Net Neutrality

November 12, 2014 / / No Comments

Enough people asking what I think of net neutrality so I will attempt to answer, but warning, I do not have a clean and simple answer!

I think the permissionless innovation, nondiscriminatory nature of Internet is of critical importance and must be maintained or strengthened. I also think telco/cable companies need incentives to build far more/better net infrastructure than we have now and be able to make money on it. Due to the economics of network businesses, I think these are extremely difficult principles to reconcile and I don’t envy the regulators.

I further worry about the simplistic and politicized nature of much of the debate, which I think is not conducive to navigating complexity. And I further still worry about the sausage-making of any regulatory process and the likelihood of unanticipated and undesirable outcomes.

And generally, I try to spend my time trying to figure out how to bring more/better/faster Internet to more people in new/different ways.

Source Tweets: 1,2,3,4,5,6,7

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Next Generation Movie Theaters

September 1, 2014 / / No Comments

Next generation movie theaters could be so much better, charge a premium and dominate financially (like ArcLight Hollywood).

Convenience: Reserved seating, valet parking, warm embrace of Lyft and Uber including ride-pooling, on-site daycare.

Experience: No commercials before movie; super-comfortable chairs and sofas; food delivery directly to seats; sparkling clean bathrooms.

Food and drink: High-quality food with healthy options; sit-down dining on site; full bars (Lyft and Uber make more practical and safe now).

Variety of screening experiences: Silent, or noisy, or use of phones allowed, or families + kids, or all kids, or dining + movie together.

Use of crowdsourcing and crowdfunding for special screenings; full embrace of group and corporate events; all-you-can-view subscriptions…

Source: 1,2,3,4,5,6

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The Difference Between Technical-Founder/CEO vs Professional CEO

September 1, 2014 / / No Comments

In tech, we talk about difference between technical-founder/CEO (product/eng background) vs professional CEO (sales/marketing background).

Our general theory is: It’s easier to teach product innovator how to manage, than it is to teach sales/marketing operator how to innovate. There are many exceptions in both directions, of course. The mountain is hard to climb either way. There’s lots of work/learning/adaptation required.

I propose another lens on the dynamic: The difference between knowing What and Who, vs knowing How, Where, and When. Bear with me… Great tech founder/CEOs tend to focus on What and Who: What product to build, and Who to hire/train/retain/motivate to build it. Great pro CEOs tend to focus on How, Where, & When: How = processes; Where = geographic expansion; When = optimizing business across time.

To succeed at scale, each needs to learn the other skills and hire people who have them: Founder/CEO -> How/Where/When; Pro CEO -> What/Who. The challenge: It’s usually easier to hire skilled business professionals who know How/Where/When than What/Who. This is fishing from unbalanced pool. The trap: Only nailing What/Who can carry startup a long way, but only nailing How/Where/When = slow road to zombieland and company death. Ultimately = team-building for both paths. But dynamic different and differently challenging in each direction; requires open discussion.

Addendum: The Why = the mission, ideally beyond just “the company’s success.” This is increasingly important for all paths.

Addendum: The truly great tech CEOs have mastered all of these: What, Who, How, Where, and When… and Why.

Source: 1,2,3,4,5,6,7,8,9,10,11,12

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Lessons Learned From Large Institutions in Financial Crisis

August 8, 2014 / / No Comments

Lessons learned by managers and shareholders of large regulated financial institutions for the next financial crisis: There is no risk of individual executive criminal prosecution whatsoever. Bailouts are guaranteed, particularly for bondholders, for all but the weakest members of the herd.

The one thing that will get punished is acceding to the government’s request/demand for stronger companies to buy weaker companies. Ultimate fines will be levied against your shareholder base eight years in the future, not your shareholder base when the sins are committed. “Too big to fail” institutions will be allowed to become bigger than ever, increasing their safety buffer for next time.

And for bonus points, regulatory barriers against new competition will be raised, not lowered, further entrenching incumbents.

AND: “Too big to jail” is real, according to the Attorney General of the United States.

AND: Regulators on whose watch the last crisis happened, will be allowed to become even bigger and more powerful.

AND: All three government branches — executive, legislative, and judicial — are out to lunch on oversight.

Followup reading, from US Federal Judge Jed Rakoff: http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

Followup viewing: Both nonfiction “Too Big To Fail” film and fiction “Margin Call” film are excellent at capturing the 2008 crisis.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12

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Lyft Line Launch

August 8, 2014 / / No Comments

We @a16z are very excited about the launch of Lyft Line, and I want to explain why!

Lyft and Lyft Line are an archetypal example of how Silicon Valley is going straight at the hard problems, in this case transportation. A growing number of people know about the amazing consumer utility and convenience created by “a ride on demand whenever you want”. And in parallel, services like Lyft make it possible for people who may otherwise not be able to make car payments to keep their cars.

In many cities, this results in a triple win: Consumer convenience, driver economic benefits, and improved business/tourism environment. But beyond that, as Lyft and its peers grow, ride sharing becomes increasingly convenient and affordable as *alternative* to owning a car. This leads to environmental benefits: Fewer cars needed -> less natural resource utilization; Network efficiency -> fewer miles driven.

Online supply/demand matching eliminates the need for cars-for-hire to drive around & look for riders. Network optimization in bits not atoms. Lyft Line is especially environmentally friendly: Facilitates multiple people riding together on the same route, still with high convenience! Everyone in world wants equivalent to upper-middle-class American lifestyle. Services like Lyft make it possible without destroying planet.

Few new techs deliver so much to so many: riders, drivers, car owners, cities, environment. And to think it just looks like an app :-). Closing note: Lyft Line is the classic “peace dividend of smartphone wars” — not possible pre universal smartphones.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12

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Pruning Brands and SKUs to Encourage Company Growth

August 7, 2014 / / No Comments

Really interesting business experiment starting at Procter & Gamble: P&G “will sell or exit 90-100 mostly minor brands in bold attempt to refocus the business behind its 70-80 remaining best-selling brands. Less will be much more,” P&G CEO told analysts. “The objective is growth… We’re going to be much more agile and adaptable.”

I think a majority of big company CEOs think they should do this in their own companies. But few ever pull the trigger. It’s too scary. A common thing you hear at big companies is “SKU proliferation” — the sheer number of items for sale. It bloats the organization and makes action harder.

Steve Jobs legendarily used the strategy of cutting brands and SKUs for Apple’s turnaround. But few CEOs have followed suit in last 15 years. Like Steve, AG Lafley at P&G is one of the most respected CEOs in the world. If this works for P&G as well as it did at Apple, I think the odds go way up that many big company CEOs will pull the trigger on the same strategy. It could be transformative for business.

The stakes are high: Whether, and how, big companies will be able to grow their businesses and their number of workers in the future. Further, whether/how big companies will invest in new product creation in the future. Paring the old can be staging for creating the new.

Of course, Larry Page is busily ignoring Steve Jobs’ advice to do the same thing at Google! And Jeff Bezos is furiously expanding Amazon. There are no absolutes, but I think it’s very healthy for every big company to consider: How to best set up to grow and create new things?

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12

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Ten + One Ways to Grievously Damage Your High-Growth Tech Startup and Silicon Valley in the Process

July 9, 2014 / / No Comments

Ten + one ways to grievously damage your high-growth tech startup, and Silicon Valley in the process:

  1. Only hire, and only train/motivate/incent your managers to hire — don’t optimize efficiency, don’t do performance management, don’t fire.
  2. Founders, sell too much of your own personal stock too quickly, alienating your employees and questioning your long-term commitment.
  3. Let private stock sales by employees get out of hand: create hit-and-run culture and take on burdens of being public before going public.
  4. Dilute the s*** out of cap table: be sloppy and undisciplined w/stock grants to early employees, plant morale land mine for later employees.
  5. Maximize absolute valuation of each growth round: make later rounds harder and harder to achieve, until you trigger a disastrous down round.
  6. Let non-SV investors suck you into terrible structural terms on growth rounds: guarantee massive trauma if anything goes slightly wrong.
  7. Go public too soon, before you’re a fortress, before you can withstand all the assaults: ending in stock price death spiral and train wreck.
  8. Pour huge money into overly glorious new headquarters, signaling to employees “we’ve made it, we’re amazing”, then repeat two years later.
  9. Confuse conference circuit and party scene with actual work. Encourage alcohol and drugs, party culture in company, value ballers over nerds.
  10. Refuse to take HR seriously: allow terrible internal manager and employee behavior to catalyze into catastrophic ethical and legal crisis.
  11. And the one that will actually kill you: Assume more cash is always available at higher and higher valuations, forever.

Source: Tweets – 0,1,2,3,4,5,6,7,8,9,10,11

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An Answer to Critics Who Say that Silicon Valley Isn’t Building/Funding the Right Things

July 9, 2014 / / No Comments

One persistent canard from would-be SV critics is “Silicon Valley isn’t building/funding the right things, aka solutions to big problems.” There are six logical problems with the false choice of “make trivial apps for 20-something SF hipsters” vs “do things that matter”.

First, “make trivial apps” vs “do things that matter” are not actually in conflict; there’s plenty of room and plenty of money to do both.

Second, it’s often hard to tell which is which up front. Almost all big world-changers were dismissed by critics as trivial at first.

Third, observer bias: Only read consumer tech blogs, only go to consumer tech conferences, think SV only works on consumer tech. Founders of non-consumer-tech startups routinely find same pundits mounting criticism have little interest in hearing about other domains. This is exacerbated by the SF-centric consumer tech party scene–other domains in SV don’t have the same party culture, just nerds at work. New arrivals to SV get sucked into SF party scene, and never make it to the South Bay industrial parks where everything else is happening.

Fourth, battling cynical critiques: Founders who articulate the big vision for changing the world get called arrogant and vainglorious. Both criticisms are leveled with no cognitive dissonance: Founders are either not pursuing big ideas, or are out of control egomaniacs if they are.

Fifth, subtext often that communication tech/apps in particular somehow aren’t important or don’t matter, vs energy, education, etc. I think this is 100% incorrect: Communication tech/apps including the Internet are the foundation for everything else we’ll do for 100 years. Why? Communication is the foundation of collaborative work, which is how all the important problems get solved. People working together.

Sixth: Anyone who thinks SV can be doing more/better/different, come join us and participate in building new things, products, companies! Jump in, the water’s warm! SV draws talent from all over the world and all walks of life; nothing preventing any critic from contributing. As my old boss Jim Barksdale used to say, “We have plenty of uniforms your size.” Many opportunities to contribute and make a difference! And, of course, tech startup ecosystem now expanding worldwide. Opportunities to contribute from anywhere abound, linked via Internet.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17

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Tweetstorm Addendum to Unbundling Series

July 1, 2014 / / No Comments

Late night tweetstorm addendum to earlier series on unbundling and rebundling: Younger followers asked me to expand on DEC/Sun/Microsoft unbundling: older history, therefore useful to study as precedent for our time.

Once upon a time (1950s-1960s), businesses mostly bought computers from IBM, and IBM also bundled in all the software & services you’d need. IBM bundled offerings were extremely expensive, while demand for computers spread to departments and smaller businesses who had less money. So DEC unbundled the computer itself from the total bundle and sold it for less money to customers who could then write their own software.

But a DEC computer itself was a bundle of proprietary components: VAX hardware, VMS operating system, RDB database, etc. In the 80’s, Sun came along & sold a similar power computer to DEC’s for 1/4 the cost w/unbundled components: Unix OS + Motorola chips.

DEC responded by going upmarket and becoming more like IBM; Sun and other Unix workstation vendors chewed through their market + grew it more. Critical point: At the point when DEC started to tip over, its integrated offering was as close to perfect as our industry will ever see.

Ask people who were working then (like me) and they’ll tell you to this day that they miss VAX/VMS and how productive they could be on it. Meanwhile Microsoft and Intel came along and fully implemented the unbundled low-cost computer, first PCs and then Windows-based servers.

Sun responded to Microsoft/Intel by rebundling: Rebuilding itself in DEC’s image with Sparc chip, Solaris OS — proprietary HW+SW stack. Again, Sun got close to perfection as an integrated system when it unbundled Microsoft+Intel and Linux+Intel went broad and forced the sale of the company.

Picking up thread with Microsoft: Microsoft has spent last 15 years rebundling, rebuilding itself in DEC’s image much like Sun. Now + HW! Once again, bundled Microsoft stack very close to perfect just as it comes under attack from next unbundling wave: mobile + cloud.

Fascinating twist: Under new leadership, Microsoft 2014 now committed to unbundling — full app + cloud support for iOS, Android, Linux! Microsoft is taking new unbundling strategy offensively vs new titans who are bundling as fast as possible! Apple, Google, Amazon, Oracle.

The point? I don’t know much about what our industry will look like in 50 years, but I’m quite confident these same dynamics will apply.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18

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Intellectual Generosity In Silicon Valley

June 19, 2014 / / No Comments

One of the special things about our industry is how intellectually generous many of the leading participants are (no, I don’t mean me.) When I arrived in Silicon Valley in Jan 1994, I sought out all of the written material I could on startups and venture capital. I found exactly two books. An excellent but dry financial analysis of startup returns, and an excellent but dated book by Gordon Bell. So then I looked for magazines, and found exactly one: Red Herring. Which for several years was the best magazine about startups.

Red Herring Magazine Cover

Red Herring Magazine Cover

But, in 1994, Red Herring was ~8 (?) memographed pages, cost $12 (?), published every 2 months (?), and available at only a few newsstands. That was it. I knew there was more material at Stanford and Harvard business schools but I couldn’t get to it. There was nothing else. Today, 20 years later, the difference is *profound*. Many of the leading theorists and practitioners share *huge* amounts of info for free. That’s a big difference in Silicon Valley, but what I hear every day from people all over the world is what a big difference it’s making everywhere else.

A 14-year-old kid in Indonesia w/smartphone has access to 10,000x more info on tech and startups today than I did in Palo Alto 20 years ago and the cycle is closing: there is startlingly profound new thinking happening all over the world and coming right back to Silicon Valley. In our industry, it’s hard to underestimate the consequences of a positive feedback loop and this is a positive feedback loop.

Assumption *must* be: Tech entrepreneurship all over the world is going to expand a thousand fold in the next 20 years. How could it not?

https://twitter.com/abenomixx/status/479757502360207360
https://twitter.com/blm849/status/479758191408857088

Source Tweets: 1,2,3,4,5,6,7,8,9,10,11,12