraph blog posts).  I'm a very guilty party. In the last few months I've done dozens of tweets and fewer than a post a month to this blog.

The danger is that people with serious thoughts about a subject, which would call for a several paragraph thoughtful post, properly cross linked to interesting web content, will now just tweet the essence.  And the dialogues that great blog posts engender will be lost.

I'm not sure there's anyway to stop this (after all, it is the law), but I'm going to try and add more blogging to my twittering.

UNI – Acquired tastes in food and investing

Between Idealab, First Round Capital, the New York Angels, and just plain email, I see about 50 new business plans a week.  Many of these are “instant pass” – they don’t fit my investment objectives, nor those of my three or four half time jobs with FRC, Idealab, etc.  While these may be heartbreaking for the entrepreneurs involved, I don’t lose that much sleep over them.

There is another category, which can potentially be big hits, and these are the ones that take most of the time – due diligence, meetings, thoughts about how to work them.  They lead to the 20 or so First Round investments each year, to Idealab’s new company startups, the NY Angels 5-10 investments, and several personal investments that I make. And over the long run, they’ve proven to be worth my investment of money and time, taken as a portfolio whole.

The heartbreaking deals are those I call UNI.  As a Japanese sushi, uni (or sea urchin) is somewhat of an acquired taste.  It is a bit slimy, but can have a wonderful sweetness to it.  I acquired a taste for it during my many trips to Japan in the 80s and 90s, and order it whenever it’s fresh.  I also see a lot of businesses that taste sweet, but have a somewhat slippery texture, I call these UNI -  User, not Investor.  These are deals where the product excites some of my sensibilities, and I can quickly see that I, and maybe many other early adopters I know, would easily become users.  But I either don’t see a business model, or see how it gets to be a very large company.  In many cases, I can see getting to a $10-20 million business throwing off  a few million a year. But there is either  market or no vision of how to get it to $50-100 million.  These are wonderful business for the entrepreneur, friends and family, and some angel investors.  They generate cash flow and great lifestyles.  They just don’t work for the venture business.

Many of the ideas we see that build on the social network or new communications platforms fall into the UNI category.  As a big user of Facebook, Twitter, et. al., tools that help me do it are most welcome, and I try many of them.  As businesses, most of them don’t have the ability to generate much revenue. The same seems true for the iPhone app business.  Lots of neat apps (see the humorous iPhone ad you’ll never see on TV), but not many generating enough revenue for long enough to build venture scale companies. 

So please don’t feel offended if I pass on your deal, after showing great excitement for your product. You may well have a winner – for small scale investors, but  cannot generate the scale that works with venture math.

@Martin RIP

Actually, I doubt that Martin wants peace - he always wanted to be where there was some interesting action.  I, as many others, was shocked to learn yesterday that Martin Schaedel (@Martin), involved early with  Farecompare and internet investor and entrepreneur, had been killed in a plane crash at Santa Monica Airport, where he had been taking flying lessons for the past week.
   I only knew him since October, when I met him at Betaworks day in NY.  But it's a measure of how internet techology works that he and I became friends very quickly.  We clicked at Betaday, and had lunch a few days later - giving our backgrounds and finding things in our interests that intersected.  of course he was young and dating supermodels, and I have a forty one year marriage and six grandchildren, but those differences were not at all relevant to people who love life and everything about it.
   Ten years ago, I might have seen him every few months and felt that he was an acquaintance. Now, we got on each other's twitter streams and sent recommendations and comments about travel, restaurants and people to meet. it made for a much more friend relationshsip than merely acquaintance.
   After his trip to Asia last Christmas, when I was chiding him for not knowing that it's now called Myanmaar (he said it was tough to get the visas for Burma), he emailed to say he was going to be in LA after Sundance, where he had checked out a film one of my cousins worked on,  and did I know folks he should meet.  I suggested the founders of GumGum (a First Round investment where I'm on the board), and they set it up for Wednesday.  They did meet (see photo - probably the last one of Martin), and had such a good meeting before lunch that he came back for a few hours after lunch to set up next steps.

    Then he told Ophir and Air he had to get to Santa Monica Airport for a 4 pm flight with a friend in an aerobatic trainer (the Italian Marchetti).  It crashed shortly after takeoff, cutting off two lives in their prime.
    I feel richer for having known him even the short four months that I did, and see the great value in these modern tools that can connect lives more richly than ever before. And I hope that he has gotten into the VIP rooms wherever he's ended up - he'll add to their fun as well.

We still love startups

I've always liked looking at new ideas and companies early (or way too early, as this blog's title notes). And I'm pleased to say that the economic turmoil has not dampened my enthusiasm, nor that of my partners at First Round Capital, nor that of other early stage players such as New York's Betaworks.

I attended a wonderful afternoon of presentations by 16 Betaworks companies, some, such as Twitter (which bought the Betawork's backed Summize, now search.twitter.com ), that are well known, and others just appearing for the first time. Some that First Round had passed on, though we loved the product, e.g, Someecards.com - a great site.

And now, I'm pleased to let you know that our San Francisco based folks (Rob Hayes, Christine Herron and Kent Goldman), are going to hold "office hours" at the University Cafe in Palo Alto on Tuesday, October 21st from 11-1. They'll listen to new ideas and talk about the economic climate.  More details from the creator at Kent Goldman's Cornice blog, and an RSVP link on Christine's blog.

Demo and TechCrunch50 - Startups are going strong

For the first time in many years, i won't physically get to either  the 18th year of DEMOFall or the second year of the TechCrunch50 (it was 40 last year, supposed to be 20). But through the magic of the world wide web, I can see how vibrant the startup and new product economy really is. Demo has videos up of their new products, and TechCrunch has Qik and ustreams which let non-attendees like me see the good stuff in real time.

DemoFall has 72 companies/products being introduced, some from big companies like Best Buy and Real Networks, but most from startups like SpinSpotter that help to find truth in the stuff you're reading, or alerts.com that lets you set up information push on things of interest. And there's the new Plastic Logic Reader, which is exciting to a Kindle user like me. Of course, they've raised $200 million, which is a little more that FirstRound normally does, so we're not investors.

TechCrunch50 has 52 companies (selected from over 1,000), including OtherInBox, which lets you give special emails and keeps most of the marketing junk mail (not spam), out of your normal inbox, and Yammer, which is a secure enterprise usable communications site, with capabilites of Twitter, IM etc. all protected and tracked.

At FirstRound Capital, we normally look at 2,000 deals a year to make 20 investments, and both of these great conferences provide tremendous raw material (although I must admit we prefer to see them before they've gotten the exposure). But it's really great to know that there are thousands of high quality startups still being created in the US and elsewhere, and that even in this tough economy, the new economics of capital efficient startups is thriving.

Wirewize: Connecting the CE Future to your CE Past

We've all faced the problem of bringing home a great new piece of consumer electronics (plasma TV, DVR, 5.1 surround system), and trying to connect it to the existing system. Even for those considered tech gurus by their slightly more challenged relatives, this is not a simple problem.

First, one finds the the right cables may not be readily at hand. This either means another trip to the store (or web store), or making do with the wrong cables and lesser connections (e.g., S-Video instead of HDMI).  And deciphering the back panels of various manufacturers equipment, with those wonderful icons (some designed for Martians, no doubt), is another intellectual challenge.

About two years ago, Dean Summers, founder of Partsearch Technologies (an Idealab company), came up with a better idea. This led to his leaving Partsearch and starting CE-interactive, and the launch of their Wirewize.com site. (First Round Capital is an investor in this venture).

You can set up a locker by selecting the electronics gear that you already own.  Almost 10,000 of the top amplifiers, TVs, cable boxes, game consoles, etc. are already in the database.  When you want to add a new piece of gear, wirewize.com can tell you what cables you'll need for the best connectivity, and show you detailed pictures of each back panel, with hard to mess up instructions for where to connect each of the cables that it told you to get.

Presto, fewer returns or return trips, better quality pictures and sound, and the ability to return at any time to wirewize and see if there is upgraded software for your devices (yes, much of the CE world now does this). And you can read many of the manuals online as well.  Right now, the free version can be tried at www.wirewize.com.  I've already used it to find a better way to connect my TiVo Series 3 and my Panasonic system.

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.