Download - Disrupting the Disruptors: Technology 3 - Alex Hammer Books...Things could change, but how strong is Facebook in mobile compared to Google and Apple, for starters? (Think mobile operating

DisruptingtheDisruptors:Technology3.0

WhattheFutureMayHoldForFacebook,Google,Amazon,Apple,Microsoft,TwitterandOthersViaDisruptiveInnovationsFromMobiletoSearchtoEcommercetoBitcoin

ByAlexHammer

(multi-timebestsellingAmazonAuthor)

IntroductionDisruptingtheDisruptors:Technology3.0containsthefollowing:

Chapter1:HowFacebookCouldBeKilledByMobile(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)Excerpt:“SoftwareISfamouslyeatingtheworld(MarcAndreessen)WhySoftwareIsEatingTheWorld

Everybusinessisbecomingasoftwarebusiness,andbeingdisruptedintheprocess.Inregardtomobilespecifically,itmaywellbeeatingtheUniverse.Mobileisdisruptingthedisrupters.StartingwithFacebook.”

WhatcanwelearnfromAmazoninregardtocreatingthenextdisruptivewaveofEcommerce?Excerpt:“You'veheardaboutthebuyingcycle.Thebuyingcycledependsonthetypeofproduct,theprice,thedegreeofneed(andhowimmediateitis)andotherfactors,butmostpeople(unlesstheyareveryhighlymotivated,forexampletheyneedtheproductandrightawayandcaneasilyaffordit)willnotbuyaproductthefirsttimetheyseeit.Theyneedtobeexposedtoitoveraperiodoftime.Theyneedtocompareittootherproducts.Theyneedtoconsiderwhetherthatisthetypeofproduct,amongallthechoices,thattheyreallywantorneed.ThatiswhytheycallitthebuyingCYCLE.”

Chapter3:

IndustryLeadersofTech2.0InterviewDavidCohen:"Lookforustocontinuetopileupunfairadvantagesforourcompanies"Excerpt:“Itsoundsreallysimple,anditis.It’sallaboutthepeople.Wetaketheverybestentrepreneurswecanfind,andputtheminaroomwiththeverybestmentors.Wehaveover1,000greatpeoplethathaveaskedtobeTechStarsmentorsthatwehaven’tbroughtin.Likeeverythingwedo,it’saboutqualityoverquantity.The300mentorsthatwedohaveareliterallythebest.Theyengagedeeply,andthey’reincredible.Whenyouputthesementorsinaroomwithreallyfantasticentrepreneurstheoutcomeisoftenpuremagic.There’sasayingabouthiringtopsoftwaredevelopers.Thetop1%are10timesmoreproductivethanthenext10%,whoare10%moreproductivethantherest.AtTechStars,wethinkthesameistrueofmentorsandentrepreneurs.Filteringonthebestatbothlevelshasproducedsomethingreallyspecial.

TheWorld'sMostSuccessfulVC'sandHowTheyDiscover"TheNextBigThing"FirstExcerpt:“3.TheNetworkEffect2.0

Ifyouwanttoknowhowsuccessfulyouwillbeinthefuture,thequickestandmostaccuratewaytodothatistolookatthepowerofyournetwork.

Networks,likemoney,flowtovalue.Ifyouwanttoincreasethestrengthofyournetworkyoumustincreasethestrengthofyourvalue.

Whenyouhaveplentytogiveyouwillattracttakers,whichyoucanthinkofascustomers,andwillattracttheattentionofhighlevelindividualsandsystems.

Chapter5:TheFutureofSearch-HowtheLawofAcceleratingReturnsisDisruptingtheDisruptersandGivingtheAdvantagetoFacebook,Twitter,AppleandAmazon(andonemore)Excerpt:“RayKurzweilfamouslytalksabouttheacceleratingrateoftechnologychangeonanexponentialbasis.TheLawofAcceleratingReturns"Ananalysisofthehistoryoftechnologyshowsthattechnologicalchangeisexponential,contrarytothecommonsense“intuitivelinear”view.Sowewon’texperience100yearsofprogressinthe21stcentury—itwillbemorelike20,000yearsofprogress(attoday’srate).The“returns,”suchaschipspeedandcost-effectiveness,alsoincreaseexponentially.There’sevenexponentialgrowthintherateofexponentialgrowth."

Oneimplicationofthisisthatitiseasierthaneverforthedisruptersthemselvestobedisrupted.Fortheadoptioncycleofnewanddisruptivetechnologiesisbecomingmoreandmoreandmoreacceleratedandcompressed.

Chapter6:FredWilsonandtheFutureofBitcoin-AnAnalysisoftheBitcoinInvestmentLandscapeExcerpt:“Let'sunpackalittleofwhatFredsaysabovefirstinregardtoregulationandBitcoin.TheUnitedStatesis,infact,considered,whenviewedonaglobalregulatoryscale,oneofthefriendliercountriestowardsBitcoin(Source:Exclusive:StateofBitcoin2014ReportAnalysesEmergingTrends,Slide8).Forexample,thereisamarkedcontrastintheregulatoryenvironmentoftheUnitedStatestowardsBitcoinversus,famously,themoreunfavorableattitudeofChina,whichisitselfmildcomparedtoRussia.

So,weneedtokeepthatperspectivehere.Chapter7:

TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"Excerpt:“WhatDoestheFutureDominantCompanyLookLike?Google,Amazon,Facebook,AppleandevenMicrosoftincreasinglycompeteagainsteachother.AretheyContentProviders?AdvertisingPlatforms?SearchEngines?SocialNetworks?HardwareProviders?EcommercePlatforms?

Themorecomplextheworldbecomes,themoreweneedintegratedsystemsthatarehighlypersonalizedand(self)organizedtoguideus.

Gainingefficienciesinthiscompetitivelandscapebydifferentiatingsignalfromnoiseisthe"killerapp".

Chapter8:IndustryLeadersInterviewBradFeld-"Fundamentally,it’saboutbeingopen,honest,direct,respectful,andhumble"

Excerpt:“BradFeld:Ireadalotofsciencefictionandamconstantlythinkingaboutthefuture,bothfromthecontextofthepresent,aswellasthecontextofthepast(say–writing40yearsagoabouttoday).WhenIletmymindrunfree,it’scleartomethatthemachineshavealreadytakenover.Fromthishasemergedourhumancomputerinteractiontheme.”

Chapter9:Whatinvestorsdon'trealizeaboutstartupsExcerpt:“InBlackSwanFarmingPaulGrahamwrites:"That'smadeharderbythefactthatthebeststartupideasseematfirstlikebadideas.I'vewrittenaboutthisbefore:ifagoodideawereobviouslygood,someoneelsewouldalreadyhavedoneit.Sothemostsuccessfulfounderstendtoworkonideas

thatfewbesidethemrealizearegood.Whichisnotthatfarfromadescriptionofinsanity,tillyoureachthepointwhereyouseeresults."

Successinanyfieldisaboutseeingaroundcurves.WayneGretzky,askedabouthissuccess,famouslysaidthatheskatesnottowherethepuckisbutwhereitisgoingtobe.

80%ofoursuccesscomesfrom20%ofourefforts,but99%ofourgreatsuccesscomesfrom1%ofourefforts.Grahamagain:

"Unfortunatelypickingwinnersisharderthanthat.Youhavetoignoretheelephantinfrontofyou,thelikelihoodthey'llsucceed,andfocusinsteadontheseparateandalmostinvisiblyintangiblequestionofwhetherthey'llsucceedreallybig...”Chapter10:BeyondContentSearch-TowardaScienceofContentOrganizationExcerpt:“Thefutureofcontentiscontentorganization.OnehasmillionsandmillionsofYouTubevideosavailabletowatch,but,evenwithsearch,it'sdifficulttofindwhatyouwant.Sometimesyoudon'tknowexactlywhatyouwant(andthatiswhyyouaredoingthesearchinthefirstplace)andsometimeswhatyouthinkyouwantisonlyasmallsubsetorwhatyoureallywantifyouknewallofthechoicesavailable.

WehavethousandsofTVchannelsavailablebutwecan'tfindthegoodstufftowatch.

Techvideosareallovertheweb.Howdoyoufindallofthebestvideosproducedyesterdayontheweb,orallthebestvideosofasingleperson(blinkx.comisonestart,butitisstillnotintelligentsearch,thereistoomuchwadingandsorting)?

THENOISEISOUTWEIGHINGTHESIGNAL,ANDTHERESULTISINEFFICIENCYANDWASTE.Curationisoneanswer,butitistooexpensive(askMahalo).

andChapter11:WhyVox,PandoandFiveThirtyEightShouldMergeExcerpt:“Theremayormaynotbeenoughoxygenforeachofthesesites,orthelargestones,tosurvivealongwiththeircompetitorsovertime,butifdisciplineisnotinstilledfromtheinsideviaamerger,thelackofscale,lackoforganizationandlackofdifferentiationwillmakeallthreerelativelyeasyandprimepickingsfordisruptionfromtheoutside.

Remember,weliveinaneranowofthethedisruptorsthemselvesbeingvulnerabletobeingdisrupted.”

CHAPTERONE

HowFacebookCouldBeKilledByMobile(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)

SoftwareISfamouslyeatingtheworld(MarcAndreessen)WhySoftwareIsEatingTheWorld

Everybusinessisbecomingasoftwarebusiness,andbeingdisruptedintheprocess.Inregardtomobilespecifically,itmaywellbeeatingtheUniverse.Mobileisdisruptingthedisruptors.StartingwithFacebook.

TheannouncementthatFacebookpaid$19billionforWhatsAppisaseminaleventinthehistoryoftechnology.IknowthatthissoundsboldbutitdemonstratedjustforstartersthatthedaysofpurchasingaquicklybuiltInstagramfor$1billionisfar(veryfar,veryveryfar)fromablackswanevent.

AnditshowsthatFacebook,justrecentlyconsideredtheemergentdominantforceintechnology,isclearlyonthedefensiveplayingcatch-up.

ANDHIGHLYVULNERABLE.

Youdon'tbelievethat?IfmobileiseatingtheUniverse,alotofbigcompanieswhodonotexcelinmobileasaCORECOMPETENCYinthemobilespacewilldie.

(Facebook'sstrengthsinmobilewillalsobediscussed)Isthetechnologylandscapestartingtonotonlyshiftbutexplode?

Thingscouldchange,buthowstrongisFacebookinmobilecomparedtoGoogleandApple,forstarters?(Thinkmobileoperatingsystem,detailedbelow)

Mobilecompetitionisthedefiningfactor.IfFacebookcannotfindawaytokeepupwithGoogleandAppleinthemobilespace,theyare(eventually)toast.

Andatthepricesthattoday'sleadingmobileappsareandwillbesellingfor-no,WhatsAppwillnotbethehigherwatermark,andperhapsnotbyalongshot,Facebook,asrichastheymayseemtobe,couldeasilygobrokeinthisarmsracerelativelyquickly.

YOUREADITHEREFIRST.

IreadinonearticlethattheWhatsApppurchaserepresented9%ofFacebook'sstock.Ifaccurate,(andI'mnotsureornotwhetheritcompletelyisasFacebookhasacurrentmarketcapof$169billionandchangePageongoogle.com,butinanyeventthepurchaserepresentsamajormajoreventforFacebook(andbeyond))I'msurprisedthatthishugebetonasingleappbyFacebookisnotbeingmorediscussedspecificallyinregardtorepresentingmorethanamoderateamountofriskforFacebook.

Idon'tknowthatthismarks(punintended)Facebookasbeingdesperate,butclearlyFacebookishighlyvulnerablelivingonthebuysideinabuyversusbuildmobileworld.

Ok,youmaynotbelieveme,butlistentowhatKaraSwisher,whoyouloveandrespect,hastosayabouttheWhatsApppurchase

FacebookPriceforHavingNoPhoneOS?$19Billion.AMust-HaveAppsPlay?Priceless.Karawritesinpart:

"Translation:Wehavenowestablishedapricefloorforwhatitcostsnottohaveamobileoperatingsysteminaworldinwhichhavingamobileoperatingsystemcountsforanawfullotthesedays.

Andthatmeans,forallintentsandpurposes,Google’sAndroidoperatingsystemandApple’siOS.Andnot,despitevariousandsundryefforts,Facebook,whichalsohastriedtocreateamutatedshellversionofitsownOScalledHome.(Phonehome,asitturnedout,didnotworkaswellasitdidinthemovie.)

Butamobilepresenceisamust-dointhecurrentdigitalenvironment,andthismassiveacquisitionmakesitclearthatFacebookhasdecidedthatitscorestrategywillbetocreateorbuyupmust-haveappsthatconsumersdemandtohaveontheirmobiledevices."

Facebookonlyhasafiniteamountofmoneyforacquisitionsofcourse,asbigasitis,andthereareandwillbealotofvaluableappsoutthere.$19billionforonecommunicationmobileapp?$19billionhere,and$19billionthere.Andprettysoonyou'retalkingrealmoney.

BankruptcymoneyperhapswhenyouconsiderthetermsofthispurchaseforFacebookandwhatitimpliesgoingforwardinthismobileeatstheUniverseworld(readtilltheveryendtoseewhatImean,nospoilerprovided).

Andprices,obviouslyarehittingthestratosphere.MarissaMayerhas"boughtin"onmobileasacorestrategy

https://www.youtube.com/watch?v=73_LTTcbymcGooglehashugepockets.Facebookistrulyvulnerableinthisnewworld.InFacebook'sDefense

OfcourseIamnotsayingthatFacebookistoast.Thatmightbeludicrous.Butitdoesn'tsoundquiteasludicrousasitdidtwodaysagobeforetheWhatsApppurchasewasannounced.

OfcourseFacebookbuildsinadditiontobuys.Paperforexample.Andtheyhavetheirownmessagingservice,whichtheyarekeeping.

ForFacebook,acompanyfamouslyknownforgrowingtothetopinsuchashortperiodbybuildingfeatureafterfeaturethemselves(Zuckerbergasacoderhimselfisaniconicimage)isn'titironicthatinthemobileworld,whichiseatingtheUniverse,thatFacebook,seentobetheupandcomingcompanydisplacingGoogleandAppleoverall,isnowindangerofbeingdestroyedbyGoogleorAppleinthismobiletransformedtechnologyworld.

Orbyanothercompany.We'reonlyattheveryveryverybeginningofthemobilelandscape.Whatifthenextgroundbreakingmobilecompany,say2-3yearsfromnow,isatthatpoint(again,rememberallthecompetitivebiddingamongthetechnologygiants)nowworth$100billion.

Andwhatifitdecidesnottosellbutcompetewiththegiantsonitsown.

MaybeSnapchatwastotallycrazytoturndownZuck's$3billionSnapchatSpurned$3BillionAcquisitionOfferfromFacebook-Digits–WSJ(orpossiblynot).Butmaybesomefuturehotshotbreakoutmobilestartupwillnotbe.

AndSnapchat,despitebeingtoday'smediadarlingmaystillseemunimpressivetosome,isnotalone.RememberTwitterfamouslyspurnedFacebook,forexample,aswell.WhenTwitterMetFacebook:TheAcquisitionDealThatFail-Whaled(Karaagain,goshdarnit)

DejaVuAllOverAgain

LookatMicrosoft.Thelostdecade(andlonger)famouslyinvolvedMicrosoftbeingverylatetotheInternet.Andnotunderstandingitwellbecauseitwasinvestedsoheavilyinitslegacyproducts.

BillGates'famouswarningshavenotbeenseriouslyenoughheededbythecompany.To.This.Day.

GoodbyeSteve"WindowsMobile-Surface"Ballmer.

AppleandGoogleateMicrosoft(Microsoftisstillinthegamebutclearlyin"ketchup"mode).AndAppleandGoogle(orsomebodyelse)maydestroyFacebookaswell.

ZuckerburgHasBeenOutvisionedbyLarryPageandJeffBezos(andofcourseSteveJobsasWell)

Thisheadlinemighthaveseemedutterlyabsurduntilrecently.MarkZuckerburghaslongbeenviewedasavisionary,andanincredibleoneatthat.Andhemaywellstillbe.Buttoday,nevermoresothanafterthisacquisition,Facebookislookingrathersmall.Ormoreaccurately,NARROW.

NotbecauseofwhatFacebookisbutbecauseofwhattheworldis,theUniverseis,thelandscapeisinthispostWhatsAppacquisitionworld.

HumptyDumptyhasfallenandcannotbeputbacktogetheragain.

MarkZuckerburg,asincredibleasheis,tosurvivemuchlessprosperneedstotakealessonoutofLarryPage'smoonshotsandJeffBezos'bringingtogetherofconvergentdominanttechnologies

TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"Andfuckingquicklyaswell.

BillGatesIbelieveitwas,wasfamouslyquotedasbeingmostscaredbytwokidsinagarage.Thesetwokids,nowfundedbyTechStarsorYCombinatorandaninitialseedround,nowhave,believeitornot,inthenextfewyearsthecapabilitytomorphquicklyintoahundredbilliondollarcompany.

Forreal.Mostwon'tofcourse.Butallitmaytakeisone.Everycompanyisatrisk.Including,forexample,Amazon:https://www.youtube.com/watch?v=cfktvIlCoYE

Itisfamouslysaidthatpeopleoverestimatetheamountofchangeintheshortterm,butunderestimatetheamountofchangeinthelongterm.

ForFacebooktoday,andmanyothersinthecomingdays,thatlong-termhasarrivedtoday.WhyTheFutureisNow

Howmuchpowerdoyouhavewhenyoucancommand$19billion,andyouarepredicatedonabusinessmodelthatmightwellbeconsideredactuallyanti-monetization(andFacebookgivesintothisanti-monetizationmodeldespitepurchasing).

Iknowitsoundscrazy.Don'tbelieveit.It'sallintheblogpostannouncingthepurchasefromWhatsAppinvestorSequoiaCapitalWhatsApp|CrunchBaseProfile

whichreadsinpart:FourNumbersThatExplainWhyFacebookAcquiredWhatsApp

"JankeepsanotefromBriantapedtohisdeskthatreads“NoAds!NoGames!NoGimmicks!”Itservesasadailyreminderoftheircommitmenttostayfocusedonbuildingapuremessagingexperience.

ThisdisciplineisreflectedinWhatsApp’sunconventionalapproachtobusiness.Afteroneyearoffreeuse,theservicecosts$1peryear—withnoSMScharges.Thiscansaveuserstrappedinexpensivedataplansupto$150peryear....."

There'smore.Getready,hereisthemoneyshotquotefromtheSequoiapost:

"FacebookhasassuredJanandBrianthatWhatsAppwillremainadfreeandtheywillnothavetocompromiseontheirprinciples.WeknowthatJan,asanewmemberofFacebook’sboard,willcontinuetochampiontherightsofWhatsAppusers."

$19Billionforanessentiallyfreeservicethatwillremainsoandwithoutads?Apurchasethatrepresents,frankly,averysubstantialchunkofyourcompany'sworth?Foroneapp?

THEWORLDHASFUCKINGFOREVERANDUTTERLYCHANGED.Believeit(ornotatyourownrisk)CHAPTERTWO

WhatcanwelearnfromAmazoninregardtocreatingthenextdisruptivewaveofEcommerce?

Interestingandimportantquestion.

I'vetalkedbeforeaboutdisruptingthedisrupters(inthiscaseFacebook);HowExactlyFacebookCouldDieByRunningOutofMoneyForMobileAcquisitions-TheDangersofBeingontheBuySideinaBuildorBuyFrameworkWhenMobileIsEatingtheUniverse(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)

Noeasytaskatall,certainly,butextremelylucrativeifevenpartiallysuccesful.

Ibelieveinlookingatthedisrupters,studyingthem,tolookforcluesandpatternsinregardtothepotential"nextbigthing".Ofcoursemanypeopleareseekingtodothissamething.

There'sdifferentpartsoftheelephant.Whatisnextinmobile,forexample?WhatsApphasapiece(a$19billiondollarpiece).Instagramhashadapiece.AndroidandAppleiOS,obviously,havemajorpieces.

Buthowdothepiecesofthepuzzlefittogether?Whataretheunderlyingprinciplesanddynamics?

Whenyouunderstandthewhole,oratleastthegeneralbigpicture,thenthevariouselementshavemoremeaning,actionablemeaning,inregardtohowtheycanbegroupedtogether.

N'estpas?WhathavewelearnedfromAmazonaboutecommerce?Ifyouwish,reflectuponthatquestionforafewmomentsandcomeupwithyourownanswers.I'llthrowoutafewideas.

WeknowthatAmazonisanEcommercerevolutionary.Howdotheydoit?Whataresomeofthekeydifferentiators?

Personalizationisone.JustasNetflixhasasuperiorrecommendationenginethatfueledtheirgrowth(e.g.,ifyoulikedthat,youmayalsolikethis)Amazonissimilar.Amazoncanbeusedasadiscoveryengine.Googlegivesyou(hopefully)theresultsyouarealreadylookingfor.Amazonisamarketplacewhereyoucandiscoveradditionalthingsyoudidn'tknowyouwantedorneeded.

Depthofselectionisanother.AmazonistheonlineWal-Mart.Butbigger(it'snotconstrainedbyphysicalspaceforonething).It'sonestopshopping.Ifyoucan'tfinditonAmazon,itprobablydoesn'texist.Thatisalittlebitofanexaggerationofcourse,butifyouwantedtogotooneplacetofindthegreatestselectioninthewidestselectionofcategories,wherewouldyougo?Amazon.It'sthe800poundgorilla.It'sthedefactostandard.

Distribution.WementionedWal-Mart.Theproblemwithstoresisthattheyare,ofcourse,expensive.Amazonhasperfecteditsdistributionmethodssuchthattheycanmoveandcontroltheflowofmerchandisetoanamazingdegree,resultingingreatcostefficiencies.Thesesavingscanbe

passedontoyouthroughinitiativessuchasAmazonPrime.

Price.Thenaturalevolutionoftheabove.Price,astheysay,matters.Wal-Martputdepartmentstorechainsoutofbusiness,andthenotherdiscountersoutofbusiness,throughgreaterefficiencies(e.g.logisticalsystems,ruthlessvendorrelationsonprice,operationalcostcontainment,etc.).Amazonputbookstoresoutofbusiness.Andmanyotherfields.

Convenience.Oneclickshoppinganyone?Findingwhatyouwantisamajorconvenience(depthofselection,personalizationandrecommendation)andthentheymakethebuyingexperienceeasy.

Completebuyerexperience.Applehasbeenthemasterofcreatingandcontrollingthebuyerexperiencefromendtoend.Theycontrolthehardware.Theycontroltheoperatingsystem.Theycontroltheservice.Amazonlivesonthatsamepage.YounotonlybuybooksandmagazinesbutyoureadthemonyourKindle(andwecoulddiscussservicesforbusinessesalsosuchasAmazonWebServices(AWS)).

Content-Ahhere'sthebigoneasfarasthefutureofEcommerceisconcerned.Amazonisamajorplayerintheonlinecontentbusiness,buttherelationshipbetweencontentandecommerceisstillinitsinfancy.

We'llshowyouhow.TheRelationshipBetweenContentandEcommerce

Ok,picturethis.RemembertheclassicReese'sPeanutButterCupscommercial,whichwentessentially"Yougotchocolateinmypeanutbutter.yougotpeanutbutteronmychocolate."

Greatcommercial.

Ecommerceandcontentarechocolateandpeanutbetter.Theygoinsanelywelltogether(I'lldetail-faroutpacingtheReese'sPeanutButterCupsanalogy).But,aswithchocolateandpeanutbutter,theirpairing(andmoreimportantlytheirsuccessfulpairing)isnotnecessarilyintuitivelyobvious.

Theideamaybesimple,inregardtoputtingthemtogether,butsimpledoesn'tmeaneasy.Youcanloseyourshirtifyoujuststartputtingupcontent(whichcanbeexpensivetoproduce,thinkofthecommonfallacy"ifyoubuildittheywillcome")andjustslopittogetherwithecommerce.

Beforegettingintosomeofthepotentialpitfalls,Iwanttooutlinewhyyoucanmakeaboatloadofmoneyifyoucaneffectivelypaircontentandecommercetogether,andwhythismayverylikelybea,oreventhe,nextdisruptivewaveofEcommerce.

IfyoucancreatewhatIcalladestinationcontentsite(anddothisbythewayacrossplatforms,phone,tabletandweb)thenyoucanuseEcommerce,ifitiswellsetupandintegrated,tosellatonofproducts.

Here'showitworks(theultrasimplifiedversion).Peoplebuyfromtrustedsources.Everybodyknowsthat.Youcanspendmillions,tensofmillions,hundredsofmillionsorevenbillionsovertimetodevelopandmaintainaleading,trustedandreliablebrand.

Thinkadvertising,inallofitsformsandexpense.Veryexpensive.Goodcontentdoesthisforyou.Howdoesthisoccur?Itrequiresabitofadiscussion.

First,letmeintroduceourstartup,Media2.0,whichis100%focusedonsuccessfullyimplementingthat"Yougotchocolateinmypeanutbutter.yougotpeanutbutteronmychocolate.".Thatis,howcontentandecommercecanbeeffectivelypairedinawaythatisextremelylucrative(asopposedtothealreadycitedalternativeofpotentiallylosingone'sshirt).Thisvideo:Whyweclaimwearethefutureofecommerce-InvestorFAQ

https://www.youtube.com/watch?v=cfktvIlCoYElaysoutthebasics.

Watchthevideo(evenstudyitifisnottoopresumptuousformetosaythat)becausethereisquiteabitthere.ButI'llalsooutlineinthispostafewoftheimportantpoints.

BeforeIdoso,letmesayjustacoupleofwordsabout"moonshots".Whatweareattemptingtodoisa"moonshot".Itisatransformativeeffort,notasmalliterationorimprovementonwhathasalreadybeendone.Ofcourse"moonshots"are,bydefinition,riskierthanthetypicalinvestment,

becausetheyarehardertoachieve.Buttheupsideissomuchgreateraswellifandwhentheyareachieved.Idiscussthenatureof"moonshots",theirnature,importanceandlimitationshere:

TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"TheessentialsOk,backtochocolateandpeanutbutter,contentandecommerce.

Thinkaboutthis:Whenyoutrustacontentsite(mobileorweb)anditbecomesadestinationsite,thismeans,asafewcomponents,thatyouascribeconsiderablevalue(andtrust)tothesite,andthatasaresultyoucomebackoftenandspendconsiderabletimethere.

Say,forexample,you'reacarbuff(thatisrathergeneral,itcouldofcoursebemorespecific,sayaBMWbuff,oranydegreeofgeneralityorspecificityalongthedimension).Youjustlovecars.Love'em,love'em,love'em.

Ok,youcomeacrossacarsitethathassuchamazingcontent,muchbetterthanyouhaveeverfoundbefore.Indepthreviewsofyourfavoritereleases,safetyreviews,amazingpictorials.Thekeyhere,forthesite,isnottotrytobeallthingstoallpeople,buttoprovideasuperiorvaluepropositionforthetargetaudience.

You'veheardaboutthebuyingcycle.Thebuyingcycledependsonthetypeofproduct,theprice,thedegreeofneed(andhowimmediateitis)andotherfactors,butmostpeople(unlesstheyareveryhighlymotivated,forexampletheyneedtheproductandrightawayandcaneasilyaffordit)willnotbuyaproductthefirsttimetheyseeit.Theyneedtobeexposedtoitoveraperiodoftime.Theyneedtocompareittootherproducts.Theyneedtoconsiderwhetherthatisthetypeofproduct,amongallthechoices,thattheyreallywantorneed.ThatiswhytheycallitthebuyingCYCLE.

Ittakestime.

Destinationsites,trustedovertimeasahighsourceofvalueadd,visitedfrequentlyandforlongperiodsoftime,areanaturalfitforthebuyingcycleifenoughsufficientotherfactorsarealsomet.

Thegeneralideais,youlovetoreadaboutBMW'sbecauseyourlastthreecarshavebeenBMW's(oryouliketoreadaboutacertainhealthissuebecauseitpertainstoyouorsomeoneyoulove,oryoulovetofollowinformationonyourfavoritesportsteam,etc.,yougettheidea,thepossibilitiesareendless)andyou'respendingagoodchuck(orevenmodestchunk)ofyourdiscretionaryincomeonproductsforyourBMW.Newtires,rims,interiorupgrades,thelistmightgoonandonandon.

WhatifyourtrustedcontentBMWdestinationsitealsoprovidedasuperiorcollection(leadingbrandsatleadingprices,etc.)ofBMWrelatedproductsinwhichyouwerealsointerested.WhatiftherewereverytightalgorithmssuchthattheproductsdisplayedALWAYSMATCHEDthecontentyouwerereadingandlearnedaboutyourinterests(personalization)overtime.LiketheAmazonandNetflix,"ifyoulikedthat,youmayalsolikethis".

Whatiftheproductofferingswereprofessionally,seamlesslyandattractivelyfittothecontent?Therehavebeenalotofstudiesforexample,thatAdsenseandotheradvertisingformatsconversionratesvarywidely,oftenquitedramatically,baseduponhowwelltheyareintegratedandthesophistication,relevanceandpresentationofthead.Thereisagreatdeal,ofcourse,thatgoesintothat,butyoustarttogetthegeneralidea.Inadestinationsite,theadtransformsfromanadtoavalueadd.Noteasytodobutdoable.

So,elementnumberoneinmakingecommerceandcontentworktogetherwelliscreatingdestinationsites.I'vecreatedtwovideoswhichdiscusstheverybasicelementsofdestinationsiteswhichIhavestartedtodiscusshere:

EssentialFactorsinMakingMoneyOnline-CreatingDestinationWebsites-Part1https://www.youtube.com/watch?v=qFonPLZMhAandEssentialFactorsinMakingMoneyOnline-CreatingDestinationWebsites-Part2https://www.youtube.com/watch?v=2bv2uU7G2-w

ThisjustBARELYscratchesthesurfaceofcourse,butthisisalongpostalreadysowe'llbreakitintochunks.

I'mintheprocessofwritingthefollowingparts,ifyouwantthemcontactmebyemailat

[email protected]

Part2:Howtoproduceeffectivecontentwithoutbreakingthebank.Thecostsofgeneratinghigh-volumehighqualitycontentcaneasilyputyououtofbusinessinashortperiodoftimeifnotdoneextremelywell.Highvolume,high-qualitycontentisacounterintuitive,franklydifficulttoaccomplishcombination,becauseoftenvolumeandqualityareseentobetradeoffsofeachother.Highvolumeisimportantincreatingdestinationwebsitesbecauseyouneedenoughcontenttobefoundonthesearchengines(andinotherways)andenoughcontentfortheindividualtowanttoreturntoreaditfrequentlyandtospendalotoftimeatyoursite(s).Highqualitycontentisessentialbecauseoneisnotseekingmerelytoobtaintraffic,buttherightkindoftraffic.Asyouarefocusedonecommerce,youwanttoattractanaudienceofindividualswithmoneytospend(acrossvaryingpricepoints)andyouneedhighqualitycontenttoattractsuchanaudience,suchademographic.

Payforperformancecontentcreators(andthereisalotmoretoitthanyoumightthink)isbutonemethodthatwillbeoutlinedthatcan,whendoneeffectively,resultinyourproducingeffectivecontentwithoutbreakingthebank.

[email protected]:BarrierstoEntry

AsIsaid,justbecausecertainideasarerelativelysimple,doesnotmeanthattheyareeasytosuccessfullyimplement.Youwantideastobesimpleoftentimes,becauseitmakesiteasierforyourteam(andyourcustomersashelpful)tounderstandthem.Butforcompetitivereasonsyouwanttheretobebarrierstoentrysuchthatyourproductcannotbeeasilycopiedorreverseengineeredbythose,especiallythosewithdeeppockets,whowouldliketoprofitoffyourlaborsbystealingyourbusinessmodel.

Barrierstoentryisonetheessentialunderpinningsinourbusinessmodel.Wehaveanumberof"secretsauce"componentsinthemodelwhicharedifficulttonotice(muchlessreplicate)butwhicharecriticaltothesuccessofpairingcontentandecommerce.Ifyouareaninvestorwhowouldlikeabeginningflavorinregardtohowsuchsecretsauceingredientscanprotectandenhanceyourinvestment,contactme.IfyouareareaderwhowouldlikeamoreexpandedbutgeneralizedunderstandingoftheseprinciplesbyreadingPart3,[email protected].

Part4:MonetizationMonetizationisthestrengthofMedia2.0'sinformationalecommercebusinessmodel.OfcoursesomanyconsumermobileandInternetcompaniessay,we'lljustgrowsolargethatwe'llfigureoutthe"revenuething"downtheroad.Wearejusttheopposite.Therevenuemodelisintrinsicandfundamentalfromthebeginning,and--thisisthebeautifulpart-isstructuredtoscaleasthebusinessscales.

InformationalEcommerceisthetermthatweuseforthechocolateandthepeanutbutter,effectivelypairingcontentandecommerce.

Thereisquiteabittounderstandingeventhebasicsofmonetizationinregardtopairingcontentandecommerce,buthereissomethingsmalltoconsiderjusttowhetyourappetite:

Adsense,adnetworksandthelikearerelativelysmallpotatoes.Sure,youcanmakeprettygoodmoneyifthetrafficishighenough,andweintegrateitintoourbusinessmodel,butourmodelmakesmanyfactorsgreaterrevenuethroughecommerce,aswe'llstarttoexplaininPart4.Wealsobuythepropertiesinexpensively,buildthemupandsellthemforaverylargeprofit,andwe'llbegintoexplainthisaswell.

[email protected].

Parts5-10:Iexpectthattherewillbeabouttenpartsinthisdiscussionasthereisalotofevenbasicessentialelementstocover.

CHAPTERTHREE

IndustryLeadersofTech2.0InterviewDavidCohen:"Lookforustocontinuetopileupunfairadvantagesforourcompanies"

IndustryLeadersofTech2.0:

1.David,youarethefounderandCEOofTechStars,theelitestartupaccelerator.AsindicatedonTechStars'website,“TechStarsprovidesseedfundingfromover75topventurecapitalfirmsandangelinvestorswhoarevestedinthesuccessofyourstartup,aswellasintensementorshipfromhundredsofthebestentrepreneursintheworld.”

TechStarsoffersfiveprograms(basedinBoulder,Boston,NewYorkCity,SeattleandaCloudprograminSanAntonio)ona“regularschedule”.

Competitionforadmissionisintense.Asstated:“TechStarsisthe#1startupacceleratorintheworld.We’reveryselective–Althoughthousandsofcompaniesapplyeachyear,weonlyinvestourmoneyandtimeinabouttencompaniesperprogramlocation.WehaveselectionrateslowerthantheIvyLeague,soyouhavetobeamongthebestofthebesttoearninvestmentfromTechStars.”

AfewofthesuperstarsthatTechStarsutilizesasmentorsintheprograminclude:BradFeld,(ManagingDirector,FoundryGroupandalsoaTechStarscofounder);foursquarefounderDennisCrowley;andJeffClavier(ManagingPartnerofSoftTechVC)amongothers.

InMarch2011,TechCrunchreportedthat“StartupincubatorTechStarshasraised$8millioninnewfundingforitsprogramsinBoston,Boulder,NewYork,andSeattle.Thenewfundingcomesfrommorethanfiftyventurefundsandover25individualangelinvestors.Thisbringstheincubator’stotalfundingtonearly$11.5million.”

Thiswasfollowedaroundsixmonthslaterwiththenewsthat“startupincubatorandnetworkTechStarshasraised$24millioninnewfundingfromtheFoundryGroup,IAVentures,AvalonVentures,DFJMercury,SoftBankCapital,SVBFinancialGroup,RREVentures,RightSideCapitalManagement,TechStarsAlumni,andseveralindividuals…thisnewfundingwillbeusedtooffereverysinglenewTechStarscompanyanadditional$100,000infundingintheformofaconvertiblenoteimmediatelyuponacceptanceintoTechStars.”

FirstbeguninBoulderin2007,8TechStarscompanieshavealreadybeenacquired,over85%ofTechStarsalumnicompaniesarestillactiveandlessthan8%havefailed.Inaddition,“ourcompaniesaverageover$1MinoutsideventurecapitalraisedafterleavingTechStars”(SendGridalonehasraisedover$27million,Orbotix$11million,andquiteafewothershaveraisedover$1millionwithseveralraisingover$5millioneachtodate).ThetencompaniesfromBoulder,Summer2009,havetodatealreadyraisedover$41millioncollectively.David,tobegin,afewquestionstotrytogainsomeinsightintothistremendoussuccessofTechStars.What,mostessentially,isthe“secretsauceofTechStars”,andhowhasthisdevelopedandevolvedasTechStarshasexpandeditslocationsandfunding?

DavidCohen:Itsoundsreallysimple,anditis.It’sallaboutthepeople.Wetaketheverybestentrepreneurswecanfind,andputtheminaroomwiththeverybestmentors.Wehaveover1,000greatpeoplethathaveaskedtobeTechStarsmentorsthatwehaven’tbroughtin.Likeeverythingwedo,it’saboutqualityoverquantity.The300mentorsthatwedohaveareliterallythebest.Theyengagedeeply,andthey’reincredible.Whenyouputthesementorsinaroomwithreallyfantasticentrepreneurstheoutcomeisoftenpuremagic.There’sasayingabouthiringtopsoftwaredevelopers.Thetop1%are10timesmoreproductivethanthenext10%,whoare10%moreproductivethantherest.AtTechStars,wethinkthesameistrueofmentorsandentrepreneurs.Filteringonthebestatbothlevelshasproducedsomethingreallyspecial.

IndustryLeadersofTech2.0:WhatseparatestheacceptedfromthenonacceptedTechStarsapplicant?Couldyouprovideafewexamplesoffactorsthathavebeencriticalinmakingthesedecisions?

DavidCohen:Often,it’sverylittleonthebubble.The#1reasonthatpeopledon’tgetacceptedintoTechStarsissimplyourfocusonqualityoverquantity.Sure,wecouldfund50startupsineverybatch,butthentheywouldn’teachgettherightamountofpersonalattentionand10to1mentortocompanyratiothatwestrivefor.Insteadwechoosetoputourfullenergyintothetop10orso,andtreatthemalllikefamily.Forus,it’snotafunnelorawaytofigureoutwhichonesaregoodorbad.WhenyougetintoTechStars,it’sforlife.Sowetakeadmissionveryseriously.

IndustryLeadersofTech2.0:WhataresomeofyourroleswithinTechStarsandhowhasthatevolved?Whatdoesatypicaldayforyou(ifthereissuchathing?)looklike?

DavidCohen:

Well,we’rebigenoughthatit’snotjustaboutme.IhaveanincredibleteamofManagingDirectorsthatI’mveryprivilegedtoworkwith(KatieRaeinBoston,DavidTischinNYC,AndySackinSeattle,NicoleGlarosinBoulder,andJasonSeatsinSanAntonio).They’reonthefrontlinesworkingwiththecompanieseveryday.IstilllovedoingthatbutastheorganizationhasgrownI’vehadtofocusmoreontheproductandservicetoourcompaniesaswell.Ienjoyboth,andwishtherewasmoretimeintheday.I’dsayabouthalfmytimeisspentworkingwithcompanies,andhalfonTechStarsortheinvestmentfundsarounditoverall.

IndustryLeadersofTech2.0:Itseemsasifeveryfewmonths,ifnotmoreoften,thereisanannouncementofanewtechstartupacceleratororincubator.Canyoutalkabouttheroleofthetechacceleratornowinthefundingofstartupsasithasdevelopedandwhereyouseethatgoing?Howaretechacceleratorsdifferentiatedfromeachotherandhavewereachedorareweapproachingasaturationpointfortechaccelerators?

DavidCohen:Ithinkthereisatleastonetechacceleratorlaunchingeverydaynow.It’snotevenatrendanymore,it’sbeyondthat.Thereareabout350acceleratorsintheworldthatIknowabout,andI’msuretherearemorenow.They’relikecolleges.Notinthe“education”sensebutinthe“affiliation”sense-theseprogramswilldevelopreputations(goodandbad)andthatwillsaysomethingaboutyourcompany.Theywilleachhavealumninetworkstryingtohelpeachother.Overall,aslongasthey’rewellintentionedandareactuallyinvestingmoneyandusingreasonable(industrystandard)terms,Ithinktheycan’treallybebadforentrepreneurship.Therearegoingtobesomebadactorsoutthere,takingmoreequitythantheyshould,and/orprovidingnoorlessfunding.AtTechStars,we’veledthechargeontransparencyandhavepublishedourfullresultssinceday1onourwebsite.Weevenreleasedthetoolforotheracceleratorstodothesamething.It’seasyforanacceleratortobetransparent,andthefactthatonemightnotbeshouldtellyousomethingaboutthem.

IndustryLeadersofTech2.0:Howcompetitiveisthelandscape?DoyouconsiderTechStarstobeincompetitionwithothertechaccelerators,forexampleYCombinator(whichemployswhatmightbeconsideredasimilarfinancingmodelasTechStars),forthebesttechstartups,andwhatdoesthatcompetitionlooklike?

DavidCohen:We’refortunatetohaveastrongreputation,thebestmentors,andarecent#1rankingbyaKauffmanFellowsstudy.IthinkYCombinatorandTechStarsenjoythisreputationeffectandhaveaccesstosomeofthebestcompanies.Butwe’renotrestingonourlaurels-weknowwehavetodeliverforourcompaniesandhelpthembecomesuccessful.Overtime,themostsuccessfulprogramswillcontinuetogetthebestapplicants.


WhatassistancedoTechStarscompaniesreceiveaftertheyleavetheinitialthreemonthmentoringprogram?

DavidCohen:We’reinvestorsforthelongterm.Wehelplikeanyinvestorwouldlongterm(introductions,productfeedback,businessmodelfeedback,etc).Wealsohaveanincrediblyvibrantalumninetworkandgettogetherphysicallyonceayear.It’sbecomeaprettyamazinggroup.Therearealsoveryvibrantonlinecommunitiesforourfoundersandcompaniesthatareheavilyused.Iusedthefamilymetaphorearlier-andit’sagoodonebecauseIthinkeveryonefeelsthisway.

IndustryLeadersofTech2.0:Ifthingscontinuetogoaswellastheyhave,wheremightTechStarsbeinfiveyears?Wemightbeinafewmoreplaces,butagainourfocusonqualityoverquantitywillwinout.Wedon’twanttobeeverywhere.Whenwedosomethingwewanttodoitwithexcellence.Lookforustocontinuetopileupunfairadvantagesforourcompanies-readyaccesstothebestpeopleintheworld,efficiencyinfundraising,betterinformation,insight,andtoolsforthem,etc.

IndustryLeadersofTech2.0:2.Asifallofthatgrowthisn’tenough,TechStarsalsohasalsochampionedtheGlobalAcceleratorNetwork“inpartnershipwiththeWhiteHouseStartupAmericainitiative.TheNetworkconsistsofonlythehighestqualityindependentlyownedandoperatedorganizationsfromaroundtheworldthatutilizeamentorship-basedstartupacceleratormodel.AllGlobalAcceleratorNetworkmembershavemetrigorousstandardstogainmembershipintheNetwork.Memberssharebestpractices,participateinregularnetworkingopportunities,andhave

accesstosomeofthebestperksintheworldwhichtheymaysharewiththecompaniestheyfund”.

“TheGlobalAcceleratorNetworkconsistsofindependentlyownedandoperatedregionalorganizationsthatoperateahighqualitystart-upacceleratorprograms.TheNetworkprovidesprofessionaldevelopment,networkingopportunities,training,consultingandongoingsupportformembers...theGlobalAcceleratorNetworkencompasses57programlocationsacross6continents”.

Howdidyoucomeupwiththeideaforthistypeofnetwork,howdoesitbenefitTechStarsinadditiontotheecosystemofstartupaccelerators,howhasitperformedtodate,andwhataresomeofthecompetitiveadvantages,despiteitsindependentnature,ofsuchuniformityorscale?Iwasgettingphonecalls2-3timesadayfrompeoplestartingacceleratorswantingtoknowwhatwe’vedoneandhowwe’vedoneit.Iwantedtohelp,butitwastakingupatonofmytime.Ratherthanthinkofthesefolksascompetitors,IdecidedtohelpbecauseIbelievethatthisacceleratorphenomenonisgoodforentrepreneursoverall(again,assumingtheyareactuallyinvestor[s],andarenottakingtoomuchequity,andarebeingtransparentwiththeirresults).Ifit’sgoodforentrepreneurs,Iwanttosupportit.Butovertimethisbecametoomuchformetohandle-andgotabitmonotonous.SowetalkedtothefolksbehindStartupAmericaintheObamaAdministration,anddecidedwe’dopensourceTechStarsandhelpchampiontheGlobalAcceleratorNetwork.TodayI’moneof7advisorstotheGANandthereareabout45memberorganizationsglobally.Seewww.joingan.comformoreinformation.

IndustryLeadersofTech2.0:3.David,theawarenessofTechStarshasbeenfurtherdevelopedthroughTV,withTechStarsonBloomberg,andvideo,ThisWeekinTechStarsandTechStarsTV(IalsolovethepowerfulvideoontheTechStarshomepageinwhichyoustartoffthevideobysaying“TechStarsislikeanunfairadvantageforyourstartup”andneartheendofthevideoexclaim“Thisiswhereyou’llfindthebestcommunityforyourstartupontheplanet”).

IwatchedthisepisodeofTechStarsonBloombergwhichfollowsTechStarsNewYorkcompaniessixmonthsafterdemoday(andintroduces“thetwoDavids”)andonethingthatstruckmewashowcompaniescouldpivotsoquicklyinashortprogramandtheclassstillbesosuccessfulraisingfundingfrominvestors.HowdidanddoesthemediaexposureandexaminationofhowthesausageismadeeffectTechStarsoverall?WemadetheTVshowfortworeasons.First,wewantedtoleteveryoneseehowvaluableamazingmentorshipcanbe.Wewantedtoencouragemorepeopletobecomementorstoentrepreneurialcompanies.Onceyou’ve“madeit”asanentrepreneurandhadasuccessfulexitortwo,youcanchoosetogorelaxonasailboatsomewhere,oryoucangiveback.Givingbackmakesahugedifferencetoourcountry,tojobcreation,andtofuturegenerations.Wewantedtoshowpeoplethattheyshoulddothat.Second,wewantedtogivepeopleanhonestlookathowharditreallyistodoastartup.It’snotforthefaintofheart,andIthinkthatcameacross.

IndustryLeadersofTech2.0:4.David,youhaveastrongbackgroundasanentrepreneur.“Davidwasafounderofseveralsoftwareandwebtechnologycompanies.HewasthefounderandCTOofPinpointTechnologieswhichwasacquiredbyZOLLMedicalCorporation(NASDAQ:ZOLL)in1999.YoucanreadaboutitinNoVision,AllDrive[Amazon].DavidwasalsothefounderandCEOofearFeeder.com,amusicservicewhichwassoldtoSonicSwapin2006.Healsohadwhathelikestothinkofasa“gracefulfailure”inbetween.”

Whataresomeofthelessonsthatyoulearnedasanentrepreneur,andhowdoesthisassistyouinyourworkwiththeentrepreneursofTechStars?

DavidCohen:Toomanytocount.Startupsareoneofthosethingsthatyouonlylearnbydoing.Ontheinternet,oneofmybiggestlessons(andIhaveafailedcompanytoshowforit)isthevalueandimportanceofdistribution.Ifyoudon’thaveawaytogetyourproductinfrontoftherightpeople,itwon’twork.Iwroteablogpostaboutthis.Thebiggestlessonthoughwouldbethevalueofmentorship.It’swhyIstartedTechStars.Inexperiencedentrepreneursgreatlyundervaluementorshipandnetworkeffects.

IndustryLeadersofTech2.0:5.David,Iorderedandreadyourbook,“DoMoreFaster”(let’sjustcuttothechaseandadmitthatyouareagenius,whichyouare),cowrittenwithBradFeldandwithmanycontributorsacrossthethemesof:IdeaandVision,People,Execution,Product,

Fundraising,LegalandStructureandWorkandLifeBalance.

Inyourchapterinthebook“BeOpentoRandomness”youwriteinpart:“Takeamomentandthinkbacktoallofthegoodthingsthathavehappenedtoyousofarinyourlife.Ifyou’relikemeandyoucontemplatethatlist,you’llrealizethatmanyofthosegoodthingscameaboutinveryrandomways…BradFeldisagreatexample.Formanyyears,Bradhasregularlyheld‘randomdays’whenhe’llmeetanyonetotalkaboutanythingfor15minutes…Now,guesshowImetBradFeld.Itwasononeofhisrandomdays.Andonthatrandomday,guesswhatwetalkedabout?TechStars!”

Howrandomarerandomdays?Howmuchofaroledoesintuitionplayinrandomness?Preparedness(inthesenseof“luckfavorsthepreparedmind”)?Thelawofattraction?

DavidCohen:Onrandomdays,I’llliterallymeetanyoneforanyreason.That’sprettyrandom!Ifyougoinwiththegoalof“learnonething”fromeverymeeting,you’llfindthatyouusuallydo!Ithinkluckfavorstheavailablemind,sometimes!

IndustryLeadersofTech2.0:Youalsowrotethetitlechapter“DoMoreFaster”.Briefly,youwroteinpart:“I’vebeeninvolvedwithafewcompaniesthatcouldn’tdomorefaster…Itturnsoutthatgivingupyouroneobviouscompetitiveadvantageoftenprovestobedeadly.Ifastartupcan’tdomorefaster,itusuallyjustgetsdeadfaster.”Constantiteration(forexample“theleanstartupmodel”)whichalsofeaturesthe“minimalviableproduct”(MVP)isprettymuchtheragethesedays(andforgoodreasonIthink).Whatisthepotentialtradeoff,however,betweenveryquickversusmoreconsideredaction?

DavidCohen:WeuseLeanStartupconceptsheavilyatTechStars,andhavebeenluckyenoughtohaveEricRiesandSteveBlankaroundtheprogramafairamount.Ihonestlyhaven’tfoundanypracticalormeaningfultradeoffswhenitcomestoLeanStartuptechniques.

IndustryLeadersofTech2.0:6.David,youarealsoablogger.Inthisrecentpost“BradFeld’srandomactsofkindness”youwriteinpart:“Bradhasgoneontoleadbyexamplewithhis“givefirst,getlater”philosophyincountlessways…The“givefirst”philosophyiswhatpowersTechStars,infact…SowhenBradannouncedthathe’dbedonatingatleast$5,000foreachofthe29upcomingmarathonsheplanstorunto“random”familiesviaGiveForward,andactivatinghiscommunitytoampitupallIcoulddowassmileandsay“That’ssoBrad.””

ThistypeofservicementalityisthesametypeofexperiencethatIhavehadwithBradandfranklyallsuccessfulpeopleinlife(Iliketosaythat“talenttakesonetothetopbutonlycharacterkeepsonethere”).Ialsobelieveinthelawofattractionsuchthatlike-mindedpeopleofmaturityareabletofindeachotherandenjoyworkingtogether.

CanyoutalkabouthowyouputallofthepiecestogetherbyfindingandkeepingthebestpeoplethroughouttheTechStarsorganization.Also,whatdoestheblogmeantoyou?

DavidCohen:I’mveryfortunatetoworkwithsuchgreatpeopleeveryday.Notjustthementorsandcompanieswefund,butmycoworkers.There’samindbogglingamountofexperienceandatthesametimehumilityandgoodwillinsideofTechStars.

PeoplespendtimeonTechStarsbecausetheyloveit,andthat’sagreatfeeling.Theblogisjustanoutletforgettingsomethoughtsout.Iamlivingmyprofessionallifeasaninvestorbyonesimplerule.Helpentrepreneurs.Theblogisjustanoutlettotrytodothatinanotherwaythathaswidereach.

IndustryLeadersofTech2.0:7.Finally,David,anybodyreadingthroughallofyouraccomplishmentssuchasthosedetailedinthisinterviewmightwellaskthemselves,“Howdoesonepersonbecomesoproductive?”Solet’saddafewmore:“Davidisa[n]activestartupadvocate,advisor,boardmember,andtechnologyadvisor…HeisalsoveryactiveattheUniversityofColorado,servingasamemberoftheBoardofAdvisorsoftheComputerScienceDepartment,theEntrepreneurialAdvisoryBoardatSiliconFlatirons,andtheBoardofAdvisorsoftheDemingCenterVentureFund.HeisamemberoftheselectioncommitteeforVentureCapitalintheRockies,andrunstheColoradochapteroftheOpenAngelForum.”So,whataresomeofthesecretstothesuccessandproductivityofDavidCohen?

DavidCohen:Neversleep.Kidding.Thesecretisprettysimpleandanyonewhofollowsitcanbeincrediblyproductive.Dowhatyoulove.Don’tdoanythingelse.Ifyoudowhatyoulove,thenworkbecomesplayandpurejoy.Youjustwanttodomoreofit,andthat’showIfeel.IamproudthatIhaveabalancedlife,infactasIwritethisI’mreturningfromafamilytriptoMexico.ButwhenI’mworkingIworkveryhardandItrytofocusandprioritize.AndIloveeveryminuteofit.

CHAPTERFOURTheWorld'sMostSuccessfulVC'sandHowTheyDiscover"TheNextBigThing"First1.Leveragekeyinfluencers

EverydayIwatch"TheCharlieRoseShow"andthe"PBSNewshour".CharlieintroducesandreintroducesmetopeoplewhoIneedtoknow.ThePBSNewshourshowsmenotjustwhatishappeningintheworld,whichtodayIcanfindanywhere,butmostimportantlywhatitmeans.Informationisn'tpower.Relevantactionableinformationispower.

TheWallStreetJournal,TheWashingtonPost....Allsuccessfulpeoplefindthetopinformation,incontext,mostefficiently.Bothatthemacrobutalso,essentially,atthemicrolevelaswell.

2.CuratorsarethenewblackPoorlyfilteredinformation,regardlessofitsquality,leadstoinformationoverload.Effectivecurationallowsonetoseetheforestfromthetrees.Curationpairedwithinsightandeffectivestrategicandmanagementsystemsinsuresthatyouarewanderingaroundinthecorrectforest(s).

3.TheNetworkEffect2.0

Ifyouwanttoknowhowsuccessfulyouwillbeinthefuture,thequickestandmostaccuratewaytodothatistolookatthepowerofyournetwork.

Networks,likemoney,flowtovalue.Ifyouwanttoincreasethestrengthofyournetworkyoumustincreasethestrengthofyourvalue.

Whenyouhaveplentytogiveyouwillattracttakers,whichyoucanthinkofascustomers,andwillattracttheattentionofhighlevelindividualsandsystems.

4.BeOpen

If"theonlyconstantischange"andonemust"evolveordie"thenopennessisthelifebloodofsuccess.Beopeninyourthinking,beopeninyourschedule,beopeninyourrelationshipsandbeopeninyourtime.

Inthisworldofexponentialgains,thisisnotyourgrandfather'ssuccess.Weallstand,astheysay,ontheshouldersofgiants,anditisalsotrue,asissaid,thatwemustunderstandhistoryorbecondemnedtorepeatit,butweliveinanincreasinglydisruptiveagesuchthattoday'ssuccesswillnotlooklikeyesterday'sandtomorrow'smostcertainlywillnot.

5.ConnectwithDisruptors

Hereismyrecent7pageinterviewwithTechStarsFounderandCEODavidCohen.If"softwareiseatingtheworld"thenTechStars(andYCombinator,andAngelList)are,potentiallyandincreasinglyinfact,eatingtheworldofprofessionalinvestors.Lookatthegrowthcurves,yes...

Butalsothemindshare.

Hereismyrecent8pageinterviewwitheliteVCBradFeld.DoesitsurpriseyouthatheandDavidCohenaresocloselyaligned?

THETOPINDIVIDUALSFINDEACHOTHER.Youshoulddothesame.6.PracticeGratitude

TheUniversehasphysicallawsandalsometaphysicalones.Onabasiclevel,thinkaboutsocialforces.Whydoyouwishtohelponeindividualoveranother?Whywouldyouhireoneoveranother?Trustoneoveranother?

Attractionappliesnotonlytogravityandmagnets.AsGhandisaid"Youmustbethechangethatyouwishtoseeintheworld".Orfamously,"whenthestudentisready,theteacherwillarrive".7.Recognize"TheNextBigThing"

Tobeaneliteinvestor,first,moresothananything,youneedaPh.D.in"thenextbigthing".

PaulGrahamhasagreatdiscussionofsomeofthefactorsinvolved.Whatifmystartup,Media2.0,turnedouttobeoneofthosenextbigthings?Wouldyouevenbeabletorecognizeit?

Ofcoursewe'dneverletyouin.CHAPTERFIVE

TheFutureofSearch-HowtheLawofAcceleratingReturnsisDisruptingtheDisruptersandGivingtheAdvantagetoFacebook,Twitter,AppleandAmazon(andonemore)

RayKurzweilfamouslytalksabouttheacceleratingrateoftechnologychangeonanexponentialbasis.TheLawofAcceleratingReturns"Ananalysisofthehistoryoftechnologyshowsthattechnologicalchangeisexponential,contrarytothecommonsense“intuitivelinear”view.Sowewon’texperience100yearsofprogressinthe21stcentury—itwillbemorelike20,000yearsofprogress(attoday’srate).The“returns,”suchaschipspeedandcost-effectiveness,alsoincreaseexponentially.There’sevenexponentialgrowthintherateofexponentialgrowth."

Oneimplicationofthisisthatitiseasierthaneverforthedisruptersthemselvestobedisrupted.Fortheadoptioncycleofnewanddisruptivetechnologiesisbecomingmoreandmoreandmoreacceleratedandcompressed.

Don'tbelieveit?LookatMobile.Facebook,forexample,longconsideredafrontrunnerininnovationis,inshortorder,nowonthedefensiveinMobile.Facebookistransitioning,atleastinmobile,fromprimarilyabuildtoabuycompany-mostrecentlyandfamouslyspending$19billionforWhatsApp,acompanythatFacebookmayormaynotbeabletomonetize,dependinguponwhoyouask.

Andastatementthatseemedutterlylaughablejustmonthsago.Utterlylaughable.Nowdoesn'tseemquiteso.

Namely,thatFacebookcoulddie:HowFacebookCouldBeKilledByMobile(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)

Dieasintooblivion.Ceasetobeanymore.

Growordiehastransitionedintoinnovateordie,andwherethisprovesimpossible,intobuyordie.

Oneconsequenceofthishasbecome,almostovernightaswell,that"moonshots"havebecomethenewnormal.TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"

TheFutureofSearch

Remembertheoldtruismthatchangeisfamouslyoverestimatedintheshortterm,butunderestimatedinthelongterm.Well,thelongtermisapproachingforsearchnow.Andthetippingpointcouldbealotquicker,andalotmoredisruptive,thanpeoplethink.

MythinkingwasstimulatedonthistopicagaintodaybyreadingthispostHeyGoogle,ASearchWarIsAboutToExplode

Hereareafewquotesfromthatposttosetthestageforthecurrentdiscussion.

"Itseemsratherclearthattheevolutionofsearchissuchthatthetraditionalsearchenginemeanslessandless,associalnetworkscontinuetogrow.Sure,GooglemaycontinuetodominatethecomScorerankingswellintothefuture,butifthoserankingsdon'tincludeagiganticportionofanothersortofsearch-social,thenwhat'sthepoint?...

Andnow,justafewweeksago,ZuckerbergstatedthatFacebookwillcompetedirectlyagainstGoogleinsearch.In2014.

Googleknowsthis,andthelate-to-the-gameGoogle+socialplatformisproofthatGoogleisworried.Socialsearchiseatingintostandardsearch,anditmakessense:AFacebookuserwhowantstoknowwhatpeoplethinkaboutanewItalianeateryinhiscity,thecontactinfoforareliablelocksmith,orwhetherornotKanyeWest'snewalbumisworthbuying-theseareallthingsthatwouldhavebeentypedintoatraditionalsearchengineinthepast...

I'darguethattheonethingthatTwitterhasoverFacebook'sheadisglobalreach,atthecostofprivacy.WhatthismeansisthataFacebookusermightdipintohisorherpersonalnetworkof750Facebookfriendsandfindinformation,orperhapsjoinapublicFacebookgroupwithanother2000members,andgetinformationthere.ButTwitterhasnosuchlimits.AusercansimplyTweetwhatheislookingfor,andunlesstheTweetisprotected,isnowopenfortheworldtoseeandcommenton.Twitterisessentiallyacrowdsourcingsearchengine...

IpointedoutthesurreptitiousSiristrategyhere.ButwhatreallycaughtmyeyewasApple'sacquisitionofTopsy,whichisaTwittersearchandanalyticscompany.

AftertakingalookatTopsy,Irealizedimmediately,thatsimplyput,itisanewagesearchengine."Newage"meaningitsearchesTwitter,ahugebankof(social)data.Onsomelevel,TopsyisequivalenttoFacebook'sGraphsearch,butthedifferenceisthatbecauseTwitterisapublicplatform,TopsycanoperateindependentlyfromTwitter,andthereforeallowacompanylikeAppletospreaditstentaclesthroughoutTwitter.AndsinceTwitteristheonlytruesocialmediacompetitortoFacebook(notincludingPinterest),acquiringTopsywasaningeniousmovebyAppletogainaholdinthesocialmediaworld,which,asIarguedabove,isreallythesearchworld."

Therearemanyimportantramificationsoftheabove,whichcouldbediscussedfordaysandstilljustscratchthesurface.Buthere'sone:MicrosoftandYahoo!,Google'stwoclosestsearchcompetitorsbyfar,seemtobecompetinginsearchbytoday'srules.

WhileFacebook,Twitter,AppleandAmazon(youhavetoaddAmazon,theyknoweverythingaboutwhatyouwant-ataminimumfromaproductperspective)areplayingtomorrow'ssearchgame.

Today'ssearchgamevs.tomorrow'ssearchgame.

(ofcoursewecouldalsogetintothenotionsofpersonalassistantsearch,voicecommandsearch,wearablesearchoranyofanumberofadditionalhypothesizednotionsinregardtothefutureofsearch).

AndtheEnvelopePleaseThefuturewinnerofsearchis..................Google-butnotGoogle.

Thefutureofsearchmaybe(getreadytobesurprisedbysomethingyoualreadysuspectedmightbetruebutdidn'trealize)

Thefutureofsearchmaybe...................YouTube.

IreadsomewherethatahealthypercentageoftheyoungersetareusingYouTubeastheirdefaultsearchengineratherthanGoogle,BingorYahoo!.

Thismakessensetome.IamincreasinglyusingYouTubeasadefaultsearchengineaswell.Inmanycases,videoanswersareprovingbetterthantextanswerstothequestionsthatIamasking.WhichmeansthatYouTubeisabettersearchengine,forme,inthesecases,thanGoogle.Andthisishappeningmoreandmore.

Andhere'sthemoneyidea:

IfYouTubewereorganizedasasearchengineaswellasGoogle,peoplemightdropGoogleovernight.IfyoucouldgetsearchresultsorganizedonYouTubeasintegratedandthoroughasyoucanonGoogle,thatcouldbeagamechanger.

Ofcourse,Google(viaYouTube)wouldbeputtingGoogleoutofbusiness,toadegreeatleast,ifitdidthat.

Cannibalization(marketing)

IrealizethatGoogleresultsalreadyincludeYouTubelistings,andthatanothercompanymaycomeupwiththeirownhybridmodel(orsomethingcompletelydifferent).

TheSoundofOneHandClapping

Google,Facebook,Amazonandtheotherbehemothsarelookingmoreandmorelikeeachothereveryday.Theycompeteinmanymajormarkets,andthedistinctionsbetweenthem(thecompaniesandsometimesalsothemarkets)areblurring.

Searchinthefuturemayexistacrossmanydifferenttypesofactivities.Thismayoccurtotheextentthatthenotionofsearchassomethingdistinctlosessomeorallofitsmeaning.

Ifthateveroccurs,thensearchmaybecomeeverything,and/ornothingatall.CHAPTERSIXFredWilsonandtheFutureofBitcoin-AnAnalysisoftheBitcoinInvestmentLandscapeEliteVCFredWilsonhasablogposttodayentitled"ALettertoSenatorManchin"ALetterToSenatorManchin

inwhichFredtakesSenatorManchintotask(andrightfullyso),asFreddescribes,forManchin'swritinga"lettertofinancialregulatorsaskingthemto“takeappropriateactiontolimittheabilitiesofthishighlyunstablecurrency.”"

Fred'sinvestmentshaveincluded(viaUnionSquareVentures),someofTech'sbiginvestinganddisruptivewins,including(asafewexamples):

Twitter(Fred'sroleinTwitterdetailedinfamousbookHatchingTwitter:ATrueStoryofMoney,Power,Friendship,andBetrayal:NickBilton:9781591846017:Amazon.com:Books)FoursquareZyngaKickstarterTumblr

andnowCoinbase,theleadingBitcoinVCinvestmenttodate(Source:Exclusive:StateofBitcoin2014ReportAnalysesEmergingTrends(Slide7)),withover$31infunding(Source:Coinbase|CrunchBaseProfile).

IwanttostartbylookingatFred'sargumentsandthenbroadenoutthediscussiontothepresentandfutureinvestinglandscapeforBitcoin(aswellasitsinterfacewithregulatory,securityandadditionalfactors).

Fredwritesinpart:"BitcoinisalreadyregulatedintheUSanditisbecomingmoreregulatedeveryday.AndtheregulatoryenvironmentintheUShasdampenedtheamountofinnovationaroundBitcointhathasdevelopedhereintheUS.AllthemajorBitcoinexchangeshavebeenbuiltoutsideoftheUSandasignificantamountoftheventurecapitalinvestmentintheBitcoinecosystemishappeningoutsideoftheUS...

WhensomethingasnewandasdifferentasBitcoinemerges,itistemptingtowantto“puttheGeniebackintothebottle”andprotectourselvesfromit.ButthankfullytheUSdidnotdothatwiththeInternet.TheimpactofthecommercialInternetontheUSeconomyandoursocietyasawholehasbeenmassiveandoverwhelminglypositiveoverthepasttwentyyears.WeshouldapproachBitcoininexactlythesamewayandifwedo,Iexpectthebenefitswewillseewillbeequallyimportant,impactful,andbeneficialtooureconomyandoursociety."

Fred'sfullletterisquiteshort.Andgeneral.Fredisaverybusyindividual,butmysenseisthatFred'sletterismeant,firstandforemost,asaverypublicbutextremelybroaddefenseofBitcointonotonlyregulatorsbuttheworldmoregenerally.

RegulationandBitcoin

Let'sunpackalittleofwhatFredsaysabovefirstinregardtoregulationandBitcoin.TheUnitedStatesis,infact,considered,whenviewedonaglobalregulatoryscale,oneofthefriendliercountriestowardsBitcoin(Source:Exclusive:StateofBitcoin2014ReportAnalysesEmergingTrends,Slide8).Forexample,thereisamarkedcontrastintheregulatoryenvironmentoftheUnitedStatestowardsBitcoinversus,famously,themoreunfavorableattitudeofChina,whichisitselfmildcomparedtoRussia.

So,weneedtokeepthatperspectivehere.

Idon'tdoubtthatasignificantpercentageofcapitalinvestmentisleavingtheUSforBitcoininvestmentsoverseas.CertainlyFredistheexpertinthisspaceandIcertainlybelievehim.ButthemoreimportantbackdropisthatthetotalamountofVCinvestmentonthispotentiallyrevolutionarytechnology,Bitcoin,remainstodatestillsosmall,under$100milliondollarstotal-reportedbyCoindeskyesterdayatonly$98million(andthatincludesallcrypotcurrencies)Source:Exclusive:StateofBitcoin2014ReportAnalysesEmergingTrends,Slide7).So,itiswaywaywaytooearlytoknow-muchlessdetermine-howtheinvestmentlandscapewillshakeoutinregardtoBitcoin,andtowhatdegreetheregulatoryclimateoftheUSwillorwillnotdriveand/orimpactthis.

IbelievestronglythatamoderateamountofregulationiscriticalforthehealthandgrowthofBitcoin.Let'stakeMt.Goxastheposterchild.Idon'tthinkthatanyonewouldclaimthatMt.Goxwassufficientlyregulated.WewillnotbeabletotrustBitcoinexchangesuntiltheyhaveacertaindegreeoftransparency,andtheywillnothavethattransparencyuntiltheyaresufficientlyregulated.Mt.Goxcouldnothavehadtheseproblemsfesteroversuchaperiodoftimewithadequatetransparencyiftheyweresufficientlyregulated.(andstillit'snotclearexactlywhatthesituationisandwasatMt.Gox,peoplearefishingforanswersandwhethertobelieveMt.Goxstatementsaswellastheleakedreport).

Ofcourse,ifBitcoinisoveregulatedthanthiswillkillitaswell.Bitcointhrives,essentially,asadecentralizednetwork,andassuchacentralizedarbiterofBitcoiniscontrarytotheveryessenceofBitcoinasithasbeencreatedandexists.

Not"toohot"andnot"toocold"

ThisregulatorybalancingactinregardtothehealthofBitcoin,thethreebearsscenarioofnot"oftoohot"andnot"toocold",certainlyseemstocomeintoplayhere.TheMediahavebeenspeculatingrecentlythatSecondMarketmightbeabletoworkeffectivelywithregulatorsintheUSintheformationofaNewYorkbasedBitcoinexchange.

Asreported,SecondMarketjumpstogivelegitimacytoBitcoin,"SecondMarketworkswithregulatorstocreatemarketsforsecuritiesthatwerepreviouslyuntradeable.Andit'sthecompany'swillingnesstoplaybytherulesplusitsrelationshipswiththebigbanksandinvestmentbanksthathavesomethinkingitsinvolvementcouldbethecredibilityBitcoinneeds."

Thisposesaninterestingdynamic,ifnotdilemma.Bitcoinisgenerallyviewedasthe"anti-banking"currency.HowcanBitcoinplaynicewiththeBigBoys,theregulatorsandthebanks,withoutbeingco-optedbythem?

Andisthatevenpossible?Likeamothtotheflame.Orawolfinsheep'sclothing.

Bitcoinisa$7Billionmarketcapandchangetoday.Theyaredefenselessinsideapredatorysystemthatgaveusthe2008meltdownandacollectionofotherscandals.

WeareTheLittlePrince,tryingtoprotecthispreciousflower.

ButjustasitisfamouslysaidthatDemocracy(orinourcase,moreaccurately,arepresentativegovernment)istheworstformofgovernmentexceptforeverythingelse,workingwiththeregulatorsandthebanksmaybetheveryworstthingintheworldforBitcoin,saveone.

Doingnothing.

Doingnothingseemsheadedto"deathbyathousandcuts"culminatingincatastrophicdefeat.

BitcoinInvestingMycompanyisputtingtogetheran$800,000fundtoinvestinpromisingBitcoincompanies.

Andseparatelywearecreatinga"CoindeskonSteroids"--think"GoogleforBitcoin"(with85%ofthecontentnotindexedonGoogle)or"WikipediaforGoogle"butbeyondcrowdsourcing.

Manyinvestors,thesmartmoneyanyway,haveadvancedtoBitcoin2.0.Bitcoin2.0isbeyondBitcoinasacurrencytoBitcoinasaplatform,andotheradvanceduses.ForexampletheEthereum'softheworld.

https://www.youtube.com/watch?v=q5FDvzj8YX4

Thesuccessfulinvestors,thesmartmoneyanyway,willbethosewhounderstandbesttheprinciplesofdisruption,andeven"disruptingthedisrupters".

Thathasbeenourmainfocusofexamination,inregardtounderstandinginaleadingwaythecoreprinciplesofthedisruptersandthe"disruptersofthedisrupters".

Asafewexamples:Formobile:HowFacebookCouldBeKilledByMobile(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)

ForEcommerce:WhatcanwelearnfromAmazoninregardtocreatingthenextdisruptivewaveofEcommerce?

ForSearch:TheFutureofSearch-HowtheLawofAcceleratingReturnsisDisruptingtheDisruptersandGivingtheAdvantagetoFaebook,Twitter,AppleandAmazon(andonemore)

andforTechnologyoverall:TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"

BitcoinandSecurity

IftheregulatorsdonotkillBitcoin,bybeingeither"toohot"or"toocold",thensecurityissuesmay.Hackersseemtobeaheadofthecurve.The"Pony"viruswhichinfectedhundredsofthousandsofcomputers'Pony'botnetstealsbitcoins,digitalcurrencies-TrustwavewasBitcoinnewstheverysamedayasMtGox'sfailure.

ThefactthatBitcoinwasnotdevastatedorevenkilledbythis1-2punchofterriblenews(andpreviouslytheSilkRoaddebacledidn'tdoinBitcoinaswell),Iattributetotwofactors.

TheinherentrobustnessandresiliencyofBitcoinbeingone,andajointstatementputoutbyleadingBitcoinentitiesuponthefallofMt.Gox,reassuringthepublicJointStatementRegardingMtGoxbeingtheother.

Ibelievethattheissueofsecurityandtheissueofregulationareultimatelycloselyintertwined.NotuntiltheregulatorsaregenuinelyinterestedinprotectingBitcoinwillthehackersbesubdued.Itwillalwaysbeanarmsracebetweenthecriminalsandtheauthorities,butthinkaboutthis,despitebanksbeingoccasionallybreached,areyouafraidtoputyourmoneyintoCitibankorevenyourlocalsmallbankbranch?OfcoursethereisFederalinsuranceondeposits,butbeyondthisyouhavealotofgovernment"'goodguys"(Iunderstandwhatyoumaybethinking,ifwecanthinkofgovernmenttechnologytypesas"goodguys"inthebackdropoftoday'sworldofNSA)workinghardtosubduethecriminalhacker"badguys".

Bitcoinneedsthisaswell.

Whileyoucanhavepolicebrutalityortheoccasionalbadapplecops,howwouldyouliketoliveinamajorcitywheretherearenocopsatall?ThatisexactlywhatowningBitcoin,mustlessinvestinginit,islargelyliketoday.

TheSuccessofBitcoinisUltimatelyDependentUponEffectiveOrganization

Foranyorganizationtofunctioneffectivelyitneedstobesufficientlyfunded,wellmanagedandemployleadingtools.Thisistrueforbusinesses,policeforces,sportsteams,younameit.

InregardtoBitcoin,thismeansthatthesuccessofBitcoinwillultimately(Ibelieve)restonhoworganizedandpowerful-andwellfocused-theBitcoincommunityis.

Focusiscriticalinadditiontomoneyandinfrastructure,becauseyoucanhavealltheresourcesintheworldbutifyoudonothavesufficientvision....

Youcanonlyexecuteaswellasyourvision,thatis.Andanorganized,collectivevisionforadecentralizedentitysuchasBitcoinis,bydefinition,noeasytaskatall.

Let'slookatafewrecentexamplesinwhichthetechnologycommunityinterfacedwithgovernment.

InwasbyanorganizedandeffectiveeffortbythetechnologycommunitythatbothSOPAandPIPAweredefeatedInternetwins:SOPAandPIPAbothshelved

Similarly,NavalRavikant(alongwithIbelieveSteveCaseandperhapsothers)helpedtospearheadanefforttoget,somehow-miraculouslymanyfeel-thelawaroundcrowdfundingchanged,bycallinginalotof"favors"inthetechnologycommunity.AsNavaldescribedtheefforttoSarahLacy.

https://www.youtube.com/watch?v=2htlO1oDcIFredWilsonSolet'sgofullcircle.Justtwodaysbeforewriting

ALetterToSenatorManchinFredwroteanotherpostonBitcoin,

MtGox-AVCinwhichFredwroteinpart:"Fulldisclosure:IboughtalittleBitcointoday.Notmuch.ButIalwaysfeelgoodbuyingwhenthereisbloodinthestreetsinanymarket.Itismyfavoritetimetobuy."I'dguessthatFred'sintent,atleastinpart,wastorallythepublicbehindBitcoin,ifonlybypersonalexample,tonotgiveuptheshipwhenMt.Goxwaslost.

HowwelltheBitcoincommunityisorganized,andonwhattheyarefocused,is,Ibelieve,thecriticalfactorthatwilldetermine,ultimately,Bitcoin'ssuccessorfailure.

Fredmaywellbeontosomethinghere.CHAPTERSEVENTechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"

LarryPageisdrivingthefutureofGoogletowardsMoonShotsThinkingbig:LarryPagetalksmoonshots

Selfdrivingcarshttps://www.youtube.com/watch?v=cdgQpa1pUUE

WearablecomputingGoogleGlassWorldwideInternet/WiFiaccessLoonforAll-ProjectLoon-GoogleHealthcarelongevityresearchWTFIsCalico,AndWhyDoesGoogleThinkItsMysteriousNewCompanyCanDefyAging?|TechCrunch

WhatDoestheFutureDominantCompanyLookLike?Google,Amazon,Facebook,AppleandevenMicrosoftincreasinglycompeteagainsteachother.AretheyContentProviders?AdvertisingPlatforms?SearchEngines?SocialNetworks?HardwareProviders?EcommercePlatforms?

Themorecomplextheworldbecomes,themoreweneedintegratedsystemsthatarehighlypersonalizedand(self)organizedtoguideus.

Gainingefficienciesinthiscompetitivelandscapebydifferentiatingsignalfromnoiseisthe"killerapp".

"GoingBigorGoingHome"Abriefillustration:

Ourstartup,Media2.0,isatthenexusofcontentandecommerce.AsAmazonhasdemonstrated(aswellasotherssuchasNetflixandeBay)commerceofthefuture(andtoday)isdrivenbycontent,sophisticatedrecommendations,trustnetworks,usergeneratedcontent(includingreviews,thinkaboutthis:WouldFacebookexistwithoutusergeneratedcontent?Whatelseisit?),personalization,efficientdistribution,socialsignals(includingsocialnetworks)etc.

Whyweclaimwearethefutureofecommerce-InvestorFAQhttps://www.youtube.com/watch?v=cfktvIlCoYE

Butthisisonlythebeginningofthetransformationofecommerce(andcommercegenerally)viatrustedcontent.

Thosewho"GetIt"WriteTheirOwnTicket

LookatGoogle.Google'sSearchis,mostessentiallyandfundamentally,anecommerceenginedrivenbycontent-specificallysearchcontent,mediatedbyPaidSearch,AdSense,AdWordsandthelike.Google"creates"itssearchcontentbyorganizinginformationfromtheworldtomeetuser'squeries.

EcommerceandContentarelikethefamousclassicHershey'scommercial."Yougotchocolateinmypeanutbutter.No,yougotpeanutbutteronmychocolate".

Thetwoflownaturallytogether,butinunobviousways,justaspeanutbutterandchocolateisnotnecessarilyanintuitivecombination.Butunlikechocolateandpeanutbutter,youcannotjustslop

contentandecommercetogetherandexpectthemtobesuccessful.Anideathatisrelativelysimpleisfarfromeasy.Justtheopposite,youcanquicklyandeasilyloseyourshirtifyoudonotunderstandwellwhatyouaredoing,fallingintotheterriblyexpensivepitfallof"ifyoubuildit,theywillcome".

Inthevideoabovewediscusscreatingdestinationsitesacrossmobileandotherplatforms,andafewoftheotherimportantkeyprinciplesinregardtoutilizingcontentandecommercetogethersuccessfully.

Thereisalotmoretotell,whichisonereasonthatthisdomainisstillinitsinfancy.ACommonLink

AsperMarcAndreessen,"softwareISeatingtheworld".EVERYbusinessisbecomingasoftwarebusiness,orataminimumatechnologybusiness,andbeingdisruptedasthisoccurs.

Buteverybusinessisbecomingacontentbusinessaswell.Lookatsocialmediaasbutoneexample.Canyourbusinesssurvivemuchlessprosperwithouteffectivecontenttoday?

Somepeoplestudycompanies.Somepeoplestudystocks.Ilookatthemacroandmicrolevel,includingstudyingthosewhomost"getit"intheareasinwhichIaminvolved:

My7pageinterviewwithDavidCohen:IndustryLeadersofTech2.0InterviewDavidCohen:"Lookforustocontinuetopileupunfairadvantagesforourcompanies"

My7pageinterviewwithBradFeld:IndustryLeadersInterviewBradFeld-"Fundamentally,it’saboutbeingopen,honest,direct,respectful,andhumble"

(andmanymanymore)Thispostisjusttowhetyourappetite.Thereissomuchmoreofimportancetodiscuss.

ButI'llleaveyouwiththis:Technologicalconvergence"Technologicalconvergenceisthetendencyfordifferenttechnologicalsystemstoevolvetowardperformingsimilartasks.Digitalconvergencecanrefertopreviouslyseparatetechnologiessuchasvoice(andtelephonyfeatures),data(andproductivityapplications),andvideothatnowshareresourcesandinteractwitheachothersynergistically.

Telecommunicationsconvergence,networkconvergenceorsimplyconvergencearebroadtermsusedtodescribeemergingtelecommunicationstechnologies,andnetworkarchitectureusedtomigratemultiplecommunicationsservicesintoasinglenetwork.[1]Specificallythisinvolvestheconvergingofpreviouslydistinctmediasuchastelephonyanddatacommunicationsintocommoninterfacesonsingledevices."

JeffBezosisageniusbecauseheunderstandshowseeminglyunrelatedbusinessesare,infact,related.LarryPageisageniusbecauseheisbetting,andbettingbig,onwhatisnext.

TheWorld'sMostSuccessfulVC'sandHowTheyDiscover"TheNextBigThing"FirstAreyou?Gobigorgohome.Thatisyouronlyrealchoicetoday.

I'vecomeupwithasayingthat"theUniverseexpandsorcontractsopportunitiesbaseduponourabilitytoreceivethem."

Thatisyourticketto"TheLawsandSecretsofSuccess".CHAPTEREIGHT

IndustryLeadersInterviewBradFeld-"Fundamentally,it’saboutbeingopen,honest,direct,respectful,andhumble"

IndustryLeadersofTech2.0:1.Inarecentinterviewyouwereasked“Whatchallengesshouldstartupsbetacklingthatthey’renot?”andyouanswered:“Idon’tthinkenoughpeoplehaveacceptedthatthemachineshavealreadytakenover.Theyarepatientlywaitingforustocatchupwiththem.Thenexttimeyouareinfrontofyourcomputer,noticehowmuchinformationyouareenteringintoit.It’sunclearwhetherwewillhaveacomputer-enhancedhumanfutureorahumanenhancedcomputerfuture,butitdoesn’tmatter.Ourworldis

nowinterdependentwiththemachines,andmoreentrepreneursshouldbeworkingonthesymbiosisbetweenthetwoentities.”Q’s:Howdidyoucometothisconclusion?BradFeld:

Ireadalotofsciencefictionandamconstantlythinkingaboutthefuture,bothfromthecontextofthepresent,aswellasthecontextofthepast(say–writing40yearsagoabouttoday).WhenIletmymindrunfree,it’scleartomethatthemachineshavealreadytakenover.Fromthishasemergedourhumancomputerinteractiontheme.

IndustryLeadersofTech2.0:Whatarethesmartestentrepreneursdoinginthisspace?BradFeld:Someexamplesofcompanieswe’veinvestedincludeOblong,Fitbit,Makerbot,Orbotix,Sifteo,andOccipital.Wethinktheentrepreneursbehindthesecompaniesareextraordinary.

IndustryLeadersofTech2.0:Whatcriteriondoyouusetoevaluatetheirwork?BradFeld:Wefocusobsessivelyontheproductandthepeopleinvolved.DowethinktheproductistransformationalinthecontextofHCI?Dowethinktheentrepreneursinvolvedcancreatesomethingamazingthatplaysintothetransformation?Ifyes,thenit’sinterestingtous.

IndustryLeadersofTech2.0:Whatdoyouseeassomeofthedynamicsandsizeofthismarket?BradFeld:Idon’tthinkaboutthingsthisway.Webelievethemacroofeverythingweinvestinisenormous,sowearen’tconstrainedbymarkets.

IndustryLeadersofTech2.0:2.Brad,in2011BusinessInsiderplacedyou#1onitslistofthemostrespectedVC’s.Inyourmind,Brad,whatarethecharacteristicsoftheVC’sthatyoumostrespectandconsidertobemosteffective?BradFeld:1.Puttingtheentrepreneurfirst.2.Takinganapproachofworkingfortheentrepreneur,insteadofviewingtheentrepreneurasworkingfortheVC.3.Havingaclearstrategy.4.Beingincrediblyopen,transparent,andTAGFEEaboutwhatyoudo.Fundamentally,it’saboutbeingopen,honest,direct,respectful,andhumble.

IndustryLeadersofTech2.0:3.Youhaveanamazingblog,FeldThoughts,whereyou’vewrittenacrossover100topics(fromVentureDealstoRobotstoRelationshipstoFailure-oneofmyfavoriteofyourtopicsispetpeeves.Thesiteboastsahealthycommunity,withtypicallyseveraldozencommentsperpost.Q's:Howdidtheblogstart?BradFeld:IstartedwritingtheblogtolearnmoreabouttwotechnologiesIwasinterestedin–RSSandusergeneratedcontent.Iwantedtounderstand(in2005)whatitwasliketobeacontentproducerasIvieweditasanareaIwasgoingtobeveryinterestedininvestingin.Ihadnoexpectationsaroundwhowouldreaditorgetbenefitfromit–Ijuststarted.

IndustryLeadersofTech2.0:Howhasitevolved?BradFeld:I’vealwayslovedwritingandatsomepointtheblogbecamemyoutletforexploringthoughts,sharingexperiences,talkingaboutthingsIwasinvolvedin,andthinkingoutloud.

IndustryLeadersofTech2.0:Whatfunctionsdoesitserveforyouandyouhopeforyouraudience?BradFeld:I[t]doesn’tserveaspecificsetoffunctionsforme–it’sjustpartofmeandhowIleadmylife.MyhopeisthatanyonewhoreadswhatIwritefindssomevalueinitsomewhere.

IndustryLeadersofTech2.0:Whatisitsrolewithinthecontextofyourtotalactivities?

BradFeld:

Idon’tthinkaboutitthisway–IwritewheneverIfeellikewriting,aboutwhateverIwanttowriteabout,whichisoften.

IndustryLeadersofTech2.0:4.Inonerelativelyrecentblogpost,“WhatI’mObsessedAboutAtWork”youwrote“Ifoundmyselfeasilysayingnotoawidevarietyofthingsthat–whilepotentiallyinteresting–didn’tappealtomeatall.Itookabreak,grabbedapieceofpaper,andscribbleddownalistofthingsIwasobsessedabout.Ididn’tthink–Ijustwrote.Here’sthelist.

StartupcommunitiesHciHumaninstrumentation3dprintingUsergeneratedcontentIntegrationbetweenthingsthatmakethem

betterTotaldisruptionofnorms

Ifyouarearegularreaderofthisblog,Iexpectnoneoftheseareasurprisetoyou.WhenIreflectontheinvestmentsI’mmostinvolvedin,includingOblong,Fitbit,MakerBot,Cheezburger,Orbotix,MobileDay,Occipital,BigDoor,Yesware,Gnip,andanewinvestmentthatshouldclosetoday,theyallfitsomewhereonthelist.”Q:Brad,whatarethe“pointsofintersection”or“sweetspots”thatconnectyourvariedinvestorinterestsandhowaretheyreflectedandoptimizedinyourinvestments?BradFeld:Wefiltereverythingwelookatbasedonourthemes.Ifsomethingdoesn’tfitinatheme,wesaynoin60seconds.Ifsomethingdoesfitinatheme,wegoreallydeeponthepeopleandproducttodetermineifwewanttobelongtermpartnerswiththeentrepreneurs.


5.In2007youco-foundedhesuccessfulVCfirmFoundryGroup,havingearlierco-foundedMobiusVentureCapitalandfoundedIntensityVenture(youalsoaretheco-founderofleadingtechincubatorTechStars(nowanetworkofprograms).AccordingtoFoundryGroup-About,FoundryGrouphasinvestedinover100companiesasaninstitutionalinvestorandover50companiesasanangelinvestor.FoundryGroup’slatestventurefund,closedinOctober2010,is$225million.

“Astrueearly-stageinvestors,wearecomfortablemakingsmallseedinvestments(aslittleas$250,000-$500,000)…Regardlessofthesizeofourinitialinvestment,thesizeofourfundallowsustocontinuetosupportourportfoliocompaniesthroughtheirentirefinancinglifecycles…WebelievethatsuccesscomesfrombuildingacollaborativeandsupportiverelationshipbetweenFoundryGroupandtheentrepreneursandexecutivesinwhomweinvest.Havingwalkedtheproverbialmileintheentrepreneur’sshoes,weunderstandwherewecanaddvalue—suchashelpingbuildoutamanagementteam,thinkingthroughstrategicbusinessdevelopmentandgrowthopportunities,orprovidingadviceonexitstrategies—andwearen’tafraidtorollupoursleevesandgetourhandsdirty…

FoundryGroup’sinvestingactivityislargelydrivenbyathematicapproach.Thethemeswepursuetendtobehorizontalinnatureandareoftendrivenbyunderlyingtechnologyprotocolsandstandardsoremergingmarkettrendsandcustomerneeds.Ratherthanlookingforshorttermhits,wefocusonthemesthathavetheabilitytodriveacycleofinnovation(andhenceprovidemultipleinvestmentopportunities)overaperiodoffivetotenyearsormore.

ExamplesoftheinvestmentthemeswearecurrentlypursuingincludeHumanComputerInteraction,ImplicitWeb,Email,Glue,andDigitalLife.Asonemightexpect,wearealwaysintheprocessofevaluatingcurrentthemesandinvestigatingnewones.Thatsaid,wedon’tstrictlylimitourinvestingactivitiestoourthemes—greatentrepreneurswithgreatideasstillcountforalotinourbook.Infact,ourthinkingaboutthesethemescanbebornfromandevolveasaresultofourinvestmentinanentrepreneurattheleadingedge.”Q:Brad,canyouexplainabitinregardtohowtheseinvestingthemesaredevelopedandevolve,andhowtheyinteractwiththecollaborativefocusthatyouhavewithentrepreneursacrossthefundinglifecycle?BradFeld:Thethemesareareasthatweareintellectuallyinterestedin.Wetrytofocusonbroadhorizontaltechnologiesorshiftsinthe

technologylandscape.Wethengodeepinahandfulofthethemes.Ourgoalistobecomethoughtleadersineachareawithaviewtoinvestinginthethemeovera20yearperiod.Partofbecomingthoughtleadersisworkingclosely–anddeeply–withtheentrepreneursinthethemesweinvestin.

IndustryLeadersofTech2.0:6.TheResourceforEntrepreneurs.,awellknownsiteinwhichentrepreneurscananonymouslysharetheirexperienceswithinvestmentfirmslistsFoundryGroupasthesecondhighestratedfundontheentiresite.Onerating,entitled“FoundryRocks”reads“Wepitchedto30+firmsforourB-Roundin2009andgotagooddoseoftheVCworld.Somegood,somenotsomuch.Foundrywastheonlyfirmwherewedidnothaveadirectintro.IstartedreadingBrad'sblogandfeltthattheyreallyunderstoodourspace.Anemail,aphonecall,ameetingwithBrad,thenameetingwitheveryoneandatermsheetwithinamonth.Thebestpart,ayear+intotheinvestment-theyreallyarewhotheyappeartobeontheirblogs.”

Another,entitled“BradFeldisaVCRockStar”statesinpart‘IhaveknownBradFeldsinceabout1990,whenhewasrecentlyoutofMITandrunningFeldTechnology.HehasadeeptechnicalbackgroundinsoftwareandISdesign,andhebecameconvincedasearlyas1994that"theInternetwilltakechangetheworld."…WIthmostVCsanintroductionisalmostanecessity.AnintroductionwouldobviouslyhelpwithBradbutismuchlessnecessary,Ithink.ThereasonisthatBradhasalreadydonealotofpre-thinkingandalreadyknowsthesectorsheisinterestedinandtheapproachthathethinkspeopleshouldtake.SomorethanmostVCs,hewillalreadybeupthelearningcurve…Bradisveryproductoriented.Ratherthantalkingabouttheproduct,showittohim.Ifyoursiteisnotyetfunctional,showhimamockup.Helikesentrepreneurswhoarepassionateabouttheproduct(e.g.,SteveJobs).

Bradtendstolookatthingsfromthepointofviewoftheentrepreneur,inpartbecausehehasbeenone.”Q's:Brad,describesomeofthecriticalcomponentsofsuccessfullydealingwithentrepreneurs.Youarehighlyvisibleandaccessible.Howdoyoufindthebestentrepreneurs,andwhatarethekeyfactorsinregardtolocating,maintainingandmanagingdealflow?BradFeld:Itrytorespondtoeveryone,Itrytobedirect,offersomethingofvaluewhenIcan,andjustbemyself.Idon’tthinkhardaboutfindingthebestentrepreneurs–Ijustgetinvolvedinthemix,engagedeeply,andgoodthingsemerge.

IndustryLeadersofTech2.0:7.I’vepurchasedtwoofyourbooks,VentureDeals(withJasonMendelson)andDoMoreFaster(withDavidCohen)andcantellyou(asIhopeyou’verealizedbynow)thatyouareagenius.VentureDealsissubtitled“Besmarterthanyourlawyerandventurecapitalist”.Common-senseinsightfulwisdomiscontainedthroughout.Onenicefeatureis“TheEntrepreneur’sPerspective”inwhichtheideasunderdiscussionarepresentedthroughtheeyesoftheentrepreneur.One“TheEntrepreneur’sPerspective”reads“Managingdirectorsorgeneralpartnershavethemojoinsideventurecapitalfirms.Ifyouhaveanyoneelseprospectingyouorworkingonthedealwithyou(associate,seniorassociate,principal,venturepartnerorEIR),treathimorherwithanenormousamountofrespect,butinsistondevelopingadirectrelationshipwithanMDoraGPaswell.AnyoneotherthananMDoraGPisunlikelytobeatthefirmforthelonghaul.TheMDsandGPsaretheoneswhomatterandwhowillmakedecisionsaboutyourcompany”.

Another“TheEntrepreneur’sExperience”reads“’Lessismore’whenitcomestoaninvestorpresentation.ThereareonlyafewkeythingsmostVCslookattounderstandandgetexcitedaboutadeal:theproblemyouaresolving,thesizeoftheopportunity,thestrengthoftheteam,thelevelofcompetitionorcompetitiveadvantagethatyouhave,yourplanofattack,andcurrentstatus.Summaryfinancials,useofproceeds,andmilestonesarealsoimportant.Mostgoodinvestorpresentationscanbedonein10slidesorfewer”.Q:Brad,notthatitsoeasybyanymeans,butinoneparagraphhowwouldyoudistillwhatyouhavelearnedintheVCbusinesssofar,andwhatyouwouldmostlikeentrepreneurstoknow?BradFeld:ThereisnosingleVCarchetype–everyVC,andeveryfirm,isdifferent.Doyou[r]researchinadvancesoyouknowwhoandwhatyouaredealingwith.Bedirectandhonestallthetime.Onlyworkonthingsyouareincrediblypassionateabout.Recognizethattherearelotsofupsanddownsandfailureintheentrepreneurialprocess–embracethechaoticpartofit.Nothingiseasysodon’tembarkonthejourneyunlessyouarewillingtoworkincrediblyhardonit.8.In“DoMoreFaster”youwroteachapterentitled“TwoStrikesAndYou’reOut”(Alex:ThankfullyIstillhavebothstrikestogo)inwhichyouwriteinpart:“IlivemylifebyasimplerulethatIcall

the‘ScrewMeOnceRule’.IpermiteveryoneIworkwithtoscrewmeoveronce.Whenthishappens,Iconfrontthem,forgivethem,andmoveon.However,iftheyscrewmeoverasecondtime,thenI’mdonewiththemforever…likeayellowcardinsoccer,youonlygettotriggertheScrewMeruleonce.Ifithappensagain.We’redone.Forever.I’vehandedoutplentyofyellowcardsandreceivedafew.Inanumberofcases,mystrongestrelationshipsarewithpeoplewhohavegottenyellowcards.Fortunately,thelistofpeoplewhohavegottentheequivalentofaredcardfrommeisveryshort.”Q:Ilovethis,becauseitstrikesaproductivebalancebetweenstrictaccountability,growthandevenreconciliation.Ilovealsoyouremphasisonprocessandrelationshipbuilding,and,astheysay,notlettingacrisisgotowaste.Canyousayalittlebitmoreabouthowthishasworkedforyou?BradFeld:I’veusedthisapproachovermanyyearstomakesureIspendtimewithpeoplewhoItrust.Idon’thavetoagreewiththem,andtheydon’thavetoagreewithme,buttherelationshiphastobeoneofmutualrespectandtrust.Thisruleallowswetoejectthepeoplewhodon’tfollowitfrommylife.

IndustryLeadersofTech2.0:Also,howdoyouprescreenpeopletobeginwith,eliminatingfromthebeginningthosewhowouldbemorelikelytowindupintheredcardcategoryovertime?BradFeld:Idon’tprescreenpeople–Ijuststartworkingwiththemandgiveeveryonethebenefitofthedoubtonthefrontendoftherelationship.Ibelieveyoulearnthemostaboutpeoplebydoingthingswiththem.

9.Iwatchedasamplingofvideosofyou.Inthisoneyoudevelopaverydirectbutcommonsense,evenkind,basicsetofrulesofthumbforentrepreneurstoapproachandinteractwithinvestors.Hereyouareon“ThisWeekinStartups”(Ilove“ThisWeekinStartups”,Jasonisverygood-IfoundoutyoualsohaveaplaceinAlaska,“Angelgrouppracticesthatmakemevomit”,Jasonwalkedthroughwalls,you’veinvestedinover300companies,beingcomfortablewithandwearingyouridea,etc.)Q's:Forentrepreneursthatmaybeinterestedinworkingwithyouandarethinkingofapproachingyoutogaugeyourinterest,whataresomethingsthattheyshouldmostkeepinmindastheydotheirduediligenceonyoutoassesspotentialcompatibility?BradFeld:There’sanenormousamountaboutmeontheInternet–justgoreaditasastartingpoint.It’seasytogettopeoplewhoknowme,oraskmedirectlyandI’llconnectyouifitmakessense.Anddon’tbebashfulaboutaskingmedirectquestions.

IndustryLeadersofTech2.0:Whoareafewpeopleintheindustrythatyouwouldmostliketointerviewifyouweretositontheothersideofthetable(whoareyoumostcurioustolearnmoreabout?)BradFeld:Idon’thavealist–IworkhardtoconnectwithwhomeverI’minterestedingettingtoknowbetter.WhenIthinkaboutthisquestion,it’smoreinthecontextofpeoplewhoaredea[d].IwouldhavelovedtospendtimewithEinstein,BenFranklin,ThomasJefferson,RichardFeynman,andFDR.

IndustryLeadersofTech2.0:andwhatwouldyouaskthem?BradFeld:Idon’tknow–I’dwanttojusthavealongdinnerwiththemandseewhereitgoes.10.Brad,youhaverun21marathonsasyouworkonyourgoalofrunningamarathoninall50states(I’veruntwomarathonsandhaven’tevenvisitedall50states).Whatdoesrunningmeantoyou,andwhatmotivatedyoutotakeonthisexcitinggoal?BradFeld:Runningismyformofmeditation.It’sachancetobealone,enjoytheplanet,andletwhateverthoughtsareinmyheadwanderaround.Idecidedtogoafterthegoalaboutadecadeagoasalongformplanforgettingintoandmaintainahighfitnesslevel.

IndustryLeadersofTech2.0:11.Brad,finally,howdoyougeteverythingdone?Youserveontheboardsof(fromFoundryGroup-Team)BigDoor,Cheezburger,Fitbit,Gnip,MakerBot,MobileDay,Oblong,Orbotix,SEOMoz,StandingCloud,andYesware.Andthat’sjustthestart.“Inadditiontohisinvestingefforts,Bradhasbeenactivewithseveralnon-profitorganizationsandcurrentlyischairoftheNationalCenterforWomen&InformationTechnology,co-chairofStartupColorado,andontheboardsofStartupWeekendandtheApplicationDevelopersAlliance.Brad…writesthewidelyreadblogsFeldThoughtsandAsktheVC.”

Inaddition,Brad,youareveryactiveinregardtotechcommunityeventsandinterviews,havea

strongsocialmediapresence(Twitter,http://www.facebook.com/bfeld,http://www.linkedin.com/in/bfeld),asnotedrunmarathons,ofcoursemeetregularlywithentrepreneursandarequiteaccessibleandwhoknowswhatelse?Theamazingthingisthatyouarealeaderandmaintainsuchahighlevelofqualityacrossyourprofessionalpursuits.Ohyes,in2012,youpublishedtwonewbooksaswell(andyoublogoccasionallyforTheHuffingtonPost.

OnTuesdaysandFridaysyouspendtwohourseachhelpinglittleoldladiescrossthestreet.Ok,Imadeupjustthepartaboutthelittleoldladiesbuttherestistrue.Whichofcoursebegstheobviousquestion:ArethereseveralBradFeldclonesrunningaroundhelpingyougetallthisdone??BradFeld:Iworkhard.ItrytohavealotofstructurearoundhowIspendmytimeandI’mconstantlyexperimentingwithnewapproacheswhenIfeelboredorburnedout.Overall,it’seasy,becauseIlovemostofthethingsIdo.

CHAPTERNINEWhatinvestorsdon'trealizeaboutstartups

It'sabigbadworldoutthereinregardtodifferentiatingsignalfromnoise.

InBlackSwanFarmingPaulGrahamwrites:"That'smadeharderbythefactthatthebeststartupideasseematfirstlikebadideas.I'vewrittenaboutthisbefore:ifagoodideawereobviouslygood,someoneelsewouldalreadyhavedoneit.Sothemostsuccessfulfounderstendtoworkonideasthatfewbesidethemrealizearegood.Whichisnotthatfarfromadescriptionofinsanity,tillyoureachthepointwhereyouseeresults."

Successinanyfieldisaboutseeingaroundcurves.WayneGretzky,askedabouthissuccess,famouslysaidthatheskatesnottowherethepuckisbutwhereitisgoingtobe.

80%ofoursuccesscomesfrom20%ofourefforts,but99%ofourgreatsuccesscomesfrom1%ofourefforts.Grahamagain:

"Unfortunatelypickingwinnersisharderthanthat.Youhavetoignoretheelephantinfrontofyou,thelikelihoodthey'llsucceed,andfocusinsteadontheseparateandalmostinvisiblyintangiblequestionofwhetherthey'llsucceedreallybig...

ThefirstruleIknewintellectually,butdidn'treallygrasptillithappenedtous.Thetotalvalueofthecompanieswe'vefundedisaround10billion,giveortakeafew.Butjusttwocompanies,DropboxandAirbnb,accountforaboutthreequartersofit.

Instartups,thebigwinnersarebigtoadegreethatviolatesourexpectationsaboutvariation.Idon'tknowwhethertheseexpectationsareinnateorlearned,butwhateverthecause,wearejustnotpreparedforthe1000xvariationinoutcomesthatonefindsinstartupinvesting."ThinkaboutallofthefactorsthatmusthavegoneintothedevelopmentofYCombinator.PersonalfactorsinPaulGrahamandothers.Companyfactorsduringitshistory.

Butthreequartersofitsvalueontwopicks.Soundslikea99%to1%ratio(ormore)tome.Sosuccessfulinvestingisreallytheartandscienceoffindingandmanagingthat1%.

Intheend,forthemostsuccessfulinvestors,nothingelsematters.NEVERFORGETTHAT.ReachingDaylightHowdoesarunningbackreachtheopenfield?

Onereliesuponexperience,andinstinct.Butthereisalsotheplaybookandstudyingfilm.Andthen,ofcourse,youhavetofactorintheimportantfactorsoftheother21peopleonthefootballfield!

Everydaywemakelittledecisionsthatcollectivelyleadtobiggerdecisions.Thesebiggerdecisions,collectively,defineourpathinlife.It'swellknownthata1%differenceinarc,overtime,relatestoadramaticallydifferentdestination.

Thearc,initsvisionanditsadjustmentsispartofthat1%.

Couldtheeliterunningbacktellyouhowtheyreachtheopenfield?Iftheydid,wouldyoubecapabletounderstand?

TheNextZuckerberg

IfIwasthenextZuckerberg(orJobsorPage)andmycompanyMedia2.0wasthenextFacebookor

AppleorGoogle,howwouldyoufindme?Thequestionis,wouldIletyou?

Graham:

"Historytendstogetrewrittenbybigsuccesses,sothatinretrospectitseemsobvioustheyweregoingtomakeitbig.ForthatreasononeofmymostvaluablememoriesishowlameFacebooksoundedtomewhenIfirstheardaboutit.Asiteforcollegestudentstowastetime?Itseemedtheperfectbadidea:asite(1)foranichemarket(2)withnomoney(3)todosomethingthatdidn'tmatter.

OnecouldhavedescribedMicrosoftandAppleinexactlythesameterms."WouldyourecognizeJobs,Page,ZuckerbergandGatesattheearlieststage?

Thegreatfoundersmanagetheirinvestorsratherthanviceversa.Whenyouseethetinytrailoutofaforestofnoisewhentheforestlooksblackyouhavevision.

LearnfromthePast

IfyouwanttofindthenextZuckerbergorPageyouneedtounderstandthem.Volumeshavebeenwrittenoneachandyetifthenextonewalkeduptoyouyoucouldstillwellmissit.

You'renotinthebusinessofexaminingcompanies,you'reinthebusinessofhavingaPh.D.inthenextbigthing.

Youhavetolivethenextbigthing,besoimmersedinitthattheforcesoftheuniversedrawittoyou.

OrasObamawouldsay,getoutoftheweedsandstopplayingsmallball.Graham+1

Isitamatterofhavingmoreshotsatthebasket?Grahamwrites:"Wecanaffordtotakeatleast10xasmuchriskasDemoDayinvestors.Andsinceriskisusuallyproportionatetoreward,ifyoucanaffordtotakemoreriskyoushould.Whatwoulditmeantotake10xmoreriskthanDemoDayinvestors?We'dhavetobewillingtofund10xmorestartupsthantheywould."

ComparethattoWarrenBuffett.WhenaskedaboutdiversificationBuffettrepliedthathebelievesinputtingallofhiseggsinonebasketandthenzealouslyguardingthatbasket.

Buffettfamouslydoeslittlebuying.Hereadsandstudiesvoraciouslyand,ashesays,he'slookingforthatoneortwooutsizedideasperyear.

Ofcoursehe'sinadifferentpartoftheinvestmentcurve,dealingonlyalreadywithhighlyestablishedcompanies.ButBuffettislivingthe1%.He'sadiamondfinder.Andbecausediamondsdon'tfadeBuffettisnotadaytrader.

OneDayLefttoLive

Psychologistshelppeopleclarifytheirvaluesbyaskingthemwhattheywoulddoiftheyhadonlyonedaylefttolive.

Ifyougetridofallofthenoise,thenonlythesignalremains!

Ifyouwanttofindthe1%investmentreturn,youhavetoclearawaythe99%.Whichmeansthatyourlifebecomesastudyofthe1%.Ifyoucouldinvestinonlyonefounder,whowoulditbe?Whatwouldthatindividuallooklike?Howwouldyourecognizehimorher?Howwouldyouappealtosuchaperson.Andhowwouldyoudrawthemintoyourlife?

Ecosystem

Graham:"I'mnotsayingthatthebigwinnersareallthatmatters,justthatthey'reallthatmattersfinanciallyforinvestors.Sincewe'renotdoingYCmainlyforfinancialreasons,thebigwinnersaren'tallthatmatterstous.We'redelightedtohavefundedReddit,forexample.Eventhoughwemadecomparativelylittlefromit,Reddithashadabigeffectontheworld,anditintroducedustoSteveHuffmanandAlexisOhanian,bothofwhomhavebecomegoodfriends."

Youhavetohaveenoughdatapointstobeabletodiscernsignalfromnoise.It'sthelittlethingsthatbindtothelittlethingsthatbindtomorelittlethingsthatbecomebig.Butyouhavetoknowwherethingsarepointing,andwhattheymean.Somethingcanbelittlebutleadingtosomethingbig,oritcanbelittleremainingsmall.

Therunningbacktakesastepleftandanotherstepleftandanotherstepleftbecausethisleadstoexplodingthroughthelinetotheright.

Liningupyourducksinarow.Youneedtherightducksandyouneedthemlinedupcorrectly.

It'swhatinvestorsdon'tknow.CHAPTERTENBeyondContentSearch-TowardaScienceofContentOrganizationThefutureofcontentiscontentorganization.

OnehasmillionsandmillionsofYouTubevideosavailabletowatch,but,evenwithsearch,it'sdifficulttofindwhatyouwant.Sometimesyoudon'tknowexactlywhatyouwant(andthatiswhyyouaredoingthesearchinthefirstplace)andsometimeswhatyouthinkyouwantisonlyasmallsubsetorwhatyoureallywantifyouknewallofthechoicesavailable.

WehavethousandsofTVchannelsavailablebutwecan'tfindthegoodstufftowatch.

Techvideosareallovertheweb.Howdoyoufindallofthebestvideosproducedyesterdayontheweb,orallthebestvideosofasingleperson(blinkx.comisonestart,butitisstillnotintelligentsearch,thereistoomuchwadingandsorting)?

THENOISEISOUTWEIGHINGTHESIGNAL,ANDTHERESULTISINEFFICIENCYANDWASTE.

Curationisoneanswer,butitistooexpensive(askMahalo).Partoftheanswermaybealogorithms(thinkGoogleSearch),andpartofitmaybeanalytics.

WENEEDASIRIORGOOGLENOWFORCONTENT-Whoevermakesabreakthroughherethatissignificanthasthepotentialtodisruptthefieldofcontent.

Partoftheanswermaythusbepersonalization(whichisreallyaformofself-organization)inwhichbaseduponyourresponsesandhistorybetterdiscoveryispresentedtoyou.Partoftheanswermaybecrowdsourcing.Discoveryhastoomuchrandomnessinit,thinkStumbleupon.

Weneeddiscoverythatisorganized.

Recommendationengines(e.g.AmazonandNetflixareastart,buttheyarelimitedbythefactthattheycaninherentlyonlyextendfromwhatyouhavealreadyputintothesystem).

Weneedascienceofcontenttofindanddiscoverthecontentthatwewant.AttentionVC's:Contentisn'tking.Itneverwas.Organizedcontentmaybe.CHAPTERELEVENWhyVox,PandoandFiveThirtyEightShouldMerge

Thelawofacceleratingreturns,asappliedtoinformation,caneasilyleadtoinformationoverload.Hence,theneedfororganizinginformationaltools.

InsearchthisincludesGoogle,Siriandthelike.

Intechnologyjournalism,ahostofnew,growingorrelaunchedsitesarebloomingtoaddressthisneed.

EnterVox,PandoandFiveThirtyEight.IlabelthemasTechCrunch2.0.TechCrunchprovidestechnologynewswithsomehistoryandcontext.

Vox,PandoandFiveThirtyEightattempttodoadeeperdivetoprovideadditionalcontextsothatthereaderhasagreaterdegreeofunderstanding.

Thisisatrendyou'llseemoreandmore,asreadersseektotranscendinformationaloverloadandgainthecompetitiveadvantageofactuallybetterunderstandingtheworld.

Herewe(continueto)goagainRecentlyIhavebeenwritingabouthowonetechnologyfieldafteranotherisbeingdisrupted.

Thereismobile(andtherisksthatthisposestoFacebook,althoughFacebookisalsoquiteresourceful).HowFacebookCouldBeKilledByMobile(andwhatKaraSwisherunderstandsbetterthanperhapstherestoftheworld)

ThereiseCommerce,andwhywhilethereisnoAmazon-killeronthehorizonnecessarily,howAmazoncouldfacemuchgreatercompetitiveforcesgoingforwardthanitdoescurrentlyineCommerceWhatcanwelearnfromAmazoninregardtocreatingthenextdisruptivewaveofEcommerce?

Thereissearch,andwhyneitherGoogle,Facebook,Apple,TwitternorAmazonmaybethefutureofsearchTheFutureofSearch-HowtheLawofAcceleratingReturnsisDisruptingtheDisruptersandGivingtheAdvantagetoFacebook,Twitter,AppleandAmazon(andonemore)

Thereisthefutureofmoneyandpayments,includingBitcoin2.0FredWilsonandtheFutureofBitcoin-AnAnalysisoftheBitcoinInvestmentLandscape

Thereistheleadingroleoftechnologyconvergence,whichGoogleandAmazonhavethegreatestlegupon

TechnologyConvergence-HowVC'sandLarryPageare"GoingBigorGoingHome"andmanymore.WhydoVox,PandoandFiveThirtyEightNeedtoMerge?Thereareseveralimportantreasons,themostobviouswhichmaybethis:

Saythattheaverageacrossthethreesitesisperhapseightpostsperdayeachof1,000wordsperpost(Ithinkasaroughestimatewe'reintheballparkandevenifweareoffbyafactoroftwoorthreeitdoesn'tmeanmuchinregardtothepointswhichfollow).

WhathappenswhenthenextcompanycomesalongandtakestheequivalentofPando'seightdailypostsacrosseightseparatetopics,orVox's,andcombinesthemintoonewellintegratedpostacrossalleighttopics?Thiswillbemorethaneighttimesmorepowerful(whichitselfcanbeagamebreaker)butmaybe100timesmorepowerful.

Here'swhy.

Whenyouunderstandeightlittlethingsseparatelyyouhaveasmallamountofknowledgeacrossdiscreteareas.WhenyouunderstandeightseparatethingsTOGETHERintermsoftheirinterrelationshipsandplacewithinanintegratedcontextandwhole,youpossessamuchgreaterdegreeofhigherlevelinsight,understandingandpower.

Considerahypotheticalexample:

Eightseparate1,000wordpostswhichdiscusstrendsin,respectively,ecommerce,mobile,adnetworks,search,enterprise,crowdfunding,socialmediaandventurecapital.VERSUSAWELLINTEGRATED8,000WORDPIECETHATDETAILSTHEINTERELATIONSHIPSBETWEENALLEIGHTTOPICS.

It'skindoflikethedifferencebetweenaskingSiri,"Wherearemysneakers?"versus"Whichbrandofsneakerswillhelpmeperformbestinthe2017NewYorkCitymarathongivenmyhistoryoftrainingandmyraceschedulefrom2000to2017"(ifSiricouldmeaningfullyanswersuchquestions,thelatterwhichisbeyondit'scurrentcapability).

Andwhataboutthecompanywhichcanproducenotoneoftheseintegrated8,000wordarticlesperdaybutten?

Sothefirstissueiscriticalmass.WhydoVox,PandoandFiveThirtyEightNeedtoMergeContinuedBeyondcriticalmassthereareadditionalimportantfactorsatplay.Perhapsthegreatestisorganization.Lookatthethreesites,Pando,VoxandFiveThirtyEight.

Thereareeachahodgepodgeofcontent.Considerthis.SaythatyouwanttoseePando'slasttenpostsonGoogle.Ok,simplesearchmighttakecareofthis.WhatifyouwantedthelasttenpoststhatdiscussedGoogle'stopcompetitors?WhatifyouwantedthetenbestpostsonthistopicfromPandofromthebeginning?Whatifyouwantedananalysis,fromthebeginningofPando,ofwhat

areGoogle'sstrengthsandweaknessesacrosseachofGoogle'stoptenproducts?Youcouldofcoursecontinuetodrilldeeperstill,butitbecomesabundantlyclearquitequicklythattheinformationthatyoudowant,ormightpossiblywantifyouknewitwasavailable,isinaccessiblytrappedwithinaseaofinformationthatyoudon'twant.

It'slikethehistoryofrecordsales,inordertogettheonesinglethatyoureallywantedyouoftenhadtobuytheentirealbumofmusicofmaterialthatyoumayormaynothavewanted.

AlthoughIthinkFiveThrityEightdefinitelyseemstohaveabitbetterbeginningorganizationthantheothertwo,itisironicthatforallthreesiteswhosemissioninvolvesorganizinginformationtoprovidedeepercontextandinsightthattheydon'tevenhaveasystemtoorganizeinanydepthorrefinementtheirowninformationovertimeanddaytoday(beyondbasiccategoryorganization).

It'dbelikeifyouturnedonESPNtowatchbasketballbutyoukeptgettingstuckingolf,billiards,baseball,footballandcroquet.

Or,topresentagreaterchallenge,youonlywantedtoresearchhowLeBronJamesperformsagainsttheDallasMavericsinthefourthquarterofgamesheplaysagainstthem,butyoukeptbeingfloodedbybasketballinformationinregardstohighschoolbasketball,collegebasketball,otherNBAteamsandthelike.

Andthentherewasone

Firstofall,althoughIcalledthethreesitesTechCrunch2.0,IamsurethatthattherearemanyviewersoverallwhodonotevenknowthedifferentiatingfactorsbetweenthesethreeandmoregeneraltechsitessuchasTechCruch,Mashable,ReadWriteetc.(I'mnotevensurewheretoputTheVerge)andtherearemanymore.

Theremayormaynotbeenoughoxygenforeachofthesesites,orthelargestones,tosurvivealongwiththeircompetitorsovertime,butifdisciplineisnotinstilledfromtheinsideviaamerger,thelackofscale,lackoforganizationandlackofdifferentiationwillmakeallthreerelativelyeasyandprimepickingsfordisruptionfromtheoutside.

Remember,weliveinaneranowofthethedisruptorsthemselvesbeingvulnerabletobeingdisrupted.